The Wet Lettuce

The HIH royal Commission is in, but little is likely to change with the Howard Government washing its hands of calls for increased regulation of the corporate sector.

Calamity Born Of Ineptitude

Criminal charges, tougher corporate laws and a national protection scheme for insurance policyholders should flow from "a calamity of monumental proportions", says the official post-mortem into the HIH collapse. After an 18-month royal commission, Justice Neville Owen said mismanagement was the principal reason for a $5.3 billion failure - which caused personal hardship, community distress and concern about the integrity of the insurance market. The chief shortcoming was the company's failure to charge high enough premiums to meet future claims, setting it on a "shambling journey towards oblivion". Losses were $1.7 billion from British operations, $640 million from the US and $591 million from the 1999 acquisition of FAI, the report said. It recommends referring 56 suspected breaches of the law to prosecuting authorities. Grounds exist to consider criminal charges against HIH chief executive Ray Williams and FAI chief executive Rodney Adler for false financial statements and misleading their boards. Those named in relation to falsifying HIH accounts are chief financial officer Dominic Fodera and US boss George Sturesteps. (Source: SMH)

ACTU: Government Response Weak

The ACTU has criticised Howard Government's do-little response to the Royal Commission report into the $5.3 billion collapse of HIH Insurance. ACTU secretary Greg Combet says the response contrasts starkly with its legislative, legal and administrative crackdown on unions in response to the Cole Royal Commission into building industry. "It's one rule for the pin stripe suits, and another for the blue overalls," Combet says. "A $5.3 billion calamity involving breaches of trust, disgusting self-indulgent squandering of people's money, insurance disasters for hundreds of thousands of businesses and people, corporate rorts and incompetence, and tax payer bailouts, and the key message from Peter Costello is that the Government is in the clear." (Source: ACTU)

Burns Baking More Job Cuts

More than 1600 Goodman Fielder workers, many of them in rural and regional Australia, will lose their jobs as new owner Burns Philp closes bakeries in a move to slash its $2.7 billion debt. Burns Philp has already cut about 500 jobs at Goodman's head office in Sydney's North Ryde, but is now understood to be targeting at least another 1100-plus jobs across the company's Australian operations, which houses 9000 staff. The milling and baking division will be hit the hardest. It is understood that as many as 17 of Goodman's 34 bakeries will be shut in the next 12 months under plans being considered by the company. (Source: The Austrlain)

Bank Charges Hit $7.8bn

Fee-weary Australians paid $7.8 billion in bank charges in 2002, 10 per cent more than the previous year. But a decade after the consumer campaign against fees commenced, there are signs the banks are listening. The growth in the amount banks generate in non-interest banking fees each year has slowed dramatically. Last year's 10 per cent gain compares with growth spurts of 14 per cent in 2001 and 2000, 13 per cent in 1999, and 19 per cent in 1998, when the Reserve Bank of Australia started collecting fee data. RBA and banking industry data show Australia's household sector paid more than its share of the extra $800 million in fee revenue the banks collected in 2002, a trend that is unlikely to win banks any new friends. (Source: SMH)

ACCC Pursues Market Power Abuse

Allan Fels might have lost out on changing the law on misuse of market power, but he has warned that the issue is not about to go away - even if he is. For Professor Fels, strengthening section 46 of the Trade Practices Act, which outlaws abuse of market power, is the last unfinished business before he steps down as chairman of the Australian Competition and Consumer Commission. The recommendation of the Dawson report not to make section 46 even more stringent follows a High Court ruling against the ACCC on allegations that building products group Boral had misused its market power. The ACCC has lost almost all its cases targeting section 46. It won only on CDs against Warner Music and Universal Music, and that is now subject to appeal. (Source: SMH)

Conrad Black's Media Empire Totters

Lord Black's newspaper empire - which includes London's Daily Telegraph, the Chicago Sun-Times and the Jerusalem Post - was facing a financial crisis yesterday as a credit rating downgrade signalled to lenders that it may be in danger of default. Standard & Poor's slashed the long-term rating on Hollinger Inc, Lord Black's main holding company, from BB minus to CCC plus, a four-notch downgrade. The move will lead to an increase in the group's borrowing costs at a time when it is suffering cash flow problems and trying to renegotiate debt. Lord Black, as plain Conrad Black, controlled Herald publisher John Fairfax in the late 1980s. Most of his individual assets, including the Telegraph titles, have been pledged to lenders, and analysts warned that the complexity of the Tory peer's business affairs could lead to a scramble among creditors fearing the empire is about to unwind. (Source: The Age)

University Sues AOL Execs

The University of California has accused AOL Time Warner chairman Steve Case, vice-chairman Kenneth Novack, former AOL president Robert Pittman and other top executives of reaping $US936 million ($1.55 billion) in illegal insider-trading profits. The suit claims they used "tricks, contrivances and bogus transactions" to manipulate AOL's stock price before and after its merger with Time Warner in January 2001. In a 184-page complaint filed in a California court, the giant university system - which lost more than $US450 million on AOL Time Warner shares as they fell from favour - accused Case and others of concealing the deterioration in America Online's business so they could complete the merger and trigger lucrative stock options. (Source: SMH)