Debt, Cossie, AWB, Centro and ANZ
February 2, 2010
Dear Mayne Report subscribers and a few extras,
Right at the top of the show today we've got a new video which directly responds to Peter Costello's debt challenge in his Higgins victory speech.
We also spent some time yesterday afternoon at Centro's head office, The Glen shopping centre in Glen Waverley, and will have a couple of interesting videos out of that before Christmas, despite being booted out by security.
In today's edition we examine Centro chairman Brian Healey, who we will be catching up with at the Incitec Pivot AGM in Melbourne this afternoon. Healey is 73, has led Centro since 1993 and is overloaded with board gigs - yet so far he has largely avoided the backlash.
The AWB charges naturally piqued our interest and there's also the beginnings of a comprehensive list on the biggest share price shocks over the past few years, with Centro's 70% plunge leading the pack.
We've also got an interesting comment piece by Robert Reeves in the wake of the ANZ AGM in Perth, who gave a good account of himself and also managed a long chat about his grievances with chairman Charles Goode after the meeting. Reeves certainly discovered how tough it is running for a corporate board, finishing with just 5.2% of the vote, but he certainly made his point loud and clear.
Enjoy the full edition and 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.
Right at the top of the show today we've got a new video which directly responds to Peter Costello's debt challenge in his Higgins victory speech.
We also spent some time yesterday afternoon at Centro's head office, The Glen shopping centre in Glen Waverley, and will have a couple of interesting videos out of that before Christmas, despite being booted out by security.
In today's edition we examine Centro chairman Brian Healey, who we will be catching up with at the Incitec Pivot AGM in Melbourne this afternoon. Healey is 73, has led Centro since 1993 and is overloaded with board gigs - yet so far he has largely avoided the backlash.
The AWB charges naturally piqued our interest and there's also the beginnings of a comprehensive list on the biggest share price shocks over the past few years, with Centro's 70% plunge leading the pack.
We've also got an interesting comment piece by Robert Reeves in the wake of the ANZ AGM in Perth, who gave a good account of himself and also managed a long chat about his grievances with chairman Charles Goode after the meeting. Reeves certainly discovered how tough it is running for a corporate board, finishing with just 5.2% of the vote, but he certainly made his point loud and clear.
Enjoy the full edition and 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.
Putting the Centro chairman through his paces today
Brian Healey has been the chairman of Centro Properties Group since 1993. As the man who hired CEO Andrew Scott back in 1997, he really should take a lot of responsibility for this week's debacle.
Brian is a very busy 73-year-old because we've got a date later today at the Incitec Pivot AGM, where he is the deputy chairman. What odds he won't show, especially given he is not up for re-election.
Unfortunately, the meeting starts at the Melbourne Exhibition Centre at 2pm and then I've got a 3pm appointment at the ABC for a one hour pre-record of the Radio National program, The National Interest, which is hosted by Peter Mares and goes to air with its "year in review" discussion at midday on Sunday.
Time permitting, I'll be pointing to the contrast between the performance of Centro and Incitec Pivot, with Centro shares falling from $10 to $1.20 over the past six months, whilst Incitec Pivot has become only the second Australian-based stock to crack the magical $100 mark. Indeed, the stock is up from $35 at the start of the year, but that doesn't mean we'll necessarily be heaping praise on Healey tomorrow.
You see, Healey came to the Incitec Pivot board in June 2003 when it's old parent company, Orica, still owned 70%. As a director of Orica since 1996, Healey presumably supported this hair-brained sell down in May 2006. Then again, Healey quit Orica after the sale and stuck with Incitec Pivot so maybe he was against the sale.
The Orica meeting is usefully scheduled for the Friday before Christmas, and it will be reasonable to pose the following question to chairman Don Mercer:
"Why did we sell our 70% stake in Incitec Pivot in May 2006 at $21 a share, when it is now trading at $106.58. Who has been held responsible for this dreadful decision which has denied Orica shareholders $3.5 billion of upside. Yes, it was nice to book a $399 million profit from the $857 million sale but surely the blossoming of Incitec Pivot is now a source of utter embarrassment for the Orica board and management which decided to cut it loose."
Healey is the oldest non-executive chairman of a major Australian company and must now surely be regretting having stuck around too long at Centro. You've got to feel a bit sorry for Foster's because it just seems to attract the chairs of companies which implode.
