Ahmed Fahour's shock Australia Post resignation
The letter began "Allegations of Fraud, Union Corruption and Collusion". The recipient was Employment Minister Michaelia Cash. The author was a former manager in the workers' compensation department of Australia Post. The date: October 26, last year.
Over dozens of pages the writer made detailed and astounding allegations about the government-owned former monopoly. They could be summed up as: chief executive Ahmed Fahour gave a union ally veto power.
"It is normal practice in Australia Post for any decision concerning a workers' compensation claim to be vetted by the NSW state secretary of the CEPU [Communications, Electrical and Plumbing Union] prior to the decision being finalised," the letter said.
"He had direct contact to the CEO Ahmed Fahour. Should he not agree with any decisions, the CEO would direct myself through management to comply."
When the manager defied the union leader, Jim Metcher, they were sidelined and then fired, the letter said.
Lashing out
The complaints may have been a disgruntled ex-employee lashing out. Fahour's spokesman denied the union leader exercised such power, and pointed to Fahour's successes during his seven years running Australia Post, including $1.7 billion in dividends paid to the federal government at a tough time for postal companies.
Fahour's good working relationship with the union – and a few concessions here and there – may have helped him keep staff costs down and introduce difficult changes, such as using more contractors to deliver parcels.
But reports in The Australian Financial Review about the allegations tapped into a well of resentment in the Coalition. Liberal MPs hated Fahour's $5.6 million pay packet, which they said voters found offensive. Two weeks ago Prime Minister Malcolm Turnbull said Fahour was paid too much. One minister's chief of staff referred to Fahour as a "celebrity chef", a sarcastic reference to his high public profile.
Fahour, who was appointed under a Labor government, was expected to appear at a Senate committee on Tuesday morning, where he would have faced questions for an hour and a half. Senator Eric Abetz, Cash's predecessor, had a copy of the ex-manager's letter and a formal statement they made to a lawyer hired by Comcare as part of an investigation into the manager's claims of workers' compensation fraud.
According to the ex-manager's allegations, which were corroborated by an independent review, Metcher waged an aggressive campaign against Australia Post's workers' compensation department to secure a payment for one of his members who hurt her elbow. The dispute led to the department head leaving, put one of his staff under the care of a psychiatrist and triggered a formal complaint by Australia Post's head of safety, who blamed her own company for endangering the health of its staff by not acting against Metcher.
Abetz, who was a member of the committee, had emails allegedly showing that Australia Post managers delayed processing reports about injured workers to protect their bonuses. "There goes my swimming pool!" one manager said, according to a source. Australia Post had also sponsored Metcher's nephew, a former postman and obscure semi-professional rugby union player.
The committee hearing would have been the first opportunity for anyone to question Fahour in person about the allegations. Fahour, who normally courted the press, had turned down multiple interview requests from the Financial Review, although privately lobbied against the paper's coverage.
Bigger question
Shocking as some of the behaviour of individuals may have been, there was a bigger issue: did a culture of workers' compensation fraud fester under Fahour?
"Sixty-three per cent of Australia Post employees have sustained an injury-related incident, resulting in 38 per cent of Australia Post employees lodging a workers' compensation claim," the letter to Cash said. "Conservative costings to manage Australia Post's workers' compensation is $250m when it should be in the order of $25-40m."
As a rule of thumb, the workers' compensation cost should be about 1 per cent of a company's wages bill, according to the former manager. At similar companies to Australia Post, Telstra and Toll, the figure is 3 per cent to 3.5 per cent.
At Australia Post it was 6.5 to 7 per cent in 2013 of the $120 million set aside on the balance sheet to cover payments, they said.
Australia Post pointed to its $29 million workers' compensation bill in 2013, which was 1.2 per cent of employee expenses "which is evidence of an efficiently run scheme". (Australia Post doesn't use an external workers' compensation scheme.)
Fahour on Thursday criticised the Financial Review's coverage of the issue, which he said was "hot air".
The manager said Australia Post's practice was to get injured employees back to work on "light duties" such as sorting mail by hand, in part because they wouldn't be counted in its workers' compensation bill.
The allegations are being considered by Comcare, a federal agency that oversees Australia Post's workers' compensation scheme.
