David Murray, conflicts of interest, NSW tunnel stuff up, pay sagas

6. Is David Murray the right man for the Future Fund?



By Stephen Mayne

Crikey argued long and hard that former Commonwealth Bank chief David Murray shouldn't be appointed CEO of Telstra and, thankfully, the board ended up going for American Sol Trujillo.

However, we now have the prospect of Murray being appointed chairman of the Federal Government's Future Fund, which is projected to have more than $100 billion under management within a few years once the full sale of Telstra is completed.

This will make Murray one of the most powerful forces in Australia when it comes to upholding good corporate governance and driving a much-needed culture of shareholder pressure. How Murray votes the Future Fund's stock on issues like executive pay will be vital.

But does Murray, who has just retired with a $17 million retirement payout, believe in shareholders taking an active stand? Crikey attended a remarkable meeting with Murray in late 1998 during a major dispute between his bank and The Daily Telegraph. News Ltd heavies at the meeting included current executive chairman John Hartigan, then Daily Telegraph editor Col Allan and current Sunday Times (Perth) editor Brett McCarthy.

Murray had pulled his bank's advertising because of a campaign the paper had run to save two branches in Western Sydney, plus a withering attack on David Murray over his "we should be sent herograms" claim and my appearance at the 1998 AGM.

During the course of the meeting Murray declared that the debate shouldn't be about how AGMs are conducted, but whether they should be held at all. He warned that people like me would send Australia down the Japanese path which sees major companies holding their AGMs on the same day to thin the resources of the notorious Yakuza gangs.

He then, only half-jokingly, said that CBA put fans behind the hot food to blow the nice smell into the AGM to encourage the elderly sandwich brigade to wind up proceedings as early as possible.

Is this the sort of man who should be representing the superannuation entitlements of hundreds of thousands of past and present federal public servants?



7. Five more conflicts of interest



By Stephen Mayne

The email has been running hot suggesting ongoing conflicts of interest and favourites from recent history. Here are five additions from each category and please keep the tips coming to smayne@crikey.com.au.

Five ongoing conflicts of interest

Stephen Hollings: The News Ltd executive is also chairman of the Audit Bureau of Circulations and is busily claiming there is no circulation rorting going on, especially by his employer who controls almost 70% of Australian's metropolitan newspaper circulation.

John Pandazopoulos: Victoria's Gaming and Racing minister was in the Tabcorp tent as usual. He was also on the Tabcorp table at the Cherie Blair dinner earlier this year. Given Tabcorp's wagering and gaming licences expire in 2012 and negotiations for renewal will begin soon, the Minister really shouldn't be accepting anything from Tabcorp.

Public Service Association of NSW: Claims to represent NSW public servants, but is run by Labor Party appointees and cronies who often act with the government's interests in mind. How can you represent employees when you're so tied up with the employer?

Stuart Gregor: Recent column in the Sunday Telegraph's Sunday magazine was all about the Australian Hotel Beer Awards, about which he writes in glowing terms. What he doesn't say anywhere is that the publicity for the event is handled by Liquid Ideas, owned by Stuart Gregor.

Public company auditors: Given the billions of dollars made by auditors every year, there is a huge inherent conflict in that they don't want to upset the company they are auditing, for fear of losing the lucrative gig. To remove the conflict, you really should have ASIC appointing the auditors on the basis of the toughness and independence they show to management.

Five favourite conflicts from the past

John Singleton: Kerry Packer's great mate joined the consortium that bought Network Ten in 1992 and he attended board meetings for a while until it was decided he was just too close to the Channel Nine owner and he quickly departed.

Richard Face: Bob Carr's Minister for Gaming and Racing was caned a couple of years ago when he retired and then planned to work as a 'consultant' in the same area. He even used Ministerial resources to help establish his business and was damned in this ICAC report.

Stan Howard: When National Textiles collapsed in 1999, enormous pressure was placed on the Federal Government to bail out the workers who'd been left with their entitlements at risk by a board led by the PM's older brother, Stan Howard. However, the PM's involvement in the decision to throw millions at the bailout was a clear conflict of interest.

David Flint: Being interviewed by John Laws about the Republic at a time when the then Australian Broadcasting Authority chairman was running the cash for comment inquiry. Later revealed to have written several laudatory letters to Alan Jones when the ABA was also investigating Jones over his Telstra sponsorship deal.

Keith Murdoch: Rupert's dad thought it was okay to temporarily step aside as chief executive of the Herald & Weekly Times and become Director-General of Information during the WWII, even attending the War Cabinet and presiding over censorship decisions. Sir Keith's private purchases of stakes in Queensland Press and News Ltd when the HWT should have taken the stakes were also a massive conflict of interest.



24. Yet another NSW tunnel stuff up



By Glenn Dyer and Stephen Mayne

If it wasn't so serious, you'd be chortling at yet another tunnel stuff-up that's captured the NSW Labor Government. Less than 24 hours after releasing that second load of documents about the Cross City Tunnel, the Government has been embarrassed by a direct threat to human and life and property in the Lane Cove Tunnel.

