Samuel's first 1000 days, Sol's US mates, PNG needs Bouganville

4. Graeme Samuel's first 1000 days at the ACCC

By Stephen Mayne

Graeme Samuel notched up his 1000th day as chairman of the ACCC last Sunday, but even the veteran corporate mover and shaker would have been surprised by the merger mania that was unleashed on day 1001 when the ASX-SFE, Tatt's-Unitab and Transpacific-Waste Management merger proposals were unveiled.

So how has Australia's most important and powerful regulator performed? One thing's for sure, his early commitment to "put consumers first" has proven to be a non-core promise. Truth be known, Samuel has dramatically changed the nature of the ACCC by pushing most of the old consumer functions back to the states. For instance, Allan Fels would have pounced on any profiteering from Cyclone Larry, but Samuel has been silent on all that banana gouging.

In fact, the other member of Peter Costello's "Dream Team" compromise with the states, deputy chairman Louise Sylvan, has seemingly vanished from public consciousness since giving this interview to Alan Kohler the day before she started work in November 2003. Crikey understands that Sylvan, a former CEO of the Australian Consumers' Association and its global equivalent, is disillusioned with the big picture approach Samuel has taken to competition and structural issues – to the detriment of consumer enforcement.

Samuel is a workaholic who apparently only sleeps three to four hours a night. He's always right across everything that is going on and is a perfectionist who gets very angry when he makes a mistake or is given wrong information. He clearly dotted every i and crossed every t before launching the cartel case against Visy, but Dick Pratt remains the most powerful man Samuel has taken on so far. Given Amcor's early confessions, he didn't have any real choice in the matter.

The backflip over the Toll-Patrick merger surprised many as it created $1 billion in shareholder value over the weekend. It was arguably his most controversial move thus far and Patrick CEO Chris Corrigan believes Samuel was intimidated by the prospect of a long legal battle with Toll.

Indeed, Samuel was scarred when the ACCC suffered a "humiliating defeat" just five months into the job after a three-week legal battle attempting to block an AGL consortium taking over Victoria's giant Loy Yang A power station. Now Samuel must track AGL's proposed takeover of Alinta which would again focus heavily on competition issues in NSW and Victoria.

Whilst Samuel hasn't just been a doormat for merger proponents – witness last week's decision to block Barloworld's bid for rival paint company Wattyl – the tentative approval of the ASX-SFE merger is the first time his ACCC has green-lighted a deal that was specifically blocked by Allan Fels. Once again, the consumer issues seem to have been largely ignored.

A genuinely crusading competition watchdog would have also tackled the outrageously profitable bank cartel and weighed in on all that Sydney Airport gouging – but Samuel has preferred to just rule on the deals that cross his desk.

The Government is not happy with Sol Trujillo's Telstra and the forthcoming ACCC decisions on the regulatory environment ahead of T3 will be crucial. As a wily political operator, don't expect Samuel, a former Liberal Party Treasurer and preselection candidate for Peter Costello's old seat of Higgins, to sway too far from the script that Peter Costello wants.

Telstra is waging an unprecedented campaign for an Australian company yet the Government wants to flog a $30 billion asset so Samuel will need to be very conscious of preserving value in any harsh "cop that" retaliation that flows.

As far as managing the ACCC, insiders are full of praise. While the Wednesday Commissioners' meeting used to go all day under the slow-talking Fels, Samuel sometimes has it all finished in two hours because he sticks to the agenda and keeps everyone focused on the issues.

He undoubtedly has the intellectual fire power and real world experience to perform the job well. But those who believed he was too close to big business remain to be convinced he was what Australia's already highly concentrated corporate sector needed.


5. Sol brings in some more US workmates

By Stephen Mayne

While it's quite common in the retail industry to "buy one get one free", did the Telstra board really understand that when they "bought" Sol Trujillo they would get up to a dozen of his former workmates.

The original "three amigos" – marketing boss Bill Stewart, chief operating officer Greg Winn and regulatory lame duck Phil Burgess – are well known Sol workmates but another two senior positions have gone to former US West/Qwest employees. Were there really no suitable Australian candidates for these roles?

The company announcement explained the latest hirings as follows:

As we "farewell" these team members, we officially welcome on board Bill Obermeier and Gloria Farler. Bill, who has been running his own consultancy in the US, has already made a major contribution to our new Branding and Strategy exercises. He brings to Telstra his extensive international experience in developing marketing, brand, advertising, PR and promotion strategies for clients including BellSouth, Bell Atlantic, Intelsat, US West and Qwest.

As Managing Director – Brand, Advertising & Sponsorships, Bill's direct reports will be Georgie Nichols (General Manager, Media), Lisa Gardner (General Manager, Sponsorships), Jon Wild (General Manager Brand and Advertising) and Melanie Reynolds (Manager, Process and Planning). His appointment is effective 10 April 2006.