Former HIH Insurance chairman Geoffrey Cohen beat a hasty retreat from the Foster's board on 28 May, 2001, which was the morning of an EGM that would have seen his first public outing since the insurer went into liquidation 11 weeks earlier on March 15. Amusingly, Foster's managed to not mention HIH when announcing Cohen's depature, which is presumably what Incitec Pivot will probably do when Healey inevitably bails, as he must.
The other good recent example of a scandal leading to rapid-fire resignations from a range of boards was Swiss bank account enthusiast Trevor Kennedy, who was publicly exposed by The AFR, along with Graham Richardson and the late Rene Rivkin, on October 30, 2003.
By November 17 he had quit all seven boards, probably because he was facing three public outings at AGMs over the next nine days. Interestingly, the Oil Search announcement at the time made no mention of the Swiss banking scandal.
I'll be keeping a close eye on the movements of the Centro board because the Melbourne business establishment, far more so than other cities, has a habit of tolerating directors who have failed miserably in other places. Surely the destruction of $5 billion in one week at Centro is grounds for swift retirements from a range of boards.
Brian is a very busy 73-year-old because we've got a date later today at the Incitec Pivot AGM, where he is the deputy chairman. What odds he won't show, especially given he is not up for re-election.
Unfortunately, the meeting starts at the Melbourne Exhibition Centre at 2pm and then I've got a 3pm appointment at the ABC for a one hour pre-record of the Radio National program, The National Interest, which is hosted by Peter Mares and goes to air with its "year in review" discussion at midday on Sunday.
Time permitting, I'll be pointing to the contrast between the performance of Centro and Incitec Pivot, with Centro shares falling from $10 to $1.20 over the past six months, whilst Incitec Pivot has become only the second Australian-based stock to crack the magical $100 mark. Indeed, the stock is up from $35 at the start of the year, but that doesn't mean we'll necessarily be heaping praise on Healey tomorrow.
You see, Healey came to the Incitec Pivot board in June 2003 when it's old parent company, Orica, still owned 70%. As a director of Orica since 1996, Healey presumably supported this hair-brained sell down in May 2006. Then again, Healey quit Orica after the sale and stuck with Incitec Pivot so maybe he was against the sale.
The Orica meeting is usefully scheduled for the Friday before Christmas, and it will be reasonable to pose the following question to chairman Don Mercer:
"Why did we sell our 70% stake in Incitec Pivot in May 2006 at $21 a share, when it is now trading at $106.58. Who has been held responsible for this dreadful decision which has denied Orica shareholders $3.5 billion of upside. Yes, it was nice to book a $399 million profit from the $857 million sale but surely the blossoming of Incitec Pivot is now a source of utter embarrassment for the Orica board and management which decided to cut it loose."
Healey is the oldest non-executive chairman of a major Australian company and must now surely be regretting having stuck around too long at Centro. You've got to feel a bit sorry for Foster's because it just seems to attract the chairs of companies which implode.
Former HIH Insurance chairman Geoffrey Cohen beat a hasty retreat from the Foster's board on 28 May, 2001, which was the morning of an EGM that would have seen his first public outing since the insurer went into liquidation 11 weeks earlier on March 15. Amusingly, Foster's managed to not mention HIH when announcing Cohen's depature, which is presumably what Incitec Pivot will probably do when Healey inevitably bails, as he must.
The other good recent example of a scandal leading to rapid-fire resignations from a range of boards was Swiss bank account enthusiast Trevor Kennedy, who was publicly exposed by The AFR, along with Graham Richardson and the late Rene Rivkin, on October 30, 2003.
By November 17 he had quit all seven boards, probably because he was facing three public outings at AGMs over the next nine days. Interestingly, the Oil Search announcement at the time made no mention of the Swiss banking scandal.
I'll be keeping a close eye on the movements of the Centro board because the Melbourne business establishment, far more so than other cities, has a habit of tolerating directors who have failed miserably in other places. Surely the destruction of $5 billion in one week at Centro is grounds for swift retirements from a range of boards.
At last, charges over AWB
AWB started paying bribes to Saddam Hussein's regime way back in mid-1999. More than eight years, $300 million and a Royal Commission later, we finally have these charges laid against six blokes by ASIC yesterday.
And what a lovely irony that it was only after a change of government that the likes of Trevor Flugge, a big wig in the National Party, will face court, abeit just a civil action to start with.
We've been building up an AGM History section this week, pulling out every article we've written after asking questions at an AGM since it all began with Energy Resources of Australia way back in October 1998. We're linking directly to Crikey for any relevent articles that is publicly available, so do check out this account of the 2007 AWB AGM.
