ASX chief Elmer Funke Kupper quits in face of investigation

Sydney Morning Herald | 21 March 2016

• The questions we asked the ASX

The head of the Australian Securities Exchange, Elmer Funke Kupper, has quit his $3.5 million a year job over allegations that he knew of a $200,000 payment to the family of Cambodian strongman prime minister Hun Sen.

The $200,000 payment was made when Mr Funke Kupper was chief executive of gaming giant Tabcorp and is now the focus of an international anti-bribery investigation led by the Australian Federal Police.

Elmer Funke Kupper has now also departed the Tabcorp board. Photo: Paul Jeffers

ASX chairman Rick Holliday-Smith announced the resignation late on Monday as it emerged Mr Funke Kupper was personally the subject of the investigation and was explicitly warned against making the payment.

Mr Holliday-Smith said the board had "accepted that Elmer wanted to direct his full focus to the investigations which may be made into the Tabcorp matter" and did not want them interfering with the role of leading the ASX.

Mr Funke Kupper has not responded to detailed questions on his conduct provided to him last week but told the Australian Financial Review on Monday that ​he had not done anything wrong.

Former ASX chief Elmer Funke Kupper. Photo: Josh Robenstone

"I have done this [resigned] in the interests of good corporate governance and the interests of strict process. I have taken this step so that the company is able to build its future," said Mr Funke Kupper.

"This is highly unusual. My name has not been mentioned. I have not been told I am being investigated. My job is to take control of the situation."

ASX board shift

As recently as last Wednesday, the ASX board was standing by Mr Funke Kupper insisting he would stay on.

Later that day a series of detailed questions were sent by Fairfax Media to the ASX. Those questions have not yet been answered.

"Elmer has demonstrated leadership and energy during his time at ASX. He hands over a stronger team and a core franchise well positioned for future opportunities," Mr Holliday-Smith said.

"His legacy is a globally competitive, more externally focused company, which is committed to innovation and investment in the customer services and infrastructure that are at the heart of Australia's financial marketplace."

Mr Funke Kupper will be paid out in lieu of notice by the ASX.

Standing aside at Tabcorp

Tabcorp's also issued a statement saying Mr Funke Kupper would be granted a leave of absence at his request from the company's board which he joined as a non-executive director after leaving as chief executive.

"The company appreciates Mr Funke Kupper's request which is in accordance with the highest professional and governance standards," the statement said.

Fairfax Media revealed last week that the police were investigating whether the payment by Tabcorp breached Australia's foreign bribery laws.

Tabcorp at the time was investigating a lucrative online gaming business in Cambodia leading up to the 2010 FIFA World Cup, and channelled the payment via the United States to a company linked to the sister of Hun Sen.

Funke Kupper in focus

Fairfax Media can now reveal that Mr Funke Kupper is himself the subject of a criminal investigation in Australia and the United States.

He was one of a small executive management team which was warned explicitly and directly by fellow senior Tabcorp staff about the legal and integrity risks relating to the payment.

Fairfax Media has identified two senior staff members at Tabcorp who had serious concerns about the Cambodian strategy and payment, but has decided not to name them for legal reasons.

The payment was made by Tabcorp in the face of this advice.

Proper channels

The Tabcorp executive who assisted Mr Funke Kupper with the Cambodia strategy, Robert Nason, said that he assumed Mr Kupper would have overseen anything to do with the Cambodia strategy.

Asked directly about his former boss's knowledge, Mr Nason said: "All investments, anything we would have done, would have gone through the proper channels".

The payment was made after Mr Nason left the company, and he said he had no knowledge of it.

The transaction of funds does not only involve possible bribery, but also accounting offences.

Cambodia strategy

After leaving Tabcorp, Mr Kupper moved to become the chief executive of the ASX – the company that runs and oversees the rules that govern Australia's share market.

Mr Kupper had told Fairfax Media he had no memory of the payment and that he had no intention of standing down from the ASX.

Mr Holliday-Smith also said last week he was "not aware of any reason" why Mr Funke Kupper should step down from his position overseeing the ASX.

Gaming industry sources said the $200,000 Tabcorp payment was made to a consulting firm connected to one of Hun Sen's sisters in a transaction facilitated by one of Hun Sen's nephews.

The payment was made as Tabcorp was examining the potential to get Cambodian government backing to launch an online sports betting business. At the time, Tabcorp's newly-acquired subsidiary Luxbet wanted to access the lucrative Asian gambling market in the lead up to the 2010 FIFA world cup.

The securing of a Cambodian gaming licence, which would give the company a platform to trade across Asia and internationally, would have only been issued with the permission of Hun Sen or his regime's senior officials.

US anti-corruption authorities responsible for enforcing the Foreign Corrupt Practices Act, which prohibits the United States being used to facilitate possible bribery, identified the payment at least 12 months ago.

In 2011, Tabcorp abandoned the plan to launch an online sports betting platform in Cambodia.