Sued, Rio Tinto tilt, last day profits, Clegg, MAV elections, WA News, Rich List, Packer, pokies, Cornwall, Gottie, talk circuit and some family news

March 25, 2011

Dear 14,000-plus Readers,

Greetings for the first time since our last bumper edition on February 7. There's plenty of juicy stories below (plus this cracking new Cornwall animation) so it you fancy on-passing this edition, here is the URL. And don't forget you can unsubscribe from these occasional email missives here.

Local government update - contested peak body elections and Supreme Court writs

We sent this special edition on February 22 analysing the candidates for the board of the Municipal Association of Victoria and were a little surprised that Presidential candidate Reid Mather fired back with this missive to the voting delegates from Victoria's 79 councils, which included the following:

Many of you would have received the latest Mayne Report via email. My program directs them to my junk mail box; I can see no reason to alter that. In my view the current report is bias (sic) and was not an accurate reflection on the Presidential Forum.

The votes were counted on Friday and the Presidential candidate we backed, incumbent independent Bill McArthur, was victorious in the three horse field without going to preferences, apparently. I say apparently because the MAV has not yet disclosed the full voting results. All they've got online is this link to the new board, which does include Reid Mather as a regional representative.

The Victorian Local Government Association (VLGA) initially adopted a similar non-disclosure position about their recent board elections but after some lobbying the board agreed to disclose the full results. Check them out here.

The new MAV board meets on Friday and, apart from electing a city and rural deputy president, the top agenda item should be full disclosure of the voting results. We await the decision with interest.

Sued by developer in the Victorian Supreme Court

Before leaving local government matters, I should disclose that the developer of a nursing home in Manningham's Green Wedge zone has issued this Supreme Court writ against me and another councillor, David Ellis, alleging defamation.

The writ only runs to 8 pages but was drawn up by Simon Wilson QC, one of the top Victorian silks who costs about $8000 a day.

I've written previously about this issue when legal threats were first made last year and in terms of the reaction so far, The Manningham Leader produced this page five lead last Wednesday.

We've entered into discussions about how the matter will be defended but no final position has been reached. However, the most likely scenario would involve a curtailment of future public comment as the case proceeds.

There was certainly a curtailment of public comment ahead of the last Manningham council meeting.

I was served with the writ three hours before council was due to debate and vote on the official council position on the nursing home development plan before the state government was due to make its final decision.

The effect of the writ was to trigger a conflict of interest under the Local Government Act which meant I was removed from the debate and vote courtesy of being involved in so-called “civil action” related to the proposal.

Under this formula, any developer can slap a defamation writ on a councillor to silence them and knock them out of a vote.

Interestingly, the developer in question has just invited me to the launch of a "health and wellbeing project" that Manningham council is partially funding. Not sure how suing councillors in the Victorian Supreme Court adds to anyone's health and wellbeing or the ability to fund such programs, but we'll be going along later this week to find out more.

Donate to help keep us going

The Mayne Report has notched up $300,000 in losses over the past four years and we do rely on donations to survive.

It has been nice to receive more than $12,000 worth of donations over the past couple of years and if you fancy giving us a hand to help fund our activism and keep us going on the political and AGM circuit, just click here or on the image below:

Rio Tinto pre-empts disclosure of pro-Aussie board tilt

Australia's most over-worked director, Sir Rod Eddington, has quit the Rio Tinto board two years after suffering a huge protest vote and just days before the notice of meeting for the upcoming London and Perth AGMs will be released.

Sir Rod's resignation will leave just two Australian residents - AFL President Mike Fitzpatrick and iron ore boss Sam Walsh - on the Rio Tinto board which currently numbers 14.

Lo and behold, last month I lobbed a board tilt at Rio arguing that the company "needs to have more than three Australian-based directors given the Australian operations deliver a majority of group profit."

And lo and behold Friday's Rio Tinto press release acknowledges "the desirability of appointing another Australian director after the retirement of Sir Rod Eddington".

But it sounds like Rio is planning to keep the Australian-based contingent suppressed to less than one quarter of the board. These clowns really don't have any idea about playing the Aussie card with a Labor Government.

They should be relocating the global Rio Tinto HQ from London to Australia and recognising that they are the biggest single beneficiary from the country with arguably the world's greatest natural resources dowry.

Interestingly, Friday's press release re-announced the planned departure of former Alcan chairman Yves Fortier after the May 5 AGM in Perth. Why did they feel the need to do that? Could it be because the full platform I've submitted reads as follows:

Mr Mayne believes the Rio Tinto board has not been held accountable for the folly of paying an enterprise value of $US44 billion for Alcan. Only three new directors have been appointed since 2007. Where is the boardroom accountability for the refusal to originally engage with BHP-Billiton, the excessive Alcan acquisition, the debt-laden balance sheet, the massively discounted rights issue, the purported bail out from Chinalco and the now-aborted iron ore joint venture with BHP-Billiton?

Mr Mayne also believes Rio Tinto needs to have more than three Australian-based directors given the Australian operations deliver a majority of group profit. There are political risks associated with treating Australia as a branch office, as evidenced by the Australian government's proposed Resources Super Profits Tax in 2010.

