Racing NSW details ATC failings in explosive letter

Racing NSW released the reasons for appointing Morgan Kelly from Ernst & Young as an administrator for the Australian Turf Club on Tuesday afternoon.

It was a case of tit-for-tat information being released after ATC chairman Tim Hale sent an email to all club members after the directors got an injunction from the Supreme Court to stay Racing NSW’s administration order.

The Court will hear submissions on Thursday in the case that is reviewing the massive divide between the regulator and NSW’s biggest club.

The 12-page letter from Racing NSW to Hale stated eight reasons for its decision to put the club into administration.

“Racing NSW considers that this determination [to place the ATC in administration] is both necessary and unavoidable to ensure the proper discharge of its statutory functions and duties,” the letter reads.

“It is not a decision taken lightly, nor is it one arrived at precipitously. Rather, it is the culmination of months of escalating concern regarding the ATC’s financial viability, governance issues, and the apparent incapacity of the ATC Board to discharge its duties to a standard commensurate with the scale, importance, and public trust inherent in its role.”

“Especially considering the length of time that the ATC Board members have been on the ATC Board, ranging from 10 months to almost 5 years, with an average tenure of 3 years.”

“Racing NSW commenced the show cause process because of serious and growing concerns regarding the ATC’s deteriorating financial position. Those concerns did not abate during the process. Instead, they intensified.”

“The ATC Board was unable to articulate or provide a credible, coherent, or disciplined strategy to stabilise or improve the ATC’s financial performance.”

“The material advanced was overwhelmingly reactive, superficial, and devoid of rigorous commercial analysis.”

“Far from demonstrating leadership, the ATC Board’s focus appeared to be limited to short-term, distressed asset disposals, pursued without adequate strategic planning and in circumstances where there is a significant risk that assets will be sold grossly undervalue and thus impair the ATC’s balance sheet.”

“The ATC did not demonstrate, at the appropriate level of detail, how it would increase revenues and decrease costs in the future. Its responses were often superficial and in the nature of motherhood statements.”

“The ATC Board also failed to adequately address the corporate governance issues raised by Racing NSW. The information provided by the ATC did not provide Racing NSW confidence that they would be able to implement and adhere to best practice corporate governance going forward.”

There are some remarkable figures in the reasons, which reveal the ATC receives $42.4 million for the broadcast and digital rights every year.

The final reason of the eight set out addressed Hale and his relationship and exchange of information with maverick MP Mark Latham.

There are corporate governance concerns around the relationship, which Hale cleared up in a Statutory Declaration provided to Racing NSW on December 4.

The letter’s conclusions included the ATC board had “fallen short of the standard that a competent board would be expected to meet”, and it was “in a state of disfunction.” [sic]

The letter also stated that one or more of the ATC directors had breached their director’s duties. At least one director had failed to comply with the ATC Code of Conduct and one or more of the directors had acted contrary to accepted standards of corporate behaviour.

It was why Racing NSW decided to remove the ATC board.