Ten months after giving them an enormous bollocking at Melbourne Park it is just incredible that the following AWB directors remain on the board:
If the AWB can't reform itself, then the Rudd Government needs to step in an abolish the single desk, along with the crazy corporate governance system that sees farmers from prescribed states controlling the board. These farmers failed the governance test miserably yet still fail to clear out. It will be very disappointing if they show their faces again at the 2008 AGM in February.
And what a lovely irony that it was only after a change of government that the likes of Trevor Flugge, a big wig in the National Party, will face court, abeit just a civil action to start with.
We've been building up an AGM History section this week, pulling out every article we've written after asking questions at an AGM since it all began with Energy Resources of Australia way back in October 1998. We're linking directly to Crikey for any relevent articles that is publicly available, so do check out this account of the 2007 AWB AGM.
Ten months after giving them an enormous bollocking at Melbourne Park it is just incredible that the following AWB directors remain on the board:
Brendan Stewart: Queensland grain grower, director since February 2000 and chairman since March 2003. Has signalled his intention to resign but remains chairman of the nomination committee which has rejected wholesale changes.Now that the big six have been charged, surely it is untenable to have four out of 11 directors who were on the board for the duration of the biggest bribery scandal in Australian history.
Warrick McClelland: Victorian grain grower and AWB director since November 1998.
Christopher Moffet: WA grain grower and AWB director since November 1998 who was re-elected in March 2005.
John Simpson: NSW grain grower and AWB director since November 1998.
If the AWB can't reform itself, then the Rudd Government needs to step in an abolish the single desk, along with the crazy corporate governance system that sees farmers from prescribed states controlling the board. These farmers failed the governance test miserably yet still fail to clear out. It will be very disappointing if they show their faces again at the 2008 AGM in February.
Robert Reeves reflects on his ANZ tilt
Former ANZ executive Robert Reeves might have only got 5.2% of the vote in his board tilt at Tuesday's AGM in Perth but he was pleased to get the whole question of ethics and whistleblowing on the agenda and reflects back on the exercise in this piece for The Mayne Report.
Why have a Governance Policy when it is clearly not required? Since its inception three years ago, ANZ boasts that they have never undertaken an investigation of a Whistleblowing incident. Check out their last three Corporate Responsibility Reports for proof. Over 30,000 employees worldwide - what a truly fantastic organisation to exist in.
You may then well ask why should ANZ waste the space in the Annual Report and the Corporate Responsibility Report when clearly the ANZ Whistleblower Protection Policy (WPP) is not required.
But let's look a little closer at why ANZ's Whistleblower Protection Policy may be up there with fairies in the garden.
Firstly, ex-employees are not covered under the policy. This means that anyone who is caught up in an incident may be sacked and the policy gives them no “Protection” as they are no longer an employee. What a great process for keeping the slate clean. Doesn't really encourage participation but.
Secondly, if the employee or now ex-employee takes legal action, say for breach of contract, which is evidenced by the Whistleblower's information, then ANZ's policy (as per ANZ General Counsel & Company Secretary letter to me, dated 8 November 2005) is to no longer treat it as a Whistleblowing incident but a legal claim. ANZ then must defend the claim at all costs. And take that nasty incident off the WPP list and bring in the yapping QCs. The slate is still clean.
Thirdly, former CEO John McFarlane is on record in an email to me stating that “whistleblowing tends to relate to securities matters, not employment related issues”. So don't worry we will never classify anything as a WPP incident because our real definition is very very narrow. Whew - aren't we good at the ANZ for having no whistleblowing incidents to investigate.
Fourthly, and if anyone should dare to suggest there is a whistleblowing incident bring out the QCs. ANZ clearly believe whistleblowing is a purely legal matter. At the 2007 AGM it was revealed the Board recently engaged a QC for two weeks to look into a whistleblowing incident. Why a QC? Surely whistleblowing may relate to non-legal concepts such as ethics. ANZ's own WPP says as much – oh I forgot – why bother we can use the first three reasons not to even attempt to “Protect” anyone under the ANZ Whistleblower Protection Policy so its content is superfluous.
For more details go to www.anzvalues.com.au.
You may then well ask why should ANZ waste the space in the Annual Report and the Corporate Responsibility Report when clearly the ANZ Whistleblower Protection Policy (WPP) is not required.
