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The Dick Smith drama continues: 22 jobs cut, employees underpaid, and investigations underway

  • News
  • February 9, 2016
  • Elly Strang
The Dick Smith drama continues: 22 jobs cut, employees underpaid, and investigations underway

After a month of analysing Dick Smith’s books, receivers of troubled retailer Dick Smith have uncovered some discrepancies in staff pay.

Receiver James Stewart said the investigations had found that up to 3200 current and former employees of the business may have been underpaid through their annual leave entitlements.

This potentially dates back as far as 2010, he says.

The underpayment issue doesn’t affect any current or former employees in New Zealand.

The receivers estimate this could be up to A$2 million, so the issue has been brought before the Fair Work Ombudsman and the Shop Distributive and Allied Employees’ Association.

With the company’s New Zealand arm, BusinessDesk reports almost 200 New Zealand staff are owed $353,000 by the company.

As well as this, Dick Smith’s chief financial officer Michael Potts has lost his job as part of a restructuring effort by the receivers. A total of 22 support office jobs, including Potts, will be lost.

This follows former CEO Nick Abboud, who left a week after the chain went into receivership. Former Woolworths executive Bert van de Velde will act as the interim CFO.

Adding fuel to the fire, an Australian senator has called for an independent inquiry into the Australian Securities and Investments Commission, a corporate watchdog.

He said the public needs answers as to how a private equity firm “made a killing” by floating Dick Smith Holdings for A$520 million in 2013. The deal was called “the greatest private equity heist of all time”.

"How on Earth did this happen?" Senator Xenophon said.

“There seems to have been a systemic failure of our corporate regulatory structure whether it's the case of the watchdog, the auditors, or the private equity firm which made a killing when they floated Dick Smith just two years ago, whether they should be held accountable.

But the fact is, this shouldn't have happened. The employees of this company deserve answers."

Dick Smith recently published a letter on its New Zealand site to its customers, promising to win back the trust of its customers under new management through great products, prices and service.

But the trust of its customers will be hard won if Facebook comments about the letter are anything to go by.

Customers are clearly still fuming at the company over the possibility of being left in the lurch with vouchers, returns and lay-bys.

“This letter with an invitation to 'shop as normal' is a real slap in the face for customers like us with gift vouchers you'll no longer honour,” wrote one customer.

Another said, “You have got to be joking. I bought a computer online in DSE New Year sale. Dick Smith has said they won't be sending the computer or refunding my money. They referred me to the receiver who won't reply to my emails. Do Not Trust Them. You would be sucker to believe this letter.”

However, receivers still believe the New Zealand operation is profitable, and would be an attractive prospect to be bought by another business or buyer.

More than 40 parties have come forward to express interest in purchasing the company, and a shortlist is now being put together.

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