The Real Corporate Terrorists

Nominee companies splatter the �top 20 shareholder� lists of most Australian companies but with all their influence they are not subject to the ASX Listing Rule 4.10.9, which means they do not have to reveal to the public or normally even the company being invested in, the identity or any information relating to the companies or individuals that actually hold its shares. An OECD report on Corporate Governance, detailed by Oxfam, suggested that nominee companies allowed shareholders to shirk social responsibilities through anonymity and further, nominee companies may be used for illicit purposes including money laundering, bribery, corruption, improper insider dealings, illicit tax practices, and financing terrorist activity.

WEEK IN REVIEW

Less well-off paying more: consumer groups

Consumer organisations believe the bulk of the fees that have helped boost bank profits are being borne by low-income earners and small businesses.

Full story: http://www.theage.com.au/text/articles/2003/11/14/1068674388209.html

Joy Battles Goode at ANZ

Suburban branch manager Joy Buckland will target ANZ chairman Charles Goode in her board tilt, arguing that shareholders should not return a man who holds multiple company directorships.

Full story: http://workers.labor.net.au/203/news5_joy.html

Insider report rouses watchdog

The Australian Securities and Investments Commission has dissented from a government report on insider trading laws which proposes narrowing the definition of insider trading and exempting some kinds of transactions.

Full story: http://www.theaustralian.news.com.au/common/story_page/0,5744,7927374%255E643,00.html

Guide points finger at noxious boards

Domineering company directors and chief executives who intimidate and ridicule their colleagues encourage boardroom dysfunction that can ultimately lead to the downfall of a company.

Full story: http://www.theage.com.au/text/articles/2003/11/19/1069027185983.html

NAB chief's pay tops $6m

National Australia Bank chief executive Frank Cicutto earned more than $6 million last year and stands to exceed Westpac chief David Morgan's $7.4 million package if he collects all long-term options and shares.

Full story: http://www.theage.com.au/text/articles/2003/11/18/1069027117261.html

Frank Lowy defends $13 million pay

Westfield's founder and executive chairman, Frank Lowy, yesterday took the initiative and defended his $13.39 million pay packet, saying he wasn't driven by greed and that he gives his money to charity.

Full story: http://www.theage.com.au/text/articles/2003/11/17/1069027047148.html

Law reforms stop short: Hulls

The Victorian Government has questioned the strength of the latest wave of financial services law reforms that have been proposed by the Howard Government - saying they could and should go further.

Full story: http://www.smh.com.au/text/articles/2003/11/14/1068674382920.html

Commonwealth 'should join Ansett mediation'

The Federal Government is under pressure from the Federal Court to take part in talks that could release $415 million owed to former Ansett Airlines workers and creditors.

Full story: http://www.theage.com.au/text/articles/2003/11/17/1069027047875.html

Closure Of Melbourne Biscuit Plant Sparks Call For Gov't Aid

MELBOURNE, Nov 19 Asia Pulse - Government intervention has been urged following the announcement that 200 jobs will be lost with the closure of Melbourne biscuit maker George Weston Foods.

Full story: http://au.news.yahoo.com//031119/3/mky2.html

Proxy Voters Try To Block Australia's ABC Learning Options Award

Proxy voters have attempted to block a move by Australia's ABC LEARNING CENTRES LTD (ASX:ABS) to award share options to directors. Shareholders at the childcare centre owner-operator's annual general meeting yesterday voted in favour of the issue of up to 2.55 million options to the company's six directors under an incentive plan.

Full story: http://au.news.yahoo.com//031119/3/ml02.html

Millions milked

Australia's child-care boom is turning ugly. Behind the painted smiles and cuddly brand names, this $3 billion service industry is at war with itself. A BRW investigation reveals that big profits are drawing free-wheeling entrepreneurs into the industry. But bitter industrial disputes and claims of miserable operating conditions are creating a potent mix that will change the business comprehensively.

Full story: http://www.theage.com.au/text/articles/2003/11/17/1069027027097.html

US EXCESS

US forex fraud 'staggering': attorney

Forty-seven currency traders were indicted on Wednesday on charges including conspiracy, wire fraud, money laundering and securities fraud.

Full story: http://www.theage.com.au/articles/2003/11/20/1069027253090.html

FBI nabs 48 in foreign exchange scam

FBI agents on Tuesday arrested at least 48 Wall Street foreign exchange professionals in a sting against several top firms thought to have defrauded small retail investors of millions of dollars.

Full story: http://www.theage.com.au/text/articles/2003/11/19/1069027185989.html

Conrad Black quits Hollinger "immediately," firm responds to SEC

NEW YORK (AFP) - Tycoon Conrad Black stepped down two days ahead of schedule as chief executive of media giant Hollinger International, as the company scrambled to provide key financial documents to US regulators.