Gloria Farler joins Strategic Marketing as Managing Director – Market Based Management and brings to Telstra more than 20 years international marketing experience in independent marketing consulting to companies such as Time Warner, Orange/France Telecom, Bell Canada, Rhythms Netconnections and US West. Gloria also is an Adjunct Professor at the University of Denver. Gloria's team will take Lynette Elliott's work forward and will provide customer-focused tools and processes to facilitate marketing decisions and the implementation of market based management. She will assume her role on the 18 April 2006.

Then there is Tom Lamming, the highly paid IT consultant who reportedly knocked back the role of chief information officer but is billing Telstra $15,000 a day from his home in Denver.

However, it should be stressed that Sol is not recruiting exclusively from his personal network and has also really blazed the trail in finally breaking the glass ceiling at Telstra. Whilst John Stanhope is still hanging in there as chief financial officer, a replacement is waiting in the wings in Tarek Robbiati, the deputy CFO who Sol recruited from Europe.

After his old workmate Lamming knocked back the job, Sol recruited Fiona Balfour from Qantas as chief information officer and Andrea Grant from Holden was appointed head of HR – a sensible choice given the head count reductions Telstra is planning aren't that different from the axe wielding that recently went down at GMH.

Two other internally promoted woman have also benefited from Sol's reign, namely Kate McKenzie, the former regulatory chief who is now running Telstra Wholesale and Holly Kramer, Ziggy's old marketing boss who is now in charge of product management.

Then again, George Trumbull was also well known for promoting women at AMP but still proved to be the most disastrous American import of all time. Let's hope Sol doesn't finish up in the same category.


14. More unionists who defected to the dark side

By Stephen Mayne

By jingo, there have been a lot of sell-outs by unionists over the years but perhaps the most financially successful former union official is Morgan Stanley's Australian boss Steve Harker as one Crikey subscriber explains:

I am not sure which union it was that he started out as an official but it has always struck me as one of the most remarkable transformations. That of Steve Harker, the former shop official turned investment banker who ran BZW in Australia and then was global deputy to John Mack "the Knife" in London prior to its sale to ABN Amro. On return to Sydney he took up the reins as CEO of Wall Street powerhouse Morgan Stanley in Australia and the puff piece on him in The AFR last week said he had gone from 15 to 250 people in the last few years. He currently owns and resides in a three storey house on the harbour in Point Piper. That's quite a ride!

The names listed below are mainly from Victoria but check out the rapidly expanding full list on the site here.

It is probably a bit rough to accuse someone of selling out if they left a health union to work in the IR department of a public sector health department under a Labor Government but for the time being we're including them:

Colin Sutherland: Former state secretary of the Municipal Officers Association (now ASU) looking after SECV workers but then took up a position as South East Asian regional manager for US giant Mission Energy which bought the Loy Yang B power station.

Paul Burns: Former La Trobe Valley industrial officer for the MOA (SECV) Branch before defecting to Mission Energy which bought Loy Yang B.

Trish Caswell: Industrial officer with the Victorian Trades Hall before joining the ACF and then completely selling out by joining the Forest Industries Association.

Alan Saltry: Industrial officer, MOA (SECV) Branch before joining the SECV IR department before its privatisation.

Barbara Thompson: Industrial officer with ANF, MSAV and HSUA. Replaced Tim Lees as Director, IR with Victorian Health Department.

Sue Mountford: Branch secretary of the SPSF/CPSU and now employed in IR Division of HDV.

Bob Burrows: Senior industrial officer with ANF. Now works for the Victorian Hospitals Industrial Association (VHIA) which represents public hospitals which are in dispute with health workers.

Les Butler: General Secretary of the Hospital Employees Federation before doing HR with the Royal Women's Hospital followed by the VHIA and now HR at Western Health.

Sam Eichenbaum: Was secretary of the Medical Scientists Association (part of the HSU) before joining McPherson and Kelley, employer solicitors.

Ian Oldmeadow: Went from ACTU to Qantas.

Val Gostenick: Industrial officer for the ANF before joining legal firm Corrs Chambers Westgarth where he is now a partner.

Anne-Marie Corboy: Went from being Secretary of the then VSTA to CEO of industry fund HESTA after losing an election. Is chair of the board at Northern Health where she presides over privatisations and contracting out.

Iain Ross: Was an officer of the ACTU before joining the AIRC and is now with legal firm Corrs Chambers Westgarth.

Barbara Hart: Was an officer of the Victorian Trades Hall assigned to the Health Unions Group but is now with HR at Northern Health.

Fran Williams: A former organiser with the Health Services Union Victoria #1 Branch. Went to the Services Industry Advisory Group working against health workers.