Mr Mayne believes Canada is over-represented on the Rio Tinto board and that in light of the Alcan debacle, former Alcan director Paul Tellier, aged 71, ought not to be seeking a further three year term at the 2011 AGMs.

It remains to be seen if the platform will be censored. The unwritten element of Friday's announcement was that the 71-year old Canadian Alcan man is indeed going to seek another three year term. Why has Aussie Sir Rod been booted and the ageing Canadian Alcan man given another 3 year term?

One good element of Sir Rod's departure is that it will free up his time to focus on his toughest job - keeping Rupert Murdoch in line as News Corp's senior independent director.

Rupert turns 80 on Friday and we've charged Sir Rod with the job of persuading him to go non-executive and slash his salary - just like Westfield founder Frank Lowy did last week. Don't hold your breath because when it comes to standing up to dominant chairs or CEOs, Sir Rod has been found wanting in the past at places like Allco, Rio and News Corp.

Keeping the pressure on excessive Westfield pay

We're a little chuffed that our call for Frank Lowy to slash his salary and move to non-executive chairman of Westfield has come to pass less than five weeks after the arguments were laid out in this piece for Fairfax Media's website. Crikey subscribers can check out this analysis in last Thursday's edition and we also submitted this letter which was published in The AFR on Friday:

Congratulations to The AFR's Robert Harley for getting the scoop ("New age for Westfield board as Lowy prepares to let go", March 2) that Frank Lowy will bet taking a pay cut from $15 million a year to $750,000 on becoming non-executive Westfield chairman and that he will receive a one-off $2.3 million retirement benefit in late May as part of the transition.

It's a real shame that Westfield didn't feel the need to disclose this information to the ASX as part of Wednesday's board restructuring and succession announcement.

You would think that Westfield remuneration committee member and ASX chairman David Gonski would strive to lead by example when it comes to disclosure and selective briefings.

When appointing a new managing director - as Westfield foreshadowed on Wednesday with the appointment of Steven and Peter Lowy as joint group CEOs - it is also conventional for the board to inform the market of the contractual arrangements.

Yet Westfield's 3 page ASX announcement was silent on this point.

Frank, Steven and Peter Lowy were paid a collective $29.6 million in 2009 and shareholders will soon be advised the 2010 figures in the annual report.

Steven Lowy collected $7.65 million and David Lowy was paid $US6.857 million in 2009. What has the board decided to do with their pay packets now that Frank Lowy has surrendered 95% of his excessive pay packet? Is that $14 million going to shareholders or Frank's sons? It's a question that is worth about $100 million to Westfield's market capitalisation so surely shareholders deserve to be told.

The Cornwall collection - new animation on educating migrants

Former Fairfax and Crikey cartoonist Mark Cornwall has been contributing toThe Mayne Report since March 2009. Here is a collection of his best cartoons and there are now also some amusing animations.

Indeed, click here to check out Cornwall's latest animation on Youtube which is an edgy parody of an appropriate education regime for new migrants set against the national anthem.

Why WA News retail shareholders should vote against Stokes related party deal

WA News is a rare beast with loads of retail shareholders who collectively control 38% of the company and a pristine balance sheet.

Now it is being loaded up with debt in a highly complex related party transaction which involves the $4.1 billion purchase of Seven Media Group because the world's biggest private equity firm, KKR, wants to exit with a tidy profit.

The Kerry Stokes machine is pushing hard with an intensive lobbying blitz. I was due to meet lead independent director Doug Flynn on Thursday but he pulled out at the last minute. The scheduled meeting still went ahead with the PR consultant plus a senior corporate adviser to WA News. It was a very lively one hour discussion, but I can't talk about the detail as it was off the record.

Shareholders have some hard decisions to make before gathering in Perth to vote on April 11.

Firstly, shares in WA News have badly underperformed from their recent peak of $8.44 in April last year. On November 16 last year it was still trading as high as $7.30, but then steadily declined as the deal was negotiated over the past few months. It was down to $6.34 by the time the deal was announced and today hit a low of $5.19.

The brutal truth of this situation is that anyone who buys a business from KKR is probably paying over odds. Kerry Stokes doesn't mind because for him there are additional benefits of retaining control and keeping his tax bill down.

When you exclude the existing 24% Stokes stake in WA News, the company is exactly 50-50% owned by institutional and retail investors. The institutions have already subscribed for 90% of their accelerated 4-for-7 entitlement offer at $5.20 and the offer to 26,700 retail investors to raise $326 million opened last week.

Retail investors are being shafted because WA News is paying too much for Seven Media Group, the offer is not renounceable, there is no bookbuild to sell any shortfall and there is no ability to apply for "overs" to take up the slack from investors who decline the offer.

But why would anyone take up the $5.20 offer when the stock is down to $5.19? Kerry Stokes and KKR need to sweeten the terms by agreeing to take a smaller number of shares, otherwise the deal should be voted down.

Knowing the apathy of retail investors, they are highly unlikely to subscribe for more than $100 million worth of shares at the current price. That will leave a lot of stock with under-writers UBS and JP Morgan.

At some point retail investors need to take a stand to protect themselves from related party deals and capital raisings which do little more than destroy value.

True, WA News is managing decline at the moment, but that doesn't mean over-paying for a national television network is the answer.

