Corporate Australia tends to have a short memory. It was less than three years ago that the first substantial Australian victim of the credit crunch, Centro Properties Group, collapsed — remaining as a going concern only courtesy of the good graces of its lenders. In the past two years, Centro lost more than $6 billion (including $653 million this year), while its majority-owned subsidiary Centro Retail Group reported a loss of $2.6 billion in 2009. The deficits largely resulted from Centro’s disastrous acquisition of US-based REIT New Plan Excel Realty in 2007, which was purchased only months before the onset of the global financial crisis.

In its recently released financial report, Centro Properties told unit-holders that the entity’s net tangible asset backing was negative $2.1 billion (or negative $3.12 per share). In short, that means the current value of the group’s debts currently exceeds the value of its assets by more than $2 billion. Aside from owning a business that is worth far less than nothing, current Centro shareholders are also facing two separate class actions alleging that it deliberately misclassified its debit position to previous shareholders.

But only three years after the New Plan calamity, two members of the Centro board that approved the acquisition not only continue to oversee the business, but have quietly collected a pay rise right under the nose of Centro shareholders.

Centro chairman, former lawyer Paul Cooper (who was appointed to the Centro board in 2006), and former Orica executive Jim Hall (a Centro director since 2005), managed to not only survive a boardroom cull (which led to the departure of Brian Healey, Graham Goldie, Peter Wilkinson and Sam Kavourkis) but also, unbeknownst to all but the most observant of shareholders, actually received a substantial pay rise this year.

Throughout their tenures, Cooper and Hall have sat on the boards of Centro Properties Group and its majority-owned subsidiary, Centro Retail Trust. Previously, Cooper and Hall were paid directors’ fees for their work on the Centro Properties, but not the Centro Retail board. This is a common arrangement — for example, former directors of Babcock & Brown and Macquarie Bank who sat on the boards of the mothership and various satellite companies were not paid multiple sets of directors’ fees.

The reason for this is directors’ roles on the satellites companies have generally been considered part of their responsibility as a director of the mothership. (Other Centro Properties directors, such as Goldie,  Kavourakis and Wilkinson who previously served on the Centro Retail board were not paid two sets of directors’ fees for their dual roles).

Despite Centro’s share price remaining about 99% below is 2007 peak, this year Hall and Cooper received two sets of directors fees — for  Centro Retail and Centro Properties. In its 2010 annual report, Centro Retail noted that the total fees paid to Cooper were $103,414 while Hall received $121,720. Both Hall and Cooper received no directors’ fees the prior year at Centro Retail.

Centro Properties 2010 annual report noted that last year Cooper received $376,050 from Centro Properties. In total, Cooper’s roles at Centro will see him take home about $480,000 this year, making him one of the highest paid chairmen in Australia, despite Centro’s minnow status — the company’s market capitalisation is only $160 million. By contrast, successful retailer JB Hi-Fi, which has a market capitalisation of $2.3 billion, paid its chairman Patrick Elliott remuneration of $195,000. Property developer Stockland, which is valued by investors 56 times more than Centro, paid its chairman Graham Bradley $398,123 last year, less than what Cooper received.

Cooper’s fellow director on the Centro Properties and Retail boards, Jim Hall, has also carved a lucrative, albeit unsuccessful suite of directorships. Hall, who sits on the boards of ConnectEast (shares down by more than 70% in the past three years), Alesco (down 82% since 2007) and Paperlinx (down 85% since 2007) was paid $684,000 for his various board roles last year.

In an affront to corporate governance, the dual fees being paid to Hall and Cooper were not approved by Centro shareholders, in fact, the first Centro Retail shareholders would have been told of the fees was buried in page 30 of Centro Retail’s financial report.  (Centro Retail, like most public companies, had previously obtained carte blanche shareholder approval to pay its board up to $1.5 million back in 2008).

Cooper and Hall can at least lay claim to being busy during the year, attending almost 70 board meetings each (and additional committee meetings) as Centro struggles to overcome its huge debt burden. However, the fault for Centro’s predicament can partly be laid at the feet of the Centro board (of which Hall and Cooper were members) which approved of the entity’s acquisition binge and that resulted in the company almost folding under the weight of its tens of billions of dollars of debt.

This is not the first instance of Centro’s C-suite generosity. While most of the company’s executives fared badly when Centro’s share price collapsed (due to a large amount of their remuneration being tied to Centro equity), Andrew Scott, the person most responsible for the entity’s foibles, was very well rewarded.

In December 2007, Scott was given a $3 million termination payment. The payment was also partially contingent on consulting work that Scott agreed to perform (this was because Scott was one of the few people to understand Centro’s outrageously complex corporate and partnership structure). Ultimately, Scott performed virtually no consulting work at Centro but collected the full termination benefits — to the perpetrators go the spoils.

Centro remains one of the largest Australian victims of the global financial crisis, brought undone by a Byzantine structure, foolhardy acquisitions and more than $18 billion in debt. Combined, the company’s recent losses are the second greatest in Australian history — dwarfed only by News Corporation’s $12 billion loss in 2002.

But this doesn’t seem to matter when determining the remuneration of the company’s directors.

*Adam Schwab is the author of Pigs at the Trough: Lessons from Australia’s Decade of Corporate Greed