At a board meeting on 27 March, a joint advice from barristers Robertson Wright and Robert Bromwich was tabled. In their opinion, members of the two clubs had not been transferred properly and the club should go to the Supreme Court to verify this.

At the same meeting, the Board voted to re-appoint Greg Evans to the Board. The tension in the aftermath of the aborted election saw Terry Heidtmann briefly align himself with the group. Heidtmann voted for the reappointment of Evans, restoring the Five’s numbers on the Board.

On the weekend of the cancelled election, a group of managers had a session with Terrence Lynch, a barrister who specialises in the field of licensing and had appeared many times on behalf of the Department of Gaming and Racing (DGR).

The management team used Steve Bowers to brief Bernie Coles QC and Lynch for an opinion on the transfer process that had been used. Putting together the amalgamation strategy had been a painstaking and meticulous exercise. It had been put under the microscope many times because of the concerns of some directors. They were confident that they had followed a properly executed amalgamation policy, but now they needed a legal opinion to support that position.

Coles and Lynch advised that the management’s understanding of amalgamation was correct and that the Club had acted correctly. However, if there were any irregularities in the process, they could very easily be overcome by the court. 

According to Cowan, Steve Bowers estimated that in order to fix this problem – assuming there was a problem – it would cost a maximum of $25,000. Coles and Lynch did not think it necessary to go to the Supreme Court at all. They only suggested it because the other legal team thought there were irregularities.

The Supreme Court may have ruled that nothing needed to be done – that the transfer of membership had been done correctly. If it had ruled in favour of the other team – that then transfers had been illegal – it had the power to rule that they were all members of Panthers. Either outcome offered a way of resolving the membership question, although neither necessarily produced the result being sought by the Five.

Lynch says,

The essential difference between the two advices was that – if you accepted that there had been a problem about the memberships, their approach said “let’s not make them members” and our advice said “here’s how we can get them in”.

That was the fundamental difference. They wanted declarations that people weren’t members and we suggested means by which they could be confirmed as members, if it was the case that they weren’t.

The competing legal opinions reflected very different briefs and very different objectives. Brett Boon briefed Wright and Bromwich, and communication between the club and Boon was through members of the Five. Their evidence indicates that the outcome they were seeking was one that would prevent Newcastle and Port Macquarie members from voting or standing for the Board.

From management’s perspective, the distinction was stark: one side was asking, “How can we keep our promises?”; the other, “How can we break those promises?”

Lynch says his view concurs with that of John Ralston as to when amalgamation occurs and memberships combine.

The licensing act provisions never really say at what point an amalgamation actually occurs. The court cancels the old club’s certification, and there’s really not much of a notion of amalgamation. There’s some things that happen that tell you it’s before the event, and then these provisions in the law say this has occurred, but you never really know when it does happen …

So, if the members are part of the whole entity that is the club, and then two clubs merge and become one, how can you separate one part of the entity from the rest?

Wright and Bromwich had recommended an application to the Supreme Court. Steve Bowers points out that this would also not have been acceptable to the Five.

Their proposal was to make application to the Supreme Court to have all the members from the amalgamating clubs removed from Panthers’ membership register. I attended an urgent conference in the chambers of Robertson Wright SC with Robert Bromwich, barrister, and Brett Boon, for the purpose of discussing how the matter could be expedited before the Court.

I met Terrence Lynch immediately prior to the Wright conference to seek his advice. This was a very significant issue – Panthers was going to take action to toss out its amalgamating members. I listened carefully to [Wright’s and Bromwich’s] discussion about the nature and seriousness of the membership problem and how it should be resolved. Lynch believed that there was an insurmountable problem in this approach. It would require evidence that Panthers never intended that the amalgamating members become members of Panthers.

I asked them;

“Who will we get to give evidence that the Club never intended to make them members? Roger Cowan can’t do it. He is on the record as having stated that membership of Panthers was a condition of amalgamation.”

I pointed out that no senior manager could give evidence for the same reason.

The mood in the room changed. The futility of approaching the Supreme Court under these circumstances was apparent. I realised at that moment there would be no urgent application to the Supreme Court – in fact there would be no application at all.¹

The vote was unanimously in favour.

