More bureaucrats, Mark Day, Ray White real estate, News Corp and Wal-mart, Crane Group

10. The huge list of fired NSW bureaucrats


By Stephen Mayne

David Blunkett's resignation from the Blair Cabinet last night over a conflict of interest and breach of the ministerial guidelines once again shows how the Westminster system of accountability is meant to work. Blunkett didn't run a private position past a committee which vets what former Ministers can do for two years after leaving office, so he was out for the second time in a year.

Given that John Howard is following Tony Blair on new anti-terror laws (which Blair backed down on big time overnight), why doesn't he follow suit on upholding ministerial standards? Isn't it all a stark contrast with Australia? How many years has it been since John Howard fired a Minister over a breaking scandal or blunder? Certainly not this millennium.

And what about the NSW Labor Government? Has anyone seen a higher ratio of sacked bureaucrats to Ministers than the last 10 years of blundering administration in NSW. It will probably take a couple of days to track them all down, but here's an initial stab at ten of the NSW bureaucrats who have fallen on their swords or been sacked whilst a Minister has remained in the job.

Amanda Adrian: sacked as Health Care Complaints Commission by Health Minister Morris Iemma in 1994 after the inquiry into the Camben and Campbelltown hospitals.

Helen Bauer: sacked in 1998 after just 15 months as head of the difficult Department of Community Services.

Ken Baxter: Bob Carr hired Jeff Kennett's top bureaucrat when he won office in 1995 but then fired his departmental secretary in 1997.

Grahame Bush: stood down as chairman of the South Western Sydney Area Health Service over the Camden and Campbelltown hospital scandals.

Energy Australia Board: Treasurer Michael Egan sacked all six board members of what was then Australia's biggest electricity distributor in November 1997 but never really gave an adequate explanation.

Paul Forward: quit as CEO of the Roads and Traffic Authority last week after what Roads Minister Joe Tripodi called "a grave mistake" in not disclosing full details of the financial liabilities for taxpayers in the Cross City Tunnel contract.

Mal Hemmerling: sacked as CEO of SOCOG by Michael Knight in 1997.

Kaye Loder: sacked by Bob Carr as chairwoman of the NSW Casino Control Authority in April 2000 after making comments on Four Corners suggesting she would prefer drug money went through the Sydney casino rather than interstate.

Ian Southwell: sacked as CEO of the South Western Sydney Area Health Service over the Camden and Campbelltown hospital scandals

Alex Walker: departed as CEO of Sydney Water in 2003. The Opposition claimed at the time he was "made to carry the can for the board and the government's incompetence".

This list will probably finish up at more than 30, so keep the additions and suggestions coming to smayne@crikey.com.au.



20. Mark Day: how Rupert and I stirred up outrage over Gough



By Stephen Mayne

Mark Day had an interesting column in The Australian today reflecting back on the role he and Rupert played after Sir John Kerr sacked Gough Whitlam, which included the following:

I was editing the Sydney Daily Mirror at the time. Peter Barron, later to go on to high office within the Hawke government and then as a lobbyist for Kerry Packer, was our man in Canberra and it was he who rang shortly after 1pm saying: "Kerr's sacked Gough - I've got to go." Click.

This conversation took only a few seconds, and I hardly stopped as I rushed from the Mirror's editorial offices to the adjacent executive suites. Without knocking I burst into the anteroom next to the boardroom where Rupert Murdoch, then chairman Ken May and editorial manager Frank Shaw were among a small kitchen cabinet chomping on sandwiches and generally chewing the fat. "Kerr's sacked Gough," I spluttered. There was stunned silence for a few seconds. Then, at once, Ken May threw his napkin into the air and shouted "He's done it!" while Rupert rushed past me towards his own office, and the others demanded more details than I could provide.

We had a special edition on the streets in half an hour, and kept the presses running flat out all afternoon. That evening, Rupert came to my office and suggested we should carry an editorial the next day saying "More in sorrow than in anger, Gough's got to go."