Feedback and corrections to smayne@crikey.com.au


24. Beattie lands his Victorian energy retailer

By Stephen Mayne, small Australian Energy shareholder

With the Liberman family sitting on the sidelines and not voting their 19% stake, shareholders in electricity retailer Australian Energy this morning overwhelmingly voted in favour of selling the company to the Queensland Government-owned Ergon Energy for $103 million or $1.95 a share.

Crikey was the only shareholder to speak but chairman Alan Castleman, who was threatening to sue for defamation in our only previous encounter, declined to elaborate on any conversations or deals that had been done with the Libermans.

Based on the numbers, it looks the Libermans didn't have enough shares to vote the deal down after Ergon refused to accede to its demands and lift its offer. A total of 75% of all shares were voted and 99.3% were in favour. Even if the Liberman family had voted their 19% stake against it, the 75% approval requirement would still have been met.

Besides, voting down the deal would only have served to junk the share price and attract the sort of publicity that the super-secretive Melbourne billionaires hate.

The whole scenario is a triumph for former Victorian Treasurer Alan Stockdale who broke the vertically integrated SECV up into 15 pieces and created a world-leading competitive model complete with an active spot market.

Stockers dreamed of new players entering the game and delivering benefits to customers – Australian Energy's prices are an average 6-10% below the lumbering giants of the industry – and that is precisely what the company did when it floated five years ago after raising just $8 million.

The sale to Ergon has been a bonanza for the 100 staff who still own about 40% of the company but Ergon does desperately need their trading expertise when a full competitive market is finally opened up in Queensland on 1 July next year.

All up, this is a good corporate story which includes benefits for customers, innovation, competition and a very tasty return for Australian Energy shareholders, including the scheming Libermans who paid an average $1.50 a share for their stake, despite dropping a few hundred thousands with their botched over-the-odds purchase or an additional 9% stake to try and force the bid price up.

Peter Beattie's boys at Ergon didn't blink, the Australian Energy shareholders showed no sign of supporting the Libermans and they remained on the sidelines and embarrassed at today's EGM.


25. Why PNG needs Bougainville Copper

By Stephen Mayne

The Bougainville Copper 2005 annual report was released this week but it will only be more doom and gloom for any shareholders who bother to turn up for the annual meeting in Port Moresby on 2 May. Chairman and managing director Peter Taylor, from 53.5% owner Rio Tinto, opened his commentary by getting straight to the point about the missed opportunity for one of Asia's poorest nations:

From 1972 until 1989 Bougainville Copper Ltd operated a large open pit mine and processing facility at Panguna on Bougainville Island in the North Solomons Province of PNG producing copper concentrate containing significant quantities of gold and silver. On 15 May, 1989 production was brought to a halt by militant activitity.

In the 17 years the mine had produced concentrate containing three million tonnes of copper, 306 tonnes of gold and 784 tonnes of silver. The production represented approximately 44% of PNG's exports over that period. Contributions to the National Government in the form of taxes, duties and dividends (PNG owned 19%) were approximately 17% of internally generated PNG government revenue during that time.

Given the record commodity prices at the moment, we're talking $35 billion worth of past production in today's dollars – $22 billion in copper, $8.6 billion in gold and $4.3 billion in silver. And how poor is PNG? Well, this is what Klaus Rohland from the World Bank said in a recent lecture:

Almost 30 years after independence, PNG's development record is dismal. According to World Bank figures the country has hardly made any progress on development indicators. Gross National Income in 1977 was $US490, as of 2001 – and in real terms this means it's significantly lower than it was 25 years ago.

Adult literacy stood at 32% in 1977 compared to 36% in 2001. Life expectancy was 48 years then and has improved to 59 years in 2001. Infant mortality has stagnated around 80 per thousand. At the same time, the population has grown from 2.9 million to over 5 million. And most worryingly, HIV/AIDS is rapidly increasing: Papua New Guinea ranks 4th in East Asia after Myanmar, Thailand and Vietnam. PNG ranks 164th in the list of the world's countries – close to Dijibouti or Chad, two of the poorest countries in Africa.

So here we have a poor neighbour and former colony, a lucrative mine and a global resources boom, yet nothing has been resolved. Taylor said the following about the future:

There is a clear revival of interest in mining world wide driven by the demand for metals to fuel China's rapid growth. PNG, Bougainville and the company are well placed to take advantage of this upturn in resource activity. They need to work together now to develop a strategy that is mutually beneficial. BCL will be doing what it can to ensure the opportunities are not missed.

After ten years in government and billions of dollars in aid, it really is a shame that our relationship with PNG is more noted for Sir Michael Somare getting upset about having to take his shoes off at Brisbane Airport rather than any long term settlement that got the giant Bougainville mine back up and running.

Sure, the issues are difficult and complicated, but we've now spent more than $1 billion frolicking in Iraq when a bigger deployment to our nearest neighbour might have got the mine up and running again.

Copyright © 2022 The Mayne Report. All rights reserved

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