For an organisation with acute financial problems, the ABC sure knows how to blow up a budget — it spent the equivalent of employing more than a dozen journalists for a year just to remove one managing director.
Sacking Michelle Guthrie as the ABC’s managing director has likely cost the public broadcaster more than $2 million, including legal fees that were charged to the ABC of more than $250,000.
Costs revealed
ABC invoices from law firm MinterEllison obtained by Crikey show the broadcaster was charged $233,913 for what the documents say are “Adverse action claim — MG”, plus another $25,067 for general legal advice about Guthrie’s unfair dismissal case. A total of $258,981 in fees is listed for legal work undertaken between November 27 2018 and January 30 2019.
The cost of that advice was on top of the $1.64 million Guthrie was paid, which included a $730,000 out-of-court settlement, as well as the staff hours spent on dealing with the matter, the public relations disaster that ensued, the disruption to the board and the money spent on headhunters both for Guthrie and her replacement, as well as the search for a new chair.
Crikey obtained three invoices through a freedom of information request to the ABC, but access to eight other documents relating to the cost of the dismissal case were withheld, with the ABC claiming the correspondence contains “confidential and privileged” legal advice that it is unwilling to make public.
The withheld documents include various internal email threads between senior ABC staff, as well as an ABC board paper containing discussion about the case.
Legal fallout
Guthrie was sacked in September 2018 after serving just two-and-a-half years of her five-year term, with then-ABC chair Justin Milne saying the board of directors believed it was not in the best interests of the ABC for Guthrie to continue to lead the organisation.
She immediately instigated an unfair dismissal case, saying there was “no justification” to apply the termination clause in her contract. Guthrie’s sacking triggered some of the rockiest months in the ABC’s history, with Milne resigning just days after Guthrie was dumped as managing director, and the pair slinging mud at each other through the media in the weeks following.
An out-of-court settlement was eventually agreed between the ABC and Guthrie, a payout that new ABC managing director David Anderson has argued was necessary to avoid an even bigger legal bill for the dispute. The legal costs were covered by the ABC’s insurance.
The Saturday Paper reported that Guthrie was originally appointed after a search by recruiters Egon Zehnder, through a lengthy process that included psychometric testing and with only one other candidate interviewed by the full board: Anderson, who has now succeeded her. The Australian Financial Review’s Rear Window column estimated recruiter Spencer Stuart likely pocketed $300,000 from the ABC to recruit for Guthrie’s replacement.
New chair Ita Buttrose was appointed by the government, which rejected the candidates suggested by another global recruiter, Korn Ferry.
‘No more fat to cut’
Managing the ABC’s budget has been a particular concern for the public broadcaster since last year’s budget included a funding indexation freeze that started on this Monday. The cuts will cost the ABC $84 million over three years, which Guthrie said could not be absorbed with efficiencies, and Anderson has said will mean “inevitable” job and programming cuts.
“Despite extensive requests from the ABC, the budget papers locked in the $83.7m pause in indexation funding flagged in last year’s budget,” Anderson told staff in an email. He said the first-year impact of the cuts would be $14.6 million.
News director Gaven Morris also said there was “no more fat left to cut” when the freeze was announced. “In ABC News, almost 96% of our annual budget of $202.4m is spent on journalism and production,” he told the Melbourne Press Club. “Make no mistake, there is no more fat to cut in ABC News. From this point on, we’re cutting into muscle.”
Then-Communications Minister Mitch Fifield told 2GB the freeze, and efficiency review, were in place to ensure transparency at the public broadcaster and said the ABC was still funded well enough to fulfil its charter requirements.
An ABC spokesman said: “Legal costs from the case were covered by insurance and so had no substantial bearing on the ABC’s budget.”
NOTE: This story has been updated to clarify the nature of Guthrie’s payout and to add a comment from the ABC received after publication.
For overseeing a period in which the ABC commissioned “Think Tank” she should never be employed again.
Then-Communications Minister Mitch Fifield told 2GB the freeze, and efficiency review, were in place to ensure transparency at the public broadcaster.
Fancy that – cutting funds ensures transparency. Let’s cut Dutton’s and Pezzullo’s salaries by half to ensure greater transparency.
In fact I think we need a pay freeze and an efficiency review on the govt backbenchers, starting with Tim Wilson, “to ensure transparency”.
very sloppy crikey
If Guthrie had lodged an unfair dismissal claim compensation would have been capped at six months. She was not covered by an award and would have thus been above the income threshold.
I think you will find she lodged an unlawful termination claim much the same as a rugby player. There is no cap on compensation and the matter after clearing a fair work commission procedural clearing house goes to the Federal Court
Unlike the rugby player’s employer the abc agreed to the settlement in a conference at the Fair Work Commission. rather than run the risk of the matter proceeding to the Federal Court and full hearing and all that goes withit.
One can only wonder what the abc management did not want aired.
You may well be right that there is a technical legal difference between the two – though the ABC has consistently referred to it in news reports as an unfair dismissal case.
Indeed, and the dirty laundry would have been exposed, that of Milne and the rest of the ABC Board.
Who appointed Guthrie and Milne to oversee the ABC in the first place? What have outside recruiters got to do with anything? Didn’t the Government have its grubby little fingers in the process?
Why aren’t those responsible for the mess cleaning it up, including the costs incurred? The ABC has better fish to fry than to be handed some cack-handed, expensive, possibly inappropriate management snaff-oo to pay off.
Stop blaming the ABC as though it set out to encourage this imbroglio.
the abc settled way to quick.
Andersens claim of a $2million legal bill is nonsense The settlement was a gift from the incoming Director to the outgoing.
A bit more attention to preserving the public purse would not go astray.
No problem spending it on news or reporting or production but just a few to many snouts in the trough at the top.
What happened to the Board members who presided over the fiasco?
Those largely Coalition appointed Board members couldn’t settle out of court fast enough nothing like having a public court hearing to expose their corruption and partisan flaying of the ABC and Emma Alberici.
Vanessa Guthrie of the Minerals Council was appointed by Turnbull himself, despite not making the short list recommended by the committee supposed to make the decision at arms-length
Oh what a surprise – the Coalition picks for the ABC board don’t know what they are doing
https://theaimn.com/oh-what-a-surprise-the-coalition-picks-for-the-abc-board-dont-know-what-they-are-doing/
It was inevitable that there would be problems at the ABC when the Coalition chose to ignore advice from the independent nominations panel about board appointments based on merit to, instead, give jobs to people for all the wrong reasons.
Depends on the intention – “jobs to people for all the wrong reasons” – this seem to be carrying on the fine tradition of Jonathan Shier.
Just bear in mind that it started with David downHill – a HawKeating plant.
Given the earlier article about the plague of consultancies, this fiasco is surely a prime example of what happens when outsiders with bugger all knowledge of a specialised field epaid bigbuck$ – I especially like the detail that Anderson was rejected for Guthrie.
Yay for such a brilliantly successful selection.