Insurance broker Steadfast Group Ltd (ASX:SDF) – the subject of an overnight Four Corners investigation – has seen $600M wiped off its value as the company dips -12% in afternoon trades.
At the centre of the catalyst behind this sell-off is the Australian Broadcasting Corporation (ABC), which became the subject of a Steadfast announcement released on Monday shortly after it declared a trading halt.
“Steadfast Group refers to matters raised by the ABC in this morning’s media,” the company wrote on Monday, referring to an article that went live before the nightly broadcast.
“We refute the allegations made and are disappointed that important information has been selectively presented. Steadfast provided the ABC with information on 29 August and 4 September 2024, which was not included in the coverage to date.”
Clearly, that position wasn’t enough to persuade the market, looking at today’s sell-off. (In Steadfast Group’s defence, it’s worth noting the company still boasts a $5.8B market cap as at lunchtime on Tuesday.)
Steadfast deny all allegations broadcasted in the report and contained within ABC articles.
what are the allegations in question?
Monday night’s Four Corners report ultimately alleged Steadfast Group has been engaged in something of a cartel where relating to strata management and apartment sales.
The report alleged Steadfast has ties to a number of other companies involved in the space that sees the cartel effectively giving each other contracts for work against apartment owners’ best wishes in the presence of cheaper offers from unconnected suppliers and contractors – in other words, anticompetitive behaviour.
A large part of that involves another company called CHU Insurance. Australian Apartment Advocacy (AAA) has since suspended CHU insurance – a long-term sponsor of AAA – following the Four Corners report.
Much of the allegations of cartel-like behaviour relates to funnelling apartment owners into insurance contracts with a company closely tied to Steadfast – but which wasn’t disclosed.
The involved companies would then, allegedly, give each other kickbacks without apartment owners’ knowledge. A number of owners from across the nation provided interviews for the report.
The failure to inform apartment owners of these reported ties is the general thrust of the allegations placed against Steadfast – which, if substantiated in a court of law, would pass the threshold of illegal behaviour.
Steadfast CEO Robert Kelly AM was interviewed by reporters and denied allegations, telling the ABC its reporters had been lied to.
“Steadfast is naturally concerned about any case that may fall short of our standards and expectations,” Kelly said on Monday ahead of the broadcast.
“Should instances be raised that require further action, we will of course investigate and act to rectify any shortfalls in our processes and procedures.”
Steadfast did issue at least one apology relating to at least one allegation of misconduct that comprised part of the Four Corners investigation broadcast on Monday evening.
Perhaps most crucial to the decline in the company’s share price is the involvement of ACCC chair Gina Cass-Gottlieb in the Four Corners report.
The competition regulator has called for a ban on strata insurance commissions in Australia – the main way Steadfast, for its part in the network of companies, makes money.
SDF last traded at $5.27.