WiseTech board purge triggers $9b share plunge as White scandals ...

WiseTech investors are dumping their shares on news its independent board members quit the $41 billion software giant after failing to agree with disgraced company founder Richard White about his continuing role. The move has effectively handed control of the company to White.

In a statement to the ASX before the start of Monday’s trading, the Sydney-based software maker said the four had determined it was in the best interests of the company to stand aside.

“This followed intractable differences in the board and differing views around the ongoing role of the founder and founding CEO, Richard White,” the statement said.

Matthew Haupt, portfolio manager at Wilson Asset Management - which owns WiseTech shares - told Bloomberg it effectively ends the investor and board tension between retaining key talent and good governance. “Talent has won the day at the expense of corporate governance,” he said.

WiseTech shares plunged on Monday morning and remained more than 23 per cent lower before noon, falling to a low of $92.93. The shares had been halted from trading since Thursday after new details of White’s issues emerged.

White was forced to step down as chief executive last year after he was accused of bullying and inappropriate conduct, but he retains control of the company via a 38.7 per cent stake.

The board was put under pressure last week when fresh allegations emerged that White provided a female employee with financial support and help with her visa in return for an ongoing sexual relationship.

The boardroom resignations come amid further revelations about White’s relationship with his wife, Zena Nasser. These include allegations of questions about White’s growing influence over the business’s controlling stake. White and Nasser have been contacted for comment.

Chairman Richard Dammery, Lisa Brock, Michael Malone and Fiona Pak-Poy will all resign after signing off on the company’s half-year financial results this Wednesday.

Former director Mike Gregg will rejoin the board that day to ensure the company has the number of directors needed to be publicly listed.

The other board members are Maree Isaacs, co-founder and company executive, and Charles Gibbon, a director for 19 years.

White bolstered his control of the group in December when Isaacs agreed to sell her interest in WiseTech to him via instalment payments based on the prevailing share price. It will give him full control of the entity which owns the 38.7 per cent stake in WiseTech.

Analyst commentary after the board exodus highlighted that - whatever the issues with his personal behaviour - investors’ main concern was that White retains control of the spectacularly successful business he founded, having turned it into the biggest tech company on the Australian sharemarket.

E&P analyst Paul Mason said the independent directors’ departure probably resolves that fear, albeit with a need to bring on quite a number of new independent directors now.

“In terms of management and board, we believe there were great concerns in the market about whether Richard White was being pushed out under pressure from the media and maybe the board, with some investors having relayed to us their concerns that maybe someone on the board was leaking information to the media,” Mason said.

“The initial reaction from speaking to people last week after the trading halt went into effect was a panic as to whether Richard was actually going to resign due to board pressure.”

WiseTech also downgraded its financial forecasts on Monday, saying revenue would be at the low end of the forecasts given at its annual meeting in November last year, but profit margins would be at the top end of its guidance due to cost-cutting measures.

White and WiseTech were plunged into turmoil last year following an investigation by The Sydney Morning Herald, The Age, and The Australian Financial Review. The investigation revealed that White had paid for a multimillion-dollar house for an employee and that an outgoing WiseTech Global director had accused him of intimidation and bullying.

Speaking at the company’s annual shareholder meeting in November, chairman Dammery said the group would downgrade its financial guidance due to the scandal.

“Upfront, I need to say that the board is disappointed that the diversion of Richard White’s attention away from product development at a critical juncture has impacted the timing of the release of some of the three breakthrough products,” Dammery said.

Monday’s financial guidance downgrade was due to those product delays, the company said.

WiseTech has become a world-beating tech giant by offering logistics companies software to manage their operations more efficiently, which also gives it unparalleled insights into global trade via some of the world’s largest freight forwarders, such as FedEx, UPS and DHL.

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