But let's look a little closer at why ANZ's Whistleblower Protection Policy may be up there with fairies in the garden.
Firstly, ex-employees are not covered under the policy. This means that anyone who is caught up in an incident may be sacked and the policy gives them no “Protection” as they are no longer an employee. What a great process for keeping the slate clean. Doesn't really encourage participation but.
Secondly, if the employee or now ex-employee takes legal action, say for breach of contract, which is evidenced by the Whistleblower's information, then ANZ's policy (as per ANZ General Counsel & Company Secretary letter to me, dated 8 November 2005) is to no longer treat it as a Whistleblowing incident but a legal claim. ANZ then must defend the claim at all costs. And take that nasty incident off the WPP list and bring in the yapping QCs. The slate is still clean.
Thirdly, former CEO John McFarlane is on record in an email to me stating that “whistleblowing tends to relate to securities matters, not employment related issues”. So don't worry we will never classify anything as a WPP incident because our real definition is very very narrow. Whew - aren't we good at the ANZ for having no whistleblowing incidents to investigate.
Fourthly, and if anyone should dare to suggest there is a whistleblowing incident bring out the QCs. ANZ clearly believe whistleblowing is a purely legal matter. At the 2007 AGM it was revealed the Board recently engaged a QC for two weeks to look into a whistleblowing incident. Why a QC? Surely whistleblowing may relate to non-legal concepts such as ethics. ANZ's own WPP says as much – oh I forgot – why bother we can use the first three reasons not to even attempt to “Protect” anyone under the ANZ Whistleblower Protection Policy so its content is superfluous.
For more details go to www.anzvalues.com.au.
Biggest share price tanks in history
This is by no means comprehensive but we will be building the definitive list of one-day share price tanks caused by the release of specific bad news, so if any others spring to mind, drop us a line to stephen@maynereport.com.
Centro Property Group: crashed form $5.70 to 88c in two trading days after revealing it couldn't roll over its debt.
Burns Philip: shares plunged from $2.16 to 90c on September 24, 1997, after it failed to sell the herbs and spices division and instead took a massive write-down.
Downer EDI: announced a $199 million provision on August 8, 2006, against its troubled Douglas Mineral Sands project in Victoria, resulting in a net loss of $25 million for 2005-06. Share price crashed the next day by 30% from $7.40 to $5.15.
Commander Communications: after a three week suspension for failing to lodge its accounts, the troubled telco saw its shares plunge 29% on October 19, 2007.
Leighton Holdings: stunned the market on May 6, 2004, with a 25 per cent profit downgrade due to cost blowouts on Melbourne Spencer Street station and Sydney's Hilton Hotel. The unexpected $70 million provision sent the shares tumbling $2.31 to a three year low of $7.90, a one-day loss of 22.6% or $630 million.
Commander Communications: the voice and data communication solutions provider reported a disappointing annual profit increase to $23.6 million on August 22, 2005, sending its shares plunging 46c to $2.07, a loss of 18% on the day.
Downer EDI: shares crashed 16.5% on August 2, 2007, when CEO Stephen Gillies quit after the 2006-07 profit forecast was slashed from $160 million to $101 million.
Paperlinx: warned of a 20% drop in profit on April 27, 2005, and the market treated the stock to a haircut of almost 30% that day.
Brambles: shares fell 10% in 2001 when CEO John Fletcher departed after a disagreement with new chairman Don Argus.
Coles Myer: shares fell 8% on the day in 1994 when their finance director Philip Bowman was terminated and then blew the whistle on Yannon.
Woolworths: the defection of supermarket boss Ian Cornell to Franklins in November 1998 saw Woolies shares plunged 7.3% as $504 million was wiped off its value. Woolies has since doubled as Roger Corbett proved all the critics wrong.
Perpetual Trustees: when Peter Morgan, senior portfolio manager, resigned from his role in September 2002, Perpetual's share price plunged 7% although it recovered some ground the next day.
Burns Philip: shares plunged from $2.16 to 90c on September 24, 1997, after it failed to sell the herbs and spices division and instead took a massive write-down.
Downer EDI: announced a $199 million provision on August 8, 2006, against its troubled Douglas Mineral Sands project in Victoria, resulting in a net loss of $25 million for 2005-06. Share price crashed the next day by 30% from $7.40 to $5.15.
Commander Communications: after a three week suspension for failing to lodge its accounts, the troubled telco saw its shares plunge 29% on October 19, 2007.
