Ray Evans, ASX merger, Tatts board, Green bashing, most attacked companies
July 22, 2008
Here are Stephen Mayne's six stories from the Crikey edition on Tuesday, 28 March, 2006.
3. Hugh Morgan's Svengali steps out from the shadows
By Stephen Mayne
After decades pulling the strings behind the scenes, Ray Evans, the Svengali behind former WMC CEO Hugh Morgan, finally stepped out of the shadows on Inside Business two days ago. Evans is chairman of the seemingly resuscitated right wing think tank, the HR Nicholls Society, and this is what he told the ABC's IR warrior Stephen Long for his Inside Business report:
It's rather like going back to the old Soviet system of command and control where every economic decision has to go back to some central authority and get ticked off. Well, there's a lot of that sort of attitude in this new legislation and I think it's very unfortunate.Evans spent more than a decade working under Hugh Morgan, writing his more inflammatory speeches and pushing his weight around in Melbourne's right wing think tank scene. However, he was out of a job by the time BHP took over WMC in 2004, at which point Morgan took over as President of the Business Council, where insiders say that he was largely kept on the straight and narrow, except when he'd just had a conspiratorial lunch with Evans.
I don't believe the Howard Government is really that keen on freedom. This new legislation is all about regulation.
He is a centralist, he's the most centralist prime minister we've had, I think, since Gough Whitlam. This attempt on his part to diminish the role of the states, to concentrate all power in Canberra, is very much to Australia's detriment.
The problem with the WorkChoices legislation is that you have nearly 2,000 pages of detailed prescription.
Crikey produced one of the few public outings for Evans with this anonymous piece by a Melbourne think tank insider in 2000.
Tony Jones latched onto the duo on Lateline last night when his interview with Workplace Relations minister Kevin Andrews included the following:
The HR Nicholls Society was founded 20 years ago by the young Peter Costello, among others, to push the cause of industrial relations reform. One of the co-founders is the society's current president Ray Evans, and yesterday he claimed the Government's reforms are "like going back to the old Soviet system of command and control". His complaint is about the plethora of new regulations that emerged with the new laws.Andrews should have said that the two old Cold War warriors are a bit of a laughing stock these days, but inside contained himself to describing the HR Nicholls Society as "a small organisation".
Amongst its members are the Reserve Bank director Hugh Morgan, the immediate past president of the Business Council of Australia, and the former head of Western Mining. Now when people like that belong to a group that's saying that you've made a big mistake here, that you're going back to a command and control-style economy, do you have to sit up and take notice?
Given that Morgan has also publicly lent his name to Josh Frydenberg's attempt to unseat Petro Georgiou in Kooyong, it is fair to say that his relationship with Peter Costello is probably a touch strained these days, especially given the Treasurer's infamous glass jaw.
Cossie appointed Morgan to the Reserve Bank board on 14 August, 1996, but he certainly won't be getting another government gig when his term expires on 28 July, 2007.
4. Customers ignored in ASX merger rush
By Stephen Mayne
The merging of two monopolies, ASX and SFE Corp, produced a predictable celebration from shareholders yesterday but there was barely a whimper from the customers of the two businesses who face even greater gouging to make the union pay.
The AFR's John Durie at least gave the consumer angle a bit of a run but The Australian's Bryan Frith bought the monopolists' line in pointing out all the other mergers around the world between stock exchanges and derivatives markets since former ACCC chairman Allan Fels knocked back the original merger proposal in 1999.
Frith is merely running the old "national champion" argument – that local players should be able to beef up to give them the critical mass to expand overseas.
Yeah, like the Big Four banks with their record $210 billion market capitalisation don't have the firepower to expand overseas without merging to create even more powerful financial conglomerates to gouge Australian consumers every which way.
The Australian produced an interesting table today showing where the combined ASX-SFE business will rank amongst global exchanges.
Does anyone else think it a little odd that an $800 billion economy like Australia will boast a $5 billion exchange, ranked nine in the world, which is only marginally less valuable than the NASDAQ and the London Stock Exchange. Doesn't that tell you Australian customers are getting ripped off blind?