The reports, involving a hole 10 to 15 metres long and more than 10 metres deep (it breached the tunnel after a rock slippage into the tunnel overnight) started rolling in the early hours this morning, shortly after 2am and before the documents from the previous day's release had been fully digested. Here's a report on the latest revelations about Cross City Tunnel.

Many political operatives were looking forward to settling down and reading the thousands of pages released by this most cynical of Governments, and its Roads Minister Joe Tripodi. They were released as the Melbourne Cup was being run in Melbourne, an act of political cynicism that's typical of Tripodi, who seems to be a Teflon minister because of his role in pushing Morris Iemma into the Premiership.

According to early reports, the Cross City tunnel operators have the NSW Government by the short and curlies and yet there's still no move to sack the then Minister, Carl Scully. No wonder Bob Carr jumped to the golden halls of Macquarie Bank. What's more interesting is that a bloke called Paul Levins is the head of corporate affairs for the tunnel builder, Bauldestone Hornibrook. He was the chief of staff to the former NSW Infrastructure Minister, Craig Knowles.

Makes you wonder just how the NSW Government can claim to have been so ignorant of what was going on when it ran the department negotiating with the tunnel builders and operators, and had at least one strategically-placed former operative in place as an early warning system.

The slippage and rising damage bill for the Lane Cove Tunnel will crystallise growing concerns about the agreement with its builders and operators, the Leighton Holdings subsidiaries Thiess and John Holland. Leighton shares slumped as much as 80c this morning and by 10.30am were down 43c to $14.84, a loss of $119 million in market capitalisation.

Transfield Services is the long-term operator and maintainer of the tunnel and its shares fell 10c to $7.20. You've got to feel a bit sorry for Hong Kong billionaire Li Ka-shing whose CKI is the major shareholder in both troubled tunnels. Check out this upbeat press release when the 40% Lane Cove Tunnel investment was made and this link explaining the 50% stake in the Cross City Tunnel.

What next? Some sort of massive power blackout to stymie CKI's forthcoming $1 billion-plus Spark Infrastructure float of its Australian electricity operations.

With the same party on the other side of the table, it is no wonder there's believed to be similar agreements in place with both tunnels to restrict alternative road use. Perhaps the NSW Government can be forced to release all these documents before the Lane Cove Tunnel opens and hopefully this latest problem will force an early debate.

There's a block of units that will have to be demolished and Epping Road – perhaps the second most important road into Sydney – which is closed today as workers attempt to stabilise the situation by pumping hundreds of tonnes of concrete into the hole.

Residents from the area reported they've been having problems with water pressure over the past four months. This morning it took several hours for the builders to confirm that it was the rock slippage that caused all the problems. Under the tunnel agreement there was supposed to be constant monitoring of the ground by the companies while the construction went on. The water pressure problems for the past four months call that into question.



25. The different pay sagas of Novogen and ConsMin



By Stephen Mayne

The AFR ran a front page story this morning headlined "Payback time: shareholders vote against big salaries," which suggested the non-binding votes on remuneration reports showed plenty of concern among investors. However, the paper has cranked up the numbers by including the "abstain" votes with the "against" votes to come up with a higher overall "protest" figure.

The AGM season is now about half finished and I thought there would be higher "against" votes on remuneration reports than what has been seen so far. John Fairfax is the most likely top 100 company to face a defeat on November 18 after Fred Hilmer's totally unjustified $4.5 million golden goodbye.

Pharmaceutical R&D company Novogen is undoubtedly a disgrace after copping a season high 72.5% primary "against" vote on the proxies and then going for the "passed by a show of hands" rort for the second year in a row when a pay resolution was in dire trouble.

Novogen's deception at last week's AGM even flushed out Dean Paatsch, one of the powerful proxy advisers for the global firm Institutional Shareholder Services, to make public comment as you can see here in The Age.

Check out Novogen's original and amended proxy results announcement here. Don't you just love the accompanying commentary: "The majority vote on the show of hands in favour and the 12.5% proxy vote against was noted by the chairman for this non-binding ordinary resolution."

What tosh. A show of hands from the floor is meaningless and there were only 4.62 million votes in favour of the remuneration report and 12.2 million votes against. Because it has 97 million shares on issue and a relatively low 20% turn out, this is how they could claim only 12.5% of the total share capital rejected the remuneration report.

Given that Novogen hasn't delivered any share price performance for two years, they can't run the same argument as Consolidated Minerals CEO Michael Kiernan who had his pay deal scuttled by institutions after creating a lot of value and then resigned in a huff, triggering a share price slump. On this one, the institutions should back down.

Check out the flurry of recent ConsMin announcements here and a six month comparative share price graph here. Kiernan is the former truck driver who got the stock up from 60c in July 2003 to a peak of more than $4.30 when his latest pay deal was framed three months ago. His resignation saw the shares tank from $4.12 to $3.12 in a month but his return got the shares back to $3.30 yesterday.