The secret relationship, the $40 million legal fight and the corporate cop’s latest case

When luxury whitegoods retailer Winning Group appointed former Super Retail boss Anthony Heraghty as chief executive last month, they knew he came with baggage.

They knew he had conducted a secret relationship with the company’s head of human resources. They knew he had allegedly lied about the relationship to the board and the market. They knew that the board had burnt $40 million in legal bills seeking to defend his lie and destroy the reputation of two senior women who attempted to expose it.

They knew he was eventually dumped by Super Retail Group for misleading the company. And they knew that, even as Heraghty’s appointment was announced, the corporate watchdog was still probing Super Retail Group’s handling of whistleblower complaints.

So Winning Group can hardly be surprised that, within weeks of Heraghty getting his feet under the desk, the decision to hire him spectacularly imploded. On Monday the Australian Securities and Investments Commission commenced legal proceedings against Heraghty in the Federal Court, alleging he breached his director’s duties and lied to the board and the market about the relationship.

“ASIC alleges Mr Heraghty put himself in a position where his personal interests conflicted with his duties to Super Retail Group and that he failed to properly disclose and manage that conflict,” ASIC chair Sarah Court said.

“The allegations in this matter raise important issues about governance, transparency and trust in the information provided to boards and the market.”

Given the scale of Heraghty’s very recent fall from grace at Super Retail Group, it was utterly predictable that scandal would follow him to the new job. Predictable, at least, to everyone except Winning. The company did not address the $40 million elephant in the room when he was announced as chief executive in July. And after ASIC launched its legal action on Monday morning, it maintained stony silence.

Just days earlier, however, Winning’s external public relations representatives were offering up interviews with Heraghty to celebrate subsidiary Appliances Online’s 21st birthday sale.

Evidently, Winning Group had put a lot of faith in the value of second chances. Or, at least, in the value of Heraghty’s ability to make it rain. Founded more than a century ago, the family-owned company is planning a $1 billion sharemarket float, and believed that Heraghty was the man to take them into that new era. It has also drawn some serious backers, with Ellerston Capital, the investment firm backed by wealthy families, taking a $100 million stake this year.

Perhaps the Winning board felt Heraghty’s tawdry scandal was simply a personal matter that could be swiftly brushed aside. Infidelity does not contravene the Corporations Act, after all.

But the corporate regulator has taken pains to make clear that it is not acting as the moral arbiter for executive conduct.

“This case is not about private relationships but whether a director properly disclosed and managed conflicts of interest and met their duties to the company and shareholders,” Court said.

If ASIC is successful, Heraghty could face penalties in the seven figures.

And it’s worth remembering that Heraghty is not only alleged to have misled the board and the market. His former company Super Retail Group led an aggressive campaign of lawfare against the two whistleblowers, former chief legal officer Rebecca Farrell and company secretary Amelia Berczelly, that left both hospitalised for stress.

In an affidavit, Berczelly said she believed the company had “wanted to push me to kill myself, destroy my reputation, and bankrupt me as a means to silence me and punish me”.

All of this has been well documented in dozens of news articles, of which Winning would be well and truly aware. It was a very big call to hire Heraghty in July, knowing full well the financial and reputational damage he had inflicted upon Super Retail Group.

Winning viewed Heraghty as the man to help them scale new heights. Instead, he has dragged them into the muck along with him. They can’t be surprised this has now blown up.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.

Kishor Napier-Raman is a senior business writer for The Sydney Morning Herald and The Age. Previously he worked as a CBD columnist and reporter in the federal parliamentary press gallery.Connect via X or email.