Media tart video, disappearing billionaires, Sir Rod, Tanner's delusions, PMP, Babcock, Woolies' pokies, Wesfarmers, Rich List and much more

February 19, 2010

Dear Mayne Reporters,

First up this week, we've actually produced a new video. Shock, horror! And it's lots of fun tracking the events of March 4 - an outrageous day of media tartery which culminated in appearances on both Today Tonight and A Current Affair at the same time. There's a cameo from 4-year-old tart delivery boy Philip Mayne and even the old mate Demtel Tim "but wait, there's more" Shaw gets a guernsey. We've also opened up on events at Manningham Council where I've been publicly defending our executive pay arrangements against outrageous and misleading attacks by long-standing whingers in the public gallery. Talk about a role reversal. Who would have thunk it?

It took a couple of days to make, so do enjoy our first video of 2009 and we will endeavour to produce one with each weekly edition of The Mayne Report.

More freedom for The Mayne Report

The 4-year non-compete agreement with Crikey expired on Monday so we're now able to write about politics and media, plus send emails to more than 500 people at a time and freelance material anywhere we like. However, the focus will still very much remain on delivering a strong weekly corporate governance newsletter and this latest edition has plenty of juicy material.

What Kevin "do nothing" Rudd should do on executive pay?

The Rudd Government has now been in power for 16 months and still have done precisely nothing on the question of executive pay. The SBS program Insight is tackling the issue next month and attempting to assemble a panel of experts to dissect what should happen.

Will the deeply conservative Corporate Governance minister Nick Sherry front up? What about ASIC chairman Tony D'Aloisio, the man who pocketed $7.8 million without any reference to shareholders when fired as ASX CEO.

Whilst Australia had a better regime that most going into the crisis, the biggest problem remains the inability of fund managers to bring themselves to vote against directors responsible for outrageous executive payouts.

How Oz Minerals chairman Barry Cusack can remain in charge and on the Toll and McMahon Holdings boards after approving that $8.4 million golden goodbye for Owen Hegarty just beggars belief.

For what it's worth, I reckon the focus should be on maximising shareholder power and visibility over voting, rather than prescriptive attempts to cap executive pay. These eight reforms would make a big difference:

* Make it compulsory for licensed fund managers to vote their shares in ASX300 companies and disclose how they vote.

* Require full disclosure of a CEO contract, rather than just a summary of the key terms.

* Any termination payment in excess of $1 million in cash, shares or benefits requires specific binding shareholder approval.

* Restore the pre-existing requirement that all equity issues to senior managers requires specific shareholder approval.

* Rather than giving CEOs an exemption from the three year director election cycle, put them up for election every year so shareholders can directly reflect on their performance and pay.

* Eliminate the outrageous and widely rorted tax concessions for senior executives who get paid with shares rather than cash.

* Require fund managers to disclose their own pay packets by closing the loophole that only sees those technically classified as "executives" revealed in the annual reports of public companies.

* Require all major super funds to disclose their fully audited accounts and pay practices, as occurs with public companies.

As you contemplate some of this, go back and read this edition after we exposed the $55 million executive heist at Toll Holdings last year, along with the video three from the top showing CEO Paul Little ducking and weaving. The Toll heist was the most egregious executive pay rort we've ever seen in Australia - yet institutional shareholders still haven't sued, let alone commenced a process of board renewal.

Sir Rod further tainted by Allco debacle

One of the biggest structural problems in Australia is the way our own financial supermarkets, the Big Four banks, also dominate the funds management industry. This next little tale highlights the complete lack of church and state separation between banks, funds managers and the boards of our major companies.

The administrator of Allco Finance Group, McGrathNichol, today told creditors the notorious Rubicon transaction might have been illegal because of the conflicts of interest involving David Coe and Gordon Fell. Business Spectator has the details here and we're feeling increasingly vindicated after aggressively speaking out against the deal at the Allco EGM in December 2007, as you can see from this subscriber edition at the time.

