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Former Leighton boss Wal King repaid $ 40,000 worth of unauthorised expenses – including trips to Madrid, a $ 780 meal at Sydney’s Rockpool restaurant and stays at luxury hotels – that he billed to a company credit card in the weeks after he had left the construction giant.
A Fairfax Media investigation can also reveal a small number of senior Leighton staff were so concerned by a $ 6 million consultancy awarded to Mr King upon his 2011 departure that external legal advice was sought to determine if it might have breached Australian corporate laws that apply to retirement benefits.
Wal King’s exit entitled him to $ 6 million in consultancy fees over three years, a company credit card, an office and IT support. Photo: Rob Homer
The legal advice was sought in July 2011 after it was discovered that the terms of the consultancy agreement organised before Mr King’s departure meant he would be able to invoice Leighton for $ 6 million in fees over three years without having to provide any services.
A 2011 memo written by a senior Leighton executive to an external lawyer about the matter stated “there is no requirement for Lawrom (Mr King’s private company) to actually perform any services in consideration for the fees”.
Federal police investigating Leighton for alleged foreign bribery offences have been told by a former company executive that he believed the arrangement with Mr King “was a pretty blatant breach of the limitations in the Corporations Act on executive termination payments”.
The bill at Sydney’s Rockpool restaurant came to $ 780. Photo: Domino Postiglione
Mr King’s departure agreement with Leighton entitled him to $ 6 million in consultancy fees over three years, a company credit card, an office and IT support.
The unusual and generous nature of Mr King’s consultancy agreement raises questions about the company’s use of shareholder funds.
Credit card statements show Mr King racked up $ 40,000 in expenses on his company provided credit card for overseas travel, accommodation and meals between February and April 2011. None of these expenses had been approved by Leighton.
Wal King stayed at Madrid’s luxury Hotel Villa Magna at $ 887 a night after he left the firm in 2011. Photo: Supplied
Mr King stayed at Madrid’s luxury Hotel Villa Magna at $ 887 a night and at the London Hotel in Manhattan, paying $ 1626 for two nights. An April 5, 2011 bill at Rockpool came to $ 780.
A May 2011 memo to Leighton’s then chief executive David Stewart and chairman, David Mortimer, stated “given there has been no work commissioned by LHL [Leighton Holdings Limited], there should have been no requirement for the utilisation of the credit card”.
Under the terms of his consultancy agreement, Mr King was entitled to use the credit card, but only after receiving approval for expenses from Mr Stewart or the board.
Mr King declined to speak to Fairfax Media this week. But a company source still close to him said the former chief executive believed the expenses would have been approved had he asked first and that he had actually repaid a few thousand dollars more than he needed to.
Mr King wrote a cheque for $ 40,000 to cover the credit card bill after being challenged by Mr Stewart and Mr Mortimer in a May 2011 letter that asked him to “show cause why the unauthorised expenditure does not constitute a breach of the [consultancy] agreement”.
Mr King’s corporate credit card statements from 2010 – when he was still chief executive – show monthly bills of $ 40,000 or more on travel, accommodation and dining.
Statements from corporate cards belonging to a handful of other Leighton executives show they were used to book flights for dozens of other company workers in 2010, allowing the executives to receive maximum bonus points.