If the independent WAN directors really wanted to diversify and grow the company, then they should also have engaged with Fairfax Media which has a lot more synergies to offer than the $15 million which the current deal proposes.

Check out this piece in Crikey on February 28 which spelt out the arguments for a Fairfax move and also rips into the unfairness of the retail capital raising.

Some of these arguments aren't quite so relevent with the stock tanking and it is also true to say that renounceability leads to bigger discounts.

The question about retail investors applying for "overs" is quite interesting. WAN's $40 million public offer at $5.20 is designed to compensate for the lack of an "overs" offer and the argument goes that this leads to a lower underwriting fee.

In other words, the directors try and save the whole company a few million in fees to investment banks because the same multi-national players will make plenty of profit taking up the slack from retail investors with neither the wit or the means to take up the offer.

With retail being offered $326 million, that shortfall is now likely to be much larger than expected.

Throw in the 24% stake in WA News which Kerry Stokes has already conditionally sold to institutions at $5.60 a pop and we potentially have a lot of annoyed investors who could yet turn around and vote the whole deal down.

At this stage, I'll be voting my 8 WA News against the proposal. If enough donations come through, I'll also be headed to Perth for the EGM on April 11.

Donate to send us to Perth, Sydney and Adelaide

The better half is clamping down hard on the travel budget for interstate AGMs, which is a bit of a shame as the AGM mini-season in April and May promises plenty of lively interaction. Here's what would be a good travelling schedule:

Perth, April 11: WA News EGM to approve $4.1bn related party deal.

Perth, May 5: Rio Tinto AGM where running for board.

Adelaide, early May: Santos AGM and am running for board calling for SPP after recent placement.

Sydney, May 25: Westfield AGM after Frank Lowy steps back.

There are a raft of other interesting meetings coming up as you can see from this forward agenda of the AGM mini-season.

We'll be doing occasional subscriber or donor only reports after some encounters during the mini-season so if you've never given to our cause before, why not get on board below with a $50 contribution that will help send us interstate for some worthy governance combat and allow you to read some of our post-AGM critiques.

Last day results deluge delivers less red ink than usual

Alan Kohler likes to interview an equity strategist at the end of each reporting season to assess the overall picture.

Yesterday on Inside Business he chatted with David Cassidy from UBS who feels the market represents good value at the moment, even after pointing out that industrial stocks are being hit by the consumer slowdown and high Australian dollar.

Our favourite analysis of the profits season is to examine the last day deluge. Last Tuesday, February 28, was no different to previous years in that there were more losses announced in one day than for any week of the season.

We asked the ASX to explain the logistics of handling such a deluge and this was what spinner Matthew Gibbs emailed through:

ASX's Company Announcements Platform (CAP) copes exceedingly well - extra staffing arrangements are made to manage the higher volume of announcements and the system has more than sufficient capacity. On Tuesday, for example, 937 announcements were processed in total, 249 related to profit reports. As busy as yesterday was, it was short of the single day record for announcements processed of over 1,500 last October.

As you know, major reporting deadlines occur twice a year so ASX systems and staff are well seasoned.

Companies are responsible for the content of their reports - ASX cannot vet every line (but companies can seek input from their ASX company adviser prior to lodgement). However, we do check that there are no high-level discrepancies before releasing them to the market. Generally, we seek to publish announcements within 15 minutes of receipt. During especially busy periods, like reporting season, announcements will be queued and release to market may take a little longer.

You'll have to ask companies why they lodge after 5pm. ASX receives profit reports up until the CAP offices closes - 8.30pm - and even early the next morning. If these reports can be processed and released before the next trading day begins (CAP begins publishing at 8.30am) the companies responsible will not be in breach of the reporting deadline.

Even under the old 75-day reporting season calendar (it's now two months), there was always a clustering of lodgements on the last couple of days prior to the deadline.

Regards, Matt

Interesting stuff. Go here to see our list tracking how the results announcements deluged through during the day.

In terms of the hourly breakdown, it went like this:

17 before 9am (3 profits and 14 losses)

Biggest profit: 8.45am, QR National: $277.5m profit
Biggest loss: 8.34am, Downer EDI: $103.8m loss

14 between 9-10am (7 profits and 7 losses)

Biggest profit: 9.25am, QBE Insurance: $US1.27bn full year profit
Biggest loss: 9.45am, Beach Energy: $87.6m loss

10 between 10-11am (7 profits and 3 losses)

Biggest loss: 10.44am, Mariner Corporation: $1.18m loss
Biggest profit: 10.46am, Perilya Mining: $74.2m profit

5 between 11-12am (4 profits and 1 loss)

Biggest loss: 11.14am, Compumedics: $1.14m loss
Biggest profit: 11.50am, Brookfield Prime Property Fund: $23.7m profit

18 between 12-1pm (11 profits and 7 losses)

Biggest profit: 12.22pm, Max Trust: $22.66m profit
Biggest loss: 12.27pm, RCL Group: $22.2m loss

18 between 1-2pm (4 profits and 14 losses)

Biggest profit: 1.16pm, 3Q Holdings: $1.23m profit
Biggest loss: 1.41pm, Mirabela Nickel: $47.6m loss

