Sunday, September 23, 2012
The school, the cliquey in-group who can do no wrong, and the unfortunate prefect
who stuffed up counting the annual fete’s takings
The schoolyard is life’s stage at its
Darwinian brutest. And here I don’t mean
“stage” as a chronological, passing thing; rather, “stage” as in the raised surface
on which we rehearse, over and over, the script for the rest of our lives. You might be initially reassured by its being
only a rehearsal – there’s no real audience – but there’s quite enough
happening backstage (i.e. in-school) during these years to make opening night and
beyond, before an actual audience (i.e. the big wide world), seem like no big
deal. At least for some. For others, if you struggled during the
“rehearsal” years, the rest of one’s life can seem like the teenaged backstage
bullies have merely moved 20 metres, into the prime seats, in adulthood.
Following the last week’s oh-so-Melbourne,
storm in a pinafore (or so I initially thought) saga of sacked MLC principal
Rosa Storelli has had all the elements of a Year 9 drama. Whether you see this drama as set in the
primal schoolyard (as I suspect Ms Storelli does), or the boardroom (where Year
9 is only a fondly remembered, middlebrow David Williamson school play) makes
all the difference as to who you perceive as the baddies.
The known facts seem to be in surprisingly
little dispute. Ms Storelli’s employment was subject to a salary-packaged
arrangement. Salary packaging, which
basically means (legally) minimising assessable income for tax purposes, is common
for highly-paid executives and for workers across the board in the not-for-profit
sector (who are usually not highly-paid).
Where these two groups coincide, as they appear to in Ms Storelli’s case
– a highly-paid principal of a not-for-profit school – a salary packaging deal would
appear to be both irresistible and complex.
A “secret Deloitte report” into alleged
overpayments to Ms Storelli shows two types of shortfall, totalling $716,905.
The first is a relatively straightforward imbalance between money that the
school has paid to third-parties (including a nanny) under salary sacrifice
arrangements, versus that which the school has so far been reimbursed by Ms
Storelli. This apparently amounts to
about $267,000 (accrued since 1997-98), of which more than $100,000 is for the
nanny alone. The nanny’s $100,000+ is
separately itemised because this was an amount Ms Storelli apparently had
previously agreed (in early 2012) to repay the school, with the Board’s full
knowledge and consent, at least at that time.
We also know in some detail how and when this particular debt accrued:
“As the nanny's salary went up, so did the
amount deducted from Ms Storelli's salary. In 2001-02, the nanny was paid
$31,151 - the same amount deducted from Ms Storelli's salary. But there [i.e.
from 2002-03] the salary deduction stayed: $31,151 a year being deducted, while
the nanny's wages climbed to $45,433 by 2012”.
The second type of shortfall is the more
complicated matter* of fringe benefits tax (FBT). Apparently, the school has paid FBT of $1.33
million on Ms Storelli's expenses, but allegedly recovered only $882,105 under
salary sacrificing, leaving what the board says is a FBT-reimbursement shortfall
of about $450,000.
Ms Storelli appears to dispute her
liability for repayment of the $716,905, other than for the nanny’s
$100,000+. Her main defence here seems
to be that one or more of three previous chairs of the school board (Christine
Kilpatrick, Margaret Jackson and Lyndsey Cattermole) – not the board itself –
had made oral and written representations to her stating that those other liabilities
were properly the school’s, and not Ms Storelli’s personally. Ms Storelli has
also pointed out that all of the disputed arrangements were on the record, at
least such that accounting-consulting firm Deloitte (which has done the
school’s external audit every year since 2006), must have been aware of them,
and so at least implicitly approved them.
On the other hand, the school board and
Deloitte have presented a formidable and united flank. Their strategy here appears threefold: to continue throwing further mud at Ms
Storelli; to not even address suggestions of past negligence on their own (or
their predecessors’) part; and to profit from (in the case of Deloitte, and possibly
at least one other large accounting-consulting firm) doing the first two of
these. (I am assuming that the “further Deloitte review . . . into the salary packaging arrangements
of other senior staff at MLC” now under way is not pro-bono. Less clear is whether the two other big
accounting-consulting firms, which both have partners on the school board, PwC
(at whose offices Ms Storelli was formally sacked at) and KPMG also have/had
vested financial interests here.)
