The Australian Securities and Investments Commission (ASIC) has issued civil penalty proceedings in the Federal Court of Australia against former Tennis Australia directors Harold Mitchell and Stephen Healy.
ASIC's case relates to a decision made in 2013 by the Tennis Australia board to award the domestic television broadcast rights for the Australian Open tournament to the Seven Network for a five-year period without a competitive tender process.
The corporate regulator alleges that both Mitchell, the former leader of media agency Dentsu Mitchell and Free TV chairman, and Healy, who stepped down from his Tennis Australia role last year, withheld material information from the Tennis Australia board when it made its decision to award the domestic broadcast rights.
ASIC has also stated that the two failed to ensure that the board was fully informed about the value of the rights, the interest of other networks seeking to acquire those rights and the best method of marketing them.
It is also seeking to prove that the two ex-directors failed to advise the board that Tennis Australia was likely to obtain better terms by putting the rights out to competitive tender.
Mitchell, who retired from the board at the end of October, also had numerous charges laid solely against him, including that he passed confidential information to Seven about competitor networks seeking to acquire the rights.
It is also alleged he gave Seven further information on the views and negotiating position of Tennis Australia’s management, as well as downplaying the interest of other parties to the Tennis Australia board.
"Seven West Media is disappointed in ASIC’s decision announced today regarding the Tennis Australia Directors. Seven has co-operated fully with ASIC during this long and drawn out investigation," a spokesperson for Seven told AdNews.
"As a bidder for the rights Seven, which had an exclusive negotiating period under its contract, complied with the process dictated by Tennis Australia.
"In Seven’s experience Harold Mitchell and Stephen Healy always acted in a highly professional and proper manner, and are of the highest character and reputation."
ASIC is seeking pecuniary penalties be ordered against Mitchell and Healy and that both be disqualified from managing corporations.
Earlier this year, Nine acquired the rights to broadcast the Australian Open, alongside other key domestic tennis tournaments, while Seven and Foxtel acquired the rights to the Cricket.
“This matter does not relate to our current operations. As this is a legal matter and we are not a party to the proceedings we are unable to offer further comment at this time," a Tennis Australia spokesperson said.
ASIC is making no further comment on the matter.
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