Roger Cowan says he was extremely concerned at what Panthers was doing to the other clubs.

We had told them that they would start out as full members. When the time came to renew their membership, they could opt for a lower membership fee or remain as full members.

Now, we were being told that members of the Newcastle club should have applied for membership of a new entity. … Every one of the 30,000 members of Newcastle would have had to find a member of Panthers to sign a nomination. Furthermore, the Newcastle member would have had to be known by the nominator. Very few would be able to become members under that set of rules.

Just imagine the stupidity of it. We address a meeting of Newcastle
members and say to them:

“We want you to agree to sign over more than $40 million worth of your assets to us. In return we will pay out your debt of $14 million and we will treat you fairly and equitably as members of the company that will own all those assets”.

After the assets are signed over and the debt rearranged, we go back to the members and tell them:

“Sorry but now we have decided that you cannot become members of the entity that has taken over your assets unless you can find an existing member who will recommend you for membership”.

The opinion of Coles and Lynch was presented to the Board at a meeting on 23 April, but the minutes record no substantive discussion of it. Instead, the Footy Five group commissioned the Acuiti solicitors to find a solution to the membership problem. Acuiti was also asked to carry out a thorough review of the procedures used by management in amalgamations.

Steve Bowers warned the Board that their solution would probably cost more than $400,000. He suggested that the matter could be handled much more quickly by asking for a court ruling, which would probably cost around $25,000. The Five dismissed the suggestion and accused Bowers of trying to mislead the board. As it turned out, Bowers had underestimated the final cost.

But there were other costs that were harder to quantify — wasted management time, stress, interruption to the more important tasks of running the club, legal costs, lost opportunities and the diversion of resources. Some examples have already been documented.

Roger Cowan also noticed a toll on his management team:

The cancellation of the election strengthened the resolve of some managers who were already growing weary of the constant bickering and obstruction in the boardroom to find other employment.

John Wilson was a good example. The management team had done quite a lot of management exercises on recognising and understanding values, and honesty came out as the most important value for John. He was resentful that the Board had put that value to the sword by breaking promises that he had made to members and directors of other clubs. He said he could not work comfortably in such an environment.

There are many other values that drive individuals. Barry Walsh, for example, would be high in the value of loyalty. He was not in the management team, but it seems obvious. If Barry is in a team, he will never let the team down. Keith Rhind has a good way of describing this value – “If we are ever struggling through the desert, I will be happy to let Barry carry our water”. Clashes in values almost always lead to irresolvable conflict. The secret is to understand and respect the differences and avoid clashes.

The atmosphere in Panthers’ boardroom during this period has been described as ‘horrendous’, and a ‘never-ending nightmare’ by those who experienced it. Meetings went on for many hours and left everybody drained and frustrated. Management saw the Acuiti review as a cynical exercise by the Five to find something to discredit management, and to justify the decision to cancel the election, which they knew was being investigated by the DGR.

A 70-page report was prepared by Brett Boon and his associate and presented to the Board in May.

Ian Temby found in the conclusion to his report,

… the club aborted the March 2002 election because of some apprehension that, if carried through to conclusion, it would or might lead to loss of power by the existing board’.

He continued,

Most [directors] were more concerned about outcome than principle.

He said the decision stemmed partly from their distrust of management, and partly because Boon’s advice was ‘palatable’.

His [Temby’s] report attached no blame to the management team for any problems relating to amalgamation of the cancelled election. It says,

Cowan fought hard to deliver on the promises he had made, and he was pursuing the interests of all members, not just those from the Penrith site.

He adds that most members of the board, however, saw their principal allegiance as being to the Penrith members. He went on,

Cowan’s approach is to my mind distinctly preferable to theirs.

Allegiance to Penrith members may have been one factor. But Temby’s findings also identified apprehension about the existing Board losing power, while the evidence of some directors acknowledged concerns about their positions. The aborted election had exposed divisions that were now becoming increasingly difficult to contain. Those divisions would soon move into a new and more destructive phase.

Removed from The Series
The original Chapter 17 concluded with a lighter account of what happened when members of the Panthers management team informally reconstructed the result of the abandoned election. Read: On a Lighter Note

1. No Supreme Court proceedings were ultimately commenced over the membership issue. Ian Temby later recorded that an administrative solution was pursued instead. ↩︎

Commentary and Contributions

On 21 March 2002, the Panthers Board voted to cancel an election for the Board.

