According to Fenn, “Downer is still investigating the issue, so details are preliminary. Misrepresentation of the contract performance is something we take very seriously, and we are looking at very closely. Whether that meets the legal definition of fraud is something we will be investigating.”

(That said, there is no suggestion that the manager in charge of the account ran off with money, although he has left the company. Nor is there any suggestion that senior management had any inkling of the problem, which it said was discovered on Monday night.)

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Fenn explains that this particular contract involved tens of thousands of small work orders each month, so no one invoice stood out. The usual practice is to track work done as the costs come, and book revenue accordingly.

It seems the multiple work orders rendered the accounting more opaque.

What must be difficult for shareholders to understand is how the $170 million in revenue per year, which was being booked over the three-year period, wasn’t matched with the cash coming through the door and into the bank account.

Had this happened over, let’s say, a six-month period, it might be more understandable. But how no-one noticed it over three years is a head scratcher.

Understandably, the group of investors that called into Downer’s explainer call on Thursday morning was keen to receive assurances that no other contracts risked the same accounting fate.

Fenn was adamant that this was a one-off, and that the processes had been checked.

Perhaps unfairly, this reminded me of the early statements from Medibank. What began as a “cyber incident” with assurances from Medibank that no customer data was compromised, evolved daily into the situation we have today, where all customers have had their data stolen and much (like mine) has been posted by thieves on the dark web.

The reputation of Medibank and its executives have been somewhat cushioned by the fact that they were victims of a bunch of nefarious criminals – so blame has neatly been focused on bad actors.

Shareholders waived through Medibank’s executive remuneration package only a few weeks ago on the basis that executive culpability hasn’t been established.

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Meanwhile, Downer’s board must deal with the thorny issue of its own remuneration plan.

Only last month, the company received a protest vote – or first strike – against its remuneration report as shareholders argued executives had received the lion’s share of their short-term bonuses even though profits had fallen.

Now that the corporate snafu will result in profits for the past three years being even worse than reported, the board seems to have shot itself in the foot by defending the lucrative pay packages.

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