14 between 2-3pm (6 profits and 8 losses)

Biggest loss: 2.01pm, Heartwear International: $29.3m loss
Biggest profit: 2.05pm, Mineral Deposits: $US279m profit

25 between 3-4pm (8 profits and 17 losses)

Biggest loss: 3.09pm, Centrepoint Alliance: $8.1m loss
Biggest profit: 3.49pm, Macquarie Fortess: $10.23m profit

39 between 4-5pm (12 profits and 27 losses)

Biggest profit: 4.29pm, United Overseas Investments: $93.1m profit
Biggest loss: 4.37pm, Alternative Investment Trust: $60m loss

27 between 5-6pm (6 profits and 21 losses)

Biggest profit: 5.48pm, China Steel Australia: $1.89m profit
Biggest loss: 5.58pm, Powerlan: $5.5m loss

41 between 6-7pm (18 profits and 23 losses)

Biggest profit: 6.17pm, Dart Energy: $36.64m profit
Biggest loss: 6.53pm, Water Resources Ltd: $27.6m loss

7 after 8pm (2 profit and 5 losses)

Biggest loss: 8.07pm, Continental Coal: $30.8m loss
Biggest profit: 8.15pm, Nexus Energy: $32.45m profit

Check out the full list of more than 200 announcements on the day.

Packer, Murdoch, Woolies and Australia's ever worsenign corporate concentration

Australia has already got one of the most concentrated corporate markets in the world and it seems to be getting worse with every passing week.

The proposed $340 million purchase of Cellarmaster by Woolworths will just further crucify independent retailers and make the wine business even tougher.

Then you've got the appalling situation with broadcast media where Southern Cross Media is buying Austereo in a move that will see even more syndicated radio content.

Even worse, it looked like the Murdoch and Packer interests (known colloquially as Packdoch or Murder) had seemingly gained control of Network Ten and are about to neuter One HD, its sports focused digital channel.

This comes at exactly the same time as Foxtel is attempting a merger with Austar which would include Fox Sports, the 50-50 Murder joint venture. Talk about a conflict of interest!

After having gifted enormous value to the free-to-air networks through multi-channelling, reduced licence fees and the anti-siphoning list, we're now about to see private equity giants CVC and KKR get out of Nine and Seven respectively with handy profits.

The Weekend Australian produced this feature last week portraying Australia's broadcast media sector as "one big happy family", which perhaps explain why you don't see nearly enough media discussion about cartels and corporate concentration.

At least the Packer dummy spit at Ten has now put a bit of mongrel back into the scene. The worst situation of all is when the billionaire media moguls are all secretly co-operating.

It just beggars belief that James Packer felt he could act a Ten Network director and argue against the hiring of a new CEO on the grounds that it might upset a competitor with whom he had some side peace deal with.

Once this position was articulated around the board table, security should have been called to frog-march Packer off the premises. If Stokes is seriously able to dictate to Packer on Ten's management appointments, how secure is the Ten board room information that Packer was given access to?

Kairiki Energy joins the rip-off club

Kairiki Energy is a Perth-based explorer focused on oil and gas in the Philippines. It has also shown an ability to wantonly disregard the interests of small shareholders.

The company was already on our SPP shame file for a placement in 2007. Since then the share price has tanked and it has now come back with another capital raising which shafts shareholders.

Firstly, we've got a $3.48 million placement to clients of Perth-based broker Pattersons at 3c a pop. In an apparent attempt to share the love around, we've got a parallel 1-for-3 rights issue at 3c.

The problem here is that the stock is currently trading at more 4c and shareholders have no ability to apply for additional shares, as occurs in the many pro-rata capital raisings. When a stock is beaten up, you usually get quite a number of shares left on the table. In these circumstances, the directors should invite shareholders to apply to extra shares.

In this case, shareholders are forbidden from doing this and the shortfall will automatically transfer across to underwriter Pattersons which is already being paid a tidy fee for its services.

Skilled Engineering comprehensively shafts retail investors

After opening 3 days worth of mail on Friday night, I was seething on reading the details of Skilled Engineering's $71.3 million capital raisings.

What started out as an accelerated 1-for-6 entitlement offer at $1.68, suddenly added an institional placement component raising a further $17.9 million at $1.72. Given that the stock ranged between $1.83 and $2 on February 25 when the placement was done, what on earth were the directors doings selectively placing discounted stock to the big end of town?

Even worse, the $14.2 million retail component of the offer is under-written, but does not allow for shareholders to apply for "overs", so it will probably finish about 50% under-subscribed and provide a windfall to the underwriters.

The situation at WA News is similar, although at least there was no placement of new stock.

Given that Skilled Engineering placed $17.9 million with institutions at a discount, I'll be arguing strongly that the directors now owe retail shareholders a $15,000 SPP at $1.72. Given the price is currently $1.95 it would be well supported.

Pokies campaign trucking along as critics line up to attack differential rates

The campaign to end Australia's status as the world's most pokies addicted nation continues on a range of fronts, led admirably by the likes of Andrew Wilkie and Nick Xenophon.

Manningham council adopted a robust gambling policy last month and we're now examining the question of imposing a special rate on some pokies venues to raise an estimated $260,000 of extra revenue if the full 400% loading was applied.

