Adland veteran Harold Mitchell is being taken to court over a broadcast rights deal he brokered with the Seven Network while working as a director of Tennis Australia.
The Australian Securities and Investments Commission (ASIC) announced on its website this morning that it has issued civil penalty proceedings in the Federal Court of Australia against Mitchell and Stephen Healy, both former directors of Tennis Australia.
ASIC’s case relates to a decision made in 2013 by the Tennis Australia board to award the domestic TV broadcast rights for the Australian Open tournament to Seven for a five-year period without a competitive tender process.
The regulator alleges that both Mitchell and Healy withheld material information from the Tennis Australia board when it made its decision to award the domestic broadcast rights.
ASIC claims the pair failed to ensure the board was fully informed about the value of the rights, the interest of parties other than Seven in acquiring those rights, and the best method of marketing them.
It is alleged by ASIC that Mitchell and Healy also failed to advise the board that Tennis Australia was likely to obtain better terms by putting the rights out to competitive tender, and failed to ensure that a sub-committee – appointed by the board to advise it about the granting of the rights – carried out its functions.
ASIC also alleges that Mitchell passed on confidential information to Seven about the interest of its competitors in acquiring the rights, and as well as the views and negotiating position of Tennis Australia’s management and board about the granting of the rights.
Mitchell is also alleged to have downplayed to the Tennis Australia board the interests of parties other than Seven in acquiring the rights, and failed to inform the Tennis Australia board about the concerns that Seven had over the interest of Network Ten in acquiring the rights.
Finally, ASIC claims Mitchell encouraged the Tennis Australia board to conclude an agreement with Seven instead of putting the rights out to competitive tender.
ASIC is seeking declarations that Mitchell contravened sections 180(1), 182(1) and 183(1) of the Corporations Act, and that Healy contravened section 180(1) of the Act.
The regulator is also seeking that pecuniary penalties be ordered against Mitchell and Healy, and that both be disqualified from managing corporations.
The maximum pecuniary penalty that may be ordered against a person for a single contravention of sections 180, 182, or 183 of the Corporations Act is $200,000.
The court action comes just over two weeks after Mitchell retired from Tennis Australia’s board – a role he had held for the last 10 years.
B&T has contacted Seven for comment.