Councillor misadventures and News corp
July 22, 2008
Here are Stephen Mayne's three stories from the Crikey edition on Monday, 10 July, 2006.
17. More councillor misadventures
By Stephen Mayne
There was a very strong reaction to Friday's call for submissions for our forthcoming comprehensive list of councillor and mayor misadventures over the past 20 years. We're already pushing 20 names and here are ten of the new entries. Keep them coming to smayne@crikey.com.au.
John Abi-saab: former Mayor of Wauchope and Mayor of Hastings who lost a National Party preselection contest in Oxley then popped up on Strathfield council, which was rocked in 2004 by allegations which triggered an ICAC inquiry over alleged payments by local property developers. Abi-saab was accused by ICAC of an elaborate blackmail plot to become mayor.
Frank Arkell: former Lord Mayor of Wollongong and ALP MP who resigned in disgrace after paedophilia accusations and was eventually brutally murdered.
George Droutsas: The ALP mayor in the City of Whitehorse and Bracks government staffer was accused of running dummy candidates in the 2005 election but was cleared of any wrongdoing despite one candidate professing not to know they were running until contacted by a local newspaper.
David Jones: the Bendigo mayor's partner, Sheree Robertson, was fined $1500 in January for lighting a fire on their property when fire restrictions were in place.
Charles Matthews: the Randwick City Councillor received a bathroom vanity from a developer after providing some assistance on a development application. ICAC produced this report in 1995 but he remains on council to this day.
David Saunderson: ALP councillor in Geelong who is under investigation for failing to disclose developer donations.
Dean Sherriff: suspended as a Banyule councillor in Melbourne last year after a road rage incident.
Alfred Tsang: Former Strathfield mayor who in 2004 was filmed accepting cash from a local developer who offered $200,000 for assistance with a local car park project. ICAC recommended six people be charged and Tsang was eventually convicted.
David Vendy: the major of Ballarat was charged with one count of assaulting Frank Campbell, an attendee at the proposed Learmonth saleyards panel hearing, in March 2006.
John Wilmott: the Shoalhaven councillor tipped a bowl of tomato sauce over fellow Liberal councillor Gareth Ward during a council meeting after disagreements about development codes and spelling.
24. Why prospectuses for rights issues should be dumped
By Stephen Mayne
The Hartnell Colloquium at ANU on Friday generated some fascinating debate about corporate law from the 30 participants, who included the former ASIC chairman Tony Hartnell, HIH Royal Commissioner Neville Owen and a bunch of lawyers and academics.
The Chatham House rule applied so no individual comment can be attributed to anyone without permission, but one of the most sensible suggested reforms was to require listed companies to include forecasts in the annual report each year. The forecasts requirement is the only major difference between a prospectus and an annual report, but the effect of the law in the market is that very few companies now raise money by way of a rights issue which requires a prospectus.
Look no further than the Federal Government and Telstra, which is now contemplating avoiding the rigours of a prospectus and a retail offer by simply having an institutional placement. Rather than lowering the disclosure standard by removing forecasts from prospectuses, a better solution would be to increase it by requiring forecasts in all annual reports.
There is something fundamentally corrupt about placements because they involve a company hand-picking new shareholders in a process that often dilutes existing shareholders who might not be on a "favoured status" list with the underwriter or the issuer.
After raising money from institutions through a placement, many companies now offer retail shareholders an opportunity to buy up to $5000 worth of shares at the same price. However, this is also unfair because it is not pro-rata.
A good example is property manager Macquarie Goodman, which last Monday closed a retail share purchase plan (SPP) at $5.04 a share. The stock is currently trading at $5.97 so it was a no-brainer. If I wasn't swamped in paperwork from having 120 stocks in the portfolio, a cheque for $5000 would have been written out to lock in a lazy $958 paper profit (17%) on day one. This would have exceeded my $500 investment in the company, but despite only owning 125 shares, I was being an offered a chance to buy another 992 at a bargain price. The wealthy retail investor with one million Macquarie Goodman shares was offered the same, so clearly a pro-rata rights issue is far more equitable but the prospectus requirements make it too hard.
All this is related to my Macquarie Bank board tilt as the platform is to ban Macquarie staff from taking up shares in any issue the bank is managing. Placements are open to preferential deals with the Macquarie insiders whereas this can't happen with a rights issue. The argument against forecasts in annual reports is the supposed liability issue but the law could be framed to minimise potential litigation.
We'll draw up lists of placements and rights issues over the last five years to demonstrate the point that the old fashioned rights issue has virtually been killed off by these onerous prospectus requirements. Email through any interesting examples to smayne@crikey.com.au.
25. News Corp seeks SEC permission to reject Paula Piccinini's husband
By Stephen Mayne, thrice rejected candidate for the News Corp board
After spending thousands of dollars getting outside legal advice, News Corp has rejected my latest tilt at their board on the grounds it was "not timely" and seemingly wasn't allowed under US law anyway.
Third Avenue law firm Hogan & Hartson last week couriered a four-page letter by Federal Express to the Securities & Exchange Commission in Washington which was headlined "Re: Proxy Statement of News Corporation, Stockholder Proposal Submitted by Paula Piccinini".
US law requires a listed company to seek permission from the SEC to justify rejecting a shareholder resolution or board nomination, so the letter states:
The Company believes that the Proponent's proposal nominating her husband, Stephen Mayne, "to stand for the Board of News Corporation (sic) Ltd at the forthcoming 2006 annual meeting in October" may be excluded from the Company's proxy materials for the procedural and substantive reasons set forth in detail below. We respectfully request confirmation that the Staff will not recommend to the Commission that enforcement action be taken if the Company excludes the Proposal from its 2006 proxy material.The first reason cited is that the nomination was "not timely" because News Corp must have received it 80 days before the proxy statement is distributed and my nomination lobbed "25 days after the May 22 2006 deadline".
The second reason is more curious because it again cites rule 14a-8 which permits exclusion "if the proposal relates to an election for membership on the company's board of directors". Hmmm, so how do you run for a US board then?
The nomination only happened after The Daily Telegraph refused to run my polite 96-word letter responding to a Piers Akerman sledge. It would have been far easier all round if this was published and we didn't have to go through the full Press Council hearing process and legal debate about this board tilt.
That said, it is a relief not to be travelling to New York in the middle of the Victorian election campaign. I'll be leaving all this personal campaigning against News Corp alone for a while but there's always 2007 as that will be Rupert's first board election in decades, possibly ever.
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