Putting Peter Joseph through his paces at GPT

By Stephen Mayne
January 15, 2008

This was sent to Crikey subscribers on April 19, 2006, although I subsequently had a meeting with Peter Joseph and concluded that his dealings with Kerry Packer were all above board.

When Kerry Packer passed away on Boxing Day, former St Vincent's Hospital chairman Peter Joseph was all over the media telling the world what a generous benefactor he had been.

This, of course, is the same Peter Joseph who is chairman of GPT Group and was a director of ANI back in 1991 when Packer lobbed one of the most infamous hospital passes in Australian corporate history – the notorious $2 million sale of his bleeding European environmental waste management business ABT.

This related party transaction was neither disclosed nor voted on by shareholders, but two weeks later Packer sold his remaining 30% stake in ANI, crystallising a profit of $200 million.

In 1994, Ross Palmer sold his company, Palmer Tube Mills, to ANI but made the mistake of accepting ANI shares for 90% of the proceeds at the nominal price of $1.90 a share. When ANI's European Holter-ABT division suddenly caused a $400 million write-down in 1996, the shares plunged and the Palmers found themselves seriously out of pocket.

Come 1996, Ross Palmer and another director, Fred Smith, were the only two independent ANI directors who didn't approve the ABT deal, so they steamed ahead with their own two-man board investigation and got some legal advice from Mallesons suggesting ANI should sue Packer for $400 million.

At this point, Peter Joseph proposed a special resolution and succeeded in having Palmer dumped from the board for being "disharmonious and disruptive" at the 1996 AGM. The resolution succeeded partly because Joseph's colleagues at BT lifted their stake from 3% to 15% and voted against Palmer. Sadly this wasn't too flash an investment and ended up costing BT about $40 million, which wasn't quite as bad as the $150 million they dropped backing the Packer's in One.Tel, but that's another story.

Anyway, I treated 260 shareholders in GPT to a little history lesson about this saga yesterday when it came to the proposal to give Peter Joseph another three years as chairman.

Given GPT's sweetheart deal with Frank Lowy's Westfield Group last year and the recent deal over Highpoint with Melbourne billionaire Marc Besen, I asked whether Joseph had a habit of going weak at the knees when confronted by a billionaire.

Sadly, acting GPT chairman Ken Moss ruled the statement out of order and said there was no need for Joseph to respond. As a long-time chairman of the St James Ethics Centre, Joseph has no doubt spent many hours contemplating what happened at ANI 15 years ago.

Second GPT AGM story in Crikey

Corporate Australia has a history of companies getting a very soft run at their first AGM. That certainly could have been the case for the newly liberated GPT Group yesterday, after they won over crazy Jack Tilburn by promising to change the font in the annual report at a tea and scones routine two weeks ago. How cheap is he?

However, this tiny GPT shareholder flew to Sydney yesterday and let fly in what turned out to be an unscripted alliance with the property writers from The Australian, primarily Paddy Manning, that injected some much-needed life into a meeting that otherwise would have been as dead as a dodo.

I got up about eight times over the two hour gathering and at one point read out a detailed extract from this story in The Weekend Australian about GPT's recent over-the-top purchase of 50% of Melbourne's Highpoint shopping centre, which included the following:

One source told The Australian the Besens had hoped to get over $500 million for the stake, but were staggered at the amount of money thrown at them by the fund managers. In the end, GPT Group paid $621 million, claiming it would get an income return of 5.5% in the first year. Industry experts still cannot make the deal stack up on those numbers and say the price reflected a 4.8% yield on Highpoint's current income, the first time a big commercial property asset has sold for a sub-5% yield in Australia. Even the Lowys, unquestionably among the smartest, most aggressive retail property investors in the world - could not believe the price paid for Highpoint.

This was the basis for my attack on last year's sweetheart deal with Westfield, when two prime GPT shopping centre stakes were sold at book value to secure Lowy backing for the proposal to dump a 30-year association with Lend Lease and endorse a new imbalanced joint venture with the sharp lads at Babcock & Brown.

Lo and behold, only The Australian produced a decent report of yesterday's AGM stoush, although it didn't confess to having their own stories quoted at length in the attacks. The media works in curious ways, doesn't it? A paper reports something, an activist runs with it and then the paper reports the activist's public attacks, thereby further confirming the validity of the original story which was strongly contested by GPT.

Paddy Manning, the son of ABC legend Peter Manning, was also the founding editor of Ethical Investor magazine, so it wasn't surprising his story also took up GPT's interesting response to questions about the "catastrophe" near their Ayers Rock Resort in the Mutitjulu indigenous community.

After beating the drum on how great everything was at GPT it was refreshing to hear both CEO Nic Lyons and chairman Peter Joseph agree about the on-going tragedy in that community and the need for much more to be done.