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EXCLUSIVE: Former Dick Smith CEO Facing Bullying Claims

EXCLUSIVE: Former Dick Smith CEO Facing Bullying Claims

Desperate to prove himself after being passed over by Myer, the former CEO of Dick Smith Nick Aboud is today facing serious questions, including possible action by former Dick Smith management who have accused him of “bullying” staff as things got desperate at the mass retailer.

Aboud has also been accused of “blatantly lying” to supplier’s days out from the collapse of the mass retailer who now owe suppliers more than $280M for stock they have no chance of getting a return from.
 
ChannelNews has been told that Aboud who quit the retailer earlier this month is set to be retained by Anchorage Capital the Company that pocketed $320M out of the float of Dick Smith. 
 
According to sources several Dick Smith head office staff have move to lodge complaints with Fair Work Australia.
 

Earlier today Dick Smith management placed full page advertisments in national newspapers advertising that Dick Smith Stores were “Open”. 


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Last week buyers at Dick Smith were ordered not to talk to the media with all existing buyers forced to sign none disclosure agreements.
 
Questions have also been raised as to happened to millions of marketing and Co-Op dollars that Aboud and his management team extracted from suppliers running into the end of the 2015 financial year. 
  
According to senior Dick Smith management Aboud ran a blackboard at the Company’s NSW headquarters that listed how much additional money, buyers could extract from vendors for marketing activities, between May and June 2015.
 
We know that Aboud and former marketing Manager Neil Merola met with senior executives of several consumer electronic suppliers in an effort to shore up cash flow by extracting additional revenues from suppliers.
 
The CEO of one major supplier was asked for an additional $2M in CO-OP dollars. Several suppliers were told that their products could be pulled from shelves if they did contribute additional support.  
 
Back in June Marketing Director Neil Merola categorically denied that Dick Smith was trying to extract above average Channel dollars from vendors.
 
Dick Smith’s buyers pushed them to bring forward anything that could support earnings, such as rebates for advertising or discounts on stock, in the past year.
 
On 16 Jun 2015 I sent the following email to Neil Merola “We have been told by several vendors and we have had it confirmed by one of your buyers that Dick Smith is asking vendors to put up large sums of money to get their products ranged and marketed by Dick Smith, with the money having to be agreed by June 30th.
 
With one vendor you recently agreed terms and then your buyer came back and asked for an additional 20% margin or a “large payment” that has to be paid to Dick Smith by June 30th.
 
Several of your suppliers have told me the same story including both big brand and small brand vendors. 
 
The last time I raised this with you. I was told that my facts were plain “wrong”.
 
We have now seen an email between Dick Smith and a major vendor. What I am doing is giving you an opportunity to comment.’
 
Merola came back claiming that our claims were “pure fiction”.  
 
Within days of the receivers taking control of the Dick Smith electronics chain Aboud was in contact with Anchorage Capital management.
 
The former Chandlers executive who is known for his questionable management style has not commented despite leaving staff, suppliers and customers out of pocket.
 
Real Estate agents in Mosman claim that Aboud is looking to place his multimillion dollar beachside property on the market.
  
Abboud, has told Anchorage Capital executives that he was shocked by the appointment of receivers.
 
The Australian Securities and Investment Commission (ASIC) has received several calls and written correspondence calling on the Federal Government organisation to investigate what went wrong at the mass retailer.
 
Some are calling for the Federal Police to be called in to investigate.
 
Aboud is believed to be concerned that it is his signature, that is on a lot of the documents relating to the performance of Dick Smith stores prior to the float and not those of Anchorage Capital executives who benefited from the float.
 
There are also claims Abboud relied on provisions in Dick Smith’s accounts to support the underlying operation’s performance in the first few years. 
 
He was hoping, that he could build momentum in that time to sustain the operation’s performance once these provisions were expended claim s former Dick Smith senior management. 
 
Anchorage Capital Partners finally broke cover on Friday to defend the performance of the retailer under its stewardship.
 
A spokesman said Anchorage managing director Phil Cave stayed on as chairman of Dick Smith for 12 months after its public listing in December 2013 to ensure continuity.
 
He said in December 2014 the company still held more than $95 million in cash and remained debt free.
 
Dick Smith shares were suspended at 35?.
 
Unlike Abboud, who held on to his 6.5 per cent stake in Dick Smith, Anchorage sold its remaining 20 per cent interest in September 2014 at $2.22, crystallising a $370 million profit from its two-year investment in the business.
 
Abboud’s financial interest in the business has plummeted from $34 million to about $5.4 million.
 
When asked about cash flow and Dick Smith ability to pay suppliers Aboud allegedly said “There are no issues, we have everything under control, suppliers will be paid. Money has been tight running into Xmas I can guarantee you will be paid”.
 
One of the Companies hard hit is Ingram Micro who is exposed for over $14M.
 
Since acquiring Tech Pacific, Ingram Micro Australia believed to have lost over $200M.
 
Matt Sanderson the CEO of Ingram Micro Australia has not returned our calls.
 
Also exposed is Melbourne based distributor Synex who is owed over $18M.
 
According to the CEO of Synex Kee Ong, the collapse of Dick Smith is set to have a major impact on both the IT and consumer electronics industries, with several industry executives claiming that several small distributors “will go to the wall”.
 
At the recent creditors meeting not a single question was asked of voluntary administrators McGrath Nicol.
 
Over 100 interested parties representing over 350 unsecured creditors, owed about $250 million, including trade creditors, landlords and some 330 employees, attended the meeting at the Wesley conference centre.
 
About 3300 staff are owed $15 million in annual and long service leave ?as well as wage entitlements.
 
McGrath also warned that more claims could arise as the Dick Smith saga unfolds.
 
Mr Hayes acknowledged the lost deposits and gift cards that are no longer redeemable by customers, noting they were “the legal reality facing creditors”.
 
There are 200 unsecured trade creditors, 150 landlords and an unknown quantum of customers owed roughly $250 million.

 

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