Don't expect the SFE's customers to complain because they are still largely the same investment banks that have enjoyed a spectacular windfall from the demutalisation of their once not-for-profit operation.
The same goes for many of the ASX's major customers. Why would UBS or Macquarie Bank care given their profits on the merger deal as SFE shareholders? However, it is incumbent on the likes of AMP, David Murray's Future Fund and the big super funds to finally take a stand and insist that ASX stop abusing its privileged position by jacking up fees every other year.
As for the ACCC and Peter Costello, you can only shake your head and wonder why a 300-fold return for the original ASX equity holders doesn't spark some interest in a formal price monitoring regime that would protect ravaged Australian customers of the ASX, who are primarily the superannuants of Australia.
5. Who wins the jackpot on the Tatts board?
By Stephen Mayne, small Tattersall's shareholder
The $4 billion "merger of equals" between Tattersall's and Unitab once again highlights how incompetent state Labor governments have been in dishing out lucrative gaming licences and privatising key assets over the years.
Unitab was originally floated by the Beattie Government as the Queensland TAB in November 1999 at $2 a share, so yesterday's close of $15.71 means the original investors have enjoyed a capital gain of 785%, plus great dividends.
Tabcorp might be on the slide at the moment but the original investors who paid $2.25 to the Kennett government in 1994 are still 666% in front at the current price of $15.
Similarly, those who paid $2.35 to the Carr Government for shares in the NSW TAB float almost tripled their money by the time Tabcorp completed its takeover two years ago.
If the state governments had been smart, they would have pooled their TAB operations before privatisation rather than leaving the bleeding obvious to the privatised state-based monopolies.
The stupidest government of all was led by Joan Kirner in Victoria when they gave Tattersall's a free pokies licence in 1991 which is today worth an estimated $2 billion. No wonder the market is concerned the Bracks Government might try and claw back some value when this licence expires in 2012.
One interesting aspect of the Tattersall's-Unitab merger is the final board composition as each side can nominate four representatives, but they have not yet been named.
The four original Tatt's trustees quite outrageously lodged a $100 million claim as part of last year's float. One of them, William Adams, resigned from the board ahead of last year's AGM and another, Peter Kerr, was unceremoniously voted off as two beneficiaries, Mike Vertigan and Julien Playoust, easily won a proxy battle for board seats.
That left chairman David Jones, who also chairs that pillar of the Victorian establishment, the Melbourne Cricket Club, in splendid isolation as the sole surviving trustee still suing his own shareholders for $100 million.
Will the merger facilitate the departure of Jones or will the four independent directors introduced with the float - Harry Boon, Lyndsey Cattermole, Brian Jamieson and James King - get the nod, also leaving the two interlopers out in the cold? It would be interesting to know if the support of chairman Jones for the merger has come at a price and what compensation, if any, will be offered to the three directors who get turfed.
21. The Texan cowboy behind Freeport
By Stephen Mayne
If you want an insight into the sort of company that is destroying the environment around the giant Grasberg gold and copper mine in West Papua, check out these quotes from Freeport McMoran chief executive Jim Bob Moffett courtesy of Corpwatch:
"We have a volcano that's been decapitated by nature, and we're mining the esophagus, if you will."Moffett was the boss of current BHP-Billiton CEO Chip Goodyear's boss at Freeport from 1989 until 1997, the same period which led to this damning 1996 profile of Moffett's company on Mother Jones.
"I can assure you that we receive better treatment in some foreign countries than we do here" – on US citizens' attempts to hold Freeport accountable to the law.
"We find President Suharto to be a compassionate man."
"I graduated with the highest grades of any footballer at the University of Texas" – explaining his qualifications to order Austin city officials around.
"This is not a job for us, it's a religion" – describing Grasberg as the world's greatest mine.
"I guarantee you this sombitch is glad we found a copper and gold mine" – showing a slide of a smiling Irianese youth in a bellhop uniform – "(...before Freeport arrived) the young man was raising vegetables or doing whatever on the mountain with his parents."
