THE company directors’ union has appointed a new top shop steward, James Strong – a man who knows how to keep his politburo in line.
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Following an annual meeting held at an undisclosed location, the Australian Institute of Company Directors announced the veteran company director had been appointed chairman.

It’s a position Strong knows well: in addition to his various ordinary board seats, he sits in the big chair at Woolworths and troubled retailer Kathmandu, and was formerly chairman of Rip Curl and IAG. And it was at IAG, in 2001, that Strong developed a unique technique to control troublesome directors – one that raised eyebrows at the AICD at the time.

Strong asked the rest of the board to sign undated resignation letters, which he duly collected but apparently never used.

In 2006, when news of the letters broke, then-AICD CEO Ralph Evans described the move as highly unusual. ”All the codes of corporate governance stress the independence of directors,” he said.

AICD spokesman Steve Burrell told CBD the organisation’s position had not shifted ”too much” since then. ”It was an unusual measure for an unusual and unstable situation,” he said.

At the time, IAG, formerly NRMA Insurance Group, was a somewhat turbulent beast.

”I don’t think it’s a situation where he and we dramatically differ on what’s good practice,” Burrell said. ”It’s not illegal but it’s not common practice.”

Horses for courses

RETAILER Harvey Norman had a shocking Cup day hangover, with the morning after revealing a 20 per cent slump in sales, and it looks like part of Gerry Harvey’s horse racing empire is also delivering little joy to the septuagenarian rich-lister.

Harvey owns 19 of 50 shares in a managed investment scheme called the Bel Danoro (Aus) Stallion Syndicate, the principal aim of which was standing at stud stallion Bel Danoro.

CBD says ”was” because the syndicate made a $52,684 loss in 2010-11 and in late June this year its members moved to wind it up.

Back in 2005, trainer Lee Freedman touted the horse, which was also part-owned by Harvey, as having ”a big future” after it won a race on Cup day as a three-year-old.

After going around for several years, Bel Danoro ended up at Harvey’s Vinery Stud in 2007.

However, demand for his seed clearly slowed to a trickle in the 2010-11 year, with the thoroughbred generating just $1250 in revenue.

Auditors raised going concern issues, pointing out that liabilities exceeded assets by $60,348.

”The solvency of the Bel Danoro (Aus) Stallion Syndicate is maintained by members making capital contributions to meet the ongoing operating costs,” UHY Haines Norton said.

The accounts show Harvey wore most of the year’s costs, pumping in $32,167.

As for Bel Danoro, CBD has no idea what has happened to him and couldn’t reach Harvey to ask.

The stallion is no longer featured on the Vinery website.

He may be gambolling happily somewhere. Or the solvency concerns may have turned him into solvent after a trip, via the knackery, to the glue factory.

No favourites

EVENTS yesterday confirm that Qantas information commissar Olivia Wirth’s insistence that her burgeoning relationship with Australian Workers Union boss Paul Howes won’t affect dealings between airline and union is considerably more substantial than an Airbus contrail.

Demonstrating a distinct lack of favouritism, her employer delivered a kick to the guts of his union yesterday when it axed 500 engineers, many of them AWU members. Howes didn’t front the media, leaving the job of producing jet engine-pitched howls of outrage to AWU Victorian secretary Cesar Melhem.

So Howes much is that relationship Wirth? Not a single job, it seems.

Fun with coal

WILL the real Martin Ferguson please stand up, please stand up, please stand up?

The marble-mouthed minister for energy was launching the extremely serious energy white paper in East Melbourne yesterday when his fascinating speech was interrupted by a pair of protesters, one wearing a Martin mask.

The fake Ferguson – or was it the real one? – pranced about the stage, singing a sarcastic song praising the virtues of coal as an energy source. Clearly unimpressed, the real Ferguson – or was it the fake one? – stood by the side of the stage until the pair, from activist group Quit Coal, were escorted from the room.

A forest saved

THE paper chase is alive and well at the corporate watchdog, which reduced its consumption of paper from 18 reams a person to a mere 14 reams a person in the financial year just gone.

On CBD’s shonky calculator, that means the Australian Securities and Investments Commission’s 1738 employees used about 12.1 million pieces of paper.

Assuming they take four weeks’ holidays, that’s an average of 29 pages a day.

