House of Cards

The fallout from the HIH collapse threatens to travel all the way to the Lodge with a legal case pulling the PM into its complex web.

Howard Pulled into HIH Mire

APRA's decision to approve HIH's takeover of FAI four years ago could personally embarrass the Prime Minister as well as cost the Federal Government a hefty damages bill. The HIH liquidator, Tony McGrath, of the accounting firm KPMG, has filed a claim against the Government and the Australian Prudential Regulation Authority alleging negligence and seeking damages. he government claim focuses on the knowledge of APRA and its predecessor, the Insurance and Superannuation Commission, about the poor health of FAI, which they supervised from the introduction of insurance licences in 1974. John Howard is vulnerable, because the HIH royal commission has heard that he overruled the Insurance and Superannuation Commission to approve licences for FAI after he became treasurer in 1978. Howard's role was also raised at the commission in June when Mr Adler's successor as chief executive, his son Rodney, recalled "the ISC were most unpleasant to my father". When counsel for APRA, James Stevenson, suggested three of four licences were granted only because of "the intervention of the then treasurer", Mr Adler replied: "Commonsense had to come from the top." (Source: SMH)

Costello ACCC Choice an 'Insider'

ACT Treasurer Ted Quinlan has attacked the Commonwealth's chosen successor to Australian Competition and Consumer Commission head Allan Fels in Parliament, claiming he is an advocate of insider trading. A majority of state governments last week rejected Graeme Samuel, who currently heads the National Competition Council, claiming Federal Treasurer Peter Costello did not consult them. Quinlan today told the ACT Legislative Assembly, Mr Samuel thought insider trading of company shares was a good thing. (Source: ABC)

Massive Losses at AMP

Up to a quarter of AMP's 4900-strong Australian workforce is facing retrenchment after chief executive Andrew Mohl yesterday confirmed a major overhaul of the group's financial services and banking operations. The group unveiled $100 million worth of cost cuts from AMP Financial Services (AFS) and corporate office operations and the release of an additional $500 million from the planned sale of many of its banking operations, which helped propel its share price 22c to $12.04 An estimated 550 jobs will go from the 4000-strong AFS, a further 500 AMP Banking staff could lose their jobs, with an additional 160 jobs being cut at the group's head office and regional divisions. Tony Beck, national secretary of the Finance Sector Union, branded the job cuts a disgrace and accused Mohl of putting the short-term demands of analysts and shareholders ahead of longer-term prospects. (Source: SMH)

Spotless Bosses' Pay Queried

Questions from shareholders about executive pay took the gloss off Spotless Group annual meeting, with chairman Brian Blythe forced to defend his $2.9 million remuneration package. One shareholder asked why Mr Blythe and managing director Ron Evans, who received almost $3 million in fiscal 2002, had been paid more than Telstra chief Ziggy Switkowski (who earned $2.4 million) when the companies differed in size and earnings and Spotless shares had fallen 14 per cent in the past year. Blythe said the remuneration was based on contracts entered into in 1978. Blythe later had to justify an increase in interest-free loans to directors, with one shareholder asking if it amounted to "ad hoc remuneration". (Source: The Age)

Keycorp Directors' Fees Go Up

Keycorp executives have received accolades for turning around the loss-making machine and detailing how it would turn a profit next year. But when it came to a hike in directors' fees, shareholders sent a clear message - show us the money first. Concerns were raised about the increase in provisions for directors' fees from $350,000 to $500,000 when the company still hadn't recorded a profit or a significant share price recovery. Shares in the smartcard vendor closed 7c higher at $1.26c yesterday compared with a year low of 74c in July, but still well short of its $17 all-time high. (Source: SMH)

NAB Chief Regains Options Plan

NAB chief executive Frank Cicutto is back on the options trail after missing out last year because of the HomeSide debacle. NAB is granting Mr Cicutto up to 300,000 options as long as certain hurdles are met. The value of the exercise price of the options are based on the weighted average price at which NAB shares were traded in the one week period leading up to and including the date the options are granted. Cicutto can also earn 100,000 performance rights in an arrangement which will need to gain shareholder approval at the bank's annual general meeting next month. NAB shares plummeted 67 cents to $32.50 In 2000/01 Mr Cicutto took a massive pay cut in the wake of the bank's 36 per cent drop in 2000/01 full year profit due largely to the $4 billion writedown of the United States mortgage originator HomeSide. (Source; Nine MSN)

New Tel Outsources, Slashes Staff

Staff in New Tel's core telecommunications business face a bleak Christmas in the wake of the company unveiling plans to outsource its operations in a bid to stave off administration. New Tel managing director Peter Malone said that most of New Tel's operational roles would become redundant as the result of a restructuring of its telecommunications operations. It is not clear whether New Tel will maintain its own sales team to continue to sell products with the New Tel brand. Most of New Tel's 206 operational staff are based in Sydney, with four based in Perth and about six in both Melbourne and Brisbane. Malone and the New Tel board have come under fire from what shareholders and analysts see as an extremely high cost structure - including reports he has purchased a new$400,000 Aston Martin car, weven as the company faces its current troubles. (Source; The Age)

Poor Old Jean-Pierre

One of Britain's highest paid chief executives is in line for a huge pay increase that will reignite shareholder anger over boardroom pay. Jean-Pierre Garnier, chief executive of drugs group GlaxoSmithKline, earned a total package of some £7 million ($19.5 million) last year. Yet he is feeling underpaid, is said to need more money to keep motivated and wants what one investor called a "massive" increase, even though the company's profits and shares sank last year. His demands will be a test case under the Government's new rules to give shareholders the right to block big pay awards. It has emerged that GlaxoSmithKline, whose products range from the controversial anti-depressant Seroxat to Ribena fruit drinks, is planning a series of secret meetings with key shareholders to get their backing for Garnier's new pay deal before going public with the details (Source: The Guardian)