Fairfax's Melbourne Weekly Eastern covered the issue well three weeks ago. Manningham mayor Geoff Gough has already lined himself up publically as an opponent with the following quotes:

"Personally, I do not agree with differential rates, because it is an interference to make some people pay more and some people pay less."

"I don't agree with the idea of putting penalties on some legal businesses and not others – we have to wonder whether there will be pressure to impose double rates on every pub and bottle shop, or every TAB."

"Philosophically, I don't know if councils should be making those kinds of judgments."

I was also quite surprised to read Paul Bendat's recent blog where he also came out against differential rates in the following strident terms:

Darebin now joins Moreland and Manningham in an idiot's parade of local government councils eager to get their share of the pokie gambling losses. Once locked into this new source of revenue, without a clue about what to do with it, they will become as addicted as our own State governments, the AFL and the NRL. Bear in mind that 40% of this new money is earned on the backs of problem gamblers. It's immoral and, frankly, disgusting.

Woolies would have been delighted to read this critique, as they were the only objectors to Manningham's new gambling policy. It is plain wrong to suggest Manningham would become addicted through an additional $260,000 in rates on a $100 million budget.

Besides, there is no meaningful connection between pokies revenue and rates revenue through our capital improved valuation system. Our rate revenue would not be hooked into pokies losses like the state governments. Any money raised through a differential rate would be specifically used to fund research or problem gaming programs which would be directly aimed at reducing pokies addiction in Manningham.

The differential rate would also send a marginal negative price signal to those aspiring to open new pokies venues in Manningham. Like with all so-called sin taxes, raising the tax is designed to discourage the damaging product.

Tom Cummings and the ClubPubFail campaign

In other pokies news, here is a recent missive which warms the heart:

Good morning,

As you would be aware, ClubsAustralia recently joined forces with the Australian Hotels Association and will be launching a massive campaign to turn public and political opinion against mandatory pre-commitment. They have committed $20 million to this campaign; $10 million for this year and $10 million for 2012.

This is a disgraceful turn of events. The Clubs may hold political sway in NSW, strongly influencing state politics, but they cannot be allowed to do the same nationally; not when the issue at stake is the incredible harm problem gambling causes to our society.

To this end, I have launched a counter-campaign called ClubPubFail. This is in direct opposition to the ClubsAustralia/AHA campaign, and calls for:

* an end to the campaign against mandatory pre-commitment technology
* formal recognition of the dangers of poker machines, and support for reform including mandatory pre-commitment
* formal recognition that a significant percentage of poker machine revenue comes from problem gamblers

Our website is Please take a look and feel free to offer your support, or contact me if you have any comments or questions. This is NOT a campaign against clubs and pubs in general, but a specific campaign against the ClubsAustralia/AHA campaign opposing mandatory pre-commitment.

Finally, if you approve of what we are trying to do, I ask that you help in promoting this counter-campaign as widely as possible. The ClubsAustralia/AHA campaign is incredibly well-funded and will no doubt be incredibly well-organised; that doesn't mean they can't be stopped.

Tom Cummings

Finally, check out the latest from Paul Bendat's Pokieact website and this package of our past pokies coverage.

And try watching this 30 second anti-pokies ad made by Paul Bendat two years back featuring our daughter Alice, who was 6 at the time:

Brett Clegg rejects Hywood offer and pockets News Ltd pay rise

Caroline Overington, The Australian's Media Diary columnist, produced this item three weeks ago:

As widely reported, Greg Hywood last week became the first former journalist in two decades to run the Fairfax Media group. His opening words (give or take the odd verb) were: “From today, things will get better”—but not, perhaps, for Michael Gill.

Columnist Mark Day hinted at this last week, and we here at Diary have since been able to establish it as a fact: Gill's job was recently offered to an executive here at News Limited. The approach was made with the knowledge of some, and perhaps all, of the Fairfax board. Now, Gill may not want to believe it. He may say: ‘Oh, come on, they would say that, wouldn't they, because they are News Limited, and they have gun sights on us.”

To which Diary says: believe what you will, Mr Gill, but your job was offered to an executive here at News Limited not two months ago. That is 100 per cent fact.

The executive whose confidential offer clearly wasn't confidential was none other than Brett Clegg, who negotiated himself a pay rise, a promotion and the title "Deputy CEO of The Australian", as was explained in this story on January 25.

Clegg replaces Nick Leeder, who defected to run Google Australia.

This still leaves a major problem for Fairfax CEO Greg Hywood in deciding who should replace Michael Gill in charge of The AFR. There are no obvious internal candidates and Clegg would have been suitable given his previous stint at the paper.

Michael Stutchbury is another refugee at The AFR now seemingly under-utilised at The Australian since he was ousted as editor, but AFR insiders regard him as "too right wing" and his commercial or managerial talents are less clear cut than his editorial abilities.

It is not often that journalists defect from Fairfax and quickly win the trust of News Ltd heavies to hold a senior executive post. The secret for Brett Clegg was that he was literally a rain maker from the moment he stepped through the door. He showed rare journalistic entrepreneurship on the revenue side and given The Australian's constant battle to make a profit, News Ltd CEO John Hartigan clearly felt it was worth trying to keep him and deny Fairfax that skill.

