Merino breeders welcome senator interest in one-way mirror incident

Terry Sim, September 15, 2017

AWI CEO Stuart McCullough

MERINOSELECT ram breeders have questioned Australian Wool Innovation chief executive officer Stuart McCullough’s account of a research focus group observed by AWI chairman Wal Merriman behind a one-way mirror.

On June 15 this year Mr Merriman, attended and asked to join an AWI-commissioned focus group of MERINOSELECT breeders invited to Sydney to discuss sheep genetic tools and investment. Despite not being invited by the Axiom Research researchers nor AWI staff managing the project, Mr Merriman was allowed to observe it behind a one-way mirror.

The MERINOSELECT breeders invited to the focus group believe several issues raised in Mr McCullough’s letter sent to Australian wool growers on September 13 to “lay the facts on the table and give a clear understanding of what occurred,” needed clarification, potentially via a broader inquiry.

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Queensland Nationals Senator Barry O’Sullivan, the co-chair of the Senate Rural and Regional Affairs Committee, has confirmed AWI is scheduled to be questioned on October 23 and 24 about specific issues growing out of the last estimates and on the one-way mirror focus group incident. He said the  AWI focus group incident was not appropriate, “particularly when we’ve had advice that the group had been assured of anonymity and confidentiality.

“They were reluctant starts in the group in the first place and concerned about issues of commercial-in-confidence,” he said.

“I don’t think it would have gone ahead had they known or discovered that someone was watching through a one-way mirror.

“The very nature of using a one-way mirror is not a very transparent behaviour.”

Merriman’s duty and requests to attend

In his letter this week, Mr McCullough said Mr Merriman, who is also co-principal of the Merryville Merino stud, was requested by some breeders to attend the focus group. The AWI CEO said Mr Merriman feels a strong duty to have a good understanding of the attitudes and feelings of growers and shareholders to AWI direction and strategy, particularly on contentious matters.

However, all the MERINOSELECT breeders who attended the June 15 session told Sheep Central they had not asked Mr Merriman to attend. Willandra Merino Stud principal Ross Wells, who was invited to another Axiom-run focus group for traditional ram breeders on June 16, said he had notified Mr Merriman of the focus groups, but claimed he did not request the AWI chairman’s attendance.

The MERINOSELECT breeders said the invitation of some breeders did not entitle Mr Merriman to attend their focus group uninvited.

“He attended the workshop that no-one requested he come to?” Trigger Vale Poll Merino Stud principal, Andrew Bouffler said.

The breeders queried why Mr Merriman attended the MERINOSELECT focus group and not others in the research series, which involved MERINOSELECT breeder clients in the afternoon, and traditional ram breeders and their clients the following day.

Leahcim Merino Stud principal Andrew Michael said Mr McCullough’s letter “is a play on words.

“I’m pretty sure none of the MERINOSELECT breeders would have wanted him (Mr Merriman) at the first focus group,” Mr Michael said.

“In real terms, we are the victims here; we are not the ones creating this problem.”

Karbullah Poll Merino principal Mark Murphy said AWI was “trying to cover their tracks.”

“They’ve had two and a half months to come up with a story and they are trying to back-peddle now.”

Toland Merino Stud principal Phil Toland said he would understand if Mr Merriman had attended the traditional breeder focus group on June 16, but not the MERINOSELECT session.

“It’s a good thing that they (AWI) wrote a letter, but some of the information there is questionable, that’s all.”

Participants knew AWI was there?

Mr Michael disputed Mr McCullough’s statement that breeders “knew representatives from AWI were observing the focus session, without participating”. Only two of the eight MERINOSELECT breeders, Jim Litchfield and Mark Mortimer, have admitted this.

“That’s just not right, there was no way we knew that AWI were there,” Mr Michael said.

He said there had been no apology from AWI over the event and the issue now needed to be taken up by the big commercial wool growers.

Woodyarrup Merino and Poll Merino Stud principal Craig Dewar was disappointed he had travelled to Sydney for a confidential meeting at which Mr Merriman’s presence was not declared by researchers.

Research focus group style is common

In his letter, Mr McCullough said AWI has never held a focus group in the style of the June 15 session run by Axiom Research — where observers, including client representatives, watch and listen behind a one-way mirror while a facilitator engages participants in a meeting room. He also said the AWI board and CEO were unaware the focus group was being conducted in this fashion.

Sheep Central has been told Mr McCullough, in approving the project would have had access to its operational detail in the proposal paperwork and Axiom contract. AWI has funded similar focus groups which used this common commercial focus group approach, including in China as part of The Woolmark Company’s Mothers and Babies program, where participant reactions were recorded.