"We're going to mine all the way to New Orleans."
Goodyear was presumably one of the key executives who negotiated Rio Tinto's entry into Grasberg in 1995 at exactly the same time that BHP was thoroughly bruised by its Ok Tedi experience in neighbouring PNG. The timeline for Rio Tinto's involvement is interesting when you consider the long battle the company waged with BHP for leadership in the global copper market. Having missed Grasberg, BHP went off and blew $3.2 billion on Magma Copper.
May 1994: BHP sued in the Victorian Supreme Court for $4 billion by PNG landowners over damage caused by the Ok Tedi copper mine.
February 1995: RTZ unveils investment of up to $2.3 billion in Grasberg mine and its operator, Freeport McMoran.
April 1995: Australian Council for Overseas Aid report released claiming the Indonesian army and security forces killed 37 people involved in protests over the mine in a seven month period.
October 1995: RTZ and CRA unveil their proposed dual-listed company merger
December 1995: Having missed out on Grasberg, BHP spends $3.2 billion on the ill-fated Magma Copper purchase.
December 1995: RTZ and CRA shareholders approve merger deal
March 1996: Grasberg mine closed for three days because of attacks by the local population
April 1996: An Indonesia soldier who had just returned from an operation against West Papuan independence activists around the mine opened fire indiscriminately at Timika airstrip, killing 18 people.
April 1996: Freeport agrees to pay 1% of income to local Irian Jaya community
June 1996: BHP reaches Ok Tedi settlement, gifting stake in mine to a community trust and vowing to fix some of the environmental damage.
June 2000: Almost $4 billion wiped from the market value of Rio Tinto after the Indonesian Government ordered a cut in production following a landslide that killed four workers.
October 2003: Eight workers killed in another landslide causing mine to be closed for two weeks.
March 2004: Rio Tinto sells its 13% stake in Freeport for $US882 million but retains 40% stake in post-1994 elements of the Grasberg mine.
22. AGM watch – Australia's ten most attacked companies
By Stephen Mayne
Chartered Secretaries Australia is hosting what should be an interesting governance symposium in Melbourne and Sydney next week posing the question, "Is the AGM dead?"
My gig is to assess the role of special interest groups at AGMs, particularly the threat of greater union agitation given their reduced power in the new federal industrial relations environment. Here is an attempt to list the ten most attacked Australian companies over the past few years:
Gunns. Cops it in the neck from greenies at every AGM and The Wilderness Society even got an EGM up in 2003. However, the tree-lopping Tasmanian cowboys don't help themselves by being bull-headed and banning the press.
Boral. Green groups and the Transport Workers Union have got up several resolutions over the years and Greens Senator Christine Milne ran for the board in 2001. Labor's Stephen Conroy attended the 2003 AGM and blasted Boral for supposedly squashing shareholder democracy when his attacks were more motivated by concerns his old union, the TWU, had about changes proposed for Canberra lorry drivers.
Rio Tinto. Attracts the most diverse range of special interest groups spanning unions, greenies and campaigners for the likes of West Papuan independence. The unions got up two resolutions in 2000 which received surprisingly strong support.
BHP-Billiton. Like Rio Tinto, attracts all sorts ranging from Jack Tilburn to Andrew Denton, who tackled chairman Don Argus at the 2003 AGM over BHP's desire to extract nickel from Indonesia's Gag Island. The unions were particularly prominent at the Billiton merger EGM in 2001 and 100 signatures were gathered for a special shareholder resolution over Ok Tedi in the 1990s.
ERA. The Rio Tinto-controlled company has never suffered an EGM but the AGMs are usually full of ferals due to the Ranger Uranium mine in the Northern Territory.
AMP. Used to be the world's fastest land-clearing company through its ownership of Stanbroke Pastoral, so the sale of this business in 2003 should have calmed things down but AMP has still had outside board candidates in three years since 1998. Combined with GIO and the $5 billion loss in 2004, AMP AGMs have been very lively over the years.
