Holding Woolies to account for pokies porkies

February 2, 2010

The decision has been taken to nominate for the Woolworths board at the November 27 AGM on an anti-pokies platform after Paul Bendat, who runs the pokiewatch website, had no joy in getting the retailing giant to concede that CEO Michael Luscombe made a series of inaccurate statements at last year's AGM.

A detailed question was asked about the 11,000-strong Woolies pokies division run by Alan Bond's former business partner Bruce Mathieson and Luscombe replied as follows:

We don't have ATMs in our gaming areas. We don't cash cheques in those hotels. We do have facilities for self barring in all of our hotels. (Is that right, Bruce? Right?). On all of our gaming machines there are signs talking about the fact that you cannot win on those machines, right in front of the face of that area. We don't allow people to eat in those areas. There are clocks in all of the gaming areas so people understand how long they've been there.

We take this very very very seriously. And… I'm a little bit disappointed that a shareholder would not have recognised it when visited one of our hotels that that's the case. Because I can assure you that from the ALH board down and the management of Bruce Mathieson senior, in particular, take this very very seriously. And we want to take a leadership position on this in our industry. In fact, our internal covenant for that is, in fact, to take a leadership position in the area of problem gaming.

The pokiewatch website lays out chapter and verse how this is quite inaccurate after literally more than 100 site visits with cameras to various Woolies pubs in Victoria.

I sent an email to Woolworths company secretary and general counsel Peter Horton earlier this week inquiring about any pro-forma forms they could provide for the necessary 100 signatures from shareholders to either propose a resolution or a 1000 word statement for shareholders under S249P of the Corporation's Act.

He replied and asked the question: "Is there a particular issue/matter you are interested in raising that perhaps we can discuss? I am happy to talk about if you would like to give me a call."

It's a bit late for that. Paul Bendat has been writing to Woolworths and Luscombe for months and is still yet to receive a reply. And it's not as if he is some professional troublemaker. Paul's father is Jack Bendat, the BRW Rich Lister who was Kerry Stokes' business partner for 20 years. The Bendat family built a large number of the Woolworths supermarkets in Western Australia and Paul is clearly appalled that a once great company has transformed itself into the biggest pokies operator in the country with the world's worst per capita gambling losses.

This one will be sorted out on the floor of the AGM and in the notice of meeting which will go to all 350,000 Woolworths shareholders.

Trying to get Stan Wallis to retire from AFIC

Now that Maurice Newman has finally departed the ASX board after 18 years, the campaign to weed out long-serving or poorly performing directors continues. Here is the text of what will be read out at the $5 billion Australian Foundation Investment Company (AFIC) AGM on Monday morning:

Thank you chairman. My name is Shane Marden and I work for Stephen Mayne and am here today as his proxy to ask one very simple and polite question.

Does the AFIC board still believe it is appropriate to have Stan Wallis on the board of Australia's biggest listed investment company, when Mr Wallis was the chairman of AMP during a period when it lost more than $5 billion in the UK.

Mr Teele, AFIC's chairman, said the following about Mr Wallis at last year's AGM: "In my opinion, Stan probably did more to rescue and turn AMP around than anybody ever knows."

The facts of the matter are that Mr Wallis joined the AMP board in 1990 and was chairman from 2000 until 2003. A few months after he resigned and voluntarily declined to take his $1.6 million retirement benefit such was the embarrassment, AMP reported a record $5.54 billion loss for calendar 2003.

At the 2000 AMP AGM, when AMP shares were trading just above $11, Mr Wallis confidently predicted they were really worth closer to $30.

By late 2003 they fell below $3 when AMP almost went broke.

By what objective measure did Mr Wallis “rescue and turn around” AMP. If the former AMP CEOs George Trumbull and Paul Batchelor are not on any Australian boards, why should the chairman of AMP during Australia's biggest capital destruction continue to sit on the prestigious AFIC board. Surely AFIC should be setting a good example on director accountability?

Mr Wallis turns 70 next year and is one of Australia's longest serving directors having first joined AFIC in 1987. Mr Mayne politely counsels that it is time he gracefully retires after 21 years. If not, Mr Mayne is formally serving notice today that he will propose the removal of Mr Wallis as a director at a shareholder meeting in 2009.

We would appreciate your comments as to whether we can expect a speedy retirement from Mr Wallis after he was re-elected with 96% of the vote in favour at last year's AFIC AGM, which he failed to attend. Thank you.

