Mind Your Business

Directors continue to spread themselves thin by sitting on multiple boards to keep their earnings on par with senior management. Until directors dedicate enough time to fully understand the companies in their portfolio, they cannot hope to be fully confident in the integrity of business activities in which they are involved. This week, overloaded Southcorp directors learnt the hard way for showing little respect to the shareholders and workers that offer companies the most but watch from the sideline with the most to lose.

PICKS OF THE WEEK

Argus, Warburton hunted off Southcorp board by ASA

Don Argus and Dick Warburton have headed off a simmering campaign of indignant shareholders by resigning from the board of struggling wine company Southcorp. The ASA was planning a campaign against Mr Argus, the chairman of BHP Billiton and Brambles, on the grounds that he was already overloaded.

Full story: http://www.smh.com.au/text/articles/2003/08/27/1061663852228.htm

Australia - land of long hours and low pay

According to the OECD, Australians now work the longest hours in the rich-world. Even more than the Japanese. So we must be earning more than the others, right? Wrong.

Full story: http://www.crikey.com.au/business/2003/08/27-0005.html

Hurdles for Telstra's $7million man

TELSTRA chief executive Ziggy Switkowski could earn as much as $7 million a year under a new contract to lead Australia's biggest company until the end of 2007.

Full story: http://www.theaustralian.news.com.au/common/story_page/0,5744,7086967%255E643,00.html

Former GIO shareholders win case

THE cheque is in the mail for more than 23,000 former GIO shareholders after the Federal Court yesterday approved their record-breaking $112 million class action settlement over AMP's rejected 1998 takeover bid for GIO.

Full story: http://www.theaustralian.news.com.au/common/story_page/0,5744,7077804%255E643,00.html

Murdoch a capital imperialist, says BBC

Rupert Murdoch has been savaged as a "capital imperialist" who wants to destroy the BBC.

Full story: http://www.theage.com.au/text/articles/2003/08/26/1061663789860.htm

Gambling tales from a fallen Aristocrat

Executives of the slot machine maker paint a picture of a poorly run company desperately trying to inflate the numbers with any possible deal.

Full story: http://www.theage.com.au/text/articles/2003/08/22/1061529333839.htm

Australia's Pan Distributed Drugs Containing Metals: Report

SYDNEY, Aug 29 Asia Pulse - Pan Pharmaceuticals (ASX:PPH) was distributing drugs containing metal and was cross-contaminating drugs for people with antibiotics for animals, according to a secret audit report.

Full story: http://au.news.yahoo.com//030829/3/lh23.html

LEGISLATION NEWS

ASIC goes easy on rorts of '90s

The regulator investigated and found nothing because it chose not to look in the right places.

Full story: http://www.smh.com.au/text/articles/2003/08/24/1061663676843.htm

ASIC exposes broker analysts

THE Australian Securities and Investments Commission has criticised Australian investment banks for failing to stamp out potential conflicts of interest among their research analysts.

Full story: http://www.theaustralian.news.com.au/common/story_page/0,5744,7038828%255E643,00.html

CEO rage is wasted, says ACCC

Australian Competition and Consumer Commission chairman Graeme Samuel has warned chief executives that the regulator will not be swayed by public attacks on its integrity.

Full story: http://www.theage.com.au/text/articles/2003/08/25/1061663734533.htm

INTERNATIONAL

NYSE pays Grasso $220m on top of salary and bonus

The board of the New York Stock Exchange announced yesterday that it had paid its chairman and chief executive, Richard Grasso, a lump sum of $US140 million ($220 million) in accrued savings, benefits and incentives.

Full story: http://www.smh.com.au/articles/2003/08/28/1062050611386.html

WorldCom boss charged

OKLAHOMA prosecutors filed the first criminal charges today against WorldCom and former CEO Bernard Ebbers in the $US11 billion ($17.2 billion) accounting scandal that plunged the long-distance giant into bankruptcy.

Full story: http://www.theaustralian.news.com.au/common/story_page/0,5744,7089204%255E462,00.html

Coke chief quits over rigging scam

Coca-Cola Co, the world's largest soft-drink maker, has replaced the head of a division being investigated by US federal authorities for rigging a marketing test conducted for Burger King Corp.

Full story: http://www.theage.com.au/text/articles/2003/08/26/1061663789856.htm

MIND YOUR BUSINESS

Bosswatch report 18/7/2002

Company directors argue that complying with 'strong' corporate governance procedures leaves too little time for them to understand the finer workings of the particular company that shareholders have paid them good money to oversee.

Far from dedicating more time to understanding the business and ensuring that shareholders and workers are protected from fraudulent business activities, directors continue to spread themselves thin by sitting on multiple boards to keep their earnings on par with senior management.