Coles Myer. When you add up Solly Lew stooges (1995 and 2002), the Rodney Adler-funded attacks by Laurance Gruzman QC in the 1990s, a s249p statement from the ASA in 2002 and nine outside candidates, our once biggest retailer has dealt with plenty of drama over the years.
Telstra. 25 outside board candidates at nine AGMs constitutes plenty of agenda pushing with the CEPU union leading the charge given secretary Len Cooper's six board tilts. The ASA also got up a s249p statement in 2001 and plenty of regional campaigners have spoken up in the past, dragging a typical Telstra AGM out to more than four hours.
Wesfarmers. Agreed to an EGM in 1999 requisitioned by more than 100 greenies who each owned just one share. The attacks have subsided since the exit from its WA forestry business to Gunns in 2004 although green groups still take aim at its booming coal division.
IAG. Whilst the majority of factional agitation has taken place at the still mutually-owned NRMA, IAG faced an EGM in 2001 attempting to limit director payouts. James Strong's replacement of Nick Whitlam as chairman in April 2001 was the key event that settled things down as the 2000 AGM was very feisty.
We're also going to work up a list of individual AGMs that were supposedly hijacked by so-called special interest groups. If you've got any suggestions please email smayne@crikey.com.au.
30. Stephen Mayne on Christian Kerr's Green bashing
By Stephen Mayne
The debate about Christian Kerr's ongoing attacks on the Greens has made for interesting reading in recent weeks but this letter from Russell Dovey in Crikey yesterday summed up my feelings:
The people who are moaning about Crikey's supposed decline should take a look at every other media publication in Australia. I challenge them to name one which so consistently ignores the spin and digs right down to the facts, and which prominently publishes, in full, replies from the parties reported on. I challenge them to name one that doesn't hesitate to go into the dirty laundry of any prominent figure, even ones on their own staff. Regarding Christian Kerr, he obviously has a thing against the Greens. He also obviously has a thing against the ALP Right, the ALP Left, Peter Costello, John Howard, the entire Federal ministry, every state Liberal party, the Democrats, the ABC, Eddie McGuire, lefties, rednecks, wheat farmers, weather, tectonic activity and the laws of physics. Keep the b*stard, honest!There's no doubt that Christian hates the Greens, just like the political pundit he respects enormously, ABC election analyst Antony Green. Sometimes this might colour his view as I reckon Bob Brown's adviser Ben Oquist won the most recent joust on the facts. However, the Greens have got off relatively lightly compared with the damage inflicted on the Democrats during our two-year jihad against the party that only ended when Natasha Stott Despoja resigned the leadership in 2002 and visited Steve Price's then lawyer, AFL operations boss Adrian Anderson, with a view to launching defamation proceedings.
In fact, Christian is completely gloomy about all minor political parties. When I tried to launch People Power in 2001, he attacked the move in Crikey and privately derided it as a completely lost cause. No doubt there will be more barbs if I proceed with tentative plans to run for a much broader version of People Power in this year's Victorian election.
Neville Wran told a Labor Party fundraiser in 2002 that "Crikey is a great little website because they have a go at every one." And it should be pointed out that the new owners of Crikey haven't rejected a single item that Christian or I have submitted over the past 13 months.
Christian himself has pulled very few punches over the years. Indeed, his Hillary Bray column started out as a major booster of Peter Costello and the Liberal moderates in general, but Christian is now arguably the harshest critic of the Treasurer's performance.
The only group which I reckon gets off lightly is News Ltd – reflecting Christian's "pragmatic" approach to media moguls, especially since he landed a punditry gig with Sky News during the 2004 election and also started a column with News Ltd's Adelaide suburbans, Messenger Community Newspapers, which continues to this day.
However, the rest of the Crikey team more than make up for any lack of Murdoch attacks emanating from Kerr's corner. I'm arguably guilty of the same in not attacking ABC local radio in Melbourne, Sydney and Tasmania since landing weekly slots talking business and politics, although both Sally Loane and Virginia Trioli have delivered verbal bollockings over the years after critical pieces appeared in Crikey.
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