AWB, donations, Liz Knight, pokies and Ian Law

8. McCrann, Morris, Costello and AWB spin

By Stephen Mayne

Rupert Murdoch's flagship, The Australian, is now well into double figures on AWB splashes and has clearly identified itself from the pack in going much harder on the story than anybody else.

However, the paper's Saturday columnist and daily commentator for the Murdoch tabloids, Terry McCrann, mustn't have been looking at what's been published because this morning he began one of his items as follows:

The John Fairfax hyper-ventilation over the Australian Wheat Board saga continues apace. Yesterday The Age and The Sydney Morning Herald were joined by trashy dot com (as usual, Terry can't bring himself to name us and thereby utterly confuses his readers) which thundered that the real question was: "What kind of government could have employed a management and board who clearly weren't fit to open a packet of Wheaties let alone run a Wheat Board."

McCrann then went on to argue that the AWB has nothing to do with the government because it was privatised in 1999 and corrupt payments didn't start until late 1999.

Firstly, it certainly wasn't "privatised" in the conventional sense because we the taxpayers didn't actually receive anything from the sale. As with most statutory marketing bodies, National Party interests pushed for the proverbial free lunch and the value arguably partially owned by the taxpayer was handed over to the farmers for free.

The point is that the government was in charge of this whole process and decided upon a board that was gifted huge monopoly powers and then went headlong down the path of giving $300 million to the regime we wanted to depose.

You then have the separate issue of government knowledge and complicity after the "privatisation" with what were clearly illegal payments rorting the UN scheme.

In directing US Ambassador Michael Thawley to tell what turned out to be a lie to US Senators in 2004 clearly shows some government involvement and concern. Then there have been numerous examples of warnings being send to DFAT about dodgy dealings.

The government is dragged further into the mess by the fact that two of the key conspirators in the whole scandal, Trevor Flugge and Michael Long, were subsequently hired and paid by the Government to go and help set up the agricultural arrangements in Iraq after Saddam was deposed.

We then have the question of containing the political damage. Who has AWB Ltd hired as lobbyists and crisis managers to get it through this mess? None other than Jackson Wells Morris, the firm which boasts the PM's former chief of staff and best mate Grahame Morris as a director.

Morris was asked about AWB during a regular Sky News debate with Labor arm-twister Bruce Hawker on Monday night and he implied the PM had no problems and knew nothing before finally confessing his firm was acting for AWB.

Surely the interests and actions of the AWB and the government are now very different. AWB should hire someone whose career has not been largely devoted to promoting and defending the interests of one John Howard.

Finally, has anyone else noticed how hard Peter Costello is going in talking up the AWB scandal? He almost seems to be enjoying the discomfort being suffered by a certain Prime Minister, a certain leadership aspirant called Downer and the entire National Party/farmer mafia.


11. More muddy political donation vignettes

By Stephen Mayne

The political donations analysis continues apace and we should point out the excellent site created by the Greens, www.democracy4sale.org, which tracks donations over the past few years. Meanwhile, here are a few more vignettes:

Did the Packers really give $5516 to the Greens?

The Daily Telegraph's main donations story on Thursday concluded with the line: "The Greens received $5516 from the Howard mortgage Trust, which is ultimately owned by the Packer Family."

Sadly, the implication of this is grossly distorted. Firstly, the Packers don't own the Howard Mortgage Trust, it is owned by its unit holders. Sure, the $3 billion trust pays about $30 million a year to its manager, Challenger Financial Services, but even this business is only 25% owned by the Packers.

Secondly, the trust didn't make any sort of a donation to the Greens, which just happened to have some spare cash deposited there. This just demonstrates how cumbersome the disclosure regime is. A political party should not have to disclose earnings on its own assets, in the same context as cash donations because they are entirely different. Sure, we should be shown balance sheets of political parties and maybe even details of their assets, but breaking down the interest on every last cash management account is over the top.

Challenger was even moved to make an ASX statement on the blunder, which is described as "incorrect and highly misleading".

What about the $1.1m-plus for the CEC?

