$20,000 a week - a total of $1.7 million - was being paid for a "hospitality tent" when in fact that tent was being provided as part of another contract. Instead the money was being paid to an unknown number of players in breach of the salary cap. This was discovered when the NRL salary cap auditor was tipped off to the existence of a number of side agreements, between Storm and player(s), which were held in a separate room at Storm HQ. We are told that only the ex-CEO knew anything about this. His ex-deputy has been stood down. Neither the NRL, the Storm Board, the owners of Storm, the other executives at Storm, the players, nor it seems anyone else knew about these payments.
I'm actually finding all of this a little difficult to understand. If I was investigating this, or if I were the owners, I'd like some questions answered:
- What was the nature of the agreements found in the "other room" and who were they with? What did those other parties think they were for?
- What form did the payments take and was that form such that it should have been questioned?
- What did the company's auditors think of the regular payment of such a large amount of money and in conducting their audits what documentation did they review for these payments?
- What review process did the Audit Committee of the Storm Board undertake with respect to payments being made and the correlation between contractual obligations and the payments made under contracts?
- How is it that payments of this sort could be made and yet no other member of the executive team was aware of them? What control mechanisms does the Storm have in place for the review and control of payments?
At the moment one person appears to be taking the fall for this. I don't know whether that's right or wrong. However, generally accepted corporate governance standards provide checks and balances which mean that payments of this magnitude and duration should be identified and questioned.
No doubt there are simple explanations for these questions and we will hear them in the fullness of time. I await the investigation with interest.