Up above sends silliness south

By Peter V O'Brien

Friday 27th August 2004

The northern hemisphere's silly season has infiltrated Australasian business in a curious inversion of seasons.

Company shareholders who noted various happenings this month probably wondered what winter madness engulfed directors and managers.

Australia's National Australia Bank led the way with strange decisions and statements, after making useful and sensible announcements early in the month.

NAB chairman Graham Kraehe announced on August 13 the appointment of four new non-executive directors to the board, in addition to the August 11 announcement of two new executive directors in chief executive, Australia, Ahmed Fahour and group chief financial officer Michael Ullmer.

The non-executive directors were leading figures in Australian business, including former senior bank executive Paul Rizzo, who had 27 years in the industry at ANZ, CBA and as the State Bank of Victoria's chief executive.

Lawyer Jillian Segal was another notable appointee, having been a commissioner and deputy chairman of the Australian Securities & Investment Commission, a director of the Australian Stock Exchange and chairman of the Australian Banking & Financial Services Ombudsman Board, a position she would resign.

Kraehe said (validly) that the total board would "now have an excellent balance of skills and experience, as well as a broad range of industries, backgrounds and cultures and geographic locations."

That was good news for the embattled bank's shareholders, until Kraehe and chief executive John Stewart participated in one of those strange "open briefings" under the auspices of an outfit known as corporatefile.com.au. These exercises are described as "interviews" and follow a question and answer format, with most of the statements adding little knowledge about the relevant company.

The interview with NAB's people concentrated on the new board appointments, including the executive directors. Brief examples of questions and answers showed their incisiveness and intellectual depth.

"How do you see the board interacting with the market going forward?"

Graham Kraehe: "We've made the announcement about the appointees, many of whom are well known to the market. With respect to key issues pertaining to the board and corporate governance, the primary interface between the board and the market will be the chairman and I've made a strong commitment to maintain regular communication with the market."

Kraehe could have added the ASX required the company to "maintain regular communication with the market."

After a discussion about the annual meeting date, we got this insight: "Are you expecting the full attendance of the board?"

Graham Kraehe: "We'll certainly have the whole board there and shareholders will be asked to approve the new appointments."

Of course they would be asked for approval; it is a legal requirement.

NAB did better the following week when it said investment bank Lazard would advise on options for the company's banks in the UK and Ireland to ensure it was not being too pessimistic or optimistic on the value it could create.

The reorganised board was obviously decisive and on the ball. After years of buying banks and operating as a banking group, it had appointed an investment bank to advise it how to run banks and increase their value as part of a banking group.

The bill would no doubt be charged out in sterling, rather than Australian dollars. Never mind, the announcement showed the board was interacting with the market, going forward.

Automotive parts and accessories group Repco Corporation also had an open briefing through corporatefile.com.au, sprinkled with typical thrust and counter-thrust questions and answers.

Repco's profit for the year ended June rose 36% to $A34.1 million, prompting a question: "What were the key drivers behind this 36% increase?"

Managing director Peter Mummery: "The key drivers behind the result were both sales growth and the realisation of operating efficiencies during the year."

Mummery was asked about the opening of 44 new stores since July 2003 against a target of 48, why the "slippage versus expectations" and what the "ambitions going forward" were.

The managing director said "some slippage did occur and the issues there have now been addressed."

He was asked what could have been done better in hindsight and said the company attempted too much in the first half, all at the same time which created operational issues.

"I think the important thing for us is to learn from this experience." Thank God they learn from experience.

The New Zealand government, through Inland Revenue, produced the best example of winter's mental hypothermia, with proposals to tackle the black economy again.

Assessments of the black economy and its effective tax-free status were discussed in the National Business Review in the mid-1970s, going beyond tradespeople working for cash and departmental deals with trade organisations. Criminal, near-criminal and "morally doubtful" activities involve vast sums and are rarely in the tax net. Change is unlikely in 2004.

The New Zealand government, through Inland Revenue, produced the best example of winter's mental hypothermia, with proposals to tackle the black economy again

Comments from our readers

No comments yet