This latest move by the Allco administrator is a terrible look for Teflon Rod, aka Kevin Rudd's great mate and adviser Sir Rod Eddington, who was on Allco's three-member related party transactions board committee at the time. The Rubicon deal only got through because of this green light from Sir Rod, John Howard's great mate Bob Mansfield and Paul Keating's much-admired adviser Barbara Ward, who copped a big Allco-related protest when seeking election to the Qantas board last November. How on earth can ANZ, a major fund manager in Australia, still think Sir Rod is an appropriate choice as their next chairman? Have they not heard of the Rio Tinto debacles of recent times and his status as chairman of the News Corp remuneration committee which gave departing chief operating officer Peter Chernin the most lucrative golden parachute in the history of Australian-listed companies?

Besides, ANZ appears to have actually lost about $30 million on an Allco-related options deal with the Liberman family, as Richard Gluyasexplained in The Australian last year.

David Marr had this very interesting feature in The SMH last Saturday lamenting the lack of regulatory action over the scandal involving AWB's $300 million in bribes to Saddam Hussein's regime. The same can be said for Allco, given the appalling governance and notorious related party transactions which clearly contributed to the estimated $5 billion-plus that investors will end up dropping in the debt-laden empire.

How Allco made the British Government landlord to the ASX

This Crikey story on February 18 predicting where the global financial crisis might finish sparked a torrent of angry comments, but these words are becoming increasingly relevent:

It's clear that the vast majority of the global banking system will be nationalised. We're part of this because Australian bank liabilities and deposits have been guaranteed. With the global banks having huge exposures to weaker countries with falling currencies and huge borrowing requirements, the equity in those countries will be wiped out in what is going to be one gigantic debt for equity swap. This will leave government backed banks in strong countries controlling vast swathes of assets in weak countries. The Australian banks, for instance, will have huge influence over New Zealand.

This point is best demonstrated by considering why Allco used to hold its AGMs at the ASX headquarters in Sydney and who controls the building now. As you can see in the "Allco disaster" video four from the top of our video page, 20 Bridge St in Sydney is owned by Allco property fund Record Realty, which is now in the hands of its bankers. And who are the bankers? Today's Record Realty statement to its tenant, the ASX, explained why the results still haven't been released in these terms:

Record Financial Management Ltd continues to have ongoing discussions with BOS International in respect of formalising an extension to the waiver of certain debt covenants contained in Record Realty's facility with BOS International. This facility has an expiry date of 19 July 2009.

And who owns BOS International? None other than the British government which has injected $40 billion for a 43% stake in the combined Lloyds and HBOS, which is scrambling to recover its share of Record Realty's crippling $1.8 billion in debt, secured against buildings such as the ASX headquarters in Sydney's Bridge Street.

Given Australia's huge dependence on foreign debt, it will be interesting to see which other trophy Australian assets will end up being controlled by foreign governments through nationalised banks. After all, the Singapore and Chinese governments already own more Australian business assets than the Australian government - and that was before Singapore finished up with 11% of Citigroup.

Why Lindsay Tanner can't sleep at night

Federal Finance Minister Lindsay Tanner admitted yesterday in this Press Club speech that he has been losing some sleep about the Federal Government's huge borrowing program. However, he then came up with the facile analogy that the debt binge was like someone earning $100,000 a year taking out a $5000 personal loan.

We gave this issue a big whirl with Lindy Burns on 774 ABC Melbourne's Drive program yesterday and the following list tracks all Federal government bond issues since the $42 billion stimulus package was announced in February.

Surely, you just can't keep borrowing $600 million of new money every Wednesday and Friday and if you look at the figures on subscription levels you can see how demand is starting to wane:

Friday, March 13: $600m tender of 16 month bonds expiring in August 2010 to be conducted later on this most unlucky of days.

Wednesday, March 11: $600m tender for eight year bonds expiring in February 2017 were sold for an average yield of 4.18% and was 3 times over-subscribed.

Friday, March 6: $600m tender for 5 year Commonwealth bonds expiring in June 2014 were sold for an average yield of 3.71% and was 3.1 times over-subscribed.

