Visy acts on corporate governance
October 30, 2007
VISY has taken another step to repair the damage from its price-fixing deal by overhauling its corporate governance and putting former bosses of one of its best customers at the helm.
Visy boss Richard Pratt has appointed former Foster's chief executive Ted Kunkel to chair a new board to oversee the company's Australian operations, Australasian Manufacturing Group (AMG). These are Visy recycling, pulp and paper, Visy Board, and its packaging operations.
The new board will report to the Pratt family advisory board, which controls all the companies and holdings in the Pratt empire, including the family's private investment arm, Thorney Holdings, and Visy's US operations.
The new board effectively adds an extra layer of supervision for the company, now convulsing with the prospect of paying a record fine of at least $36 million and a $1.5 million penalty for its former chief executive, Harry Debney.
The penalties come after the Australian Competition and Consumer Commission pursued Mr Pratt and Visy over claims of illegal price fixing and market sharing with arch-rival Amcor in the $2 billion cardboard box market between 2000 and 2004.
Judge Peter Heerey has reserved his decision on the level of the penalties, and a decision could be given this week.
Mr Kunkel joined the Pratt family board after he retired from Foster's in April 2004, after 36 years at the beverages company.
The aim of Visy in recruiting Mr Kunkel to the family board was to get a customer's perspective. Foster's remains one of Visy's biggest customers.
Significantly, Foster's was also one of the companies roped into the price-fixing arrangement that has devastated the reputation of Visy and Mr Pratt. Other companies that were affected in the market-rigging deal included Inghams Enterprises, Goodman Fielder, Nestle Australia, George Weston Foods, Merino, The Mildura Food Company, National Foods, Eagle Boys Dial-A-Pizza Australia, Gillette Australia, Parmalat Australia, the food and beverage division of Cadbury Schweppes and the Hardy Wine Company.
Ironically, 11 years ago, Foster's, with Mr Kunkel at the helm, sued Mr Pratt and Pratt Holdings in proceedings that centred on a 1988 transaction.
Under settlement terms, the details of which neither party would disclose, Mr Pratt was reported to have agreed to pay Foster's $20 million in exchange for a long-term box supply contract and an end to the legal proceedings.
Visy has also appointed former Foster's Australia managing director John Murphy as its chief executive.
He replaces Mr Debney, who quit last week, claiming personal responsibility for breaking competition laws.
Mr Murphy had been with Foster's for 26 years. Highly regarded and considered an architect of its transition into a multi-beverage company, he had also been managing director of Carlton & United Breweries.
But he quit Foster's last year during a management reshuffle.