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Claim ACTEW misled govt

ACTEW Managing Director Mark Sullivan.

ACTEW Managing Director Mark Sullivan. Photo: Lyn Mills

ACTEW misled its shareholders, the government and the ACT's taxpayers over managing director Mark Sullivan's $855,000 annual salary, Chief Minister Katy Gallagher says.

A letter from the water utility's chairman, John Mackay, to the government in September 2011 assures the company's two shareholders, the Chief Minister and Treasurer, that Mr Sullivan's pay packet was $621,000.

But the managing director was paid $855,000 that year, a figure the Chief Minister says is not appropriate to manage a government-owned water monopoly.

John Mackay.

John Mackay. Photo: Lyn Mills

Mr Sullivan is Australia's highest paid water executive by a margin of more than $200,000. An investigation is also under way into how Treasury and Chief Minister's department bureaucrats failed to alert their political bosses to the under-reporting of the salary for more than four months after they became aware of the discrepancy.

Mr Mackay said he based his letter to the Chief Minister on the same flawed figures that made their way into the annual report and that he and his colleague acted promptly when the mistake came to light.

''It was an honest mistake, we weren't trying to hide anything, there was no conspiracy,'' the chairman said on Tuesday. ''The accounts people went and got a number, jammed it in a report and it was wrong. I am absolutely sure that from a company law sense, we did what we had to do."

Ms Gallagher and Treasurer Andrew Barr have been criticised after it was revealed last week that Mr Sullivan's wage had been under-reported by nearly a quarter of a million dollars in a key company publication and that the two shareholders did not know how much the executive was paid.

The under-reporting in the company's 2010-2011 annual report, published just weeks after Mr Mackay's letter to the Chief Minister and which contained the same incorrect salary figure as the correspondence, was explained as a spreadsheet error.

But the Chief Minister hit back on Tuesday, telling The Canberra Times that her confidence in ACTEW's management had been "tested" after being assured the chief executive's salary was $234,000 less than it actually was.

The letter offered an assurance that the salary of $621,000 had been independently assessed by a company called Egan Associates, in June 2010, which reported it was an "appropriate level of remuneration."

Ms Gallagher described the letter as "clearly misleading".

"This is clearly misleading the shareholders through a private letter after the shareholders had asked more questions," the Chief Minister said.

"This is evidence that we were not asleep at the wheel, that we were asking questions about performance pay and we were given that figure.

"We didn't just sit by and let him get paid $855,000; we were never told.

"In fact the same year that he was being paid that, we were given written assurance that he wasn't."

Ms Gallagher also said that she and her deputy were unhappy with the performance of public servants who knew about the under-reporting four months before their political bosses.

"It doesn't reflect well on the ACT Public Service that on November 9, they advised Treasury officials that there had been a mistake in the annual report and over the next two months it ping-ponged between ACTEW and the public service here," she said.

"ACTEW indicated in an email on November 9, that they would brief the shareholders, and they didn't."

The Chief Minster said she wanted further investigations into the level of Mr Sullivan's salary.

"I'm still trying to ascertain that $855,000 is an appropriate salary - personally, I don't think it is," she said. I think it's very high for a government-owned utility, a monopoly, although I do recognise there are other responsibilities.

"I'm not sure if ACTEW see it this way, but what we have is serious misleading of the community through the annual reports and through information provided to the shareholders.

"We need to get to the bottom of it and Andrew and I are working on that and then we'll make all the information available that we can.

"But I think it's fair to say that confidence has been tested in the advice we are getting, particularly when we have sought specific advice and there it is, clear as day, signed off by the chair and they're out by 27 per cent."

20 comments

  • The accounts people oh yeh these people have no shame.

    Commenter
    amro
    Date and time
    March 27, 2013, 9:11AM
    • The salary packages of Mr Sullivan, Mr Costello et al need major scrutiny. As a Canberran I am disgusted that such enormous amounts are being paid to 'run' public services. What exactly do they DO? Not much, it seems, other than live off the fat of the land.

      Commenter
      Mardi
      Location
      Tuggeranong
      Date and time
      March 27, 2013, 9:29AM
      • Clearly if there was an accounting mistake and Mr. Sullivan was overpaid by $234,000 he simply needs to pay back every cent of the difference to the ACT taxpayer... In the same way a bank error could have lead to him having $234,000 extra in his bank account, he is committing a criminal act if he spends the money when he knows he shouldn't have it in his account. Where are the lawyers? Let's get this sorted out!

        Commenter
        GotOverpaid
        Location
        Canberra
        Date and time
        March 27, 2013, 10:29AM
        • It's pretty simple, really. Starting from the top, Mackay should resign.

          Commenter
          Stephen
          Date and time
          March 27, 2013, 10:30AM
          • How does a person not know how much they are paid?

            Commenter
            YS
            Date and time
            March 27, 2013, 10:31AM
            • I love it when these people claim that they deserve these extreme salary levels because of the unique skills they bring. Yet, they blame other people when things go wrong, "the accounts people". What is that saying, success has a thousand fathers, failure is an orphan.

              Commenter
              Frederica Mckellar
              Date and time
              March 27, 2013, 10:33AM
              • Meanwhile ACTEW has a dysfunctional call centre and it is trying as hard as it can to increase water costs for consumers. This is whats wrong with this public utility and the public service monopoly in general!. I feel just a little irate about this sort of senior management pork-barrelling!

                Commenter
                snaddle
                Date and time
                March 27, 2013, 10:36AM
                • Another ACT Treasury stuff-up. Thank god that place was closed.

                  But now, are the shareholders (Katy and Andrew) going to call an Extraordinary General Meeting and reduce these two clowns salary to something commensurate with their performance (EL 1 to 2 for example)? Or is Katy just having a whinge to make it seem it’s all OK.

                  Commenter
                  Economist
                  Date and time
                  March 27, 2013, 10:44AM
                  • Excuse me Mr McKay but doesn't the board set the salaries?
                    How fascinating to see this abuse of both power and privilege - the excuses remind me of Rupert Murdoch at the Levenson Enquiry. Please explain to us the ACT taxpayer and owners of Actew Water - how such an salary package is warranted when there is no market competition?

                    Commenter
                    Bored46
                    Date and time
                    March 27, 2013, 10:46AM
                    • Day Jar Voo or something like that, sounds just like ACTEWS Michael Costello and the Rhodium Asset Solutions debacle.

                      Commenter
                      MIKE the HAMMER
                      Location
                      ACT
                      Date and time
                      March 27, 2013, 11:57AM

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