The battle for West Australian Newspapers was Australia’s first US-style proxy battle for control of a major company board.
While that issue remains unresolved heading into this year’s AGM, with Kerry Stokes’ Seven Network still sitting there as the largest shareholder with no board representation, a second dramatic board proxy battle has now emerged.
The board of former monopoly wheat marketer AWB Ltd has dramatically split; four troglodyte grower representatives have signed a letter opposing constitutional reform even after the Liberals and the Rudd Government recently combined to smash the single desk in Parliament.
The documents for the EGM on August 21 have all been released this morning and these clowns really do deserve to be sued. Have they no shame after the disgrace that was the single desk and those $300 million in bribes to Saddam Hussein?
The AWB realists, led by Queensland grower chairman Brendan Stewart, had a pre-emptive crack at reform that was narrowly defeated at the AGM in February because they feared the Cold War warriors would seize control in the farmer elections and then install a troglodyte as chairman.
While Stewart should be condemned for his role as a director right through the bribes scandal, he has seen the light on corporate governance and championed the push for constitutional reform that will see him and all other grower directors booted from the board.
Former National Party leader John Anderson drove the privatisation of AWB in the late 1990s which included unique poison pills that were an affront to corporate governance. He should come out now and condemn the structure which sees AWB banned from takeovers and growers guaranteed 7 of the 11 board seats and the chair, regardless of who actually owns the company.
No wonder the former $2 billion company is now only worth $840 million. That’s called a huge “governance discount”.
Adele Ferguson has delivered a well-briefed broadside at the gang of four in The Australian today, pointing out that all the governance houses and institutional shareholders are lining up behind reform, which requires support from 75% of the grower shareholders to pass.
Ferguson hints strongly that the four — Colin Nicholl from Western Australia, Russell McKenzie from Victoria, Rodger Schirmer from NSW, along with Xavier Martin from NSW — could face legal action if reform fails because they are not acting in the best interests of the company.
The four may be currently covered by AWB’s directors and officers insurance, but you can bet your bottom dollar that this is being reviewed by the insurer right now, particularly in the current environment of heightened liability paranoia and litigation.
The single desk is dead, killed off by more than 90% of the politicians in Federal Parliament. About 50 of Australia’s 23,000 grain growers managed a couple of noisy protests in Canberra with Parliament House; now we are seeing one final act of defiance.
If reform is defeated, I hope these directors get sued, lose their farms and go bankrupt as they are nothing short of a disgrace.
Check out this multi-media package on The Mayne Report after the dramatic 2008 AWB AGM in February.
If only commentators, including Stephen Mayne, knew what they are talking about.
Price support? The Australian Wheat Board supported Australian consumers by selling wheat to the home market at less than the export price. This was regarded by growers as a fair tradeoff for the security that the system gave growers.
The government guaranteed collective financing which that system provided did not involve any subsidies except in 1987 when the final return failed to reach the guaranteed figure. It was this collective financing system which ignorant onlookers (and, believe it or not, some ignorant farmers too) mistook for subsidisation.
That financing system ensured that growers received cash in time to sow next year’s crop, thereby guaranteeing a competitive supply of wheat in the next season. The borrowings were repaid with interest as the wheat was marketed, with any surplus returned to growers when available. 1987 was the only year there was a shortfall.
The single desk marketing system which the wheat board operated made it possible for Australian farmers to operate with minimal government assistance in a world market where their competitors are heavily subsidised. It was well managed, it did not play producers off against one another, and it distributed to growers the profits which would in an open market be taken by traders.
The competition which is needed to make a market work properly was provided in the world marketplace, where the Wheat Board’s Australian monopoly gave it the capital mass necessary to operate successfully in that world market.
The stand being taken by your so called gang of four is a last ditch protest against a fait accompli. The bookworms Anderson and his mates doomed the single desk when they abolished the Wheat Board. You are right if you say that the single desk cannot be operated by a private firm which does not hold a monopoly in the market. It is not proper for a private company to hold a monopoly in the market for a major commodity. Therefore the single desk can’t stay. But don’t blame the current government for this. The bookworms in the Nats did it when they were there.
Do not fail to understand that it was the AWB’s single desk monopoly which made it possible for Australia to have a wheat industry without subsidisation to match our competitors. It is a very, very sad day to see it go.
As for the Saddam Hussein garbage. Here again we see blind bookworms at work.
The blood sucking media and the lawyers had a field day, but AWB didn’t really do much wrong at all. The $300 million did indeed go for trucking fees to transport the wheat from the sea ports to the inland cities, at a per tonne freight cost of half of what it costs us to cart wheat to our local silos. The problem was that this was found to be illegal under the “oil for food’ program.
How many of you commentators remember that the basis for the “oil for food program” was non existent weapons of mass destruction? The oil for food program was more corrupt than Dickens’s ass.
The drop in AWB’s share value is partly caused by the furore over the Iraqi problem, but much more due to the failure of crops during the drought.
Get off their backs. They are not nearly as bad as you paint them.
Is there a future without the single desk? There is a light on the horizon.
The US decision to subsidise ethanol production has caused the price of grain to rise to a level much nearer the real cost of production. This should enable the removal of the direct subsidies for grain production which have been crippling Australian agriculture.
If that eventuates Australian farmers should then have the “level playing field” that was promised to us but not delivered 25 years ago. Subsidisation should then be directed generally to supplying those with special needs instead of selectively to production.
I had some communications with the farmers mobs during the AWB and Saddam Hussein scandals who told me they would not openly complain because they had all received massive price increases while the Iraqis were starving to death.
Why don’t these miserable bastards have to pay back the money and when do the court cases start?
Watch out Marilyn, if you keep raising the AWB scandal with wheat farmers, they might realise that some of the money they were selling their wheat for was spent on ‘trucking fees’ and they might try to sue more poor Iraqis to get their $300 million back too!
Opponents of reform of AWB do not deserve support but they do deserve to be undertood. Grain farmers are price takers in a risky business. The old price support and single desk arrangements received support, despite sound economic analysis to the contrary, because for farmers they provided reliable information about prices received and mitigated risks (such as making decisions on poor information about prices and not being paid because of purchaser default).
The return to open markets brings back problems of asymmetric information about prices and fears of asymmetric exposure to risk. Even well managed, well capitalised and information literate farm businesses remain baffled about how to make the best decisions on what price to sell at, when and to whom.
In these circumstances, while fighting a rearguard action about the single desk is not the answer, it remains attractive as a means of mitigating risk.