How Jamie Pherous loaned Shine law firm $13 million


The loan shows how potential conflicts of interest can be a gray area open to many interpretations. Some people – including Mr Bellas, who said he did not negotiate the terms of the loan – argued that there was no potential conflict of interest.

Others have argued that such ties could raise issues of potential conflicts of interest, triggering at least concerns about perceived governance. It would be prudent for the independent directors of Corporate Travel to know about it, added a governance expert.

Tony Bellas, then president of Corporate Travel Management. Attila Csaszar

AFR weekend The Back Window Column in May revealed Mr Pherous’ six-month loan to Shine, which paid $958,876 in interest. The loan was listed in accounts filed in a personal tax case for Mr Pherous.

But how the loan was obtained was unclear.

Mr Bellas, speaking recently on an afternoon, was initially reluctant to discuss specifics.

“People have dealt with conflicts of interest all along and made disclosures about their conflicts,” he said.

So was this done at Corporate Travel in this case? “In all cases where there is a conflict, it is declared,” he argued.

But how was the loan obtained, Mr. Bellas had asked Mr. Pherous? “You have the answer to your questions. If there are conflicts, you make statements.

He wanted to hang up the phone, say FRG weekend to ask further questions of Mr. Pherous and Shine’s managing director, Simon Morrison.

“I have grandchildren here that I’m trying to manage,” Mr Bellas said. “It’s the end, mate. Talk to them.”

Later, Mr. Bellas, via email, revealed that he did not believe there was a conflict of interest in this case.

When asked why he would or would not make a statement, he replied, “There was no conflict of interest. The financing arrangement was entered into between Jamie personally and Shine and was entered into at arm’s length on terms consistent with standard practice for the personal injury legal industry.

“No involvement in the terms of negotiation”

Mr Bellas said he had no involvement “in discussing or negotiating the commercial terms of the funding agreement”.

Shine confirmed that Mr. Bellas made the loan introduction. Its chief financial officer, Ravin Raj, had asked board members in 2018 if they knew of anyone who could act as a lender while he secured a new backer. These funders pay for expenses such as medical expert fees in the event of a dispute.

Mr. Bellas came back and told them that Mr. Pherous, whose Corporate Travel shareholding alone is worth $335 million, might be available, Mr. Raj confirmed. Mr Raj also said he had contacted other stock exchange presidents in Brisbane to try to find lenders.

Shine chief executive Mr Morrison said his company had checked that the interest rate was appropriate with the chief financial officer in charge of the process. “We knew [it was] Jamie Pherous and had to exercise appropriate caution,” he said.

Shine had to make sure the interest rate was at least at market rate or lower, he said. “It was lower,” he said. Interest payments show an annualized rate of nearly 15.3%.

“Potential conflict if on both counts”

Mr Morrison also initially said he thought the directors sitting at the two companies, if they knew about the loan, would likely have declared a potential conflict of interest. “The potential conflict is that there would be directors sitting on the boards of both companies,” he explained to FRG weekend.

But after reviewing the records, he texted: ‘No conflict existed as it involved Mr Pherous on a personal basis and not Corporate Travel.’

Shine confirmed his board had been given a minute about the loan and at one point said the lender was Mr Pherous.

Another Shine director at the time, Greg Moynihan, was also then a member of the board of directors of Corporate Travel. But Shine confirmed Mr Moynihan did not present Mr Pherous for a loan. Mr. Moynihan declined to comment.

Mr. Pherous has repeatedly refused to discuss the loan. The only living independent director of Corporate Travel’s board at the time was retired US Admiral Robert Natter. He did not respond to repeated questions sent through battery company Novonix, where he is chairman and again shares a board seat with Mr Bellas.

A “grey” area

Gavin Nicholson, a corporate governance expert from the Queensland University of Technology Business School, said potential conflicts of interest sometimes weren’t cut and dried.

“There is often so much gray,” he said.

One area was whether actions influenced decision-making, which Nicholson said was highly subjective and depended on an individual’s state of mind.

Another issue was perception, an area where he said most ASX-listed entities have taken a conservative approach.

He said that while he understood people saying the Shine loan was a private matter, it also went to the issue of perception. This could involve oversight issues, whether a CEO would feel comfortable being asked about a loan from a president or whether a president would feel obligated to a CEO to make a loan, he said. -he declares.

Although people could easily know how to act, the perception of any potential for conflict was another issue, he argued. Dr Nicholson also said it would be prudent for the independent directors of Corporate Travel’s board to be told about the loan.


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