Dear Mayne Report subscribers and a few extras,

First and foremost, can you believe Qantas provided another massive profit upgrade yesterday, which sent its shares surging to almost $6. As someone who sold down in March when the directors were talking doom and gloom if the $5.45 private equity bid failed, I'm just itching to be the named plaintiff in what is a no-brainer class action. It was outrageous of the board to let the bid close in early May with a profit forecast that turned out to be $130 million light. Now, they've done it again. Stay tuned for this class action really should be launched soon and I'm trying hard to drum up some interest amongst the class action specialists.

I'm on a 6.15am flight to Sydney tomorrow for Virginia Trioli's farewell show so the rest of this has to be brief.

Having had 200 chats to Virginia on the ABC in Melbourne and Sydney over the last eight years, I could hardly say no to her request to co-host the first half hour of her last show and we've paid tribute to her in the full edition. However, within hours of booking the flights, this email arrived in the inbox:

From: neil.manning@aec.gov.au
Sent: Wednesday, 12 December 2007 5:58 PM
Subject: Declaration of Poll

To all Candidates for the Federal Division Electorate of Higgins,

I wish to advise that I will be declaring the poll for the Division of Higgins on Friday 14th December at 10:00am at my office at 1343 Malvern Road, Malvern. I wish to invite all candidates and/or their representatives to the declaration.

I have attached an up to date spreadsheet of all the voting from the Polling Places, Postal Votes, Absent Votes, Pre-Poll Votes and the Provisional Votes. I am still conducting a formal distribution of preferences which will be finished by Friday. There maybe a few minor adjustments to the figures following this count..

If you have any questions on this matter please do not hesitate to contact me.

Regards, Neil

Having missed Cossie at the ballot draw, I'm now going to miss the declaration as well. Damn. However, read the full edition for a cheeky letter that will be hand-delivered to the former Treasurer by the three-person Mayne Report hit squad that will be attending.

Tonight we've also got more detail on the bunfight between ANZ and its former executive turned board candidate Robert Reeves after ANZ spindoctor Paul Edwards entered the fray, sparking a strong response.

There's also another eight names for the Mayne Report Rich List and the audio from the relevent exchanges at the Allco Finance Group EGM on Wednesday is available here. The subscriber-only account of the Allco meeting is now up on the website.

If any of our 23 paying subscribers want to catch up in Sydney tomorrow afternoon, just drop me a line to stephen@maynereport.com or call (0412) 106 241. The email is playing up tonight so if you don't get a reply just call the mobile.

Do ya best, Stephen Mayne

* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.

Paul Edwards: Mr Reeves is a former employee of ANZ who was a mid-level manager. His position was made redundant in 2003.

Reeves response: I was a Senior Manager and my position was spuriously made redundant in 2003. See the Whistleblower Statement at Anzvalues.com.au.

Paul Edwards: Litigation was subsequently initiated by Mr Reeves in respect of his employment. ANZ denied Mr Reeves allegations but settled the litigation mindful of the executive time and significant costs involved in defending the matter in court.

Reeves response: Yes litigation was initiated by me – it would be unusual for the ANZ to initiate an action against themselves – with respect to my employment. This was after Shane Freeman in mid-2003 challenged me to take ANZ to court after refusing to read the Whistleblower Statement. Of course ANZ denied the allegations but interestingly were willing to offer a letter of apology and compensation prior to the settlement being made. The settlement in the form of an Offer of Compromise is a legal tactic that placed me under significant financial jeopardy if the subsequent court case awards me less than what is offered. Edwards's last point begs the questions as to why didn't the ANZ seek settlement early in proceedings when all our costs were lower. It is estimated this action has cost the ANZ $1.5 million with the payment to me of over $500,000 the Freehills legal fees at say $500,000 and executive time at $500,000 remembering this was drawn out by ANZ from July 2003 to August 2006.

Paul Edwards: The settlement was not an admission of liability but simply an acknowledgment of the commercial sense of avoiding the costs of litigation. The amount accepted by Mr Reeves was a fraction of the amount he was claiming.

Reeves response: ANZ can say what they like about admissions but the facts are available for all to see. And to the extent ANZ took three years to arrive at a point of “commercial sense” is remarkable. As far as liability is concerned ANZ merely used the deep pockets of shareholders to overcome an embarrassing court appearance. Again look at the facts as presented at ANZvalues.com.au. The cost to the ANZ was not a fraction of what I claimed. The claim was in the order of $2 million and with an estimated cost to ANZ shareholders of $1.5 million this is a significant fraction. Remember the form of settlement was a major jeopardy on me going forward and after having spent over $200,000 on legal fees I was getting very concerned.

Paul Edwards: ANZ has followed proper process in respect of Mr Reeves complaints and so far as it is concerned his acceptance of the Bank's offer was meant to bring closure to his complaints. They do not give rise to any broader issues of internal governance.