We'll let you know how all that goes down on Monday, but do check out this package on last year's lively AFIC AGM exchanges.

BHP Billiton joins the platform censors club

The BHP-Billiton notice of meeting is out and while the biographical material was published as submitted, the board has watered the platform down to the following:

Mr Mayne's consent to nomination indicates that he is standing on a platform concerning the following two issues:

* he is opposed to the proposed takeover of Rio Tinto by BHP Billiton. He contends that it could be highly dilutive for BHP Billiton shareholders, citing BHP's merger with Billiton. He also contends that it is an unneccesary distraction for BHP Billiton's management.

* he believes that it is time for the Chairman, Mr Don Argus, to retire in view of his age and his length of tenure as a Director (since 1996) and as Chairman (since 1999).

I'd proposed the following wording which was far punchier:

Mr Mayne believes BHP-Billiton is embarking on an ill-considered empire-building frolic with this putative Rio Tinto takeover. He is standing for election to give shareholders a vehicle through which to register their opposition to this proposal. Mr Mayne contends the Rio Tinto merger could be highly dilutive for BHP-Billiton shareholders, similar to what happened with BHP's 2001 merger with Billiton. In that case, 42% of BHP was exchanged for Billiton's assets which have proved to be patently inferior to the booming coal, iron-ore and petroleum operations held by BHP at the time. He also feels the exhaustive and complex Rio Tinto takeover process is an unnecessary distraction for management which should be focusing on capitalising on this once-in-a-generation resources boom.

Mr Mayne also believes it is time for BHP-Billiton chairman Don Argus to retire, rather than attempt one of the world's biggest takeovers to finish off his career. Mr Argus has been a director of BHP since 1996 and chairman since 1999. He is a 70 years old. Time's up! Please vote for Mr Mayne to send the board a strong protest message on the Rio Tinto takeover strategy and the need for generational change at the top.

You be the judge as to whether that is a reasonable edit and censor job by the board. Surely there needs to be some form of independent body such as the Australian Electoral Commission or even the ASX to adjudicate on these things.

The SMH reported some aspects of the platform on September 25 and it will be interesting to ask at the AFIC AGM whether it will be voting its BHP shares in favour of Argus, given that the BHP Billiton chairman also sits on the AFIC board along with those two other aging dinosaurs, Bruce Teele and Stan Wallis.

Will Kohler skewer his own chairman on Sunday?

Crikey chose not to run this ASX story today. Not sure if there is some sensitivity around Alan Kohler but here it is. Also check out this fabulous Michael West piece on the ASX flaws that was published on the Fairfax websites this afternoon:

John Howard's great mate Maurice Newman was widely condemned for his swansong performance as ASX chairman at Wednesday's AGM when he blamed journalists for unfairly vilifying the monopoly Australian market operator.

The likes of Terry McCrann, The Australian's Jennifer Hewett and The Age's Ian McIlwraith all took aim at the ASX yesterday for being in denial about its failures as market supervisor. The Australian followed up with this strong editorial today.

Rather than journalists, it has actually been the world's most powerful proxy adviser, Risk Metrics, that has led the charge against the ASX.

Indeed, Risk Metrics released this report about the key flaws in the externally managed models of Babcock and Macquarie last week, arguing that ASX has dropped the ball by allowing these appallingly governed structures to flourish without full disclosure of management contracts, pre-emptive rights, poison pills and debt covenants.

Terry McCrann was absolutely right to point to this press release put out by the ASX the day before the AGM, which he summarised as follows:

In essence, ASX's rebuttal of the RiskMetrics critique came down to: it's not our job to keep the market fully informed, beyond what a prospectus requires.

ASX had clearly seen the proxies at the time of its defiant press release and concluded that with only 5% supporting my board nomination and 10% opposing incumbent Russell Aboud, as Risk Metrics recommended, it could afford to get on the front foot.

My platform was the very simple proposition that ASX force all the Babcock and Macquarie vehicles to release their management agreements in full, as is required in the US.

Newman didn't tell the AGM but there was some support given that 21% of votes cast abstained, the highest abstain vote in my 30 board tilts.

Rather than winning the battle, Newman would have been shocked by the negative publicity yesterday when he fronted Inside Business host Alan Kohler for an interview that will air this Sunday.

The Risk Metrics team of Dean Paatsch and Martin Lawrence are very well networked with the media and will no doubt have briefed Kohler up before hand.

Indeed, they have previously contributed columns such as this one on executive pay disclosure to Kohler's Business Spectator venture. Lawrence, a former journalist, was also interviewed by Kohler for Inside Business on the Babcock & Brown fiasco in June.