The mud-throwing by the school board and profiting by one or more big accounting-consulting firms is transparent, once you juxtapose
their repeated, shrill cry of “governance”, against the reality of corporate
boardroom seats in 2012. Interlocking
directorships make boardrooms – and here the school was moulded identically to
just about any given listed company – self-perpetuating** cliques. Calling them “bullies”, as Ms Storelli has,
may strike you as childish regression, or desperation, but in this case their
pack behaviour and systemic abuse of power over a visibly weaker victim is
stark. If you think I’m exaggerating,
here is how “governance” has been sanctimoniously invoked by the board three
times in recent days:
“A source close to the board said Ms
Storelli had previously offered to repay the outstanding nanny money
interest-free over four years. To accept
the repayment interest-free caused a fringe benefit tax problem for the
college, and would not represent corporate governance best practice”. [Note that this doesn’t explain why the board
was happy to renegotiate Ms Storelli’s contract in March 2012, apparently
including the interest-free element, against its own high standards of “best
practice”].
“‘You can't have your CEO able to hand out largesse bonuses to the people she was the boss of. This is a standard governance issue’ [also] said a source close to the board” (emphasis added and quote edited). [This
refers to annual bonuses of $40,000 to $50,000 allegedly paid in several years
to MLC's director of corporate services Christian Gusner and funding for Ms
Storelli’s long-time personal assistant Prudence Vernall to attend a
professional development course in the USA , both apparently “approved by
Ms Storelli without the knowledge or authority of the board's remuneration
committee” (same URL). Wow, so the board, or its
remuneration committee at least (aka the clique within the clique), thinks that
one of its important jobs is to mind absolutely everyone’s lunch money.]
Board treasurer Tony Peake said: “after
detailed forensic financial analysis by Deloitte, the board's unanimous
decision was taken with deep regret, but with good governance as the
foundation for the decision” (emphasis added).
[Translation: after Deloitte were
paid more money, they picked up things that they missed the first time. You might say that Deloitte’s regular audits
were “standard” governance (like public schooling, darling, you DO get what you
pay for), its second bite at the cherry (the one that led to Ms Storelli’s
sacking) “good” governance, and its pending further review promises to be no
less, I’m sure, than “best” governance.]
Talking of corporate waffle, the pending
further Deloitte review “is also looking at why another staff member [Christian
Gusner, I’m guessing] and Ms Storelli’s salary packages were handled
internally, and not by Salpac, the external company that handles salary
packaging for the majority of MLC staff”.
Translation: when it comes to minding
your lunch money, the bully clique has some hired muscle, too. Or at least the services of a company whose
apparent proficiency in the tax minimisation industry overcomes the dubious
literacy of its website’s self-promotion section:
Update
25 September 2012
When I read yesterday yet another media
snippet from a “source close to the board” (i.e. presumably a board member,
speaking off-the-record), I was confused by its tone:
On one hand, the anonymous board member invokes
the parol evidence rule as confidently as a know-it-all first year commerce
student, but on the other hand there is something disconcertingly personal
about “Why would the school pay for her house to be cleaned”. Apart from its vagueness as to which house is
meant (Ms Storelli has apparently lived in off-school residences since 2004),
there is the odd focus on cleaning as an apparently dubious element of Ms
Storelli’s salary package. Out of all
the expense items that might, in the court of public opinion, scream that Ms
Storelli was living the high life of the expense of “the school” (= school
fee-payers and taxpayers), house-cleaning doesn’t seem to be up there (especially
as Ms Storelli has not, so far, been accused of overpaying and/or sending off
her cleaner on “professional development” courses overseas).
My first strong hunch is that this
anonymous board member was a woman (who generally have much more of a “thing”
about cleaning than men), and more specifically, a woman with a bee in her
bonnet about cleaning. More
specifically still, my profile suspect is of a formerly high-flying woman who
is currently “reduced” (as she sees it) to doing her own cleaning. Enter Belinda Probert.
The MLC board’s official website (as
accessed today), and most of the non-Fairfax media coverage in the last week
have referred to Ms Probert as “the Deputy Vice-Chancellor of La Trobe
University”. In fact, she left this
position more than a year ago, in July 2011,“to do more policy and research work”.
Judging by Ms Probert’s subsequent
appearances on Google – but more importantly, her plain desperate reluctance
to give up an old job-title that has long been someone else’s – she has spent
the last 15 months with plenty of time on her hands, and with much less money
that she has long enjoyed. I therefore suspect that Ms Storelli’s
cleaner – and much of the fuel in the current fire more generally – boils down to a matter of concentrated, venomous jealousy –
as magnified by Ms Probert’s current under-employment.