Shock, horror - company advises dividend cheque was not banked

Here is an amusing exchange with K2 Asset Management after they wrote to us advising that a 58c dividend cheque had not been banked:

Hi James, thanks for your letter of February 9, 2011 regarding the unbanked K2 dividend cheque.

I've got the world's biggest small share portfolio with 650 holdings worth less than $30,000. The average holding is worth about $45 and with K2, it is just 10 shares worth $12 based on last week's close.

I've got a policy of not banking cheques for less than $5 and have a stockpile of 226 unbanked cheques which I use as a prop at some public speaking events.

I was very impressed that yours was the first letter I've ever received alerting me to the unbanked dividend cheque. Well done indeed. Could you please advise what led to this decision to send the letter and how many other shareholders hadn't banked their dividend cheques?

Could I also suggest you include a direct debit form with the next dividend cheques as my other policy is to always fill in those forms to avoid the drag of endless small unbanked dividend cheques.

Direct bank transfers are the best way for shareholders to receive dividend payments and many companies are now refusing to send cheques, therefore avoiding the problem of unbanked cheques.

If you'd like to discuss this my best number is 0412 106 241.

Kind regards
Stephen Mayne
Owner of 10 shares in K2 Asset Management Holdings Ltd

And here is the response from K2's James Corbett:

Hi Stephen,

The letter was sent as a courtesy to all shareholders who are yet to present their cheque for the September 2010 dividend.

After 12 months there is a requirement to lodge unclaimed money with the State Revenue Office, however, prior to completing this process we endeavor to contact shareholders with outstanding payments regardless of the dividend amount.

A direct debit form was included with the dividend cheque in September and this is our preferred method of payment where available. We will again include this form with all cheques issued for the February 2011 dividend.

I have attached a copy of the standard form from Registries which can be used to update your direct payment details prior to the record date of the interim dividend of 16th February 2011 if you wish.

James Corbett
K2 Asset Management Ltd

Donate to help keep us going

The Mayne Report has notched up $300,000 in losses over the past four years and we do rely on donations to help keep us going.

It has been nice to receive more than $12,000 worth of donations over the past couple of years and if you fancy giving us a hand to help fund our activism and keep us going on the political and AGM circuit, just click here or on the image below:

Oceanlinx investment opportunity

We're not usually in the business of promoting investment opportunities but have been contacted by one of the promoters of Oceanlinx, an internationally recognised wave energy technology company.

Australia's doesn't produce much in the way of tech plays, so here is the so-called tease which for those interested parties can lead to the sending of a full Information Memorandum for the next round of capital raising.

The Mayne Report Rich List

BRW magazine does a great job with its various Australian Rich Lists but we've broadened their efforts to track any Australian who has ever been worth more than $10 million. We've got more than 1500 names with those who've fallen back below $10 million now italicised. Below are our latest new or updated entries:

Peter Wenzel: was a stockbroker who backed Christopher Skase in his day and in 2011 sold his Portsea mansion for more than $4 million.

Jacobsen family: the children of Toorak philanthropist Maurice Jacobsen inherited a tidy pile when he died in late 2010 and one of the first things Marcus and Vicki did was sell his Toorak mansion.

Melissa de Campo: the well-known architect and designer was attempting to sell her South Yarra mansion for $10 million in early 2011.

Ashton Waugh: Sydney publican who bought a Vaucluse mansion for $6.7 million in 2004 and then sold it for more than $8 million in early 2011.

Collette Dinnigan: Sydney-based fashion designer who in 2011 was attempting to sell her 5 bedroom Paddington mansion for up to $8 million after an earlier failed attempt to sell it for $10 million in 2009.

Jeff Browne: the managing director of Channel Nine in Melbourne offloaded his St Kilda West home for more than $4 million in early 2011.

Crikey yarns so far in 2011

Here are links to our Crikey contributions so far this year:

Westfield board changes aimed at avoiding AGM protests
Thursday, March 3, 2011

Fairfax should move now on WA News
Monday, February 28, 2011

Why ACMA should force Lachlan Murdoch off News Corp board
Thursday, February 24, 2011

Did News Corp shareholders pay Murdoch family's $77m tax bill?
Thursday, February 17, 2011

Mayne on donations: Vic Libs still richest political division in the country
February 1, 2011

After a decade of under-performance, is it time for Rupert Murdoch to go?
January 18, 2011

Tales from the talk circuit

It was fascinating to read Andrew Crook's big feature for Crikey last week on the Australian speakers circuit. It's a really interesting place involving big money and often undisclosed payments. I was quoted in the following passage:

Even journalists can command between $1000 and $10,000 a speech with Business Spectator columnist Robert Gottliebsen understood to be pulling down $50,000-$100,000 a year and Fairfax scribe Michael Pascoe reaping a similar amount. Alan Kohler invoices for $7500 and Crikey founder Stephen Mayne says he earns a modest $20,000 a year for 30 speeches, with an extra 30% shunted to ICMI in agency fees.

Recent Crikey recruit Paul Barry says his fee is between $4000 and $5000 and comic Catherine Deveny, who is booked solid until November and is urging panels to hire more women through her website nochicksnoexcuses, invoices for $5000 but will slash that if it's a struggling community group. Established commercial TV journos such as David Koch and George Negus demand at least twice that.