Voting was already well underway. The action was unprecedented at Panthers, and almost certainly in most other clubs or businesses. The cancellation was the subject of extensive questioning and examination by Ian Temby at the Inquiry in 2004.

This was the first election at which members of amalgamating clubs could vote, and they were voting for a board that would oversee the entire Panthers organisation.

In January 2002, nominations opened for the new board, and it soon became obvious that there were a number of nominations coming in from other sites, in particular Newcastle and Port Macquarie.

Roger Cowan, Keith Rhind and John Wilson were on a business trip in New Zealand when the ClubNova amalgamation transformed from a simmering cauldron into an active volcano. A board meeting saw chairman Barry Walsh and Terry Heidtmann completely outnumbered. An argument was raging about Panthers pulling out of the amalgamation.

Walsh, the Chairman, was aghast that the board might be about to break promises that he knew had been made to Newcastle.¹ He told the meeting,

You can’t pull out. Panthers does not break its word. We don’t do things like that. It’s against everything we stand for.

He was fighting a losing battle. But a breakthrough was about to come.

Observers who attended board meetings in those times remember that Craig Terry had a habit of suddenly jumping out of his seat and heading outside for a cigarette. One of them said,

He would seem nervous and jumpy, and act as though he had an urgent and desperate need.

On this occasion, Terry pushed back his chair and made to rise.

Walsh reacted. An important issue was on the table. He asked Terry to resume his seat until the discussions were over, but he was ignored. Walsh then angrily told Terry that he had no right to leave the meeting; if he did he could forget about coming back.

Terry ignored him and left the room.

It all became too much for Walsh. His values were being abused and now he was also being treated with contempt. He bounded after Terry with an uncharacteristic aggressiveness that induced some nervousness in those left in the boardroom, where stunned silence reigned. A short time later Terry returned and sat down. He was followed closely by the angry chairman.

Walsh said,

I am going to put this to the meeting now. We’ve had enough discussion. And I can tell you we are not breaking our word. Now who is in favour of continuing with the amalgamation?

The vote was unanimously in favour.

Terry Heidtmann quipped,

Mr Chairman, I don’t know what you did, but why couldn’t you have done it earlier? We could have saved ourselves hours of argument.

In early February, despite the promises made to the Newcastle club, the Board asked the club’s Group General Counsel, Steve Bowers, to have the club’s legal team investigate the eligibility of members of other clubs to vote.

Bateman told the inquiry that he still had concerns – in the first instance, that candidates from ClubNova were even standing, and secondly, that they may be elected. He acknowledged that all nine sitting directors at Penrith could be re-elected, but the ‘two directors from one club’ stipulation could still see some of them voted out.

There would still be a minimum of five Penrith directors on the Board, but which five?

Later in February the legal advice that the Board had sought from John Ralston, on the constitutional question, was received and tabled at a board meeting. It said members of amalgamating clubs had become Panthers members on 7 January, in accordance with the Board’s resolution of November.

It added that under the Corporations Act, the Club’s register of members was proof of membership, and that the Club could not disavow members of amalgamating clubs once their names had been entered in the register.

This was not what the Footy Five alliance wanted to hear. Cowan was astounded by their next strategy.

They decided that they would seek the support of the amalgamated clubs to help ensure their seats on the new group board. They approached the other clubs asking them to back the existing Panthers directors in the election. The understanding was that each club would – obviously – canvas votes for their own candidates, but not for those from any other club.

For anyone who could apply simple logic, this meant that the Board of Panthers was saying to the members of those clubs: “Yes, you can run people, but we will be also asking the other clubs in the group not to vote for your candidates”. Such a strategy would give candidates from other sites no chance whatsoever of being elected. 

To me, it was an unbelievably bad strategy. I saw it as a clear signal that some directors were far more interested in their own seats than in the big picture.

The Newcastle and Port Macquarie clubs were interested in having a say in the future of the club, and each had stood two candidates. Now here was Penrith asking Newcastle not to vote for Port Macquarie candidates, and Port Macquarie not to vote for Newcastle candidates. After some discussion about the ramifications of the Penrith approaches, the two clubs decided to combine resources and create a joint voting ticket. It was distributed at the clubs in their areas. In Newcastle, a supporting letter from union headquarters accompanied the ticket.