Reeves response: This is utter rubbish. A formal complaint I brought against Peter Donald in July 2002 was found in my favour and Donald was allowed to alter the outcome of the investigators recommendation prior to it being presented to me in January 2003. Discovery proved this. I also raised a serious concern about Donald twice downgrading my performance appraisals in 2002. The documented evidence of Donald's behaviour was provided to Shane Freeman. I heard nothing back from Freeman but was retrenched by Donald in the meantime. The broader governance issue is that ANZ executives can target someone who is genuinely raising concerns. Paul Edwards has obviously not read the ANZ documents that prove the points I am raising.

Paul Edwards: Mr Reeves has been a serial correspondent with senior executives at ANZ in recent years, most of it in vitriolic terms.

Reeves response: Of course I wrote to many ANZ Executives informing them of what ANZ were doing. Many were very supportive including the CEO John McFarlane and Tim L'Estrange as they knew of the rot that I endured. In Edwards's eyes if stating the truth is termed vitriolic so be it. In an effort to save us all the burden of the legal case and to warn other ANZ people I indicated to many what I thought of Peter Donald and Sue Pelka.

Paul Edwards: His decision to stand for election at the 2007 AGM appears to be a further means of pursuing his grievances through what is now a 4-year campaign which ANZ does not consider this either justified or appropriate.

Reeves response: Every ANZ shareholder has the right to stand for directorship of ANZ. What the basis is for their nomination is up to them. In my instance whilst the “legal” component may be “closure” for ANZ many unanswered governance questions remain surrounding the events I endured. Edwards needs to understand that ANZ's own senior counsel described the circumstances I worked under at ANZ as one of “hatred”. During my employment despite me properly raising concerns down appropriate channels ANZ failed miserably to address my concern. The events and processes surrounding Peter Donald's behaviour as described above are just two examples. The Whistleblower Statement events as orchestrated by Sue Pelka are yet another that was never investigated.

The alarm is set for 4.30am tomorrow in preparation for a half hour chat with Virginia Trioli on 702 ABC Sydney when her final local radio program opens at 8.30am. She's inviting all the regular guests in for a farewell celebration and as her longest, I get to open the batting.

Trioli has been more important than anyone in terms of ventilating shareholder activism and corporate governance issues to a wider audience than Crikey.

We first met when sharing a desk at The Age on the business section in 1992. I was the last person hired by Fairfax (in receivership) before the staff freeze was imposed after Conrad Black's Tourang consortium took over in December 1991. And look what happened to him.

After the fall of Kennett, Virginia wrote in The Bulletin that "you cannot understate the impact" of all we put out there through jeffed.com and she even popped in to The Builders Arms Hotel for a drink on the eve of that 1999 Victorian election when I was feeling pretty wobbly about doing the complete whistleblower number and expecting the writs to start flying once Kennett was returned. History would have been very different if he'd hung on.

Trioli first interviewed me on ABC Melbourne five months later on Feb 14, 2000 – the day Crikey was launched. I was standing on the steps of Parliament showing off the $5000 seven foot Crikey foam suit on Valentine's Day, promising to shake up the political and corporate worlds.

The regular 20 minute prime time spot on 774 ABC Melbourne started in the second half of 2000, although a similar spot with Sally Loane on 702 ABC Sydney commenced in February 2000, so Aunty has provided an outlet for corporate activism and commentary in Australia's two biggest cities for more than seven years.

All up, Trioli and I have had more than 200 chats over almost eight years and about 50 hours of broadcast time. This has primarily been about business matters and there has only been one apology - to Melbourne QC Allan Myers who was upset about claims he was paid by Alan Bond with a Polish brewery that subsequently generated hundreds of millions for him.

Trioli has been there during the loss of our house, the birth of our children, the sale of Crikey and all the various battles. Various people have taken a crack at the appropriateness of the gig - including The Australian's Andrew Main, the man I currently alternate with each fortnight and who will be on later in the morning.

I've taken four breaks from the gig, one due to general exhaustion in mid-2003 and the other three due to failed political tilts - Melbourne Lord Mayor in 2001, Victorian state election in 2006 and the just complete Federal election. Each time, she's been kind enough to invite the political loser back on.

I've done hundreds of radio interviews over the years but Virginia is without doubt the sharpest inquisitor and the most lively conversationalist. You can't spout bulldust and not get picked up, but she's also very warm and is well read across a wide range of topics.

We'll miss her but wish her the very best in her future television career.

Mr Peter Costello MP
Member for Higgins
1343 Malvern Rd
Malvern 3145

Friday, December 14, 2007

By hand

Dear Peter,

Congratulations on your emphatic victory in Higgins at the 2007 Federal election. Whilst you massively out-spent Labor, which only committed $15,000 in Higgins, your return with a swing of just 1.75% against you was still well earned.