Wednesday, March 4: $600m tender for 2 year Commonwealth bonds expiring in April 2012 were sold for an average yield of 3.30% and was 3.9 times over-subscribed.

Friday, February 27: $600m tender for 12 year Commonwealth bonds expiring in May 2021 were sold for an average yield of 4.52% and was 3.9 times over-subscribed.

Wednesday, February 25: $600m tender for 4 year Commonwealth bonds expiring in May 2013 were sold for an average yield of 3.48% and was 4.1 times over-subscribed.

Friday, February 20: $600m tender for 2 year Commonwealth bonds expiring in June 2011 were sold for an average yield of 2.93% and was 4.4 times over-subscribed.

Wednesday, February 18: $600m tender for 3 year Commonwealth bonds expiring in April 2012 were sold for an average yield of 2.98% and was 4.8 times over-subscribed.

Friday, February 13: $600m tender for 5 year bonds Commonwealth expiring in June 2014 were sold for an average yield of 3.69% and was 2.9 times over-subscribed.

Wednesday, February 11: $600m tender for 4 year bonds Commonwealth expiring in May 2013 were sold for an average yield of 3.46% and was 2.6 times over-subscribed.

Friday, February 6: $600m tender for 6 year bonds Commonwealth expiring in April 2015 were sold for an average yield of 3.91% and was 2.6 times over-subscribed.

The AFR broke the story on Tuesday about the Tasmanian government failing to get a $100 million bond issue away last Friday. Similarly, the Queensland Treasury Corporation, overwhelmed by a record $16 billion borrowing program this financial year, has warned councils it will not be able to guarantee borrowings beyond June 30, 2010. The detail of all the Queensland private schools, councils, infrastructure bodies and universities that are affected by this was explained during this interview with 4BC Drive presenter Mike Smith on Tuesday.

If Canberra had the capacity, it would have stepped up and formally guaranteed all state government borrowings by now, but that would blow out all federally guaranteed debts to almost $300 billion, which is hardly something that can be likened to a $5000 overdraft.

So, just how much cash do the Federal authorities have left to deal with contingencies? The Future Fund's December 31 update reveals it has already ploughed $9 billion into bonds and has only $24 billion in cash left, which is barely higher than the forecast Federal Government deficit of $22 billion for this financial year. Even our foreign reserves have slipped to just $30.7 billion, which doesn't even make the global top 40 and the Federal Government has only deposited $10 billion of a loudly-promised $40 billion into its various infrastructure funds so far.

Then you have these various extraordinary borrowing programs of the states which will have to be scaled back by slashing promised infrastructure investment:

Treasury Corporation of Victoria: hoping to borrow $4.35 billion in 2008-09.

Queensland Treasury Corp: raised a staggering $13.8 billion in 2007-08, lifting the overall debt figure to $43 billion and was orginally projecting arecord $16.3 billion for 2008-09, but is going to fall well short.

NSW Treasury Corporation: a 2008-09 funding requirement of $6.8 billion but all but $4.9 billion was pre-borrowed in a sensible move.

WA Treasury Corporation: latest update as of December 31 forecasts record $6.8 billion borrowing program for 2008-09.

SA Financing Authority: $8.7 billion in loans outstanding at the end of last financial year and is scheduled to borrow more than $2 billion this financial year.

How Woolies dominates pokies in Manningham like nowhere else

It may yet prove fortuitous to have been elected as a councillor in the City of Manningham because it looks like we have the greatest concentration of Woolworths poker machines of any of Victoria's 79 municipalities.