In mid-March, Craig Terry obtained a copy of the ticket and the letter. The news created great consternation among the Five. The ticket featured only one of their number – John Bateman.

The fact that Panthers’ constitution banned the distribution of electioneering material on club premises also became part of the strategy.

It appears that although Terry had the ticket on 15 March, the day before voting was to start, he did nothing until the following Monday18 March when the election was already in progress. Voting at other clubs closed on 21 March but was not scheduled to end at Penrith until 23 March. By 18 March, it was clear that people were voting in fairly large numbers at other sites.

The same day, Terry decided to obtain his own legal advice. He contacted ClubsNSW and was given the name of a law firm. The company, Acuiti Legal, was a specialist in club law, and the representative that Terry spoke to was Brett Boon.

Terry told the Temby Inquiry,

I would have got into that discussion because we were talking about ClubNova, and an election ticket that was mostly related to the Newcastle area. It was probably just a natural progression that I started to talk about issues concerning the administrative processes behind the amalgamation activity. The dialogue progressed from there, and it seemed that the more that I discussed this issue the more that Brett thought there were some grave or serious issues in respect to the way that the club had been administering the amalgamation process.

Boon’s initial opinion could only have been based on the information provided to him by Craig Terry. The completeness of that information was therefore important to any assessment he could make at that stage — if that information were incomplete, it would have been virtually impossible for Boon to analyse the situation properly.

Terry’s action prompted counsel at the Inquiry to ask why he went outside Panthers to seek legal advice. He answered,

At that point I was not completely happy in respect to the completeness or veracity of the advice we were getting at board level on amalgamations.

Terry’s evidence indicates that the discussion began with the ClubNova election ticket and then broadened into questions about the administration of the amalgamation. How a concern about election material developed so quickly into fundamental questions about the membership status of the amalgamating clubs became an important issue at the Inquiry.

However it happened, the advice he received, going beyond the ticket issue, was – in the words of Ian Temby – ‘timely’ and ‘convenient’.

At a scheduled board meeting on 19 March, there was a phone hook-up with Boon. He reiterated his opinion that Port Macquarie and ClubNova were still separate clubs, and thus not eligible to either stand for the Board, or vote. This opinion was the opposite of that of John Ralston, delivered to the Board three weeks earlier. Boon told the board that he was ‘nervous about the consequences of having the elections.’

At the meeting Roger Cowan and Steve Bowers cited the Ralston opinion and warned of the ramifications from the DGR. But the group of four, as it then was, argued that there was a real threat. The evidence indicates that John Bateman spoke strongly on the subject and, because of his legal background, his opinion helped sway other directors in the direction they ultimately took.

Bateman summed up the mood of directors in his testimony.

The reaction of the board was to say: “Hey, these people are electioneering. That is not permitted under the constitution. Do we still wish to be associated or involved with these people”?²

Cowan sees such statements as a bit unrealistic to say the least.

There is always some electioneering and I doubt if any nominee, including Bateman, has not asked someone to vote in a certain way. For years there has been controversy about the retiring³ directors being denoted by asterisk on ballot papers and election material. The asterisks make it an effective how to vote ticket, especially when all the directors are in harmony and can advise their friends to tick the boxes with the asterisks.

The rules barring electioneering on the premises could never prevent electioneering off the premises.

The 19 March board meeting resolved to seek urgent legal advice from Acuiti on whether Panthers could withdraw from its amalgamation with ClubNova. The Board requested that management provide information on the consequences from the financial, public relations and marketing, and political perspectives? How would Westpac, the group’s banker, react?

Management was disturbed. From its perspective, withdrawing would mean breaking the promises made to Newcastle and potentially throwing away $26 million. Cowan and his management team regarded such a course as dishonourable and dishonest, as well as extremely costly — through the loss of assets and reputation, and the possibility of a damages claim by the Newcastle club.

