The Australian produced a vicious front-page scoop revealing that Telstra paid consultants, Bain & Co, a staggering $54 million to prepare Telstra’s strategic review last year. According to The Australian, Bain was hired by Trujillo “within days of his taking over as chief executive.” Because Bain has no significant Australian presence, it was forced to fly consultants from Singapore, the US and Europe in business class, and pay for five-star accommodation while they were in Australia. While some companies would have hired local consultants at less expense, according to The Australian, Trujillo allegedly opted for Bain as he had previously worked with its Amsterdam-based partner, Andrew Klein. Crikey spoke to several consultants who confirmed that local mid-tier consulting firms (including Accenture, Bearing Point, Cap Gemini and IBM) would charge a blended rate of around $4,000 per day per consultant for such a review (for example, a VP will charge around $6,500 per day while an entry level consultant will be around $1,200 per day). Bain, as a leading strategic consultant may be able to charge a slight premium, resulting in a blended rate of perhaps $9,000 per day. Trujillo appointed Bain in early July 2005, with the strategic review being released to the market on 15 November – meaning that Bain would have worked on the review for around 120 days. At a total cost of $54 million, that means Telstra spent approximately $450,000 per day on consultants alone. One source suggested that around 10 to 20 consultants would be required for such a review, meaning that Trujillo paid his alleged ‘mates’ at Bain around four to five times the amount he could have paid a highly regarded, Melbourne-based consultancy like Accenture.

Telstra shareholders would be justified in wondering why on earth they are paying their CEO millions of dollars in fixed, short-term and “sign-on” bonus payments when within days of being appointed, he just hires an overpriced outsider to do his job. Could the real story be that the Government got wind of this extravagance, decided enough is enough, and nominated head-kicker Geoffrey Cousins for the board?