Crikey led its Monday edition with this story about the Woolworths domination of Victoria's most lucrative pokies venues and this is the break down of who runs all the venues in Manningham:

Doncaster Inn Hotel: 100 machines, $17.4m lost in 07-08 (Woolies)

Shoppingtown Hotel: 100 machines, $16m lost in 07-08 (Woolies)

Cherry Hill Tavern: 50 machines, $7.16m lost in 07-08 (Woolies)

Manningham Club: 100 machines, $6.6m lost in 07-08 (Woolies)

Yarra Valley Country Club: 100 machines, $6.52m lost in 07-08 (land owned by Woolies)

Templestowe Hotel: 50 machines, $5.44m lost in 07-08 (owned by mini pokies mogul Samuel Castella)

Veneto Club: 90 machines, $5.41m lost in 07-08

Warrandyte Hotel and Football Club: 27 machines, $746,000 lost in 07-08

This means Woolies directly operates 350 of the 617 machines in Manningham and the four most lucrative venues where $47 million was lost in 2007-08. It also owns the land where the Yarra Valley Country Club operates, having paid local Rich Lister Harry Stamoulis about $10 million a few years back.

As far as I know, only the City of Monash comes close to this record with Woolies controlling 8 of their 16 pokies venues.

I've given the following quotes to our local paper, The Manningham Leader, and very much hope they won't feel intimidated by their largest advertiser when next week's edition comes out:

“Woolworths is not serving Manningham well. Our residents lose more at the pokies than they pay in rates and we have two of the top 10 venues in the state, both of which are Woolworths venues.”

“Woolworths is causing enormous social damage through this dangerous product and should stop targeting vulnerable citizens with free food, special offers and extended hours just to maximise their profits.”

The long term goal here is to get Woolworths out of the pokies business altogether. And that will only happen when consumers boycott their stores or institutional investors depart the register because they fail the screen on whether equity holdings are socially acceptable.

The United Nations Principles for Responsible Investment are being followed by more and more investors around the world and I reckon Woolies doesn't comply.

If the Norweigian sovereign fund can dump more than $1 billion worth of Rio Tinto shares on environmental grounds, it won't be long before a big fund gives Woolies the flick for exploiting thousands of pokies addicts - mainly lonely middle-aged women - running the world's most lethal poker machines.

Victoria has the most lucrative pokies in the world and Woolies has the market stitched up. And it ain't any more stitched than my local council. Thankfully, we've commenced a review of Manningham's gaming policies, although you can only do so much when the State government hands out the licences.

Canberra pokies operator provides funding for the Responsible Investment Academy

The Rudd Government has done something the Howard government never did - pony up cash to promote the cause of responsible investment.

Check out Nick Sherry's press release revealing a $2.5 million grant to the Responsible Investment Association for the establishment of the Responsible Investment Academy. Wonder what they'll make of the 11,000-strong pokies empire run by our biggest retailer?

Then again, the ACT ALP actually runs five pokies venues of their own to fund their political operations. Whilst the Victorian Government is to be commended for voluntarily releasing these individual venue losses breakdowns over the past three financial years, will the ACT branch of the Labor Party do the same?

I'm not aware of another political party in the world that fund raisers by running gambing dens, but this is Australia after all and we lose more per capita on the punt than any other people. So why should we be surprised if our dominant political party licences itself to share in the profitable franchises?

Tracking the tumbling BRW Rich Listers

Yesterday's regular chat with Lindy Burns on 774 ABC Melbourne included a discussion about which of the 43 billionaires identified in the 2008BRW Rich List would be relegated to humble multi-millionaires when the 2009 version comes out on Thursday, May 25.

I predicted it would be down to about 20, with the most obvious casualties being the Fairfax family, Mark Rowsthorn from Asciano, the Belgiorno-Nettis family from Transfield, Worley Parsons CEO John Grill and Transpacific Industries controlling shareholder Terry Peabody.