Mayne sounded a note of caution in an industry that sees some journalists accepting paid speaking gigs while simultaneously writing on the industries they lecture:

“From a journalistic integrity point of view, the whole area of paid speaking gigs is poorly regulated, poorly disclosed and ripe for abuse. For instance, it would be inappropriate for a particular AFL club to directly pay an influential sports journalist who covers them, but this sort of thing happens regularly.”

“Similarly, business commentators need to tread very carefully through this area. You'd never know if the likes of Bolt and McCrann are being hired by big polluters to speak whilst simultaneously prosecuting a campaign against putting a price on carbon.”

Mayne's message may have already percolated with business journalism legend Stephen Bartholomeusz refusing any fee for his half-a-dozen gabfests each year, in stark contrast to commercial radio shock jocks like Neil Mitchell and Alan Jones.

Meanwhile, click here to read feedback after some speeches and click on the image below if you fancy an engagement as the talk circuit is emerging as a modest offset to the losses of The Mayne Report:

And here is a list of upcoming speaking commitments.

Gottie loses the plot with Axa campaign

Robert Gottliebsen might be reportedly making between $50,000 and $100,000 a year on the talk circuit but his recent crazy campaign against the $14 billion Axa Asia Pacific Holdings takeover was the latest indication that perhaps it is time for Gottie to re-retire gracefully.

The three part series on Business Spectator is available here:

What's up with Axa's results

Two holes in Axa valuation

The demons of Axa directors

Whilst Gottie's similar campaign against the 2003 MIM sale to Xstrata proved to be absolutely right, back then he had MIM CEO Vince Gauci and the likes of Paul Keating on-side.

This time he was a lone voice in the wilderness who ended up getting politely slapped down by his colleague Stephen Barthololeusz after 99% of Axa APH shares voted were in favour of the deal.

Another colleague, Alan Kohler, also slapped Gottie down on Inside Business yesterday saying that the deal "caused hardly a murmer of dissent".

Jeepers, when you're Business Spectator stablemates won't back you, you really were flogging a dead horse.

I asked Axa Asia Pacific Holdings chairman Rick Allert to address the various concerns and summarise the arguments raised by Gottie at the EGM to approve the sale in Melbourne last Wednesday.

He said that Gottie was basically accusing the directors of misleading shareholders, but then pointed to various sections of the explanatory memorandum which covered all of the issues raised.

I actually reckon it was Gottie who was misleading his readers.

The bizarre thing about this campaign was Gottie's obsession with demanding Australia get fair value from the French for selling Axa's Asian business. Yet this is the same commentator who railed against the Resources Super Profits Tax where that was attempting to address a clear case of Australia clawing back some value after giving away its assets to foreign interests.

Letter from readers: the shafting of Cougar Energy

Hello Stephen,

Have you followed the whole business of Cougar Energy? It has been comprehensively done over by the Queensland Government, the Coal Seam Gas industry and sundry others.

Cougar CEO Len Walker must have really annoyed someone. The vitriol and vehemence in some of the anti-Cougar Energy activity is being fostered behind the scene from somebody.

It is my belief Cougar are innocent victims being crucified by very large forces. A David and Goliath situation.

Hope you can do something about this.

Kind Regards, Peter H

SM: I'm in a tricky situation with this one because a relative works for Cougar Energy. However, it does seem incredible that the Queensland government seems determined to permanently shut down Cougar's Kingaroy UGC plant. If I was Len Cooper, the compensation claim against the government would already have been filed because the excuses being offered for the shutdown seem very thin indeed.

PR stunt of the day- is Apple quitting all bricks and mortar Australian retailers?

The following email arrived this morning:

Hi Stephen,

Last week Ruslan Kogan made a public statement that Australia's leading retailers, specifically JB Hi-Fi, were too reliant on Apple products for their future stability.

He revealed that Apple will soon pull out of bricks and mortar retailers and start selling direct to the consumer only. Terry Smart, CEO of JB Hi-Fi sought to discredit Ruslan's comments but did not provide any evidence.

Ruslan Kogan is backing up his insight and knowledge by challenging Terry Smart to a $1,000,000 bet. The details of the bet, including the official deed are available here:

To request an interview, please get in touch.

Vuki Vujasinovic
0422 492 660

SM: That's an interesting proposition. Apple is now the world's second most valuable company and Australia has long suffered ridiculously high rents at major shopping centres. JB Hi Fi gloats that its grungy outlets only cost about 2% of total sales, the lowest ratio of any Australian retailer. With Frank Lowy privately complaining that Westfield shares are 40% undervalued, it would only take such a move by Apple to demonstrate to all and sundry the risks of online retailing to those still depending on bricks and mortar selling.

Sign up for campaign and governance Tweets

Click on the image above to join more than 3500 followers on Twitter. We are regularly dropping out observations about politics, shareholder activism and the media and here are some of the more recent Tweets:

March 6: Tom Elliott and MAV election

How on earth could Tom Elliott say on Inside Business that Frank Lowy has resigned as chairman? He's resigned as CEO but stays in the chair.