Bateman acknowledged to the Inquiry that calling for cancellation of the amalgamation with ClubNova may have been a ‘knee-jerk reaction’ because they were well into the process. Coincidentally, Craig Terry used exactly the same words – ‘knee-jerk reaction’ – when describing his feelings about pulling out of the ClubNova agreement.

A further meeting on 21 March was attended by senior managers including Roger Cowan, and solicitors Boon and Johnston from Acuiti Legal.

There is some variation on who said what at this meeting. All board members agree that Brett Boon did not actually advise them to cancel the election. However, most said that they felt that his advice left them little choice but to do so.

The 21 March meeting dropped any thought of cancelling the Newcastle amalgamation after legal advice on the consequences of pulling out, and particularly after the tabling of a letter from Westpac spelling out the club’s obligations from the bank’s perspective.

Brett Boon agreed with Ian Temby’s suggestion that it was his [Boon’s] preferred position to carry the voting through to its conclusion, at the same time making an urgent approach to the Supreme Court for a declaration as to the membership of the two clubs in question. Boon also told the Board he was prepared to leave the board meeting and immediately start to get those processes in motion.

Neither of the legal teams saw a problem with still holding the AGM scheduled for 24 March, and just not declaring the ballot.

Terry continues to maintain that he and other directors saw it as their duty as directors to cancel the election, saying they had been given ‘concrete advice’ about the legality of the memberships. Ian Temby reminded him that there was another legal opinion – from a source just as reliable – that was completely opposite.

In fact, in his final report, Temby referred to advice given by John Ralston, saying he is ‘a solicitor with a high reputation for work involving clubs, and on the evidence is perhaps the most eminent in the field in Sydney’.

At one time in his questioning, Temby asked Terry if he saw himself as ‘the guardian of the constitution’. Terry agreed that this was how he saw his role, missing the irony.

Temby asked,

Why shouldn’t I conclude that another factor driving the directors who wished to seriously examine the pull-the-plug option was the information which had been received as to voting figures to that stage?

While the majority of the directors at the meeting maintain that they aborted the election because of legal advice, Boon says it was never one of the options he offered.

Barry Walsh says that he spoke against aborting the election.

But there were three solicitors in that room, Mr Boon and his associate – and John Bateman, who is my own solicitor. They all said that it looked like the club had got it wrong. Then somebody got up and moved that the election be aborted. This really concerned me, but at that time I didn’t have any information to disagree and say, “no, we shouldn’t do this”.

Other directors agreed that Bateman’s position as a solicitor and his opinions on the issue reinforced their resolve to take the action they did, even though all acknowledge in their evidence that Boon did not specifically advise it. Craig Terry said in evidence that Bateman recommended to his fellow directors that they cancel the election.

Bateman told the inquiry,

Whether they listened to what I had to say or my view, I can’t comment on. I’m not an expert in club law. I accepted the advice that was given by Mr Boon. I believed the other board members accepted it as well, because they voted in favour of it.

Eventually, the executive staff and solicitors were asked to leave, leaving the directors alone to deliberate.. Former Panthers operations manager, Tony Lackey says they waited outside for around 45 minutes. Boon said he was nervous at the idea that they would cancel the election when he was out of the room, but was still surprised when they actually did it.

The directors then considered the matter behind closed doors, without the executive staff or solicitors present. They already knew that Cowan was vehemently opposed to stopping the election. There had also been a previous occasion when James had initially supported a resolution opposed by four of the Five, before changing his vote after staff had been asked to leave.

Whatever the reason for excluding the others on this occasion, the decision that emerged from the closed session was to stop the election.

We were brought back into the room and they dumped, they just dumped.

The Board resolved to stop the current election,

… having regard to legal advice received in relation to the issue of the validity of the persons listed on the Register of Members of Penrith Rugby League Club Limited in relation to such persons eligibility to stand for election as a Group Director and, to vote …

The Board also instructed Acuiti, through Brett Boon, to obtain advice on the legal status of the members of Port Macquarie and ClubNova Panthers members.

Early on the morning of Friday 22 March, voting was stopped at Penrith, two days early. The ballot boxes were removed and stored, the other clubs in the group were notified and a media release was issued.