However, it is probably worth actually making some preliminary guesstimates about what the billionaires are now worth so see what you make of this:

1. Andrew Forrest : $9.4 billion to $2.3 billion
2. Frank Lowy: $6.3 billion to $3 billion
3. James Packer: $6.1 billion to $2.5 billion
4. Richard Pratt: $5.4 billion to $4 billion
5. Gina Reinhart: $4.3 billion to $2 billion
6. Harry Triguboff: $3.25 billion to $2 billion
7. John Gandel: $3.21 billion to $1.8 billion
8. Kerry Stokes: $2.7 billion to $1.3 billion
9. Smorgon family: $2.44 billion to $1.5 billion
10. Shi Zhengrong: $2.33 billion to $1 billion
11. David Hains: $2.28 billion to $1.3 billion
12. Liberman family: $2.2 billion to $1.5 billion
13. Len Buckeridge: $2.1 billion to $1.5 billion
14. Kerr Nielson: $2.1 billion to $1.4 billion
15. Lang Walker: $2.04 billion to $1.5 billion
16. Lindsay Fox: $1.8 billion to $800 million
17. Besen family: $1.75 billion to $1.2 million
18. Angela Bennett & Michael Wright: $1.7 billion to $1.3 billion
19. Bruce Gordon: $1.68 billion to $500 million
20. Gerry Harvey: $1.62 billion to $1.2 billion
21. Stan Perron: $1.6 billion to $900 million
22. Len Ainsworth & Sons: $1.57 billion to $1.1 billion
23. Wilson family: $1.5 billion to $1.2 billion
24. Myer Family: $1.5 billion to $800 million
25. Clive Palmer: $1.5 billion to $800 million
26. Bob Oatley: $1.49 billion to $700 million
27. Soloman Lew: $1.47 billion to $900 million
28. John Grill: $1.33 billion to $600 million
29. Goodman family: $1.3 billion to $300 million
30. John & Timothy Fairfax: $1.3 billion to $400 million
31. Terrence Peabody: $1.3 billion to $200 million
32. John Van Lieshout: $1.25 billion to $700 million
33. Carlo Salteri: $1.19 billion to $800 million
34. Roberts family: $1.16 billion to $900 million
35. Maurice Alter: $1.15 billion to $850 million
36. Belgiorno-Nettis Family: $1.14 billion to $200 million
37. Bruce Mathieson: $1.13 billion to $950 million
38. Paul Ramsay: $1.1 billion to $900 million
39. Mark & Peter Rowsthorn: $1.09 billion to $200 million
40. Bob Ell: $1.07 billion to $600 million
41. Con & Ross Makris: $1.06 billion to $600 million
42. Ingham family: $1.06 billion to $800 million
43. Ralph Sarich: $1.05 billion to $600 million.

It will be interesting to see how this back-of-the-envelope effort compares with the BRW offering after a team of researchers spent several weeks trawling through ASIC records, annual reports, property titles and the like.

Nick Sherry on ASIC's supposed readiness

Corporate governance minister Nick Sherry made the following comments at the recent ASIC Summer School:

The last year has been one of significant reform and change at our national corporate regulator. Overall, the strength of our corporate regulatory environment has been commented on around the world.

One recent example is from the Group of 30 Consultative Group on International Economic and Monetary Affairs, who, through its Chair, Mr Paul Volcker, the former US Federal Reserve Chairman, singled out Australia, along with only the Netherlands, as closest to "optimal" regulation across 17 key jurisdictions.

The United States Treasury has also pointed to our current model as the preferred form. Yet, despite these strengths, the Commission and the Government have been working to make ASIC even stronger, a strategy that I am confident will bear fruit as the global recession unfolds during 2009.

Chairman D'Aloisio has seen through a major internal structural review that has witnessed the organisation move significantly closer to the markets and participants it regulates. ASIC has also taken on a major new feature of our regulatory system in the form of a uniform national credit law.

In addition, the Rudd Government has delivered almost $100 million in new funding and doubled the size of the Commission from three to six. I would like to take this opportunity to publicly welcome the full Commission of Chairman D'Aloisio, Deputy Chairman Cooper, and Commissioners Gibson, Boxall, Medcraft and Dwyer. I do believe that you are ready for the year ahead.

Hmmm, that doesn't exactly gel with David Marr's damning critique of ASIC in Saturday's Fairfax papers for failing to hold some people to account for the $300 million in bribes AWB paid to Saddam Hussein's regime.

And if ASIC is so good, why isn't this ASIC jail list full of far more impressive names?

