KordaMentha review slams NBN Co directors

By Daniel Palmer

Nine directors — eight former and one current — have signed a letter to KordaMentha opposing the bulk of the findings, saying they “generally disagree” with the report. “The board devoted significant time to strategic risks and, in particular, the related risks of delays and cost overruns,” the letter says, according to The Australian. “A review of board and committee agendas indicates that all key strategic risks including time delays, overruns, technological obsolescence, regulatory change, pricing and cherry-picking issues were considered on a timely basis.

Meanwhile, concerns were raised about the reporting of the access deal made with telecommunications giant Telstra, with the nominal value of $90 billion never discussed in the public domain. “Most of the public announcements regarding the ‘value’ of the Telstra DAs (definitive agreements) focused on the net present value of the agreements to Telstra, in after tax dollars as at 30 June 2010, which was estimated to be $9 billion,” the review noted. “Whilst not publically disclosed by either Telstra or NBN Co, the nominal value of the Telstra DA payments, of approximately $90 billion, was communicated to the Department of Broadband, Communications and the Digital Economy no later than April 2011.

The governance review, commissioned by the Abbott government, contends that while NBN Co’s board was not short on skill and experience, their talents lacked relevance for the task at hand. “The mix of skills and experience of these individuals was not appropriate for a company of the nature, scale and complexity of NBN Co,” KordaMentha said. “Overall, the NBN Co boards have been described to us as having a ‘lack of dirt under the fingernails’, i. e. they had a collective lack of deep operational experience and insight in areas critical to success of NBN Co.

The damning assessment of the make-up of the NBN Co board from 2009 through until September last year also saw criticism levelled at the strategic focus of the organisation. “Whilst a formal risk register was established, we consider the board did not devote enough time to the identification of the strategic risks associated with the NBN roll-out and ensuring enough focus was placed on proactive management of these key strategic risks,” the report said.

Read more here: Business Spectator

    

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