1. Walsh lived by the same ethos as Cowan and the management team. Once his word had been given, he believed in sticking to it ‘come hell or high water’.
   ↩︎
2. Remember, the Board approached the Port Macquarie and Newcastle clubs requesting them to vote only for their own candidates (and not each other’s) ensuring the existing Board would all be returned. This was undoubtedly electioneering and it encouraged those clubs to electioneer on behalf of the Penrith directors. Against that background, Bateman’s criticism of electioneering by the other clubs appears difficult to reconcile with the earlier approach made on behalf of the Penrith directors.
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3. I am certain this was meant to say, “sitting directors”. Retiring directors don’t appear on ballot papers at all. ↩︎

Commentary and Contributions

The question of whether the amalgamation strategy increased the risk that Panthers could be taken over by a group hostile to the interests of the Penrith members was first raised when the Board was discussing the Mekong Club.

Someone floated the idea that Panthers could be taken over by the Vietnamese community. Greg Evans scoffed at the fears. Any organised group could take over Panthers just as easily from inside Panthers as from another club, he said.

That was true.

Out of the 50,000 Penrith members, it was unusual for more than 900 people to vote in a board election. Any well organised group with quite a small number of members could take control of the Board.

The constitutional change went through in January 2002 and ensured Penrith the protection that the Five had been arguing for. By then, although the group continued to support one another, the Five had become four following Greg Evans’s resignation in September 2001.

In the early months of 2002, with some of the Five (now Four) still alleging that he was trying to ‘sell off’ Panthers, Cowan argued that having the organisation spread over 14 sites gave added protection, not less. An attempted takeover has to become obvious. It would need a lot of promotion to succeed. But some of the Four continued to portray Newcastle as a significant threat

As the membership issue blew up into conflict between management and Board, Cowan tried to explain to the Five the difficulties facing anyone mounting a takeover strategy.

If, for instance, Newcastle wanted to get control, it would have to win two places in its own right, and then organise others to be elected on the Penrith ticket. But if there was the slightest suspicion that this was happening, the members of the 12 other clubs would hear about it and be motivated into action.

And of course, the largest membership of them all, Penrith, would have been opposed. And why would the members of any club in the group support a back door takeover by another club? Newcastle would have to set up candidates in other clubs – and in Penrith – and then persuade enough members to vote for them. The more clubs in the group, the greater the logistical hurdle would become.

Cowan is convinced that there was never the slightest possibility of a reverse takeover.

In an interview in 2006, Greg Evans said he had been told that the union was definitely planning a takeover of Panthers.

Reverse takeover was not a furphy. The union movement was very strong, and I know someone in the union movement who said that that’s what they were planning to do.

Evans did not produce evidence to the Inquiry of the broader union takeover plan he later described. The Inquiry was presented with evidence of organised electioneering by people associated with ClubNova. A “Friends of ClubNova” communication urged members to elect two Newcastle representatives and support “like minded candidates from other clubs” as part of a nine-person ticket.

Temby found that most of the existing directors believed the election would change the composition of the Board and were worried by that prospect. He also found that legal doubt had arisen over whether the ClubNova and Port Macquarie members were entitled to vote. That legal uncertainty became the principal basis on which the Board cancelled the election.

Group board director Gary Kennedy, from Panthers ClubNova in Newcastle, is also the secretary of the Trades Hall in that city.¹ He laughs at the suggestion that they wanted to take over Panthers.

We had enough problems trying to keep our own club operating. Why would we even think about taking on something as big as Panthers? It’s just ridiculous!

David Meidling was also a member of Panthers’ Group Board and is on the Port Macquarie Panthers Advisory Board.²

I can confidently tell you that the whole thing was a furphy, probably developed by some people as a type of scare tactic. It had absolutely no basis of fact in Port Macquarie during the lead-up to the amalgamation, or any time after.

There is an important distinction in the evidence presented to the Inquiry. There was organised electioneering involving ClubNova members and a nine-person ticket. But that is not the same thing as evidence of a planned union takeover of Panthers. Temby recorded the directors’ fears of a reverse takeover, but did not find that such a takeover was actually being planned.

