Demons claim short-lived CEO lacked skills needed for the job and misled their board

Sacked Melbourne chief executive Paul Guerra made misleading statements to the Demons’ board and presented it with unrealistic financial forecasts – in which a $3 million revenue deficit was later identified – the club claims in court documents.

The former CEO also didn’t understand the club’s concussion reporting obligations and misled president Steven Smith about his whereabouts, according to the Demons’ statement of defence lodged in the Federal Court last week.

Guerra was sacked by the Demons’ board in April after just seven months in the role, which had included an annual salary of $757,000 and bonuses. He received a six-month termination payout.

The former chief executive last month launched Federal Court action against the club, alleging he was dismissed after raising concerns about widespread underpayment of administrative staff and complaining about the club’s use of a consultancy firm linked to former premier Daniel Andrews.

In the defence documents, the Demons reveal they first considered sacking Guerra within three months of him starting in the position, and claim that he “lacked the financial and management skills” for the job.

Guerra, who was appointed in April last year but did not begin in the job until early September, was allegedly warned by the board, even before he had officially started, about comments he made in the media. He has been contacted by this masthead for comment.

The club also alleged Guerra failed to properly manage a conflict of interest with his board position at Racing Victoria and the club’s push to construct a new base at Caulfield Racecourse, and claimed that he leaked sensitive club information to the media.

“Guerra’s financial forecasts presented to the board were questioned at the time as unrealistic, proved to be unrealistic and were re-forecast thereafter after identifying a material revenue deficit in excess of $3 million,” the club alleges in the court documents.

“He provided unrealistic financial reporting; made misleading statements about his whereabouts to Smith; failed to understand the club’s obligations and responsibilities in relation to concussion reporting; failed to identify and appropriately act on reputational risks for the club; and failed to identify and appropriately act on probity risks for the club.”

Having considered removing Guerra in December, the board again considered his position at a March board meeting, saying they still had the same concerns as in December but also that Guerra had continued to breach the media policy, leak to media and act outside his “scope of authority”.

Guerra also “continued to demonstrate poor financial reporting; and made misleading representations to the board,” the statement claims.

Two board members were tasked with reviewing Guerra’s position. They reported at the April meeting, at which the board unanimously agreed to sack him.

The statement said the club chose to sack Guerra because he “lacked the financial and management skills necessary to perform important aspects of the position of CEO of the club; had demonstrated a lack of judgment necessary for the position of CEO of the club, including by repeatedly disclosing information to the media and failing to manage a conflict of interest appropriately; had misled the board and its directors about material matters on several occasions; and had acted unilaterally and outside of his authority on several occasions, including in breach of express directions from the board.”

The club rejected Guerra’s claim that his termination was connected to concerns he said he raised about underpayment of staff.

Guerra had said in his statement of claim that he had raised underpayment of staff and the use of the wrong industrial awards at a meeting with AFL chief people officer Sarah Fair in October last year.

“The meeting was an introductory meeting that Fair attends with all new club CEOs as part of an induction process arranged by Mr Simon Kelleher (general manager, club finance, performance and growth, AFL),” the defence document says.

“Beyond typical induction matters, the conversation was primarily about Guerra’s proposed changes to the executive team at the club.”

They claimed that emails after the meeting backed up the fact the meeting was about organisational structure and there were no references to incorrect awards.

The club said Smith only became aware of the potential underpayment of staff issue and a review of awards and payment that was being undertaken by Marriott in March this year.

An email from Smith to Guerra three days after the board meeting outlined the club’s plan to deal with the issue.

“On the potential underpayment issue, the board did not make a resolution because the whole exec was present, but where there is a wage-compliance issue such as this, it is fundamental that there is a paper prepared for the board.

“In this case, the issue has been informally raised in the PCNR and ARI Committees and now at board. I am sure Sarah will have a good handle on it, but from the board’s perspective, we need to know what we think the issue is (and the impact of recent changes to the law), what the implications are, risk mitigation steps, legal advice (I understand KL Gates is involved), next steps (audit, retrospective claims), comms plan and potential cost and other implications.”

The documents say Marriott addressed the board on the underpayment issue in April and Guerra made no comment on it. Marriott told the board one affected staff member who was neurodiverse also received Centrelink payments and the club was working with them to ensure any potential back pay did not affect Centrelink payments.

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