AAR Victoria’s Secret; Aconex Knickers in a Knot

There were high-5s among the men and women of the FS office this week when it was announced, finally, that iconic women’s underwear brand Victoria’s Secret would be making its way down under. At the same time, a different kind of emotion was apparently playing its way out at the emergence of another apparent Victoria’s Secret – this one in the Melbourne offices of AAR.

suspicions down under

And folks, if true, this one involves a Double D-Cup of Disaster!

When we last reported on AllensGate, we mentioned that a conflict of interest is alleged to exist involving:

• a Director of Aconex (Michael Robinson)
• who is also a former Chairman and current “consultant” to AAR, the firm which is the “exclusive” supplier of legal services to Aconex, and
• a number of other Allens partners, who were (again allegedly) aware of the conflict and allowed it to continue.

Allens has repeatedly refused comment when contacted by media outlets.  If such a conflict were to exist, one might query, for example, how capable director Robinson would be in objectively assessing AAR legal advice on important questions like “does my bum look big in this?” AAR might say “no honey, your bum is beautiful”, and Aconex might believe it, when in truth Aconex has a lard-ass unfit for Victoria’s Secret apparel.

Read on for full details of this week’s juiciest gossip

But beneath this angel-winged trenchcoat of alleged conflict is an alleged abyss of knotted knickers that not even a eunuch could wear. So let’s strip the layers back slowly and share what we’ve heard.  (NB: All scurulous rumour and gossip, at this stage, but from the sheer amount of corroboration and leaked documents we think there’s some teat teeth to it.)

First we received the following tip:

[NAME REDACTED] left last year in a rush. He was the main billing partner on Aconex. Strange job choice for a career litigation partner in Melbourne to go to Perth to be a inhouse counsel for a supermarket and hardware store. Hmmmmmmmmmm????

Then this:

yes, Aconex, that g-banger suits you

Big (unscehduled) partner meeting in Allens Melbourne office yesterday with all the head honchos down from Sydney including Ewen Crouch, Michael Rose, Jim Dwyer.  … never seen so many senior partners from Sydney in Melborne all at once.

The same spy then wrote:

They all came down yesterday for an emergency partners meeting…IT IS STILL GOING – all locked up in there in Melbourne right now.

Sounds to us like the Claudia Schiff has hit the fan! But is there an AAR Victoria’s Secret? And have the partners concerned changed their underwear since Wednesday?

Well, according to our sources, legal fees collected by Allens though its relationship with Aconex are believed to have been between $5m and $10m since Mr Robinson joined the Aconex board. This seems to us to be pretty high for a business turning over less than $20m when he joined the board and about $40m now.  In the EGM we reported on earlier, the questions on notice document also implies that Allens was the single largest supplier of services to Aconex.  That’s pretty strange – for a private company with a stable business to spend more on legal fees than anything else…

Another spy reports that Aconex was named by Allens in 2008 as amongst one of its best clients and invited to an award ceremeony as recognition. Perhaps Aconex was being g-strung along?

Meanwhile, leaked correspondence from Allens GC Jim Dwyer shows that the firm is denying any allegation of conflict:

4.1 Michael Robinson has no relationship with the Firm other than the use of offices in the Firm’s Melbourne tenancy.  He is not practising as an Allens lawyer.

Perhaps they’re forgetting his email address? Michael.Robinson@aar.com.au, in case you were wondering.  Amusingly, Aconex’s own website still describes Robinson as “ a consultant to international law firm Allens Arthur Robinson”:

Mr Hosking [Aconex chairman] said: “It is a great asset to Aconex, as a rapidly growing company, to have somebody with Michael Robinson’s considerable experience on the Board.” …

“Michael knows the challenges of growth and has been associated with Aconex for a number of years. He will bring a new level of sophistication to the Board as the Company moves into the next phase of its development.” …

Michael Robinson, Aconex Director, said: “I have been involved as an adviser to the Aconex founders since the Company was established six years ago. …

Here’s where things get interesting.  We understand that all major Australian business news publications have been closely following developments on this story but have so far declined to report on it because AAR is apparently refusing all requests for comment.  Furthermore, some senior members of the NSW Bar are apparently “unavailable” to give advice (perhaps out of concern that future briefs might dry up?).  Fortunately, we’re not quite as risk averse, so here are a few of the other tidbits we’ve heard.  All completely unconfirmed, of course, so take it with a large grain of salt:

• Melbourne partner Wendy Rae is now also under investigation for her alleged role in AllensGate.  On her Allens profile page, she is described as having given “advice on various private equity acquisitions and divestments including… Francisco Partner’s capital injection into Aconex Limited”.
• at least one other Allens partner is alleged to have given “negligent advice” to Aconex in a $30m capital raising that took place in 2007, but Robinson then allegedly smoothed things over and continued to act for Aconex.
• two Aconex directors were allegedly advised by Allens when they purchased shares in Aconex, while Allens simultaneously advised the company in relation to the same transactions, and when the share purchase went belly-up, the directors allegedly made a successful claim on the company’s insurance policy.

Of course, there might well be some justification for all this.   But, if not, it could be for Allens what McCabe was to Clutz.  Allens is obviously thankful it is wearing brown undies. The real question is, if a derivative action were commenced, what would the remedies be if the various allegations are proven true? An account of all legal fees paid during the conflict period?  Damages for lost shareholder value? The mind boggles.

AAR's emergency rebranding meeting yesterday

Maybe this is just the ticket for an excuse to rebrand AAR to ‘Allens’?  Which is basically what we all call it, anyway.  More news as it comes to hand.  Allens spies: keep the good stuff coming.

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