Even though recent revelations that HIH and One.Tel directors admitted they had no idea what senior management was doing shows that there are weaknesses in corporate governance law, Paul Anderson, CEO of BHP Billiton, argued recently on Business Sunday that corporate governance in Australia is "too strong". Mr Anderson argued that company directors are required to focus too much of their time on the mechanisms and procedures of governance, in doing so "...diverting attention away from actually running the company". Shareholders must find themselves caught between a rock and a hard place when directors cite the rigors of corporate governance, designed to protect shareholder interests, as being problematic to the business of making money.

If corporate governance procedures are too strong, how do we explain the lack of confidence in his director role as shown by one of Australia's most prominent board seat warmers, Dick Warburton? A multi-board member, Mr Warburton said, "One of the first things you think of when you see or read about that [corporate fraud] is could this be happening on the boards which I'm on? It truly is something that we all think about." And further ..."when the Harris Scarfe situation cropped up, I was overseas at the time, I called Peter Wilkinson [David Jones CEO], very quickly and said, "Peter, convince me that I can sleep at night will you?" How can Mr Warburton sleep at night when he obviously doesn't have full confidence that the shareholder and workers' livelihoods are protected from fraudulent business practices?

The lack of confidence shown by directors on the corporate fraud issue can be attributable to a general sense of insecurity that comes with not understanding the business well enough...the real issue is a lack of director dedication. Directors cannot be fully confident when they spend, on average, 20 days a year with each company in their million dollar portfolios. The 20 or so days falls way short of the time required for them to gain the understanding they need to monitor the business properly, particularly when the same board member may have the issues of 10 other companies on his or her mind (predominately his). Following are just a few of many examples where directors spread themselves thin while maintaining large remunerations...

Dick Warburton is Chairman of David Jones, Caltex Australia Limited, Goldfields Limited and HIH Claims Support Service. He is also a Board Member of The Reserve Bank of Australia. He is a Director of, Southcorp Limited, Note Printing Australia Limited, Nufarm Limited and Tabcorp Holdings Limited...Bosswatch remuneration estimate--$1.45 million.

The Hon. Nick Greiner is Chairman of Baulderstone Hornibrook, The Nuance Group, British American Tobacco Australasia Limited and United Utilities Australia, and Deputy Chairman of Stockland Trust Group. He is a Director of Brian McGuigan Wines, QBE Insurance Group Limited and Bradken Treasurers...Bosswatch remuneration estimate--$1.3 million.

Geoffrey H. Levy is a Director of Mirvac Group, Investec Wentworth Pty Ltd, Rebel Sports Limited, Freedom Furniture Limited, Singleton Group Limited, Ten Network Holdings Limited, Investec Holdings Australia Limited and Investec Australia Limited. He is also the Chairman of Australian Film Finance Corporation Limited. Bosswatch remuneration estimate--$1.1 million.

SATIRE

Care of the Chaser... "Striving for mediocrity in a world of excellence."

http://www.chaser.com.au

Howard backs down on North Korea - "Weapons Threat Real This Time"

Prime Minister John Howard has expressed extreme caution on the possibility of joining any aggressive action against rogue state North Korea, pointing to their likely possession of 'actual' weapons.

"Normally when we say war is the last resort it's just an expression," said an unusually animated Mr Howard. "But when a country has an arsenal the size of North Korea's, political bluster like that actually becomes a reality."

Recent intelligence reports have suggested that North Korea's nuclear program has produced enough plutonium for up to twelve atomic bombs. According to Howard, this makes a war against Korea infinitely more dangerous than the one waged against Iraq, which possessed enough plutonium to produce three or four glowsticks.

When hearing Howard's name mentioned, a North Korean spokesperson stated that he would be "bathed in nuclear fire". Today Mr Howard responded to the statement "Look, I don't think anyone wants to be bathed in nuclear fire, and speaking for myself, I know I don't. If that fire can be stalled by a series of fruitless weapons inspections, then I'm all for it." North Korea refused to be moved however, and suggested that as far as war was concerned, Australia and her allies were "running out of time."

Howard has refused to rule out negotiations with North Korean leader Kim Jong Il "Rule out negotiations?" said Howard. "When can we start them? I'll meet him, I'll shake his hand, - I'll even laugh at his jokes if he's got half the weapons we think he does."

Critics suggest a cowardly stance could weaken our ties with the US, a view Mr Howard rejects, asserting that whatever damage a weakened ANZUS alliance does to the nation, "it couldn't do as much damage as North Korea's barrage of nuclear annihlation."

For further information

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