BHVI chairman wrong about million-dollar bonus, more governance concerns emerge

The revelation comes following last month’s Insight report which highlighted potential governance issues surrounding the awarding of the bonus. Not only does Waddell’s clarification contradict Layland’s explanation, it also highlights more than four years of inaction and confusion over the matter – to the extent that further governance-related concerns have arisen.As such, the only aspect of the saga that appears to be clear is that substantial sections of the information provided to Insight by Layland were factually incorrcet. Crucially, Layland – on numerous occasions – denied that the value of the bonus was $1 million.During a lengthy recorded interview undertaken ahead of last month’s story, Insight afforded Layland various opportunities to correct his original assertions regarding the bonus payout but he declined. Importantly, he was also given until the following day to ensure his recollection, including the size of the bonus, was accurate, but he chose not to respond.In addition to the parts of his story that have been proven donstrably wrong, Waddell has also disputed several other aspects of Laylands’ account, including whether the recipient could choose between property or cash.In a comprehensive interview with Waddell and BHVI’s legal counsel, the CEO said numerous times that the ployee was never afforded the choice between a house or cash. Instead she said the bonus was only offered as a Randwick property valued at $1 million, which was subsequently never transferred.Waddell provided board resolutions and documents showing that not only was the figure $1 million, the bonus had been referenced – and resoluted – at a 13 February 2013 board meeting: “The property was in exchange of an annual bonus of $50K per year for 20 years. Bonus valuation was $1M,” the resolution read.Given the figure had been agreed upon and minuted at a meeting he chaired, it is unclear why Layland continually said it was “nowhere near” $1 million.However, what is most confusing is why there was a four-and-a-half year delay between the original decision to award the bonus, in the form of a house, and the eventual $1 million cash payout.Waddell was not on the board in 2013 and the best explanation she could give as to why the house transfer was never finalised was neither the ployee, nor the board, could “get their acts together”.The ployee rained in the house from February 2013 until the board again attpted to resolve the situation in 2017, this time by offering the ployee a cash payment of $1 million, minus rent and fringe benefits tax.{{quote-A:R-W:450-I:2-Q: Just because my signature’s on the letter [is irrelevant]. To me, Kovin has been involved in this and authorised this all the way. -WHO:Yvette Waddell, BHVI}}Waddell’s repudiation of Layland’s claim that the recipient had a choice between the house or the cash is supported by copies of the 2013 and 2017 board resolutions supplied to Insight. However, it also appears to contradict a background briefing sent to board mbers on the day of the July 2017 meeting that states: “[the ployee] has elected to receive the $1M bonus either as a cash bonus through payroll ….”At the heart of the confusion ses to be the fact that the Randwick house had more than doubled in value from the 2013 meeting, to when BHVI’s board decided to settle the bonus in 2017.That is, by not transferring the $1 million house to the recipient at the time, BHVI’s board risked losing a $2.5 million asset in its place, as the property’s value had substantially increased in the subsequent four-and-a-half years.To cover this gap, BHVI would have required the recipient to pay the difference of the new valuation (around $1.5 million) in cash, albeit four years later, in order to hold onto a property they may well have assumed was already theirs.The 17 July 2017 ail to all board mbers, as well as then-CEO Professor Kovin Naidoo, which contained the background briefing ses to support the dilma caused by the four-and-a-half year inaction to finalise the bonus.It explained that the recipient could “pay the Institute the appreciation in value of the property in excess of $1 million” but the recipient “elected to receive” a cash bonus.However, perhaps the most worrying issue surrounding board governance of the respected international charity is whether the transaction has been accurately reflected in BHVI Financial Reports since 2013. Layland suggested this was the case, however, when questioned, Waddell was initially unable to confirm or deny this.Subsequent legal advice presented by BHVI, which was sought retroactively following Insight’s enquiries, has suggested there was no need to record the $1 million as a liability. This advice has been