The AFR labelled Newman a “dinosaur” yesterday so it will be very interesting to see how hard Kohler goes against someone whose last remaining gig is as chairman of the ABC.

Will the leader of Australia's best regarded media organisation repeat his savage attack on journalists on his own government-owned network as the government contemplates what to do with the ASX? The political class should stick with Aunty on Sunday morning after Insiders finishes to see how this one unfolds.

· Listen to the edited audio highlights from Wednesday's ASX AGM.

Another 25 Rich Listers

BRW used to enjoy a monopoly over the concept of an Australian Rich List, but we're gaining fast with another 25 entries to our own version courtesy of this week's interesting BRW Young Rich list. We've now got more than 1200 names of Australians worth more than $10 million and this list is easily the most popular feature on our website so check it out.

Mike Cannon-Brookes: co-founder of software development company Atlassian, it has grown rapidly turning over $44 million in 2007.

Simon Clausen
: an information technology entrepreneur his company PC Tools, which manufactures anti-spyware software, was sold in August 2008 to US-based Symantec for around $170 million. The BRW claims $170 million.

Carolyn Creswell
: founder of Carmen's Fine Foods which she bought for $1000 dollars. A rags-to-riches story, her company turns over $16 million annually and her personal wealth is around $20 million.

Trent Davis: founder of IT company NetBox Blue, it has steadily grown since inception which has pushed his wealth to more than $70 million.

Phillip Di Bella
: behind Di Bella coffee, he supplies machines and maintains them in over 800 cafes Australia wide. Additionally he also sells retail coffee and is looking to expand into China. Worth more than $20 million.

Jason Di Iulio
: founded Finance Mutual Australia which is one of South Australia's biggest non-bank lenders and was responsible for co-ordinating the syndicate behind the funding for the highly successful Wolf Creek.

Steve Di Petta
: a Shepparton-based flamboyant account with a substantial private and commercial property portfolio. His accounting firm has over 4500 clients and is behind discount supermarket brand Pantry direct.

Scott Farquhar
: co-founder of software development company Atlassion, it has grown rapidly turning over $44 million in 2007.

Paul Fiani
: following a stint at UBS as a fund manager, he founded Integrity Investment Management that has more than $700 million under management which has contributed the bulk of his wealth of around $24 million.

Paul Fridman: founder of property development company Fridcorp, he has bulit the company from nothing to about $500 million in developments. His wealth is close to $40 million.

George Gorrow: co-founder of the high fashion label and highly successful Ksubi. A keen surfer who has diversifed into other areas including Baddies Bar in New York.

Ben Keighran
: a technology whiz-kid who was writing software programs at 10 years of age. He is the founder of IT company Bluepulse and is worth more than $25 million.

Bruce Maclaren
: owner of Brisbane Steel Fabrications, he has seen a decade of steady rise in his business. He has a small property portfolio which places his wealth upwards of $30 million.

Nathan McMahon: a WA-based mining entrepreneur whose company Cazaly resources has been involved in legal wrangling but his wealth is still strong worth more than $20 million due to some mining investments.

Nicole and Stuart Patterson: founders of Melbourne-based Patterson Building Group, from humble beginnings they built the business with the goal of treating clients better. 14 years on and their success has pushed their wealth to above $20 million.

Jeremy Reid
: managing director of Everest Babcock & Brown, although his wealth has diminished in the previous 12 months by almost $100 million, his wealth is still north of $60 million. The BRW claims $66 million.

James Rice
: an Adelaide-based property developer who has concentrated on apartments. Interest in apartment living in Adelaide is growing rapidly which has put his company Urban Construct, as one of the leading developers in SA.

Bruno Schiavi
: has made his fortune through retail ventures and having an MO of joining with celebrities and developing products. His latest line is a lingerie line teamed with Janet Jackson, and mens underwear range partnered with Brett Lee. Worth more than $30 million.

Dan Single: co-founder of the high fashion label and highly successful Ksubi. A keen surfer who has diversifed into other areas including Baddies Bar in New York.

Karl and Luke Trouchet: these Brisbane-based brothers purchased their parents' humble campervan business - Apollo Motorhome Holidays, and have turned it into a highly successful venture pushing their wealth above $60 million. That's all for now.

Do ya best, Stephen Mayne

* The Mayne Report is a multi-media governance website published by Stephen Mayne with occasional email editions. To unsubscribe from the emails click here.