Researchers’ decision for AWI chairman to observe

In his letter, the AWI CEO declared the researchers directed Mr Merriman to go behind the one-way mirror rather than sit with the invited breeders, and described the AWI chairman as an “AWI representative observer”.

However, Axiom Research has not declared whether Mr Merriman was someone “directly involved” in the research. The Australian Market & Social Research Society ‘s Code of Professional Behaviour states that participants’ identifiable research information must not, without their consent, be revealed to anyone not directly involved in the research project and that permission to observe an interview/group discussion by a third party must be gained from the participant in accordance with the code.

Mr McCullough also offered no explanation why Mr Merriman continued to observe the focus group, without notifying the breeders or leaving.  The AWI CEO said Axiom Research accepts its oversight not to inform the focus group participants of Mr Merriman’s arrival or presence as “inadvertent error” and the company had written to participants to apologise. However, 12 weeks after the event, some of the breeders said this week they had not received an apology from Axiom Research or AWI.

Mr Bouffler believed Mr Merriman as an experienced director and chairman since 2008, on knowing there had not been disclosure of his presence, should have walked out.

“It’s not an excuse that they (the researchers) dropped the ball.

“The ball was firmly in his court.”

AWI chairman ‘clearly bound’ by confidentiality

Mr McCullough’s letter said Mr Merriman was “clearly bound” by confidentiality as were all other AWI representatives at the focus group session. However, Mr Merriman freely discussed the focus group with Sheep Central and Mr Bouffler said the AWI chairman approached him at the Australian Sheep and Wool Show in Bendigo to discuss the research meeting.

“He (Mr Merriman) didn’t ask me too much about it, I think he was just trying to find out if I knew he was there or not.”

No contravention of fiduciary duty

Mr McCullough said Mr Merriman’s presence at the focus group session was in no way a contravention of his fiduciary duty as an AWI board member.

However, Mr Michael believed Mr Merriman, acting as an AWI board director “totally independent” of his Merino breeding interests, should have waited for the research report.

“I had no issue with Neil Judd, but it is Wal’s other interests and because he is chairman of that board, he should have just had patience and waited to hear what the outcome was.”

Senator interest welcomed by breeders

The MERINOSELECT breeders have welcomed senator interest in the focus group incident.

“We’ve all got to be accountable for what we do,” Mr Michael said.

Mr Bouffler said potential “grey” areas in focus group accounts are beginning to emerge and the integrity of the MERINOSELECT breeders was being challenged.

“I would welcome an independent body, whether it is the Senate or not, looking into this matter, to make sure that the honest truth comes out.”

Mr Murphy said the issue needs to be taken further and Mr Toland said “any transparency is a good thing”, especially about the sequence of events.

Centre Plus Merino Stud principal Mark Mortimer said any organisation spending grower and government money needs to be prepared for that kind of scrutiny.

Broader focus group inquiry needed

Western Australian Merino stud breeder David Thompson, who was not part of the focus group research, believes the MERINOSELECT breeders deserve an apology from AWI over the focus group.

“They seem to be trying to shift the blame to Axiom for not informing the group.

“I don’t think he (Mr Merriman) should have been there at all.”

He welcomed analysis of the focus group session by the Senate Rural and Regional Affairs Committee provided it covered all those involved.

“They have to be able answer under oath and I think they should cast the net fairly wide and get (AWI genetics and reproduction program manager) Neil Judd there as well.

“The question needs to be asked why he resigned,” he said.

“We need to find out did the CEO know about it and why wasn’t the chairman writing the letter to explain his own actions?”

Mr Thompson said if Senate committee did not have the scope, he wanted a broader inquiry into the event encompassing the AWI board’s role.

WoolProducers Australia chief executive officer Jo Hall said wool growers need to be satisfied that Mr McCullough’s letter addresses their concerns around the incident and the wider operations of AWI.

“In saying that WoolProducers do not believe that the letter sent from AWI adequately addresses the issues around their governance that have arisen since this incident was publicised.”

Former AWI board member John Keniry said the June 15 focus group was “inappropriate.”

Government and minister quiet on man-behind-the-mirror

A Department of Agriculture and Water Resources spokesperson said the sheep breeders’ focus group is a matter for wool growers and stud breeders to raise with AWI.

“It is important that if wool growers are asked to provide confidential feedback to AWI to help guide research priorities, that the confidentiality is respected.

“AWI has recognised that this action was not a normal occurrence and has publicly stated that it will not occur again,” the department statement said.

“The Statutory Funding Agreement (SFA) between the government and AWI outlines the expectations of the Commonwealth with regard to the commitment and expenditure of public monies, and to consultation with industry in setting research and development priorities.