After all, Pixie Skase has just swanned back into Toorak from her self-imposed exile in Spain and we haven't heard ASIC or a single politician say boo. The sum total of outrage thus far is Today Tonight reporter Jonathan Creek and yours truly as explained in this week's feature video.Alternatively, watch the full Today Tonight story.

Surely the Victorian Government could give Pixie a serve given that taxpayers dropped about $200 million through Tricontinental's exposure to her late husband. Or how about a Senate inquiry? Federal taxpayers spent $3 million on the Skase Chase, yet it would only cost about $10,000 to conduct a one day Senate inquiry with Pixie as the sole witness.

Fun and games with Babcock tomorrow

Subscribers will get a quick update tomorrow night after Babcock & Brown chair Elizabeth Nosworthy presides over the scandalous meeting of unsecured noteholders which will attempt to turn $600 million of low-ranking debt into a final return of just $6000. If approved, this will enable the major lenders to effectively seize control of the assets without properly compensating the noteholders.

Babcock & Brown is involved in an interesting battle with Allco and Macquarie to establish which financial engineering house will ultimately end up destroying the most billions of investor dollars, but I reckon Babcock will top the pops above $10 billion.

Whilst Macquarie were clearly far more adept at flicking the risk to their funds whilst gouging enormous fees, Babcock & Brown is showing extraordinary chutzpah as the ship goes down.

Consider this notice of meeting sent to the unlucky sods who stumped up $600 million to buy Babcock & Brown unsecured notes after the 2004 sharemarket listing. In order to vote on the proposal to receive a pathetic 0.1c for each $100 note, investors are being called to a meeting that starts at 4.30pm on Friday, March 13, in Sydney.

Not since the last HIH Insurance AGM at 4.15pm on Friday, December 15, 2000, have we seen a more cynically scheduled investor meeting.

Ms Nosworthy clearly has a hide like a rhinocerous because she still hasn't departed some of her imploding boards. You can see how combative she was with at last year's Babcock & Brown AGM in this video.

Amazingly, we're being asked to vote on this scandal without Babcock having released its half year results. Adele Ferguson got it absolutely right with this spray at Babcock in The Australian during the week and I'm still to get a reply from Babcock spinner Kelly Hibbins after sending this email off during the week:

Hi Kelly, as a holder of BNB unsecured notes, this is a formal request for the interim results to be released before Friday's EGM so we can make an informed decision. Can you please pass this on to Elizabeth, Michael and the other directors.

Thanks, Stephen Mayne

Where is the corporate plod when you need it? Whilst ASIC remains asleep, the ASX just shouldn't allow one of its listed securities to have such a meeting without the results being on the table. Then again, why should they care given the ASX board still includes one Michael Sharp, the long-serving chairman of the Babcock & Brown audit committee.

Big dates to watch in forthcoming AGM mini-season

Whilst not strictly part of the AGM season, tomorrow's Babcock gathering in Sydney will kick-start a flurry of meeting over the coming three months. This is how it will roll out:

Babcock & Brown unsecured notes, EGM: Friday, March 13, wind up meeting in Sydney

Tolhurst Group. AGM: 10am, March 27 in Melbourne.

QBE Insurance, AGM: Wednesday, April 8, Sydney.

Rio Tinto: Wednesday, April 15, London AGM

Australand: Thursday, April 16, Four Season Hotel in Sydney.

Rio Tinto: Monday, April 20, Sydney AGM

Axa Asia Pacific, AGM: Wednesday, May 6, Melbourne Convention Centre.

Alumina, AGM: Thursday, May 7, Melbourne Exhibition Centre.

Babcock & Brown, AGM: Friday, May 22, if at all

GPT, AGM: Monday, May 25, Sydney.

Austar, AGM: Thursday, May 28, Sydney

We're still waiting for final details on Macquarie Airports, Oz Minerals, Westfield, Iress, EBI and Bell Financial Group, all of which should be quite interesting.

