Press Room

Time to behave like a real Premier

February 14, 2010

This comment piece in the Herald Sun by Terry McCrann on May 17, 1996, summed up all that was wrong with Jeff Kennett's secret Chinese share play.

As further information surfaces, Jeff Kennett's conduct over the investment in Guangdong Corporation looks arguably improper. And just plain - money-chasing - grubby.

It has now reached the point where the members of his Cabinet need to stand up and be counted. Do they consider the behavior of their leader sets an appropriate standard for ministerial behavior?

According to the promoter of the float, Richard Li, Felicity Kennett applied for 100,000 shares on September 19, 1993. That was six days after Mr Li had announced the Guangdong float had been swamped with applications for shares, and they regretted to advise that "we are unlikely to accept any further applications for shares".

That raises the immediate question of whether the Premier's wife received special treatment with her application six days later. For her, "unlikely" became "by all means".

For not only did she get some shares, but one of the biggest allocations to any individual non-institutional local investor.
But what does that also say about Mr Kennett's conduct - as he has left no doubt that he, not Felicity, personally ran the investment?

That knowing the float was such a success, knowing that all-but guaranteed the shares would list at a premium and deliver an immediate profit, he tried to grab as many as he could.

Asking for 100,000 shares, and doing so after it was a clear success, gives the lie to his claim that he sought just to make "a gesture", or an "act of good faith".

If he had got the full 100,000 - to put in his wife's name - he would have got more than 1 per cent of the shares being issued. That's the sort of parcels usually bought by big institutional investors.

And he would have made double the profit that became available to him/her when Felicity was only given 50,000.

Which all begs another question: If he did want to signal an act of good faith to encourage other Chinese companies to come to Melbourne, why keep the investment a secret?

Why not announce it, whether the shares are in his or Felicity's name?

Then incredibly - not having announced the Kennett investment - on September 28 of that year he hosted an official reception at Parliament House for Guangdong.

Present were executives, representitives of the stock exchange and both the pokies king Bruce Mathieson and Mr Li as directors of the float underwriter.

Here was the Premier throwing the weight and status of his office behind the company on the very day it joined the stock exchange lists.
A company in which his family had a material - and undisclosed - financial interest. And to rub salt in it, presumably paid for by the Victorian taxpayer.

If that's not a conflict of interest, I don't know what is. But, at least, I'd be joined in my ignorance by Mr Kennett.

The bigger issue is of course the monumental conflict in accepting "hot" shares from a company associated with the single biggest individual beneficiary of Victoria's non-casino poker machines. The said Mr Mathieson.

And doing so precisely, precisely, at the time the government - read Jeff - was making decisions that affected the number and value of those poker machines.

His attempts to deny any conflict, because Guangdong is a Chinese company, are pathetic; and verge on the excuses you hear from an errant child.

The conflict's got nothing to do with the company in which the investment was made, but everything to do with the vexed issues of gambling in Kennett's Victoria.

Does his logic mean that if he found a brown paper bag on his desk with $1 million in it, he would argue no conflict in keeping it, as he's got nothing to do with the Reserve Bank that prints the notes?

The only "saving" grace is that all this is three years in the past. He seems to be saying he's now given up this sort of behavior.

But at the very least, he needs to publicly recognise it was improper, and to demonstrate he now knows what is the appropriate standard of behavior by a Premier.