I set about drafting 500 words around that theme, detailing the Whitlam government's perceived failures, and sent a copy to Rupert for proprietorial approval. It came back with one word changed.

That editorial inflamed some elements of a massive public protest rally held in Hyde Park the day after, and hundreds of angry protesters marched on the Mirror building in Surry Hills to vent their anger.

I watched from the fourth floor as they surrounded trucks carrying papers, tore bundles from the trays, scattered them in the streets, and set them on fire. It was a radicalising moment if only in the sense that it was an extraordinary demonstration of the power of words. Never have I witnessed, before or since, such an extraordinary reaction to any words I had cobbled together.

Of course, there was more to it than that. Murdoch had enthusiastically backed the Whitlam government into office, and now he was being seen as a principal agent in its removal.

Amid all the reflections on the Whitlam sacking, it would be great to hear Rupert's perspective. I've booked the flights this morning for Rupert's "shareholder information meeting" in Adelaide on November 16 and we'll certainly try to engage him on Whitlam given the historic 30 year anniversary.

Day's mention of Frank Shaw also brought back some memories. He's one of those classically loyal Rupert types. When I was business editor of The Daily Telegraph in the late 1990s, he would ring from somewhere in the building every day just to check the News Corp share price.

Many years after retiring he was still coming in every day for some sort of loyal company historian role.



28. The ups and downs of the Ray White real estate empire



By Stephen Mayne and Sophie Vorrath

ASX listed property valuation company LandMark White has seen some interesting personnel shuffling and share trading in recent months as the stock continues its slide (see graph below) from a high of $1.10 last November to 63c.

Directors were certainly keen to support the stock earlier this year, usually at above market prices and when volume was very small, as often happens with small, tightly held companies. However, it will be interesting to see if the same applies come December when the two year escrow expires and the directors are free to dump the stock.

Given the recent resignations, who could blame some directors for wanting to get off the register. Non-executive chairman Ian Rust quit last Tuesday and Ross Perkins also resigned from the board and his position running the Queensland operation.

The previous week, National Research Manager Matt Whitby bailed out, following the move to retrench the entire research department across Australia in April this year. This was done without making an announcement to the ASX and was denied when Helen Westerman from The Age made some inquiries.

So just what buying did the directors of LandMark White do during its steady decline, something HIH Insurance directors also did in the year leading up to its demise? In total they bought 76,350 shares between 27 June and 14 October.

As you can see in the chart, LandMark White's share price rose 10c from around 60c in mid-June to 70c in mid-July, during which time, LMW's non-executive director Stuart Gregory bought 16,800 shares, while former chairman Ian Rust bought 6,550 shares.

Before the price spiked a further 2c to 72c in August, the company's largest shareholder – with a 36.8% stake – executive director and now chairman Glen White bought 10,000 shares. While on 1 September, the company's second-largest shareholder and Managing Director Bradley Piltz bought 23,000 shares.

The White family stake is only worth $6 million given Landmark White's paltry market cap of $17 million, but the family should be much happier with what's happening at realestate.com.au, which is now capitalised at $268 million. The family's 15.13 million shares are worth $37.8 million based on News Ltd's $2.50-a-share takeover offer.

Interestingly, the independent directors are rejecting Rupert's advances but News Corp has lent realestate.com.au some cash to fund its share of a joint purchase of a UK property portal which was announced yesterday.

The White family of Ray White fame were on the Crikey Revised Wealth (CRW) list before News Ltd's realestate.com.au takeover bid drew attention to their appreciating assets.



29. News Corp and Wal-Mart – birds of a feather


By Stephen Mayne

The New York Post produced an interesting editorial two weeks ago ripping into the unions and do-gooders who have kept the world's biggest retailer, Wal-Mart, out of New York City.