Good to see Bill McArthur returned for another 2 years as prez of Muncipal Association of Victoria. Better option than ALP or Nat candidates.

March 3: Rio, AFR letter and WA News

Sir Rod Eddington quits Rio board which admits need more Aussie directors. They haven't revealed my nomination on this very platform.

WA News shares down to $5.33 so instos who bought Stokes' 24% at $5.60 are under water and $326m retail offer at $5.20 looks in trouble.

Good to see The AFR gave letter on shoddy Westfield pay disclosure a run. Off now to ASA monitoring committee meeting.

March 2: Packer, Assange and AFR blunder

If J Packer argued against hiring James Warburton coz he didn't want to upset K Stokes, then Packer had a huge conflict & had to go.

US negotiating position with Julian Assange seems pretty clear - hand back 249,000 cables or source Bradley Manning faces death penalty.

Just bumped into Centro chair Paul Cooper on Collins St and we joked about AFR using my gag from AXA EGM yesterday but calling him Jeremy.

March 2: defo, Lowy and Santos chair

Local paper runs the defo yarn:

Good to see Frank Lowy has given up the $15m salary and gone non-exec chair at Westfield. That just leaves Rupert now who turns 80 next week.

Had an interesting meeting with Santos chair Peter Coates this afternoon over board tilt and shafting of retail shareholders.

February 28: Primary Healthcare, profits deluge, Richo

How politics works...Primary Healthcare boss Ed Bateman donates 200k to Libs in 09-10. Disclosed Feb 1, govt cuts pathology funding today.

Just finished 6-7pm list where were 41 results inc 18 profits & 23 losses. See

Amazing how Graham Richardson is everywhere in media despite the odium of being a high profile consultant to alleged murderer Roy Medich.

February 22: Local paper has reported that two of us councillors have been served with supreme court defamation writ. Was mentioned at council last night

February 22: Top of Lachlan Murdoch's "to do" list will be boning George Negus and the $20m investment in bigger news service.

February 22: Surely Lachlan Murdoch can't continue as a News Corp director whilst being acting CEO of Ten. Where is ACMA or ACCC?

February 22: Mirvac outed themselves yesterday at a panel hearing at Manningham as the preferred bidder for the 48ha Eastern Golf Club site in Doncaster.

February 21: Check out this email critique of candidates in contested MAV board elections:

February 21: Off to Westpac for a lunch with Mary Iskenderian, CEO of Women's World Bank. And we should celebrate Liz Murdoch joining News Corp board.

February 20: Just did ABC Perth on Stokes-Seven deal. Said it was controversial, high-risk and may be voted down by WA News minority shareholders.

February 20: Blackrock are 2nd biggest WAN shareholder with 6% and were only major insto who voted against Westrac related deal after heavy campaign.

February 20: WAN purchase of Seven Media Group for a lofty $4.085 billion looks like another case of Stokes stiffing minority shareholders.

February 16: Just back from excellent women in biz lunch with Carol Schwartz, Kelly O'Dwyer, Alexandra Richards QC, George Savvides & Kohler chairing.

February 16: So, ANZ chair John Morschel backs Singapore's ASX takeover - the same Morschel who has Lee Kuan Yew's son sitting on the ANZ board.

February 15: Am working up this interesting list tracking world's most valuable companies:

February 15: Chevron can handle $US8 billion judgement in Ecuador. It's record profit was a handy $US24 billion in 2008.

February 15: Interesting that BHP's total tax rate fell from 33% to 24%. Plenty of scope to pay a lot more tax on Aussie coal and iron ore.

February 14: Fascinating stuff on BHP's Kloppers chat with US consul courtesy of Wikileaks/Fairfax today and Pilger promising similar Murdoch hit to come.

February 14: No mention in today's edition but it's not only Valentines today but also Crikey's 11th birthday. What a journey from dot com peak in 2000.

February 10: Good outcome with VLGA board so see 1st crack at top Vic councillors list:

Mayne family news: sports update and lamenting Maroondah's pool closure decision

And finally in this March bumper edition, here's a little update on Mayne family news.

Sister Sally successfully sold her house on Saturday and was pleased with the job performed by agent Jellis Craig. The agent asked for a mention in Crikey, which is not possible, but I'm happy to oblige here. We had a nice family dinner on Saturday celebrating the sale.

Paula and the three kids went out to the Ringwood Aquatic Centre yesterday afternoon which is going to be closed in May. A controversial decision indeed by our neighbouring councillors at Maroondah, especially after they abandoned plans to build a new centre!

The diving facility at Ringwood is fabulous and Laura, 9, did her first dive off a 3 metre board. Alice, 8, and Philip, 6, both jumped off the three. Laura also jumped off the 5m board, much to her mother's surprise.

Paula continues to enjoy serving on the RACV board, is secretary of the local primary school council and is also doing a mediation course.

The kids are all getting into tennis lessons at the moment. There's also plenty of fun being had at Little Athletics and the local pool gets a regular work out. Both Laura and Alice made it into the district finals for swimming which was a real buzz. Alice and Laura are continuing on with dancing and the next things to try will be basketball for the girls and soccer for Philip.

All the kids are loving school and we've got some local heavyweight politicians coming this afternoon for the annual badge presentation ceremony.

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.