A lot is being made of the British Lord's $1 million donation to the Liberals but what about a certain Henry Gillham from Clendon in Queensland who has given more than $1.1 million to the loopy lot at the Citizens Electoral Councils since 1998. Given that Henry is presumably an Australian citizen and is unlikely to enjoy tax haven benefits, this is surely one of the most significant donations to a political party – and one that operates at the very fringes of reason. Here's a summary of what Henry's given over the past seven years:

1998-99: $24,750
1999-00: $45,285
2000-01: $37,500
2001-02: $37,000
2002-03: $53,100
2003-04: $862,000
2004-05: $57,250
Total: $1,116,885
Average: $159,555

Who's this Chinaman?

The Labor Party is right to call for a ban on donations from foreign nationals, as it not just the British Lord who's been showering the Liberals with largesse. The NSW Liberals received a tasty $49,981 from a company called Kingson Investments, which lists its address as:

Guangzhou International Trade Centre
1 1 Linhe Xi Lu
Guangzhou
Peoples Republic of China
OS 0000

Gee, a big donation from someone in a Communist country at a time when our trade is burgeoning and there's talk of free trade agreement down the track. Surely they are big enough at least arrange an Australian PO Box.


12. Labor's great pokies addiction

By Stephen Mayne

Did anyone else note that ACT Labor's four biggest donations came from the Canberra Labor Club and Woden Tradesmen's Club, and totalled $386,397? That's excluding the additional $120,000 that the Canberra Labor Club donated to the federal ALP in 2004-05.

The impact of these Labor Party owned gambling enterprises is to take money from those Canberrans who are statistically most vulnerable and least able to afford gambling. What does this say about the morality of the ALP?

Then again, Graham Richardson lobbies for casino mogul Kerry Packer, former Queensland Treasurer Keith de Lacy is a director of Cairns Casino, former NSW Premier Barry Unsworth sat on the NSW TAB board, the late John "Bruvva" Ducker was chairman of Aristocrat and former NSW Labor identity Joe Meissner was the president of the Australian Poker Association.

In other words, Labor is the party of gambling, so no wonder they happily pocketed almost $1 million from gaming interests in 2004-05, which included the following:

Canberra Labor Club and Woden Tradesmen's Club: $386,397, ACT
Australian Hotels Association: $248,000, NSW
Canberra Labor Club: $120,000, National
Clubs NSW: $32,000, NSW
Tattersall's: $30,000, Victoria
Australian Hotels Association: $27,500, SA
Individual Sydney hotels: $20,000
Mallen Colac Hotel Pty Ltd: $15,000, SA
Star City Casino: $15,000, NSW
Woolworths: $15,400, NSW
Burswood: $15,000, WA
Australian Hotels Association: $2,980, Tasmania
Australian Casino Association: $2000, National

I've left off Woolworths and the AHA in WA because the state does not allow pokies in pubs.

Apart from the deluge of pokies cash to the ALP in Canberra, it is amazing how NSW dominates the gaming receipts with more than $300,000 from hotels and casinos. It really is the old rum corp in Sin City.

Interestingly, the once huge donors at Clubs NSW pulled right back to $32,000 in 2004-05, which probably reflects the dastardly new pokies tax that the Carr Government introduced.

However, new Premier Morris Iemma caved in last August, so expect to see much bigger figures from Clubs NSW when we finally get to read the 2006-07 figures in February 2008. Have another look at the 2004-05 figures here.


21. Another 10 mid-term defectors

By Stephen Mayne, former Liberal staffer and turncoat

Julian McGauran is certainly not alone with his mid-term defection from the Nationals to the Liberal Party. After yesterday's 12 names, here are another 10 examples and keep them coming to smayne@crikey.com.au:

Brian Austin: defected from Liberal to National after the 1986 Queensland election, allowing Sir Joh to form majority government.

Don Chipp: was a Minister in the McMahon years before he joined the Liberals as a grumpy backbencher in March 1977 and successfully ran for the Democrats in the Senate later that year.

Paul Filing: federal MP for Moore 1990-98; lost Liberal preselection in 1995 but ran and won as an independent in 1996.

Steele Hall: from the Liberal and Country League, the forerunner of the Australian Democrats, and then back to the Liberal Party.

