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«COMMERCIAL RADIO INQUIRY Report of the Australian Broadcasting Authority Hearing into Radio 2UE Sydney Pty Limited February 2000 Sydney ISBN 0 642 ...»

-- [ Page 25 ] --

In light of this evidence the Authority should accept that Mr Conde took reasonable steps after he became aware of the NRMA draft contract to ensure that there would be no contracts on foot between Mr Laws and his sponsors which entitled Mr Laws to receive remuneration from them for on-air activities contrary to the 2UE policy. Mr Conde was assured that the other contracts would be amended; he did not pursue a list of sponsors. As at 27 July 1998 he was justified in trusting Mr Laws. His not re-visiting these matters in the months immediately following the acceptance of the July 1998 policy is consistent with trust rather than with any form of knowledge.

The steps taken by Mr Conde from 20 March 1998 right through to his acceptance of the terms of the NRMA draft are clearly inconsistent with any suggestion that Mr Conde was concerned only about outward appearance. The course which was adopted respected Mr Laws’ position and reputation. It was an approach that was based upon the cooperative manner in which relations between the parties had thus far been transacted.

The solution which was arrived at in the NRMA ‘litmus test’ was:

♦ to remove any obligation upon Mr Laws to make positive comment as part of the services for which he was to be remunerated by the advertiser;

♦ to remove any obligation upon Mr Laws to embellish live reads as part of the services for which he was to be remunerated by the advertiser;

♦ to acknowledge that a script for an advertisement to be broadcast on 2UE, whether a paid live read or a paid pre-recorded advertisement, may contain Mr Laws’ personal endorsement. (See clauses 2.3 and 7.4) (See also paragraphs below in respect to Mr Laws);

♦ to ensure that any material provided to Mr Laws for possible broadcast would be broadcast only if it was in the judgment of Mr Laws, and of 2UE, newsworthy. (See clause 2.4).

Since all the other agreements were to be amended to conform to these principles, Mr Conde’s reasonable expectation was that Mr Laws’ agreements would conform to station policy.

The submission (which is made by Counsel Assisting under his sub-heading for the NRMA draft contract in para 34) that it should have been obvious to Mr Conde from the outset that Mr Brennan was the wrong man to monitor compliance is not justified. Mr Burnside put to Mr Conde that Mr Brennan is a decent and honest man (T1347). This must have been perfectly clear to the Panel who saw Mr Brennan in the witness box. Mr Conde rejected the proposition that it was obvious from the start that Mr Brennan was the wrong man (T1348).

However, he conceded that with the benefit of hindsight he should have chosen someone capable of asking hard questions and insisting upon production of the endorsement agreements (T1349). It is one thing to find that Mr Conde was too trusting of people whom he believed were men of integrity. It is impermissible and grossly unfair to seek to equate that with executive ineffectiveness or being unwilling to upset the mega stars.

It is true that Mr Conde acknowledged Mr Brennan’s perceived limitations. However, this acknowledgment must be seen in light of the fact that Mr Conde, at all relevant times, took responsibility for dealing with Messrs Jones and Laws on the question of compliance. This is apparent from sections 13, 14 and 15 of the Mr Conde’s statement (exhibit 69).

B. December 1998 e-mails

In paragraph 35 of his submissions, Counsel Assisting put an unfair spin on Mr Conde’s evidence. It is necessary to read the whole of paragraphs 16.8 to 16.17 of Mr Conde’s statement, Exhibit 69 together with his cross-examination on this point; see T1386 – T1399.

The effect of his evidence is as follows: The e-mail from Mr Moltzen suggested, as one possibility, that Mr Laws was contemplating a breach of station policy but Mr Conde found it hard to believe in the light of Mr Laws’ previous acceptance of the principles stated in the 14 May 1998 letter. This is the explanation for his unsatisfactory draft letter (which, in fact, was never sent). Mr Laws had accepted the policy as evidenced in August 1998 by his sending to Mr Conde a proposed personal endorsement agreement with Trading Post, see T1563 of Mr Conde.

Ironically, as we point out later in this submission, Mr Conde’s instinct was correct.