Leighton Holdings: stunned the market on May 6, 2004, with a 25 per cent profit downgrade due to cost blowouts on Melbourne Spencer Street station and Sydney's Hilton Hotel. The unexpected $70 million provision sent the shares tumbling $2.31 to a three year low of $7.90, a one-day loss of 22.6% or $630 million.
Commander Communications: the voice and data communication solutions provider reported a disappointing annual profit increase to $23.6 million on August 22, 2005, sending its shares plunging 46c to $2.07, a loss of 18% on the day.
Downer EDI: shares crashed 16.5% on August 2, 2007, when CEO Stephen Gillies quit after the 2006-07 profit forecast was slashed from $160 million to $101 million.
Paperlinx: warned of a 20% drop in profit on April 27, 2005, and the market treated the stock to a haircut of almost 30% that day.
Brambles: shares fell 10% in 2001 when CEO John Fletcher departed after a disagreement with new chairman Don Argus.
Coles Myer: shares fell 8% on the day in 1994 when their finance director Philip Bowman was terminated and then blew the whistle on Yannon.
Woolworths: the defection of supermarket boss Ian Cornell to Franklins in November 1998 saw Woolies shares plunged 7.3% as $504 million was wiped off its value. Woolies has since doubled as Roger Corbett proved all the critics wrong.
Perpetual Trustees: when Peter Morgan, senior portfolio manager, resigned from his role in September 2002, Perpetual's share price plunged 7% although it recovered some ground the next day.
Another ten Rich Listers
We're now over 400 names for the Mayne Report Rich List and here are today's ten new entries of Australians we reckon are worth more than $20 million. Feel free to suggest additions and corrections to stephen@maynereport.com.
Mark Ashley: the CEO of Apex Minerals who owns 16 million shares worth almost $20 million.
Charles Bass: a non-executive director of Queensland coal miner Aquila Resources who owns 13 million shares worth about $130 million after a recent share surge.
Wallace Cameron: Bruce Mathieson's former controversial offsider made a fortune through the Gribbles pathology business, such that he was able to splash out about $8 million buying the Foster's executive retreat at Mt Macedon.
Gordon Dickinson: successful UBS investment banker turned rural investor who even bought Malcolm Fraser's old property Raheen.
Ross Dobinson: the executive chairman of pharmaceutical company Acrux Ltd owns 10.79 million shares worth about $15 million.
Bill Lewski: Max Green's former business partner has made a nice comeback in the retirement industry and recent deals with Babcock & Brown Communities have delivered him almost $100 million, plus an on-going role running the Prime Living Trust.
John Moore: John Howard's former Defence Minister lost a house bid when it topped $8 million a few years back, so he's clearly worth plenty.
Denis and Myrna O'Meara: own 11 million shares in Atlas Iron which are worth about $24 million.
Anthony Poli: the executive chairman of Aquila Resources, which has coal mining interests in Queensland's Bowen Basin, who owns 26 million shares worth about $250 million.
Greg Woolley: pops up on the Allco Equity Partners share register with 25 million worth about $80 million.
That's all for now.
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.
Mark Ashley: the CEO of Apex Minerals who owns 16 million shares worth almost $20 million.
Charles Bass: a non-executive director of Queensland coal miner Aquila Resources who owns 13 million shares worth about $130 million after a recent share surge.
Wallace Cameron: Bruce Mathieson's former controversial offsider made a fortune through the Gribbles pathology business, such that he was able to splash out about $8 million buying the Foster's executive retreat at Mt Macedon.
Gordon Dickinson: successful UBS investment banker turned rural investor who even bought Malcolm Fraser's old property Raheen.
Ross Dobinson: the executive chairman of pharmaceutical company Acrux Ltd owns 10.79 million shares worth about $15 million.
Bill Lewski: Max Green's former business partner has made a nice comeback in the retirement industry and recent deals with Babcock & Brown Communities have delivered him almost $100 million, plus an on-going role running the Prime Living Trust.
John Moore: John Howard's former Defence Minister lost a house bid when it topped $8 million a few years back, so he's clearly worth plenty.
Denis and Myrna O'Meara: own 11 million shares in Atlas Iron which are worth about $24 million.
Anthony Poli: the executive chairman of Aquila Resources, which has coal mining interests in Queensland's Bowen Basin, who owns 26 million shares worth about $250 million.
Greg Woolley: pops up on the Allco Equity Partners share register with 25 million worth about $80 million.
That's all for now.
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.