CEO accused of credit card misuse fires back
THE boss of Australia's largest crash repair firm alleged to have misused his expense account has counterattacked accusing a fellow director of a conflict of interest in relation to a $4.4 million fee sought for his own private investment firm.
Gold Coast-based AMA Group moved to sack chief executive Andrew Hopkins earlier this week after it claimed he had not received approval for various expenses including membership fees in a yacht club and an Emirates flight.
The fracas shines a new spotlight on the issue of executive spending as well as related party transactions that benefit directors sitting on the boards of ASX-listed companies.
Mr Hopkins, who has successfully applied to the Federal Court for a temporary injunction restraining his dismissal, has denied claims he misused company funds.
He further claims the allegations were motivated by a board battle with fellow director Simon Moore over a $4 million payment Mr Moore's capital investment firm Colinton Capital had sought from AMA in advisory fees.
Mr Hopkins' solicitor Robert Ishak in documents filed in the Federal Court said various expenses and bonuses given to Mr Hopkins dating back to 2017 had been approved by AMA chairman Anthony Day.
"Throughout his tenure as chief executive, Mr Hopkins has always been transparent with his expense claims, providing itemised accounts on a monthly basis," said Mr Ishak in a letter sent to AMA's lawyers and filed with the court.
Mr Ishak conceded that three expense claims over a three-year period were made by him in error using the AMA corporate credit card. These included monthly membership fees to the Royal Perth Yacht Club totalling $5531 and Emirates airfares totalling $1979.08. Mr Hopkins has offered to repay those amounts.
The "corporate background" to the allegations, Mr Hopkins' lawyer claims, was significant shareholder disquiet about a $4.4 million payment Mr Moore's investment firm Colinton Capital Partners had demanded from the company in 2019. The payment was related to the borrowing of funds and acquisition by AMA of Suncorp's repair business Capital Smart.
"The board of AMA ultimately for reasons which will need to be explored, negotiated a reduced amount of $3.3 million," the lawyer said in the court filing.
"When the market learned of this fee, the market demonstrated significant disquiet about the role of Mr Moore and his apparent conflict of interests.
"As a result of shareholder demands, the AMA board passed a resolution to effectively stop Mr Moore or any other director from behaving in this manner and that resolution also was ratified by the shareholders." Mr Moore declined to comment.
AMA's latest annual reports shows businesses connected to directors and key management are receiving millions from the company in the form of rent, legal and other fees. Property companies of which Mr Hopkins was a director received $2.03m in property rental fees and outgoing from the company.
Colinton Capital Partners, of which Mr Moore is a senior partner, received $3.15m in legal and advisory fees while Nicholson Ryan Lawyer, co-founded by director Leah Nicholson, received $1.5m in legal fees.
Mr Hopkins founded the Perth-based Gemini Group on 2009, a claims management and vehicle repair service business, that merged with AMA Group in 2015
Market sources say related-party transactions, particuarly in relation to property, are common in "founder led" companies which are later listed. It can sometimes involve the founder of the company, who remains on the board, renting a factory or headquarters to the listed company. "It can be difficult to untangle this sphaghetti of related-party transactions," one source said. Less common, he said, were related party transactions, involved fees for financial services.
Mr Hopkins' lawyers claim his dismissal would have a "highly deleterious" impact on the company. and result in other executives leaving. Another hearing to determine if the injunction should be extended has been set down for February 4.
The allegation against Mr Hopkins is the latest expense controversy to erupt in Australia's business community. Australia Post chief executive Christine Holgate resigned last year over her gifting of luxury watches to other executives.
It was later revealed that $200,000 was spent on private car services across her 23-month tenure in the top job - on average more than $5000 a month.
Last October, the deputy chair of the Australian Securities and Investments Commission (ASIC) resigned over a revelation about relocation costs.
That came after ASIC chair James Shipton stepped aside late last year after being paid more than $118,000 in relocation-related expenses, which were deemed excessive. Mr Shipton returned to his job yesterday after settlement of the dispute.
QUT Business School associate professor Gavin Nicholson said it was important that boards had a budget in relation to corporate expenses and there was adequate oversight.
Professor Nicholson said the issue of expensives was often a matter of public perception and the type of company involved. "What is considered acceptable for a chief executive of a small credit union will be different from a marketing company," Professor Nicholson said.
Originally published as CEO accused of credit card misuse fires back