Snowy float, Brumby, Macquarie, NAB

10. Making sense of the Snowy Hydro imbroglio

By Stephen Mayne

Chanticleer columnist John Durie got it half right on the back page of The AFR this morning when he wrote:

The loony tune brigade on the federal government side of the house are having a field day with the Snowy Hydro sale, with moves to introduce legislation to impose shareholding limits and otherwise cripple the company.

Firstly, a shareholding limit will not "cripple" Snowy. Santos still has a 15% shareholder limit courtesy of the South Australian Parliament not liking Alan Bond controlling gas supply, and it is going just fine, although the stock would be 10-20% higher if a decent takeover premium was factored into the price.

Also, it's not just the Federal Government side of the house because the three country independents – Tony Windsor, Bob Katter and Peter Andren – are meeting the PM tomorrow in an attempt actually to stop the sale rather than just impose the 10% shareholding limit in perpetuity which is being promoted by National Party MP Kay Hull in a private members' bill.

All this political carry-on will almost certainly wipe at least $100 million off the sale price if the cap is legislated, although it is completely unnecessary given that the Federal Government retains the ultimate foreign takeover protection through the FIRB.

Combine that with the audacious High Court challenge by Victorian independent Craig Ingram and "Johnny come lately" ranting by the likes of Alan Jones and we're looking at a political dog's breakfast, which was always to be expected when three governments of different political persuasions are conducting the one privatisation process and the asset deals with the hot issue of long term water rights.

It certainly doesn't help that the primary vendor is two big spending ALP state governments each facing an election within 12 months. Morris Iemma was politically very brave to embark on this sale. It just goes to show how desperate for election spending cash he's become after discovering what a financial basket case Bob Carr and Michael Egan left behind.




11. Brumby raids the TAC yet again

By Stephen Mayne

As you read this, about 50 journalists are locked up with Victorian Treasurer John Brumby getting the lowdown on the biggest tax and spend budget in the state's history, which is partly being funded by another quite outrageous $600 million raid on the Transport Accident Commission.

The TAC is one of the greatest public policy outcomes you could ever imagine. Created in 1987, it is Victoria's state-owned compulsory monopoly provider of third party insurance for people injured on Victoria's roads, irrespective of who is at fault. Even the Kennett Government refused to flog it off, which was a good thing given that NSW and Queensland taxpayers collectively dropped about $1 billion when HIH collapsed.

Despite never putting a dollar of capital into the TAC, this latest raid will bring to almost $7 billion that has been milked from it by both sides of politics since 1993. Only Telstra has delivered a government more in dividends over the past 13 years.

However, Victorians aren't exactly complaining because we have the lowest road toll in the world, as measured by deaths per registered vehicles, plus the lowest premiums in the country and the most generous benefits.

How does this magic pudding deliver to everyone? It's the economic wonders of huge public education campaigns about road safety plus the world's most officious traffic offence regime.

Investing about $500 million in road safety campaigns over 20 years has now helped produce about $7 billion in dividends for a state budget which is constrained by the constitutionally narrow revenue bases which all state Treasurers battle.

However, Victorian motorists will pay a world-leading $800 million-plus in traffic fines next year so they are being slugged every which way when they should be getting rewarded for their safe driving records.

Sadly, the RACV is asleep at the wheel as both sides of politics have conspired to raid the TAC when motorists should instead be enjoying premiums of less than $200 a year – about 30% less than the monopoly rent rate they are currently being charged.




13. More sports stars who tilted at politics

By Stephen Mayne

The emails just poured in yesterday for our list of sports stars who subsequently had a crack at politics and below are the names of ten more successful tilters and five unsuccessful ones. It will be interesting to see which category Jack Reilly, Australia's goal keeper in the 1974 World Cup, falls into. Reilly's pitch for start-up party People Power was announced yesterday and generated a little bit of coverage, including this piece from AAP.

Another ten sports stars who made it into Parliament

Darrel Baldock: one of the great AFL players who captained St Kilda to its only premiership in 1966 but made an ordinary politician from 1972 until 1987 for the ALP in Tasmania although he was a minister for seven years until 1982.

Ric Charlesworth: former WA shield cricketer and captain of Australia's men's hockey team who played in four Olympic games. Political career from 1983-93 as the ALP Federal member for Perth didn't live up to high expectations.

Michael Cleary: one of the few sportsmen to have represented Australia in three sports – rugby league, rugby union and athletics – the speedy Souths and Easts winger was a state ALP member in the Wran Labor Government.

Joseph Darling: A former Australian cricket captain who was elected as an independent to the Tasmanian Legislative Council in 1921.

Gil Langley: the Wisden Cricketer of the Year in 1957 kept wickets in the Baggy Green and also played Aussie Rules for South Australia, before becoming the Member for Unley in the SA State Parliament under Don Dunstan.

Sam Loxton: The great test cricketer and member of Bradman's 1948 Invincibles represented Prahran for many years in the Victorian Parliament but never made it to Cabinet.

Paul Osbourne: Mal Meninga's Canberra Raiders colleague who made it into the ACT Legislative Assembly as a pro-life independent but couldn't quite persuade his former captain to join him.

Neil Tresize: premiership rover for Geelong in the 1950s who rose to be John Cain's sports minister in the 1980s.

Tom Veivers: off spinner who played 21 tests for Australia before becoming the ALP member for Ashgrove in the Queensland Parliament for one term in the early 1980s.