According to its annual report, ASIC has reduced its paper use ”through the implementation and increased uptake of its Electronic Content Management record-keeping system”, which means more looking at documents on screen and less printing them out.

Got a tip?? [email protected]南京夜網.au

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AUSTRALIA’S five biggest banks would be able to survive a savage shock to the economy, including a 35 per cent plunge in house prices and unemployment soaring to 12 per cent, the banking regulator says.
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In an attempt to gauge how banks would cope with a deep economic crisis, the Australian Prudential Regulation Authority has conducted a new round of tough ”stress tests” on the major banks, the results of which were published on Thursday.

If the eurozone were to collapse and send the global economy into chaos, causing Australia’s economy to shrink by 5 per cent in a year, the regulator found the nation’s banks would face ”significant” losses.

But the chairman of APRA, John Laker, said none of the banks would fail or breach the capital requirements from the global regime known as the Basel II framework.

”The result is testament, in part, to the stronger funding positions that the advanced banks had adopted since the crisis,” Mr Laker said in Brisbane.

The five banks involved in the test were Westpac, NAB, Commonwealth Bank, ANZ and Macquarie Group, which make up 80 per cent of Australia’s banking system.

The tests also found the banks were also in a position to survive a sudden freeze in global funding markets – which flared up as a key weakness during the 2008-09 global financial crisis.

Mr Laker said a global credit market freeze would be ”systemically challenging” and would squeeze margins, but maturing wholesale debt would be offset by growth in banks’ domestic deposits.

Despite lingering concerns about the risks posted by Australia’s housing market – which is responsible for about half the banks’ credit exposure to the economy – Mr Laker said losses on home loans contributed to only a fifth of their losses in the test.

A key reason for this was the tougher lending standards in recent years.

Business lending, including commercial property loans and corporate loans, played a bigger role in the modelled losses, as these tend to go into default earlier than residential mortgages.

Under the scenario used in the test, Australia was hit by a plunge in the economies of China, Europe and North America.

It assumed Australian house prices fell 35 per cent from their peaks and unemployment surged to 12 per cent – higher than the crippling levels reached during the early 1990s recession.

It also assumed global debt markets were closed to banks for six months, sparking fierce competition for deposits, which crimped lending margins.

Mr Laker emphasised that the stress test was in no way a forecast, and it was substantially tougher than the previous round of tests in 2010.

”The stress test was intended to test the boundaries of ‘severe but plausible’, especially given the current relatively strong position of the Australian economy,” Mr Laker said.

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STATE governments lost little time in pushing back against the federal government’s call for more energy market competition by asking Canberra to overhaul regulation of the sector.

After a doubling of electricity prices in parts of Australia over the past few years, much of the interest in Thursday’s release of the energy white paper was on electricity sector reform.

Following privatisation in the 1990s, Victoria is the only state to open the door fully to electricity competition.

New South Wales has retained price controls for residential and small commercial users, and a review of the market is under way to assess competition and whether price controls should be removed.

All other states have retained some form of price control, which reflects the exposure of state politicians to the backlash from power price or supply problems.

The real work in overhauling electricity sector regulation will begin at the energy ministers’ meeting later this month.

That meeting will consider a series of reports aimed at overhauling the way investment in the power sector is regulated.

Under the present regulatory regime, electricity companies are able to inflate their capital spending plans and challenge government decisions they don’t like. This, coupled with decisions by some states such as NSW to opt for higher reliability standards, has fuelled steep power price rises in recent years.

”The federal government must … strengthen its regulator to ensure decisions are made in the long-term interests of consumers,” NSW Energy Minister Chris Hartcher said.

Victorian Energy and Resources Minister Michael O’Brien said: ”What was missing [in the white paper] was any program to ensure the Australian Energy Regulator

has the resources, the powers and the independence it needs to do the job consumers need it to do.

”The AER will continue to face difficulties in regulating large, well-resourced energy network companies without fundamental structural reform.”

The federal government wants all state governments to open the door to full competition by privatising all government-owned assets and removing price controls.

”Nearly half of NSW households have already moved away from standard regulated rates by shopping around for the best deal,” Mr Hartcher said.

”But until we are confident competition in the energy market has been found to be effective … the government will continue to provide a regulated price option.”

Victoria has mandated smart meters aimed at cutting electricity use, at significant cost to all users, but other states have refused to follow suit despite pressure from Canberra.