More names for the Rich List

The Mayne Report Rich List has more than 1200 names of Australians worth more than $10 million and with the crash upon us we are now italicising those entries who have fallen back below our cut-off. However, we've still got a few new entries:

The Steele family:
has an interest in 355 Victorian poker machines generating more than $30 million annually.

Sam Castello: controls more than 400 Victorian poker machines and is probably the second biggest individual Victorian pokies mogul, behind Bruce Mathieson. Owns big venues such as the Waterloo Cup Hotel pokies palace in Moonee Ponds and our local, The Templestowe Hotel.

Zagame family: this Melbourne family was once at the top of Victoria's poker machine industry, but has since been overtaken by big-spending investors like Bruce Mathieson. Once in charge of a greengrocer's business, they expanded the business into a pubs and restaurant empire before cashing in on gaming. It now runs more than 300 machines.

Tom Payne: he shares an interest in 280 machines with the Steele family, and has annual revenue estimated at more than $20 million from his pub and pokies interests.

Howard Stack: a Brisbane-based property investor who once sold a Surfers Paradise beachfront property for $15 million, and then turned around and purchased a neighbouring property for $6.8 million. He is selling the family home of the past 25 years to move into a Mirvac Waterfront penthouse he purchased off the plan for a record $14.25 million - smashing the previous record of just over $11 million.

The Naylor family: the estranged son of the late Channel Nine newsreader Brian Naylor has claimed the estate was worth $20 million.

PMP share offer and crisis

It's always interesting when struggling companies decide to take out small shareholders left with unmarketable parcels after a share price collapse. But how about this effort from teetering printing company PMP which wants to save on print costs:

I am writing to offer to all shareholders with a holding of PMP Limited shares valued at less than $500 (called an unmarketable parcel) about a sale facility. As at close of business 27 February 2009, our records indicate that you are a holder of an unmarketable parcel of shares (based on your shareholding and the ASX Limited (ASX) closing price of $0.305 on 27 February 2009).

PMP Limited has an excess of 3,300 shareholders with an unmarketable parcel of Shares. Due to the higher brokerage costs that you face in selling this number of shares and the expense to the Company associated with maintaining small shareholdings (eg. printing and mailing costs of distributing Annual Reports and Notices of Meeting together with share registry costs), PMP Limited would like to take this opportunity to encourage you to sell your existing holding.

PMP is clearly a company in chaos with sacked CEO Brian Evans suing for $1.5 million, chairman Graeme Reaney fending off accusations about his share dealings (see February 12 edition of The Mayne Report) and the media full of colourful stories about business practices at the company. With the stock down near 20c and a market capitalisation below $100 million, there doesn't look to be a very bright future at the business which Rupert Murdoch progressively sold off during the 1990s at prices above $2 a share.

We've opted to keep our PMP shares but don't generally mind when a company compulsorily acquire our tiny investments to save money. The likes of AWB and pipeline player APA have both done it recently and we're tracking the trend through a new list on the site.

Classical Private Eye:

Britain's Private Eye magazine was the original inspiration for Crikey and we just loved a couple of their items from the latest edition:

Walker's Crisped

Now that chancellor Alistair Darling's man in charge of the taxpayer-owned banks, Glen Moreno, has agreed to walk following the Eye's revelations of his Liechtenstien tax-dodging connections, how long for the man brought in to run the government's review of British banks' governance, Sir David Walker?

Walker, as the last Eye reported, led investment bank Morgan Stanley for several years and prefers more tropical climes for his tax avoidance. Not only was the bank a big fat bonus-payer during his six years as international chairman and European executive chariman up to December 2000 (plus a later spell in 2004/05 as international chairman), but as a recent tax tribunal reveals it was also a big-time and very crafty tax avoider.

In July 2000 two British companies in the Morgan Stanley empire, Bayfine UK and Bayfine Uk Products, entered into equal and opposite derivative contracts with the Bank of America. These deals amounted to no more than bets on both horses in a two-horse race. One would win and the other lose, in the event to the tune of precisely 119.8 million pounds.