Full story: http://au.news.yahoo.com//031120/19/mm2g.html

NEWS HIGHLIGHT

Good boards learn to smell the smoke

By Alan Kohler, Sydney Morning Herald

Your typical Australian public company director spends between 200 and 300 hours a year trying to keep an eye on a chief executive who puts in those sort of hours every month, running a sophisticated snow-making machine with a team of high-paid executives and staff.

The typical director is not exactly underpaid - getting around $500 an hour - although in a crisis the hours can double, so the charge-out rate halves.

But it's not about the money. The real issue about boards is whether it is possible to do the job at all, for any money - especially for independent part-timers coming into an industry for the first time.

How, for example, is it remotely possible to be an effective independent, part-time director of a major bank unless you understand banking?

Take National Australia Bank. It's a mostly well-run and well-governed company. Its corporate governance was given five stars in a Horwarth report last year.

The chairman is Charles Allen, former CEO of Woodside Petroleum and a veteran of the gas industry. Other directors include Peter Duncan, a former Shell man, Brian Clark from Vodafone, Graeme Kraehe, formerly of manufacturers Southcorp and Pacifica, and Ed Tweddell, former CEO of pharmaceutical firm, Faulding.

There are 25 board and committee meetings a year, probably totalling around 250 to 300 hours for each director. The average fee for a NAB non-executive director, by the way, is about $200,000. Hourly rate, therefore: $750 an hour. Not bad money at all.

But do the above gentlemen, having spent their lives in gas, oil, telecommunications, manufacturing and pharmaceuticals, have any hope of getting on top of a complex banking business that is spread around the globe, while dealing with the implications of a debt/property boom that's peaking and thinking about spending billions on AMP, during the equivalent of four or five weeks work a year?

Of course not.

Colin Carter, who recently retired after long service with Boston Consulting Group - largely, in recent years, working with boards of directors - has concluded that, in general, the job of a public company director is "not do-able".

His book, Back to the Drawing Board, with Jay Lorsch, also from BCG, is one of two on the subject published this week. The other - Boardrooms that Work, by Margaret Cairnes - was launched yesterday afternoon in Sydney by the Assistant Treasurer, Ross Cameron, and published by the Australian Institute of Company Directors and the Group of 100, a CFO organisation.

Carter and Lorsch conclude that boards all over the world are struggling, including in Australia - even though directors here typically spending twice as long on their board duties as those in the US.

"Boards are a conundrum. Take a group of part-time directors and present them with an extremely difficult job, but give them very limited time together. And then charge this institution with ultimate responsibility for ensuring that the nation's most important economic assets are well managed. How can such an unlikely arrangement work?

"It works only because of the commitment of the women and men who serve as directors."

Carter and Lorsch don't say this exactly, but if an institution relies in that way on the commitment of its members, then obviously where that commitment is lacking even slightly, or things go just a bit wrong, the result can be disastrous - as we've seen too often.

In a recent conversation, Colin Carter told me that he thought directors should develop specialisations - not that individual board members should be responsible for divisions of the company, but for broad areas of strategy, such as Asian expansion, say.

He believes directors are too reactive, and don't go on "journeys of exploration", simply because they don't have the time or the incentive.

In their book, Carter and Lorsch conclude that independence itself is not the answer to good governance and may even be a hindrance, since it can also mean ignorance. The key skill for a director, they say, is to "smell the smoke under the door before a business burns down", and the key to that lies in the internal practices and culture of the board, not in the external processes.

Margaret Cairnes arrives at much the same conclusion: "what brings boards down is not tangible, visible and measurable. What brings boards and companies down is dysfunction within their social system.

"If strong, healthy social dynamics are what make great boards great, then boards need to create a culture in which trust, respect, candour and open, constructive dissent are the norms," she says.

These are difficult, ephemeral issues, unlike ratios of independent directors and corporate governance statements in annual reports.

But anyone who has sat in a meeting afraid to open their mouth and utter the truth knows they are the main issues in corporate governance.

SATIRE

10 useful expressions for those HIGH STRESS days in the office�

1. Well, aren't we just a ray of @#$%-ing sunshine?

2. Not the brightest crayon in the box now, are we?

3. Don't bother me. I'm living happily ever after.

4. Do I look like a @#$%-ing people person?

5. This isn't an office. It's Hell with fluorescent lighting.

6. I pretend to work. They pretend to pay me.

7. You! Off my planet!!

8. Therapy is expensive, popping bubble wrap is cheap! You choose.

9. Practice random acts of intelligence & senseless acts of self-control.

10. I like cats too. Let's exchange recipes.

For further information

Contact:   Chris Owen
Email:   c.owen@labor.org.au
WWW:   www.bosswatch.labor.net.au