If Mr Laws was proposing to breach the policy it would have been alarming but the proposed deal with the Bankers seemed, at least on Christmas Eve, to have been overtaken by the Olympic sponsorship proposal. When Mr Conde learned in February 1999 that the Bankers’ deal had gone ahead he saw the letter of 19 February 1999 from Mr Laws to Mr Brennan which said ‘I don’t rejoice in the commission.’. On a fair reading of this at the time, there was nothing in it to revive the concerns raised in the Christmas e-mails. Mr Conde’s evidence that he had forgotten about the e-mails should therefore be accepted. Counsel Assisting does not suggest otherwise.

It is too easy for those who do not face the pressures of management of corporations to be critical of what may, with the benefit of hindsight, appear to be a failure to exercise strong management. It has been said, in another context, that courts should not readily substitute their judgment for those of directors who can be presumed to have much greater knowledge and expertise to evaluate the best interests of the company: See New South Wales Rugby League v Wayde (1985) 1 NSW LR 86 at 102 per Sir Laurence Street; affirmed by the High Court (1985) 59 ALJR798.





What underlies the principle stated in Wayde is that courts and tribunals should be slow to say, in the absence of clear and convincing evidence, that a director should have acted differently in

the management of the company. We ask rhetorically:

What is there to say that Mr Conde was not telling the truth?

How can the Panel, having seen him in the witness box and in the absence of any contrary evidence, say that a failure to detect a breach of station policy (formulated voluntarily by 2UE to improve upon the provisions of the Code) raises fundamental questions about his veracity and about the company’s ability to discharge its responsibilities as licensee?

Should Mr Conde be damned as being untruthful for a failure to be more vigilant, a matter he conceded in his evidence in chief, with respect to a policy by which he showed leadership in the commercial radio and television industries when he introduced it to 2UE?

It must be common ground that, as Mr Conde volunteered in his evidence in chief, he did not act with appropriate vigour and vigilance (T1393, 1394, 1395, 1397 and 1399. See also paras

1.38 and 1.39 of his witness statement, exhibit 69). The Authority cannot infer untruthfulness from performance judged in hindsight to have been wanting in those qualities. This is more so when these points were acknowledged candidly in his evidence in chief and in his witness statement in circumstances in which Mr Conde must have known that he would receive substantial adverse publicity.

It is one of the ironies of this case (but not the only one) that had Mr Conde followed up the information given to him in Mr Moltzen’s e-mail of 24 December 1998 by insisting on information as to the exact nature of the proposed transaction between Mr Laws and Australia Street Consulting as agent for the ABA, no conflict between that proposed transaction and 2UE’s policy as enunciated in the direction of 27 July 1998 would have come to light. The performance by Mr Laws of the agreement dated 25 February 1999 involved no breach of that policy.

Mr Laws gave evidence at T726-737 as to the extent of the work he agreed to do for the fee of $500,000. That evidence, not challenged in cross-examination by Counsel Assisting, was congruent with the terms of the agreement between Mr Laws and Australia Street Consulting.

It seems strange therefore that Mr Conde should be exposed to excoriating criticism for failing to do something which, had he done it, would not have entitled him to blow the whistle with any effectiveness.

It is also strange that Mr Conde has been exposed to this criticism when Counsel Assisting did not make the very sort of inquiry of Mr Laws about the basis of his ABA fee as that which he says (implicitly) Mr Conde should have made early in 1999. This despite all the comparative advantages which Counsel Assisting had: the coercive powers of the Authority, a witness under oath, and the opportunity to analyse a vast array of documents.

Counsel Assisting’s decision not to cross-examine Mr Laws on this important aspect of the ABA transaction is explicable only on the basis that Counsel Assisting accepted Mr Laws’ evidence as to the basis of his $500,000 fee.

If this be so, it is very strange indeed that Mr Conde (in sharp contrast to Mr Laws) was crossexamined to suggest that there was something untoward about the transaction.

It is regrettable that Counsel Assisting chose to characterise what was clearly an oversight by Mr Conde as anything other than that.

For these reasons, the submission of Counsel Assisting must be rejected.

–  –  –

Counsel Assisting relies upon cross-examination of Mr Conde on his e-mail of 4 September 1998 to Mr Harry Miller (T1426-T1432) to suggest that there are difficulties in accepting Mr Conde’s evidence about his knowledge of the Optus agreement. This submission should be rejected.