It would appear that sitting on various
corporate/school boards is Ms Probert’s only paid current role – it is unclear
whether MLC board members are paid (most corporate boards, of course, pay
generous “honorariums”) but judging from KPMG partner and etiquette-columnist Bernard
Salt’s carefully worded We-are-saints-doing-a-thankless-task column in
today’s Herald Sun***, which notably doesn’t invoke the “and we’re not even
paid for it!” angle, I would guess that the MLC board members are paid – and
quite well – for doing their jobs. For
most, this honorarium would be merely the second/third/fourth layer of icing on
their nice main-job package, but for Ms Probert, who AFAICT currently lives on
this “icing” alone, the task of demolishing Ms Storelli’s cake – admittedly,
it’s a bit rich – is her main job. This
task has even, it seems, involved Ms Probert going back to her first year
commerce notes on the parol evidence rule.
And so far, you’d have to say, it’s been a
job well done. The cake has gone, and
its eaters (not just Ms Probert) are loudly proclaiming what a thankless task
it was, too.
Further
update 26 September 2012
Belinda Probert wrote a column published
yesterday (which I didn’t see until today) in which she seems to claim that the MLC board are all unpaid.
Personally, I have trouble swallowing many
things said by Ms Probert. Her prose in
this snippet: “the discovery by a
completely independent and highly regarded firm such as Deloitte” (same URL)
seems out of the “completely unique and highly acclaimed” Bali
villa-rental (or whatever) web-ad songbook.
Then again (and granted I probably should
have made this disclosure earlier), I have taught and marked w-a-y too many
contract-law-for-first-year-commerce-students to not have my own “thing” about
such students’ textual follies and legal over-simplifications. What’s worse, Ms Probert seems to show that
they don’t ever grow out of this.
* Herald Sun journo James Campbell (“Sacking of MLC principal Rosa Storelli is rich drama” 23 September 2012) is oblivious to the messy complications of salary packaging. “[T]hanks to the generosity of the Federal Government, Ms Storelli was able to pay for a lot of things including her mortgage, her car, her private credit card bills and her nanny from her pre-tax income”. The fact that Ms Storelli apparently owes a large bill for FBT indicates that the “generosity of the Federal Government” does rather come with strings attached. Even more dubiously, Campbell waxes on about the good old days, “[b]ack in the 1980s . . . being the headmaster or headmistress of an elite private school was a prestigious, but not especially well-paid, position. This is why they and [the school] staff were given free housing and discounted school fees for their children”. FBT was introduced in the mid-1980s, and it seems to me to be precisely Ms Storelli’s “free” housing (etc) that has got her into her present predicament in the FBT minefield. She was clearly well-paid (over $500k annually), but if she had, say, the present-day benefit of a “free”, executive-standard house around Domain Road South Yarra (where Campbell went to school in the good old days), the imputed market rent for this would be at least a quarter of her total package. And the possible FBT headache with this – priceless.
** The MLC board has been literally self-perpetuating since 2008, with all new directors, other than the principal, “elected” by the existing board. As an aside, so it’s evidently now not just we gays who are tampering with nature by reproducing asexually or its corporate equivalent, the spawn of a board's naturally-infertile, collective wank. But in a possible strange bed-fellows twist, here I also concur with the words of former MLC chaplain David Bell: “I'd like to see a return to more church influence in the school. I do suspect the corporate model has now failed. It's not a corporation, it's not a big business, it's a school for heaven's sake.” (Footnote added 5pm 23 September 2012)
*** Bernard Salt “MLC board member defends
merits of a community board following sacking of principal Rosa Storelli” Herald
Sun 25 September 2012
Other
References (URLs paywalled):
Ellen Whinnett and Fiona Hudson, “How
Methodist Ladies' College's powerbrokers rang alarm on principal Rosa
Storelli's expenses” Herald Sun 22 September 2012
Ellen Whinnett and Fiona Hudson, “MLC board
asks sacked principal Rosa Storelli to repay $700,000” Herald Sun 22 September
2012
Stuart Rintoul “Sacked principal faces
demand for $700,000 following 'overpayments'”
Australian 21 September 2012 (Reference
added 5pm 23 September 2012)
Comments:
<< Home
The case against the Board was further cemented when Tony Abbott threw his support behind them. Nevertheless, Rosa Storelli is being hailed as a great educationalist whilst her Year 12s in a letter of support sign themselves as "Year 12's". I pity the parents who have forked out $20K per year only to have their kids end up not knowing when an apostrophe is appropriate and when it is not.
Post a Comment
<< Home