Senate hearing wants ASIC to look into ARU

Rugby Australia's secret dealings with the Melbourne Rebels could be laid bare after a senate inquiry called on Australia's corporate watchdog to investigate the rugby governing body.

WA Liberal Senator Linda Reynolds (r) was scathing of Rugby Australia at the senate hearing.

WA Liberal Senator Linda Reynolds (r) was scathing of Rugby Australia at the senate hearing.

The senate hearing wants the Australian Securities and Investments Commission to investigate deals done between RA (formerly the ARU) and the Melbourne Rebels that ultimately led to the dire financial position of Australian rugby and the axing of the Western Force.

In addition, it wants ASIC to investigate RA's annual reports.

The senate inquiry also said that the decision to axe the Force was a "foregone conclusion" that was probably made on April 9, 2017 - four months before the franchise was officially culled.

The inquiry, which was launched in the wake of the Force's axing, was concerned about the manner in which the ARU sold the Melbourne Rebels licence to Andrew Cox's Imperium Group in 2015.

It heard evidence that the licence was transferred to the Imperium Group debt free, meaning the ARU forgave $13 million in loans to the Rebels, as well as paying off other debts.

It also heard evidence that the ARU agreed to pay the Melbourne Rebels an additional $5.5 million between 2016 and 2020.

The inquiry described it as a "poor process" and a deal that "provided virtually no benefit to the ARU and disadvantaged the other members of the ARU who could not benefit from the additional funding that was provided to the Melbourne Rebels."

"The committee was very concerned by the seemingly generous terms the ARU negotiated to transfer the licence," the report said.

"The committee cannot understand the basis on which substantial additional funding was provided and why no conditions were placed on the use of the funds."

Because the Rebels were privately owned by Cox, the ARU would have faced serious legal ramifications if they had tried to axe the franchise.

And when Cox transferred the licence to the Victorian Rugby Union for $1 in early August, it made it impossible for RA to axe the franchise.

But because Rugby Australia owned the Force after forming an 'Alliance' agreement with them in June 2016, the Perth-based side could be axed without legal ramifications.

RA claims it was in negotiations with the Rebels about buying back the licence up until August 2017.

But evidence tabled to the senate hearing suggested the ARU actually helped Cox transfer the licence to the VRU in order to ensure the Rebels survived.

The senate report said the ARU appeared to have considered the possibility of removing a team from the Super Rugby competition as early as August 2016.

"... and it seems likely that the option to remove an Australian Super Rugby team was being actively considered by ARU management at the same time that the Alliance Agreement was being negotiated with the Western Force," the report said.

RA claimed it would have gone bankrupt by 2019 if it didn't axe one Australian franchise.

WA Liberal senator Linda Reynolds, who launched the senate inquiry, was damning of the ARU.

"These captains of industry who are the custodians of this great sport have driven it to the brink of financial insolvency," senator Reynolds told parliament.

KEY RECOMMENDATIONS

*That ASIC reviews the evidence received by the committee regarding transactions involving the Melbourne Rebels.

*That ASIC reviews the financial circumstances reported in RA's annual reports against the evidence presented to the committee.

*That the Australian Sports Commission consider an additional principle to be introduced in the Commission's Sports Governance Principles in relation to National Sporting Organisations' commitment and duty to player welfare

*That RA immediately transfer all intellectual property and trademarks associated with the Western Force to RugbyWA.

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