Newcrest's ethics quiz from ex CEO in 1998
January 29, 2008
Unfortunately, I was down the road at Pasminco on October 28, 1998, when this Newcrest meeting took place, but Barry Fitzgerald from The Age captures the drama well in this report.
Newcrest Mining's annual meeting in Melbourne yesterday was the scene of some extraordinary hypothetical questioning on directors' ethics by the goldminer's former long-serving managing director, Mr John Quinn.
Speaking as a shareholder in the company, Mr Quinn's hypotheticals were directed through Newcrest's retiring chairman, Sir Roderick Carnegie, to the group's chairman-elect, Mr Ian Johnson.
Mr Quinn asked Mr Johnson "what if, for example" he became aware that a director had compromised his position by soliciting a "clearly uncommercial loan from Newcrest's advisers, such as a multi-million-dollar non-recourse advance to invest in highly volatile mining shares?".
The question had another leg to it. What if a director sought to acquire "large numbers of call options over Newcrest shares immediately after being approached by the CEO of another mining company with what amounted to a takeover proposal at a handsome premium to Newcrest's prevailing share price?".
Mr Quinn said he wanted to know would Mr Johnson as chairman not tolerate such behaviour and would he do all in his power to "seek the removal of such a person from any further involvement with the company?".
Mr Johnson's answer to the three questions was as abrupt as Mr Quinn's was long. "Yes, yes and yes," Mr Johnson said.
Seasoned annual meeting observers had never heard anything like Mr Quinn's questions before. After the meeting Mr Quinn was asked what was the intent of the questions. "They were hypothetical questions," he said.
Mr Quinn's nine-year tenure at the helm of Newcrest ended in May last year. At the time the group's share price had taken a battering because of the group's ill-fated attempt to force a merger with Normandy Mining and the revelations that its flagship mine, the Telfer goldmine in Western Australia, was struggling to secure a future.
Again after the meeting, Mr Quinn said he had an enormous amount of faith in the company and that it had a mining asset base that was second to none in Australia.
Mr Quinn was replaced as an interim measure by Mr Johnson, a former CRA stalwart, and more recently by Mr Gordon Galt.
The recasting of Newcrest continued throughout last year, with Sir Roderick announcing ahead of last year's annual meeting that he would step down at yesterday's gathering.
Explaining the decision at last year's meeting, Sir Roderick said that accountability within the group for the mistakes "starts from the top".
"I am sorry, I must go," he said.
"Your board accepts its accountability for those decisions which were within its control and which resulted in our company's lesser performance," Sir Roderick said. He said the group's loss- making foray on to the Normandy Mining share register was clearly a poor one.
He continued that theme yesterday, telling shareholders as he stepped down that it was now time "for me to complete the process of accepting accountability for the past so the new board can move the company forward".
The more mundane issues of profits and dividends were addressed at yesterday's meeting.
The net loss for the September quarter was $3.7 million, slightly better than forecast. The development of new mines means the company expects to be generating profits representing more than 10 per cent of shareholders' funds from 2001-02 and that dividends could begin to flow from 2000-01.
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