1. Gary has since retired from Trades Hall, and the ClubNova clubs were purchased by Wests Newcastle, so he is no longer involved with Panthers. A great pity, as he is whip-smart and a firebrand who will always be upfront with his thoughts.
   ↩︎
2. While Port Macquarie Panthers remains in the Panthers Group, there is no longer a Group Board – or, if it called a Group Board it is effectively the Penrith Board. ↩︎

Commentary and Contributions

In Cowan’s view some of the most damaging – or potentially damaging – decisions made by a Panthers Board have been rationalised by claims that the Club was in danger of a reverse takeover – a loss of control to directors voted in from amalgamated clubs. The direct costs of these decisions were far in excess of a million dollars. The indirect costs – in reduced market share, lost opportunities and image battering – would have been much greater.

It could have been much worse. There were some close calls. On a couple of occasions, members of the Footy Five were forced to withdraw motions that would have been disastrous. One of these would have eventually cost Panthers far in excess of a hundred million dollars, perhaps double that amount.

The word ‘takeover’ had long been erased from Panthers’ management dictionary – and from its psyche, but in the minds of some of those directors, it was what was really going on in 2000-2002. This became blatantly evident during their testimony at the inquiry. And given that their understanding was that these clubs were being ‘taken over’, then their members should always remain secondary to the members of what some of them called the ‘mother club’, Penrith. It was a view that was diametrically opposed to that of Cowan, the Club’s management, the other members of the Board, and the Licensing Court.

It is difficult to reconcile that view of amalgamation with the memoranda of understanding approved by the Board for each amalgamation. Each clearly spelled out the rights of members.Each one clearly spelled out the rights of members. The very first such memorandum approved by the board was for the Hawkesbury Sporting Club on 11 June, 1999.The memorandum was part of the evidence supporting the application to the Licensing Court.

The fifth clause is unambiguous:

e) Members
– members of Hawkesbury Sporting Club [HSC] have full membership rights at Penrith Rugby League Club [PRLC]
– all entitlements and rights of members of HSC (such as 3yr, 5yr, 10yr, permanent) be preserved in their membership of PRLC

During the inquiry, all of the Five claimed they were justified in aborting an election because they were protecting the Penrith members from a reverse takeover by interests that would not support rugby league. Some said they had been misled by management as to the rights of members of the amalgamating clubs. The criticisms became a significant part of Ian Temby’s Instrument of Appointment for the inquiry.

While the amalgamating clubs were small, with few members, the Board seemed to have no problems with the process.

Roger Cowan and his management team had authorisation from the Board to take the program out into the world and sell it. Hawkesbury Sporting Club was a good example of management thinking. That club had about 2,000 members and Panthers, at that time had about 50,000 members. After amalgamation, Panthers would have 52,000 members and they could all choose between two locations. To management it was one club, one membership and two sites. As members of a club amalgamating with Panthers, the 2000 would have equal rights with all Panthers members – and there were no qualifications with that. They could vote in elections and stand for the Board. For Cowan, his management team – and some members of the board – that thinking never changed.

Port Macquarie RSL and Club Nova in Newcastle had large memberships, and each consisted of two clubs. To make matters worse in the eyes of some people, the Newcastle
clubs were strongly affiliated with the union movement.

Club Nova had a book value in excess of $40 million, and a debt that could be paid out with about $14 million.  It had 30,000 members and the city had a first-grade rugby league team with a very strong supporter base. These factors, combined with the potential for significant improvement for both clubs, meant it fitted Panthers’ criteria perfectly.

The Panthers/Club Nova deed of amalgamation was signed in October 2001, but the transfer of members was delayed by the Board, fearing that such a large membership was a threat. As soon as the amalgamation was approved by the licensing court, the Newcastle members would be entitled to vote, and nominate for the Board.

The first ever group board election was to be held early in 2002, and some of the Five had expressed discomfort about elections being influenced by the larger clubs.

Around the same time, Roger Cowan presented a paper advocating that a group board would work better if it were made up of directors from a number of clubs. He envisaged that each local club would have its own internal board (or committee) and the group board would make the major decisions relating to the entire enterprise. Penrith would hold no more than three seats on that board, and other clubs could hold a maximum of two.

Cowan felt that such a board would provide valuable input on matters affecting all clubs in the group.

His model was rejected by the majority of the Board, which resolved to instruct the club’s Group General Counsel to put the Club Nova amalgamation on hold. Evidently Cowan’s vision for a diverse board was not going to materialise.