However, poor old Wal-Mart will need more than support from one of its biggest commercial partners, News Corporation, to offset the rising tide of community unrest that will culminate with the launch of Robert Greenwald's $US1.6 million documentary, Wal-Mart: The High Cost of Low Price in New York on November 13. Wal-Mart shares have fallen by more than 20% this year and rising community opposition is partly to blame. A company PR counter-attack has been launched this week.

This piece in The Miami Herald provides a nice scene-setter for the battle that lies ahead and certainly elevates Greenwald as a figure competing with Mike Moore for anti-Bush propaganda power. After all, Greenwald's Out-Foxed has now sold 200,000 copies – which might explain Rupert's ferocious New York Post editorial.

Another explanation is the recent appointment of Paul Carlucci as the new publisher of the paper, replacing Rupert who briefly replaced Lachlan Murdoch after he resigned his executive positions three months ago. To understand the News Corp culture and Carlucci in particular, check out parts of this tough piece that Forbes magazine ran in its October 31 edition:

Paul V Carlucci takes no prisoners. The head of a marketing division of Rupert Murdoch's News Corporation, Carlucci once rallied his sales force by showing a film clip from The Untouchables in which Al Capone beats a man to death with a baseball bat.

The approach has helped make Carlucci's News America Marketing powerful and feared in the business of in-store and coupon marketing. It's a low profile but highly profitable enterprise which pulled in $US1.1 billion in sales, up 9%, for the year. It's profit margin before interest and tax: 28%.

"News America is to in-store media what Wal-Mart is to retailing," says Kenneth Harris of WPP.

But some News America rivals its success comes at their expense – and by dint of dirty tricks. Floorgraphics of Princeton claims in a law suit filed in the federal court in New Jersey in October 2004 that News America offered to pay retailers not to do business with Floorgraphics. What's more, Floorgraphics says News America infiltrated its password-protected computer system to acquire information on contracts with retailers.

But Murdoch's company is also under fire for the way it maintains its edge in the newspaper-insert business. A California jury recently found News America, which distributes SmartSource, a freestanding coupon circular that reaches 70 households every week through 1,200 Sunday newspapers, guilty of violating anti-trust and unfair-competition laws. The jury awarded privately Theme Promotions, a company with $US10 million in 2004 sales, $US7 million in damages this past August.

There may be more trouble ahead. Valassis Communications, a publicly held newspaper-insert company has said that the Federal Trade Commission was conducting an investigation to determine whether Valassis tried to fix prices by soliciting an agreement with a competitor Valassis didn't name. Valassis and News America control almost all of the coupon-insert market. News America says it isn't under investigation.

Given that Wal-Mart sell more News Corp DVDs than anyone else in the world and the two companies have a big relationship through in-store advertising, The New York Post's editorial position is hardly surprising, especially given the corporate thug who now publishes the paper.



30. Crane Group runs the remuneration gauntlet


By Stephen Mayne, small Crane Group shareholder

Just when Crikey declared that shareholder voting against remuneration reports was lower than expected, along came a 45% "against" vote for plumbing supplies company Crane Group yesterday, as you can see here.

However, just like with AGL, the protest was focused on a specific resolution – the incentive scheme for CEO Greg Sedgwick to collect 50,000 free shares just for staying at the company until 2007. There were no performance hurdles so this was almost rolled with a final vote after the poll of 14.33 million shares in favour and 12.57 million against.

The Herald Sun got it wrong today saying this was "non-binding" as Sedgwick almost joined the very small list of defeated or withdrawn resolutions.

However, if concern was so high about this package, why didn't the shareholders also vote against the actual remuneration report which had 25.16 million proxies in favour and only 771,146 against?

After all, Sedgwick collected a ridiculous $470,000 pay rise to $1.7 million last year when the company he's running saw its market capitalisation drop back below $600 million after this morning's 40c drop to $10 in a stronger market. An overpaid CEO getting free shares without hurdles should see the specific resolution and the overall remuneration report rejected.

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