Hounding AMP over BHP vote in 2001

Dear Sole Subscriber, just back in the Sussex St internet cafe after the AMP AGM and a thoroughly worthwhile talk at the Australian Shareholders' Association by Labor Senator Stephen Conroy, the shadow minister for financial regulation.

At the outset I've got to admit to being very impressed with Conroy. He is just as outraged about the BHP deal as most small shareholders and made some withering attacks on the corporate club.

It was great to see Perpetual's Peter Morgan at the ASA talk. He is the only institution still fighting the strong arm tactics of Don Argus and Paul Anderson trying to shoe-horn this shocking BHP-Billiton deal through.

I gave the AMP both barrels this morning and handed out flyers bagging their decision to vote in favour of the deal.

Check out the flyer for the details but corporate club member Stan Wallis gave a meek answer merely saying that they had decided to vote in favour of this deal.

My recollection is that AMP chairman Stan Wallis lives just around the corner from BHP chairman Don Argus in Malvern. They are real club members together and AMP has clearly put the reputation of club members ahead of the AMP's policyholders, customers and shareholders because on any reading this is a shocker of a deal and the darkest hour of the club's long and chequered history.

THE AMP FLYER

Dear AMP shareholder, you may be aware that AMP have decided to vote their 1.86 per cent stake in BHP in favour of the proposed $57 billion merger with Billiton.

After careful consideration, we have come to the view that the BHP-Billiton merger is not in the best interest of BHP shareholders, including AMP.

JB Were has estimated that the deal involves a $5.4 billion transfer of value from BHP to Billiton. It is telling that both companies refused to provide an independent expert's report to justify such a lopsided merger which sees Billiton retain effective management control.

The premium being paid by BHP is estimated to be about 20 per cent based on the current depressed Australian dollar which has put a rocket under the Big Australian's profit performance and seen the likes of WMC and Rio Tinto surge while BHP lags.

So why then is the big end of town "reluctantly" choosing to vote in favour of this deal? And who did AMP talk to before deciding to sell Australia out?

Today is your opportunity to let the AMP board know in very frank terms that they should be voting against the BHP merger.

This board has been appointed by AMP's shareholders and if you don't like the deal then AMP should vote against it. It is about time Australia's major fund managers started listening to their clients and shareholders before making decisions such as these.

Australia's major proxy advisory group Corporate Governance International has even advised clients, presumably including AMP, to reject the deal, so why approve it?

This meeting of AMP shareholders should tell the board to revoke their proxy vote and oppose the deal at tomorrow's all-important BHP shareholders meeting in Melbourne.

For too long the cosy club of Australian directors have run a closed shop of mutual support for each other. Embarrassment and a few resignations from the BHP board is no reason for the AMP board to vote in favour of a deal that destroys shareholder value.

So what are the links between BHP and AMP? Could it be that BHP's adviser on this deal, UBS Warburg, is the same Swiss investment bank that has advised AMP on recent deals.

Anyone attending last year's AMP AGM in Melbourne will remember UBS Warburg chairman Gordon Dickinson getting up and lavishing praise on the AMP board in their hour of need and defending the excessive options issue to CEO Paul Batchelor.

But AMP has never worried too much about excessive executive pay so the $140 million bonus to Billiton's executive team is no concern for the company that paid George Trumbull $30 million and its own funds management boss $5.7 million last year.

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