The following day, Panthers’ Board called an extraordinary meeting.  It requested the club’s legal adviser on registered club issues, John Ralston, a specialist in the area, to investigate a constitutional amendment that would guarantee five Penrith board seats.

They proposed an amendment to the constitution, which would ensure that at least five out of the nine directors on the group board had to come from Penrith, with a maximum of two from any other club. It guaranteed Penrith five seats on the Board, and left it open for the Penrith club to hold all nine.

Former director Evans told the Inquiry he viewed amalgamations as Panthers being a ‘white knight saving these clubs from going under’. Yet one of the original criteria endorsed by the Board was that an amalgamation would have to be potentially profitable for Panthers.

Evans told the inquiry,

We would still provide the facilities for the people of those communities. Perhaps we could use our expertise and charge ourselves out to those clubs to make some money, which then could be channeled back into football.

For Cowan, the ‘white knight’ connotation always had to be overcome before his team even proposed an amalgamation to the Board. It had to be a properly thought-out business decision with the potential to improve Panthers’ financial position.

Club Nova was a particular problem for Evans.

I believe the football club is the primary reason for the Penrith club’s existence, the primary reason. Therefore, those people involved in football in Penrith should maintain overall control, because I don’t see what synergy there is between a member of a union-based club in Newcastle and a club wanting to promote rugby league football in the Penrith region.

Cowan remembers Evans as always appearing quite studious in his approach to Board papers. Yet comments such as these reveal a very different understanding of what amalgamation should ultimately mean for the governance of Panthers.

But while Panthers had started out as purely a rugby league club, it was now a multi-million-dollar enterprise. Members of the group board would be overseeing that business. Even if they had no interest in rugby league, they could still be capable of doing an excellent job as directors of a large, diversified business.

On another level, it was quite likely that some of the members and visitors that attended all the clubs, including Penrith, had no interest in rugby league, and had possibly never even seen a game.

Evans had voted in favour of amalgamating with the Mekong Club, which had no interest in sport. Where was the synergy in that case?

John Bateman told the inquiry he had similar misgivings about Newcastle.

It just did not sit kindly with me – it was an organisation that had a political base, and to me was more of a threat than any other club that we amalgamated with. It was a union entity. Not that I have any problem with the unions, but my personal view is that they could galvanise numbers, could galvanise power. That’s the nature of that type of organisation. I was against our amalgamation with ClubNova from the start.

Bateman continued to emphasise his opposition to the amalgamation to the point that Ian Temby asked him why he was ‘pushing this line’.

Ian Temby put a question to Evans about his preferred board.

Your ideal solution would have been, perhaps, that the football club board should become the leagues club board and if the amalgamated clubs were given some degree of autonomy, you didn’t care?

To which Evans answered, ‘yes’. He agreed with Temby’s suggestion that he would have preferred not to have people from any of the other clubs on the Board.

Despite having agreed to the amalgamation and the memorandum for it, the Five voted to delay the scheduled transfer of Newcastle members until after the proposed change to the constitution could be implemented. Newcastle members would then be ineligible to vote against the changes.

It was a delay of around six weeks, a cost in excess of $50,000 and a watering down of the promises that Cowan had made to Newcastle members. The delay brought no apparent operational advantage to the business. It did, however, mean the constitutional changes could be considered before the Newcastle members acquired voting rights.

The Panthers Board then asked the CEO and chairman of ClubNova to attend an upcoming board meeting. At the meeting the Board asked for, and was given, a written undertaking by Newcastle that they would not oppose the amendments, even though they were not in the memorandum that had been agreed by both parties a few months earlier.

The undertaking therefore placed a limitation on the Newcastle members’ position that had not appeared in the memorandum agreed by the parties only months earlier.

In this period, and in 2004 at the Inquiry, the Five justified their actions on membership, constitutional changes and elections by claiming that they were misled by management.

Yet there had been more than a year of discussions before the Board agreed to an amalgamation program. Criteria were eventually set and approved by the Board. Then, each amalgamation was subjected to enormous scrutiny before it too, went to the Board. A memorandum of understanding was approved and signed off – by the Board. Each of the Five told the Inquiry that they had read the memoranda.

So how were they misled?

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