Mr Hartcher said some customers could benefit from smart meters, but his government was opposed to a national scheme because of the cost to customers if they were forced upon them.

“Customers must first understand the potential benefits that smart meters can offer,” he said. ”Energy businesses should have flexibility to offer innovative products that customers want, not ones that a government has forced upon them.

“And when these products are made available, customers should be entitled to choose.”

NSW is working with Victoria and Queensland to present a united front at this month’s meeting of energy ministers, which could clear the way for measures to overhaul electricity sector regulation to be finalised at the Council of Australian Governments meeting in early December.

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THE main newspaper publishers say digital subscriber sales for the September quarter have increased as print editions continue to decline.
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It was the first time that both major newspaper groups – the owner of this paper, Fairfax Media, and News Ltd – reported fully audited mastheads sales, including print and digital, said the industry group the Newspaper Works.

“The multi-platform publishing strategies being pursued by the major newspaper publishers have produced a very promising picture of newspaper circulations,” said Newspaper Works chief executive Tony Hale.

Fairfax’s metro mastheads, The Sydney Morning Herald and The Age, reported 56,559 weekday digital subscribers and 31,502, respectively, for the period covering July to September.

More importantly, the Fairfax metro mastheads continued to dominate the Roy Morgan total masthead readership survey for the quarter ending September 2012. The Herald topped the multi-platform measure of readership while The Age came in fourth-highest. News Ltd’s national masthead, The Australian, reported its audited digital subscriber numbers for the first time, with 31,241 average net paid weekday digital subscribers for the same period. The Australian put a paywall on its website in October last year, News Ltd’s Melbourne masthead, the Herald Sun, followed in March this year. It did not report its digital subscriber numbers for the September quarter, but a News spokesman said: ”We would expect to release those in the next quarter.”

Fairfax will start metered access early next year along the lines of The New York Times site, with free access to a set number of items before readers are asked to subscribe.

Fairfax, which has been stripping out unprofitable newspaper sales, recorded the biggest falls in print. According to the Audit Bureau, weekday circulation of The Herald is down 15.1 per cent year on year, while The Sun-Herald declined 21.3 per cent.

The Age weekday is down 16.9 per cent per cent year on year, while The Sunday Age is down 15.4 per cent.

News Corp reported the weekday sales of The Australian down 4.6 per cent, and its weekend edition dropped 5.6 per cent. The Herald Sun dropped 4.4 per cent in weekday circulation, and 5.7 per cent on Sunday.

The author owns Fairfax Media shares.

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Accused: Nick Greiner.FORMER New South Wales premier Nick Greiner has admitted concealing his company’s involvement in a deal that has become the target of a $25 million bid-rigging allegation by a Swiss investment firm.
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Pala Investments, a Swiss group controlled by Russian oligarch Vladimir Iorich, has accused Mr Greiner of using his positions in two companies to hoodwink Pala into selling a subsidiary for less that it was worth.

Mr Greiner chairs mining services company Bradken, which had expressed an interest in buying the subsidiary group Norcast in February 2011.

Bradken claims it was excluded from the sale process, after which US private equity group Castle Harlan made the purchase for $190 million and sold it to Bradken for $202 million.

In addition to his role at Bradken, Mr Greiner sits on the board of Castle Harlan’s Australian affiliate, CHAMP. He is also head of the federal government’s GST review.

Appearing in the Federal Court in Victoria, Mr Greiner said he had chosen not to ”promote” the fact that Bradken was ultimately behind the transaction, because the company had originally been rejected from a deal.

”Norcast had excluded us,” Mr Greiner said. ”So the notion that we would fly a Bradken flag over the transaction doesn’t make sense.

”It would have increased the risk of the transaction not happening.”

Pala claims that Castle Harlan was acting as an intermediary for Bradken, and that it would have asked for a higher price had it known Bradken was behind the deal.

Bradken chief executive Brian Hodges also gave evidence to the court over his involvement in the on-sale of Norcast.

When an email revealed he had passed on detailed financial information about a possible Norcast acquisition to people above him, he was forced to backstep statements that he had stopped ”pursuing” the purchase.

After Mr Hodges played down the importance of the email, counsel for Pala, Charles Scerri, QC, asked: ”So you just send meaningless information to people for the fun of it?”

Pala has filed similar claims against Castle Harlan in the Supreme Court of New York.

The case is continuing.

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