Five sports stars who failed to cut the mustard

Mal Meninga: the legendary rugby league great and Australian captain lined up for an independent shot at in the ACT assembly in 2001 when he memorably had this meltdown live on local radio and pronounced under only the mildest of questioning – "I'm buggered. I'm sorry. I have to resign" – before doffing the headphones and walking out of the studio.

John "Sammy" Newman: former Geelong player and Footy Show buffoon once tried to gain preselection for the Liberals in Victoria.

Paul Couch: Geelong champion and 1989 Brownlow Medallist who failed to win a seat in Victoria when running for the Nationals.

Martin Bella: Former Australian and Queensland rugby league prop unsuccessfully contested the last Queensland election as a National Party candidate in the state seat of Mackay.

Percy Jones: Former Carlton premiership ruckman whose "Point Percy at Parliament" campaign for the Victorian Liberals failed in 1988.





22. Macquarie pulls a swifty to deny board tilt

By Stephen Mayne, spurned nominee for the Macquarie Bank board

After my 22 board tilts at public company boards over the past six years, Macquarie Bank has today set a new precedent for rejecting a nomination to stand for election.

I faxed a signed letter of nomination with an accompanying letter supporting the nomination from my dad, also a Macquarie Bank shareholder, at 4.55pm last night. Unsigned versions were also emailed directly to company secretary Dennis Leong and the signed originals were dropped in last night's snail mail heading to the company's head office at 1 Martin Place in Sydney.

Based on past experience, faxing signed letters to head office has been sufficient but Macquarie has rejected the nomination today as Mr Leong explains in this email:

Please be advised that this does not constitute a valid nomination for election as a Voting Director under Macquarie Bank Limited's Constitution. I refer you to article 49A of the Bank's Constitution, which is on our website.

In particular, I note the requirement for nominations to be in writing, executed by the nominating member, accompanied by a consent to nomination signed by the nominee and received by the Company at its registered office (which is in Canberra) before the cut-off date (which on my calculations is today, Tuesday 30 May 2006) but you should of course take your own legal advice.

Regards
Dennis Leong
Company Secretary
Macquarie Bank Limited

C'mon Dennis, since when has it mattered whether you fax head office or the registered office? I'll fax the registered office in Canberra before 5pm just to make sure and let's hope we don't get any more silly legalese.

The tilt is based on the very simple platform that Macquarie Bank adopt the standard Wall Street policy of banning employees from taking up shares in floats or capital raisings they are handling. Macquarie Millionaires have long leap-frogged ahead of clients to scoop up lucrative allocations when such a practice is banned by most US investment banks, and chairman David Clarke has defended the practice when I've raised concerns at recent AGMs.





23. The right result in the forex trading scandal

By Stephen Mayne

Two and a half years ago, things were very different at National Australia Bank. Despite the convulsions from dropping almost $4 billion on the Homeside disaster in the US, NAB was still Australia's biggest bank and seemed to be recovering.

Alas, the biggest unauthorised trading scandal in Australian corporate history suddenly exploded and the bank has been to hell and back, but all up we seem to have achieved some worthwhile outcomes in a remarkably short time.

To start with, the four traders who directly carried out the trading now appear likely to do some porridge. The bullying head of the options desk, Luke Duffy, was sentenced to 29 months with a minimum of 16 months after pleading guilty to three charges of using his position to gain financial benefit, but he's already out on home detention and will have done his time by Christmas. He is villain number one in all of this.

In April, senior trader Gianni Gray was sentenced to 16 months behind bars and ordered to serve only eight months after also pleading guilty to three charges of using his position for personal advantage. He'll also be out by Christmas.

Vince Ficarra and David Bullen, the latter a fruit cake who published a terrible book about his experiences, fought the charges arguing they were the most junior traders and simply following orders but on Saturday both were found guilty by a jury after just six hours of deliberation and will be sentenced on 26 June.

Therefore, it appears likely all four will do brief porridge stints in a major victory for corporate regulator ASIC, which first laid charges in December 2004 and has moved with great speed on this matter relative to other more glacial probes in the past such as Steve Vizard's insider trading and the notorious Solly Lew Yannon transaction at Coles Myer in the mid-1990s.

All up, it's been a pretty impressive case of corporate accountability and regulatory intervention. The prudential regulator APRA, which was asleep when HIH collapsed in 2001, came at NAB like a bull at a gate and even had the temerity to shut down its forex options desk for more than a year, as if the $60 billion behemoth was somehow in danger of collapsing under the weight of unauthorised trading any day.

Then you have the board and management accountability which this 2004 timeline shows was incredibly fast:

13 January, 2004: scandal first publicly announced
2 February: Frank Cicutto sacked and John Stewart appointed new CEO
16 February: Charles Allen resigns and Graham Kraehe appointed new chairman
12 March: NAB releases response to PwC investigation and fires four of its top 12 executives
26 March: gang of seven directors announce proposal to call EGM to sack Cathy Walter
2 April: CFO Richard McKinnon announces retirement
7 April: NAB announces KPMG to be replaced as auditor
5 May: directors Ken Moss and Ed Tweddell announce intention to retire in three months
7 May: Cathy Walter resigns from board so EGM to sack her cancelled
21 June: Wesfarmers CEO Michael Chaney joins board and announced as new chairman from September 2005
11 August: Ahmed Fahour and Michael Ullmer recruited and announced as John Stewart's two new heir apparents

The only residual issue is potential litigation by NAB against BGC International and ICAP, two global currency broking houses which allegedly were complicit in some of the false data entry. It sounds a long shot, but NAB might extract a quick $50 million after issuing an initial ambit demand for a whopping $539 million.

Copyright © 2024 The Mayne Report. All rights reserved

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