UPDATE 06/03 - Downer's director has announced his resignation too.

ORIGINAL 03/03 - Building services giant Downer Group has lost its chair. 

The chairman of Downer, Mark Chellew, has resigned from his position. He follows the company’s chief financial officer, Michael Ferguson, who also resigned recently. 

Big investors have demanded changes after Downer recently reported errors in their accounts and a significant drop in profit. 

Mr Chellew’s resignation is immediately effective and was announced through a statement to the Australian Securities Exchange on Friday. 

The deputy chairman, Mark Menhinnitt, has taken over as acting chairman.

Investors have also been calling for changes on the company’s board. 

Mr Chellew, who has been in charge of the board for less than two years, was not deemed to be the appropriate person to oversee management, particularly after the board’s decision to award high bonuses to executives despite a fall in profits. 

Downer’s market capitalisation has almost halved since mid-2022 from $3.8 billion to around $2 billion.

According to Morningstar’s head of equities, Peter Warnes, Downer still has potential but needs “a clean-out from top to bottom” in management. 

Downer’s long-time chief executive, Grant Fenn, retired on Monday and was replaced by former chief operating officer Peter Tompkins. 

Mr Warnes added that Downer’s low share price makes the company vulnerable to a takeover bid.

The company’s share price started to decline in late December 2022 when the company revealed it would restate profits by tens of millions of dollars due to an “accounting irregularity”.

However, when Downer reported its interim results on Monday, the impact on profits and dividends was worse than expected, causing the stock to plummet another 24 per cent.

Moreover, the NSW corruption watchdog is currently investigating some of Downer’s staff for allegedly obtaining personal benefits while securing contractors for major transport projects. 

The allegations suggest that some Downer workers “dishonestly obtained a benefit for themselves” by favouring certain subcontractors when awarding transport-related work.