Mr Conde’s answers to Mr Burnside were truthful and frank. He acknowledged that Mr Miller’s fax raised two possibilities about Mr Jones’ arrangements: first, that the old arrangement (that is, the one referred to in the Service Agreement) included a personal endorsement; second, that there was a fresh arrangement (T1429 lines 1-21). How can Mr Conde be criticised for attempting to find out which of the two possibilities was correct?

Mr Conde also acknowledged that when he wrote the e-mail he thought for the first time that there might be more to the Optus arrangement than he had previously known (T1429 lines 23The fact that he did not follow up on it is unfortunate but not damning. The last full paragraph of the e-mail probably explains why he failed to take the matter further. This was because the matter was covered by the memorandum of 27 July 1998 which he thought Mr Miller had accepted. The paragraph is not set out in full in the Transcript at T1427. It

reads as follows:

‘If Alan has some personal endorsement arrangement with Optus, then I refer you to me (sic) Circular Memorandum on that subject in July 1998. Have you advised me of any such Optus arrangement?’ Mr Conde explains in paragraph 14.4 to 14.8 of exhibit 69 the reasons why he believed that he had received a sufficient acceptance from Mr Harry Miller on behalf of Mr Jones of the policy stated in the July 1998 memorandum.

For these reasons, the submission of Counsel Assisting about the September 1998 e-mail must be rejected.

There is a further issue which underlies the submissions made by Counsel Assisting that Mr Conde knew of the on-air obligations in the presenters’ contracts.672 Submissions made hy 2UE.

Schedule 11: Conduct on the Alan Jones Breakfast Show Involving Breaches Of Clause 2.2(d) of the Commercial Radio Codes of Practice By Radio 2UE Sydney Pty Limited Radio 2UE Sydney Pty Limited (2UE) is the licensee of the commercial radio broadcasting licence with call sign 2UE. As licensee, 2UE is responsible for the content of material broadcast.

From the material available to the Panel evidencing the content of a broadcast, the Panel finds that in none of the broadcasts alleged to have breached clause 2.2(d) of the Commercial Radio Codes of Practice has there been disclosure of the fact of a commercial agreement between Mr Jones and a sponsor.

2UE and Mr Jones made a number of general submissions in relation to many of the broadcasts alleged to have breached clause 2.2(d). For discussion on these general submissions, please see ‘Code of Practice 2 – News And Current Affairs Programs’ on page 17.

Colonial State Bank The Panel notes its finding that Mr Jones was aware of the existence of his commercial relationship with Colonial State Bank (please see page 45).

ROCKDALE COUNCIL EDUCATING THE ELDERLY IN THE

USE OF ELECTRONIC BANKING

Material Provided to Mr Jones A press release was sent to Mr Jones on 2 December 1998 from Colonial State Bank

covering the following points:

Rockdale council is getting behind educating the elderly in the use of electronic banking. They have organised some of the banks, the ones which are staying in their area, to hold an education day at the town hall on Thursday December 3rd from 10 ‘til 2.

Alan Crouch, Colonial State Franchisee in Rockdale tells me that he and his team – along with ANZ, Westpac and St George people – will be there to meet with the public.

Alan says it will be a chance for people who are not up to speed on electronic banking to have a chat away from the pressures of the banking chamber, to speak to the bank staff and to learn about the new way money is dispensed.673 Material Broadcast by Mr Jones

On 3 December 1998 Mr Jones broadcast the following:

Here’s a good story. Rockdale Council are getting behind educating the elderly in the use of electronic banking and organise some of the banks, the ones which are staying in the area, to hold an Education Day today at the Town Hall, Rockdale Town Hall, from 10 until 2. Alan Crouch, the Colonial State Bank franchisee at Rockdale tells me that he and his team along with ANZ, Westpac and St George will be there to meet with the public.

It will be a chance if you are not up to speed on electronic banking to have a chat, away from the pressure of the bank, to speak with the bank staff and to learn about the new way that money is dispensed. So there you are. Town Hall, Rockdale Town Hall today, Thursday from 10 until 2. You can find out about electronic banking.

Alan Crouch and his team from Colonial State Bank will be there. How do I know that? They told me. It’s at Rockdale Town Hall. Anyone can go along from 10 until 2. Learn all about electronic banking and how it can be used to your benefit and you can ask whatever questions as you like. 10 until 2 today at the Rockdale Town Hall.674 Colonial State Bank’s Submission to the Hearing



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