referred to an independent accounting and governance expert for verification.Other revelations also point to confusion, poor governance practices, and possible infighting – related to both the bonus and the structure of the institute over at least the past three years.Internal frictionBHVI’s leadership has offered conflicting accounts of who knew what and when. Former CEO Professor Kovin Naidoo has said he was not involved in decisions or discussions related to the bonus, a position supported by Layland’s recollection.Waddell has disputed this account and said Naidoo was “instrumental” in the decision to award the bonus as a cash payment in August 2017. She also says while Naidoo was not involved in the 2013 board resolution, he was made verbally aware of the bonus in early 2016, was heavily involved in how it was to be enacted and implented, and was fully aware that it had been paid out.However, the evidence presented to Insight only seed to indicate Naidoo had been informed of decisions related to the payment, rather than being consulted or asked for input. Further, the earliest correspondence shown relating to the bonus that involved Naidoo was dated April 2, 2017, in which he appears to lament the size of the bonus due to the institute’s financial situation.{{quote-A:R-W:400-I:3-Q:“To be clear, I was not asked to approve anything. I was not given the opportunity to approve anything; I was not in the office. I also did not sign off on the allocation of the bonus. Informing me must not be confused with consulting me.” -who:Kovin Naidoo, former BHVI CEO}}They’re also in disagreent over who gave final approval for the bonus. Waddell provided paperwork, which showed that she had signed off on a letter as the then chief operating officer (COO), informing the ployee the bonus would be paid during the next payroll run.Despite this, Waddell said Naidoo had in fact approved the bonus: “To me he has signed off on that. Just because my signature’s on the letter [is irrelevant]. To me, Kovin has been involved in this and authorised this all the way through, being involved in every piece of correspondence,” she said.“Kovin was surrounded by this payment, knew everything that was going on, and was obviously part of the executive discussion to work on this with [the ployee], which then flowed into the board meeting on the 18th of July.”Naidoo disagrees, and says Waddell’s signature was on the letter instead of his because the board excluded him from many processes regarding the bonus.“To be clear, I was not asked to approve anything. I was not given the opportunity to approve anything; I was not in the office. I also did not sign off on the allocation of the bonus. Informing me must not be confused with consulting me,” he said.“I was initially informed by the COO that a house was to be allocated to the staff mber. In 2017, it was then converted to a cash bonus. I was only aware in 2018 about the fact that it had been paid following that negotiation. That’s why there was a delay – they had to pass the resolution, then negotiate with the staff mber.”Aside from the bonus, it appears as though Waddell’s position on the board – despite being a subordinate to Naidoo – was another source of friction at BHVI.According to Waddell, she was initially made a tporary board mber for what was then expected to be around three months in the immediate aftermath of Professor Brien Holden’s death. This tporary position eventually became permanent, but Waddell was unable to say when or how this occurred.Waddell also wouldn’t say if there had been any discussions related to whether she should step down from the board. Instead, she intimated that Naidoo’s decision to accept the role of permanent CEO in Decber 2015 was a sign that he was comfortable with her position on the board, even though she, as COO, answered to him.She also said Naidoo had never personally raised any issues with her related to this unusual arrangent, but would not comment on whether it or the bonus was at all related to Naidoo’s sudden resignation and suggested Insight ask him directly.Naidoo has on numerous occasions cited legal advice that has prevented him from commenting on the circumstances surrounding his resignation. More reading:

Million-dollar bonus at Brien Holden sparks board governance concerns   – 07/09/2018
Revelation: Brien Holden chairman wrong   – 19/09/2018
BHVI chairman wrong about million-dollar bonus, more governance concerns erge  – 03/10/2018
Brien Holden Institute chairman resigns  – 07/10/2018
Brien Holden Institute missing $1 million questioned  – 31/10/2018
BHVI Foundation roves CEO amid maladministration investigation   – 22/02/2019
BHVI under investigation by ACNC, while serious issues uncovered at foundation   – 05/04/2019
Send this to a friend