As I told you at the Prahran RSL on election day, my goal was to take 3% off the Liberal vote in your heartland Toorak Uniting Church booth, make a point about being locked out of the budget lock-up and raise some important issues about shareholder activism.

In the end I got 84 votes or 3.26% in Toorak and your vote fell by 3.45% to a still respectable 73.45%, so it was mission accomplished.

I was disappointed to hear of your planned departure from Parliament, but would beg your indulgence on the timing of the by-election for this still aspiring member for Higgins.

The 2008 calendar is already looking busy, so could you please not clash with the mini-AGM season in April and May for companies with December 31 balance dates. It was most annoying trying to win votes off you during the peak of the 2007 AGM season in October and November. February or March would be fine, as would June or July but please don't wait any longer if you're serious about pursuing a career in the corporate world.

Personally, I think you'd make a terrific professional director of some of our big companies, especially those with large international divisions. I'd love to grill you at their AGMs, so give us a shout if you'd like any doors opened or a reference.

Onnce again, congratulations on winning Higgins, commiserations on not fulfilling your political ambitions and best of luck in the future.

Yours Sincerely

Stephen Mayne
Independent who polled 1.98% in Higgins and came fourth

Peter Campbell: education industry veteran who is now a non-executive director of listed education provider Navitas, formerly known as IBT Education. Owns 20 million shares worth more than $40 million.

Rod Jones: managing director of listed education provider Navitas, formerly known as IBT Education, who owns 55.6 million shares worth more than $100 million.

Peter Larsen: education industry veteran who is now a non-executive director of listed education provider Navitas, formerly known as IBT Education. Owns 31.2 million shares worth more than $60 million.

Max Shroder: pops up on the top 20 of listed education provider Navitas, formerly known as IBT Education, with 9.4 million shares worth about $20 million.

Julianne Hannaford: pops up on the top 20 of listed education provider Navitas, formerly known as IBT Education, with 9.3 million shares worth about $20 million.

Richard Cottee: managing director of Queensland Gas who owns 6.1 million shares worth about $20 million after a 10-fold surge over the past three years.

Robert Bryson: chairman of Queensland Gas who owns 18.23 million shares worth more than $55 million after a 10-fold surge over the past three years.

John McGrath: made his original pile through his own real estate firm in Sydney but his best little earner of late has been 2.04 million shares in the News Ltd-controlled realestate.com.au which is now worth about $15 million.

Simon Baker: the CEO of www.realestate.com.au owns 3.5 million shares worth about $25 million and has made a few private investments such as a $4 million play buying www.artshub.com.au.

John Green: the former Macquarie Banker makes our list alone on his 941,510 shares in Worley Parsons which are now worth almost $50 million.

Iain Ross: managing director of the Worley Parsons hydro-carbons division whose 466,777 shares are now worth about $23 million.

John Schubert: the chairman of the Commonwealth Bank and BHP-Billiton director made plenty when Hanson took over his Pioneer International a few years back, but his really big earner was Worley Parsons. Back in 2003-04, Schubert's last full year as Worley chairman, he was only paid $110,000 but if he has retained his 1.513 million shares these are now worth more than $75 million after a spectacular surge.

Grahame Campbell: former engineering executive who is now a non-executive director of Worley Parsons whose 504,579 shares are worth about $25 million.

Andrew Wood: runs the mergers and acquisitions division for Worley Parsons and owns 828,238 shares worth more than $40 million.

Eric Fraunschiel: made plenty as Wesfarmers finance director for the 10 years until 2002 and now a professional director, including with Worley Parsons, where his 164,852 shares are worth $8.4 million and Woodside, where his 52,702 shares are worth $2.5 million.

David Housego: the Worley Parson finance director own 157,582 shares worth $8 million but he sold an additional 116,741 shares in 2006-07 and earns more than $1 million a year.

Kevin Fitzpatrick: one of the original backers of wotif.com who sold 36.8 million shares into the 2005 float for $73 million and retains 10 million shares worth more than $50 million.

Robert Brice: one of the original backers of wotif.com who sold 6.8 million shares into the 2005 float for $13.6 million and retains 40 million shares worth more than $200 million.

Lyn Brazil: a well-known rural investor in Queensland whose biggest pay day was backing wotif.com. Sold 16.6 million shares for $33.2 million into the 2005 float and retains 10 million shares worth more than $50 million.

Dick McIlwain: The Tattersall's CEO enjoyed a $15 million-plus pay day when the business merged with Unitab in 2006 but also chairs Super Cheap Auto and Wotif.com, where his 500,000 shares are worth $2.6 million.

That's all for now.

Do ya best, Stephen Mayne

PS. If you happen to be reading this and are not yet a subscriber, why not download this form and support our shareholder activism which, if done well and properly resourced, serves a genuine public benefit. We're looking at twice weekly updates over the summer but the focus will be more concentrated on shareholder activism as we move on from the Federal election campaign.