“The operation of the SFA is not impacted by the recent occurrence.”

A spokesperson for the Minister for Agriculture and Water Resources Barnaby Joyce also said the incident was a matter for wool growers and stud breeders to raise with AWI, and that it is important wool growers’ confidentiality is respected.

“The minister understands the AWI chairman has said the man-behind-the-mirror will not happen again.”

MERINOSELECT focus group participants Jim Litchfield and Lynley Anderson had no comment to make about the AWI letter.

Click here to read Mr McCullough’s letter to wool growers.


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  1. Paul Warner, September 18, 2017

    The City Group Rooms advertises “spacious viewing rooms” “with mirrored viewing” and live CCTV monitors. The focus groups can be viewed live from anywhere in the world. All sessions can be recorded and web-casted.

    The question needs to be asked:
    – who was in the viewing room?
    – how many recordings were made?
    – who was issued recordings of the session?
    – was the session viewed offsite?

  2. Jim Weibye, September 18, 2017

    Why would AWI spend Australian wool grower funds employing an American research company to conduct the focus groups? By all accounts participants were not very impressed by the sessions.

    Perhaps if AWI had deigned to employ one of the many Australian market research companies, the sessions would have been conducted the Australian way.

  3. Jim Weibye, September 17, 2017

    Do we have a Merino Mafia? There certainly appears to be a ‘Code of Silence’.

  4. Paul Warner, September 16, 2017

    Senator O’Sullivan might also ask that with the current higher wool prices and the yield from the Wool Tax significantly increasing, should the issue be addressed, or should we let AWI die of bloat?

    He might also ask why Merriman and McCullough skite that a $2bn wool industry is now $3bn. Is it to imply it’s due to their breath-taking skills?

    He might also ask that as China now buys 75 percent of Australian wool, if China stops buying would the industry be worthless?

    Senator O’Sullivan might also revisit the previous outrage where huge sums were squandered on ex-staff in the restructure to seek a more satisfactory explanation, including exactly how the size of each gift was calculated.

    For after being paid large sums comprising all statutory entitlements, cloaked by the term “ex-gratia”, McCullough, with Merriman’s approval, gifted the well-paid staff hundreds of thousands; sums out of all proportion to their contribution to the wool industry.

    Merriman thought the gifting of these colossal “ex gratia” sums was a “a good deal”. As a wool grower, who for years had to live on the smell of an oily rag, I thought quite the opposite; that this was the antithesis of a commercial deal and that no wool grower would spend his own money in this manner.

  5. Gordon Davis, September 15, 2017

    The AWI board selection committee – Wal Merriman and two other AWI board members. What a great governance structure – the board picks the board, or should I say Wal picks the board. Levy payers are only given a choice to endorse Wal’s pick. Come on, please AWI, even you must know this is wrong. Put in a transparent board selection structure and good governance.

  6. Paul Warner, September 15, 2017

    Senator O’Sullivan at the October estimates will no doubt check the probity of McCullough’s letter, for it seriously conflicts with the views of some participants.

    He will no doubt ask why the CEO and chairman, normally only too ready to engage with the media, suddenly disappeared from view and became uncontactable, in spite of their duties.

    Senator O’Sullivan will no doubt ask why some stud masters were hesitant to participate amid concerns about issues of commercial in-confidence.

    Why McCullough informed thousands of wool growers that Merriman’s presence was requested by some participants, when all to a man deny inviting Merriman.

    Why Merriman only observed the MERINOSELECT stud master’s meeting and not the other three.

    Why the only focus group participants favoured with the knowledge that AWI staff were watching from behind the mirror were Litchfield and Mortimer.

    Why Litchfield and Mortimer did not share this fact with the other six participants.

    Why Axiom Research will not reveal whether Merriman is directly involved in the research.

    Why AWI and Axiom, while admitting “inadvertent error” three months later have not apologised to all participants for the breach of trust attached to the meeting.

    Why Merriman as a long-serving director, on knowing there no disclosure of his presence did not a) let the group know or b) exit.

  7. Jane Overnewton, September 15, 2017

    Let the wool growers make their own mind up at the next election. AWI needs to undergo a complete review and show full transparency to the members.

  8. Simon Wells, September 15, 2017

    The AWI “subterfuge letter” appears to be yet another clumsy attempt at spin or media management, riddled with questionable “facts”.
    It continues the theme of blurred stories so prevalent in this scandal, while introducing the word ‘subterfuge’. What an apt title for this saga — ‘Subterfuge in Sydney’.
    Curiously the letters author McCullough, had plenty of time to compose his missive, but when media attempted unsuccessfully to make contact, the lame excuse was “in China”. No phones in China? Perhaps Siberia is a better destination.

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