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June 1, 2015

DHR International Australia - the "racy departure"

Update June 1, 2015: added additional newspapers covering this story.

More information has come to light from the Australian media on DHR International and it status in Australia.

We've written before about DHR's current consultants in Australia (Ben Burrell, Margaret Dillon and  James Gathercole) being listed on the DHR web site as working in DHR International's Singapore office but really being in Melbourne or Sydney, Australia. We've written about potential consultants who were asked to join DHR International in Australia but were told by "shady" DHR leaders they would have to "pretend to be working out of Singapore".

Well, this article from the Sydney Morning Herald makes for some interesting reading. A similar article can found in other leading Australian newspapers such as the Age in Melbourne, Brisbane Times, Canberra Times and WA Today.

The article gives us some answers to what's been going on down under and explains that DHR:
  • withdrew $293,264 from DHR Australia's bank account in November 2012  and sent it offshore, presumably to Chicago
  • signed off on the financial statements that DHR Australia was solvent in March 2013
  • despite being solvent, claimed to go "belly-up" in Australia in 2013 so that it could fire the DHR Australian team less than a month later in April 2013 and then did not pay them their entitlements
  • removed equipment from the DHR Australian offices, including all the computers and legal records, and sent these to (presumably South) Korea - they "shut up shop so quickly and completely even staff peanut butter was taken"
  • transferred Australian clients to another DHR entity in Hong Kong, including a contract with a paint company called Wattyl
  • had a "racy departure" from Australia, and their creditors and liquidator are still chasing them
  • stripped the assets of the business and did a "phoenix job"
  • continue to operate in Australia, have Australian phone numbers but have "no living Australian corporate incarnation"
  • are completing assignments for Australian clients searching for Australian candidates for Australian-based roles, but operate out of the "tax haven of Singapore"
  • are relying on the Australian taxpayer to pay for employee entitlements: Kevin Kummer of DHR sent an email to Australian employees on April 20, 2013, saying: "As of April 2nd DH International ceased operations and terminated all employees. As such we want to make sure we take the correct legal steps to shut down the business to ensure all former employees are properly paid either by DH or by the Australian government scheme Fair Entitlements Guarantee". According to LinkedIn, Kevin Kummer worked for DHR between January 2012 and March 2014, leaving as "Vice President of Accounting & Finance"
The headline of this Sydney Morning Herald article is "DHR International leaves bill with Australian government". Given that the Hoffmann family claims to be worth $300 million and it appears that DHR International Australia had enough assets in Australia to pay its employees their entitlements, how can DHR International get away with sending all the assets to Chicago and Korea and foisting their obligations onto the Australian taxpayer?

Do the Australian IRS and SEC care about this? Do they care that DHR are still operating in Australia but have no corporation there? Are DHR paying taxes in Australia?

"In the case of the Chicago mob [DHR International], the staff might have been paid out, were it not for the transfer of the assets before the demise of DHI. Instead – and this is the broader angle – the Chicago mob is trying to rely on the Australian taxpayer to fund its employee entitlements."

As the Sydney Herald journalist puts it: "we call upon readers now to consider whether their taxpayer dollars should be deployed in this exercise of paying out employees of what is ultimately a large Chicago firm, which has already obliterated its obligations to the Australian Tax Office via an administration, but which is poised to arise phoenix-like from the ashes of its predecessor as one of the big players in the world of executive recruitment".

We note that the Australian journalist tried to get a comment from a (female) DHR executive: "Executives of this entity were contacted for comment but declined to speak. One hung up on your humble essayist but not before saying she could not talk because legal claims were afoot." Well, at least we know we should go looking for more lawsuits against DHR in Australia.

And what does this mean for CTPartners in Australia? When DHR International acquire CT, what will happen with their Australian operations (Melbourne, Perth and Sydney)? Will all of the team  of 16 consultants have to pretend to be in Singapore? Or will DHR's acquiring CTPartners allow DHR to operate "above board" in Australia again, avoiding the regulators, liquidator and lawsuits that are "afoot"?

Tip of the hat to the readers that sent us an email or comment alerting us to the original Australian news story. We suspect there's more information: if you are a former employee or creditor, please email us. You can use an anonymous email service if you like.

7 comments:

  1. Great story! You'll find that the paper is called "The Sydney Morning Herald" not the "Sydney Herald". The same story is printed in the SMH's sister publications in Melbourne, "The Age"; in Canberra, "The Canberra Times"; in Brisbane, "Brisbane Times", and Perth, "WA Today".

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  2. How can the Australian government allow this? They allow DHR with their hundreds of millions of dollars to leave the country and not pay their employees, taking lots of cash and property with them? To add insult to injury, the government then picks up the tab! Then DHR acquires CTPartners and re-enters the Australian market.

    Who would be stupid enough to work for DHR?

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  3. CT Partners Australia and DHR International are a good fit. CT acquired Johnson Executive in Australia, a small firm where there were allegedly similar issues to DHR. Before the sale, Jason Johnson allegedly fired John Colvin the Chairman of the firm.

    See http://www.afr.com/news/colvin-claims-ulterior-motive-in-job-termination-20140323-ixbqj "Former Johnson Executive Search chairman John Colvin claims he was wrongfully terminated and is entitled to over $1 million in damages after he lost his job in October 2013."

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    Replies
    1. What happened with this Colvin/Johnson lawsuit? Who won? Or did they settle?

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  4. How disgraceful. I hope no clients in Australia or anywhere else that matter would be stupid enough to work with an unethical firm like DHR International. You are only as ethical as the company you keep!

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  5. Greed is greed.

    Evil is evil.

    DHR is DHR.

    ReplyDelete