By Stephen Mayne, rejected independent candidate for the News Corp board


The 52-page News Corp proxy statement released
yesterday reveals all sorts of interesting information, but perhaps the
most controversial is a resolution to be voted on at the AGM for the
Murdoch family to be issued an additional $43 million worth of
non-voting shares in an adjustment to last year’s huge related party
transactions involving Queensland Press and the move to America.

However, the proposal does not explain what caused the differential and The AFR’s Neil Chenoweth today strongly hinted that Rupert’s Bermuda stamp duty tax dodge (explained on Crikey here) was at the heart of the adjustment.

This is from page E25 of last year’s News Corp Information Memorandum:

Cruden Group (Murdoch family) at settlement will be
recognised by reducing the number of non voting shares issued above at
an agreed price of A$22.70. An estimate of the liabilities as at the
expected completion date has been agreed at A$326.5 million.In
addition, an adjustment will be made for stamp duty in excess of A$18
million, which will be borne by the Murdoch Interests (but paid by News
Corp US). This excess is presently estimated to be A$33 million. To the
extent that actual liabilities are different to this estimate, there
will be a cash adjustment between the parties;

Proposal No 3 at the AGM reads as follows:

Approval of issuance of shares of the company’s class a
common stock to the AE Harris Trust, in lieu of cash, pursuant to an
amendment to an agreement relating to the company’s reincorporation to
the United States in November 2004.

The background explanation begins as follows:

On February 8, 2005, a special committee to the Board (the
“Special Committee”) unanimously approved, subject to stockholder
approval, an amendment to the Kayarem Share Exchange Agreement (the
“KSEA”) by and among the parties thereto to permit shares of Class A
Common Stock to be issued to the Harris Trust in lieu of a cash payment
that would have been made to the Harris Trust under the terms of the
KSEA. The Special Committee was comprised of Non-Executive Directors
and was established to evaluate the reincorporation of the Company to
the United States in November 2004 and related transactions.

Gee, it looks like Rupert has ripped off NSW taxpayers to the tune of
$51 million by listing his family’s shareholding on the Bermuda Stock
Exchange to avoid stamp duty and now News Corp is passing on that
windfall to the Murdoch family.

The
so-called independent directors have approved the deal and how ironic
that the same News Corp AGM will vote to give each of them a $US100,000
for their fine work on the “special committee.”

And why would
Rupert want to receive this compensation in shares rather than cash?
Surely, he’s not trying to avoid paying capital gains tax to the Howard
Government?

Could this be a tax dodge on a tax dodge?

Furious institutions can choose to vote this proposal down because the
Murdoch family cannot vote its shares. There are certainly plenty of
protest vehicles available for those shareholders who want to punish
Rupert and his lap-dog board for the appalling poison pill extension
and various other governance failings at the world’s most powerful
media empire.