George Hannan: senator for Victoria 1956-65 and 1970-74; resigned from Liberal Party in 1974 after losing preselection and ran unsuccessfully for his own front group, the National Liberal Party.

Billy Hughes: the World War I PM who led some Labor defectors out of the party over the conscription issue and became PM leading a government of conservatives and defectors. He remained on the conservative side for the remainder of his 50 years in parliament, although he defected at least a further time as various conservative parties formed and collapsed. He was there at the birth of the Liberal Party in the 1940s.

Don Lane: defected from Liberal to National after the 1986 Queensland election, allowing Sir Joh to form majority government.

Neil McInnes: state MP for Gippsland South (Vic); defected from National Party to Liberals following 1979 election - Nats won the seat back at the following election.

Peter McLellan: state MP for Frankston East (Vic) 1992-99; left Liberal Party after the 1996 election due to dissatisfaction with Jeff Kennett - was contesting his seat as an independent when he died on the morning of the 1999 election, forcing a rerun some weeks later.

Peter Richardson: federal MP for Tangney (WA) 1975-77; resigned from the Liberal Party and joined the Progress Party, whose Senate ticket he then headed (unsuccessfully of course) at the 1977 election.


28. Why can't Liz Knight make a proper Macquarie disclosure?

By Stephen Mayne

We've said it before and, sadly, we have to say it again. SMH business columnist Elizabeth Knight yesterday produced a column about Macquarie Bank. Sure, she had a couple of digs, but it also included this:

Macquarie has gone well beyond being classed as a traditional investment bank. However, it's fair to say that if it was valued as such the share price would be where it should be. If, however, it is approached as a fully integrated infrastructure and funds management house with investment banking functions, then the longer-term value would be much greater.

This model has a more stable earnings outlook because its clients (to a large degree its own spin-offs) are therefore captive. Macquarie has taken a bigger slice of control over its own destiny in this respect. It is also more diversified than its investment bank peers.

As usual, the tame declaration at the bottom merely stated that "The author has an indirect interest in Macquarie Bank shares."

Yeah, and I own 12 Macquarie Bank shares. So what. Liz should come straight out and declare that she is married to Alex Pollack, Macquarie's long-time media analyst and a director of the bank.

Her trifling "indirect interest" probably runs to seven figures, but you'd never know it. Liz would benefit significantly if, as she writes, Macquarie was valued "as a fully integrated infrastructure and funds management house with investment banking functions."

A decent disclosure would reveal the exact interest and ideally point out Pollack's salary and bonus scheme too.


31. The hide of Ian Law

By Stephen Mayne, small PBL shareholder

Shareholders in West Australian Newspaper have clearly lost tens of millions after buying a 50% stake in the Hoyts cinema chain from Kerry Packer's private company for $173.5 million in January 2005.

The disaster move was there for the world to see in yesterday's half year result in which Hoyts contributed just $4.9 million to earnings. The deal is only 12 months old, yet already the forecasts are way off track. So much for the predicted lift in earnings from $55.3 million in calendar year 2004 to $67.2 million in 2005. After the miserable December half, the new forecast for the 2005-06 financial year is for earnings of just $24.4 million.

Sure, 2005 was a tough year at the box office for everyone, but diversifying from newspapers to cinema was always a strange move and now Law has been poached by PBL in what cynics reckon looks like a thank-you from the Packers.

It was always a little odd that Packer's private interests bought Hoyts for $600 million in 2000 given that it was the public company, PBL, that held the earlier investment in Village Roadshow.

Despite PR spin to the contrary, it turned out to be a bad move and Kerry Packer sensibly decided to offload Hoyts. PBL was always an obvious buyer but this would have been a large and controversial related party transaction, so the Packers needed to find an independent third party to agree to the price and take up a 50% stake.

Step forward Ian Law and WA News. Given the disaster that has unfolded, the WA News board has every right to be outraged that Law has the temerity to then run off a take up a lucrative job offer from the Packers. Rather than presenting yesterday's results, the board should have punted Law on the very day his defection was announced. It all looks very grubby.

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