But here's the trick: the loss that Bayfine UK Products made would be tax-deductible against the bank's other UK profits, while the profit that Bayfine UK made would not be taxable. Intended result? A 36 million pound hand-out from British taxpayers for doing bugger-all except send money round in a circle.

Tax experts say such a large scale scheme would always go before a bank's board for approval, putting Sir David squarely in the frame for this blatant attempt to chisel millions out of the exchequer. Just the man to restore sound governance to Britian's banks!

Secret of Shame

"Only little people pay taxes, New York billionairess Leona Helmsley once said", thundered The Sun's editorial column on 16 February. "Our top bankers are guilty of the same insufferable arrogance."

Your starter for 10: can you think of another insufferably arrogant Manhattan-dwelling fat-cat who has arranged his complex network of global businesses around offshore holding companies in tax havens such as the British Virgin Islands, the Cayman Islands and the Dutch Antilles, and who in 2005 shifted his family investment company to Bermuda in order to save them having to pay around 500 million pounds in tax in his birthplace Australia?

Clue: He owns
The Sun.

I actually broke the story about Rupert's tax dodge on Crikey in March 2005 and it was more like $50 million of NSW stamp duty, rather than $1.2 billion of overall taxes, that were directly saved by the move to Bermuda. Still, the point remains the same.

Share trades and missing out on $50,000 profit from Wesfarmers

With a lot of uncertainty in the market, we have continued slowly reducing the portfolio and playing the share purchase plans which are in the money. Here is a list of the most recent trades:

March 6

White Energy Company:
sold 186 at $1.36
Wesfarmers: sold 506 at $16.80 and sold another 500 at $16.72
Sirtex Medical: sold 118 at $2.25
Sky City Entertainment Group: sold 120 at $1.99

February 25

Warehouse Group: sold 95 at $2.60

The big Wesfarmers refund

The Mayne Report edition of February 23 explained what was an opportunity to make a quick buck out of the Wesfarmers rights issue through the option to apply for additional in-the-money new shares at $13.50.

We rounded up three external financiers and cranked up every last credit card facility to throw $200,000 at the offer, which was a bit cheeky given I only owned 7 shares which were entitled to 2 new shares.

Whilst it was very disappointing to miss out on the $50,000 profit, we still made a quick gain of about $3200 after the scale back to just 1000 new shares or $13,500. However, this little refund statement is one to file away in the memorabilia box:

Where is the Fortescue share purchase plan?

The following email was sent to Fortescue Metals fixer Julian Tapp earlier this week:

Hi Julian, I trust FMG will be offering us retail investors an opportunity to invest the company on the same terms as Hunan through a share purchase plan. This has become standard practice after capital raisings by major companies such as CBA, Westpac, QBE and Westfield over the past six months.

Regards, Stephen Mayne
Fortescue shareholder

Westfield belatedly came through with an SPP after we threatened to run for their board on a platform promoting better treatment of retail investors, so let's hope we don't have to adopt the same tactic to get the recalcitrant Andrew Forrest with the program.

I've been playing phone and email tag with Fortescue's finance boss Chris Catlow so we'll see where it all finishes and update you next week.

All the radio action this week, plus Business View today

It was another busy week on radio with segments on RRR, 774 ABC Melbourne and 4BC Brisbane as follows:

Wednesday, Mar 11: 774 ABC Melbourne with Lindy Burns discussing the share market spike, fallen billionaires and federal debt.

Tuesday, Mar 10: 4BC Brisbane with Mike Smith discussing Queensland's debt crisis.

Wednesday, Mar 4:: RRR Melbourne with The Breakfasters discussing Pacific Brands, executive pay and the global economic crisis.

And if you've got Foxtel, tune into Business View on Sky News Business from 2-3pm this afternoon as I'll be on the journos panel in the Sydney studio before heading down for the heavy combat with Babcock & Brown in Pitt Street from 4.30pm.

That's all for now and if you've enjoyed this edition, tell your friends to get on board and help resource our shareholder activism.

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.