Macquarie Group chairman Kevin McCann made excessive government regulation and compliance costs a key theme of his opening address to about 300 shareholders who attended yesterday’s AGM at the Sheraton on the Park in Sydney.

In a staggering figure that no media chose to report yesterday, McCann claimed Macquarie’s global compliance costs at the hands of 190 different regulators in 28 jurisdictions had quadrupled to $413 million over the past four years. And, shock horror, this is only going to get worse.

Yet in making such a call for financial conglomerates to be able to get on with entrepreneurial business with limited interference, McCann seemed completely unaware of the hypocrisy of such a statement given the unprecedented compliance burden and red tape that he chose to impose on this year’s contested election for the Macquarie board.

For two months now, the full board of Macquarie has been wasting everyone’s time engaging in a ding-dong battle on the completely hypothetical question of whether a serial candidate is “fit and proper” to actually sit on the Macquarie board.

When company secretary Dennis Leong should have been preparing for the actual meeting, and I was having a coffee and chatting to shareholders at 9.47am yesterday, he sent me the following email on behalf of the board:

“The Board has decided to delay the completion of your fit and proper assessment in order to give you and shareholders the opportunity to be heard at today’s meeting on the resolution relating to your nomination.  The assessment will be completed if it becomes apparent that it is necessary to do so.”

Of course, the board knew at that point that the proxy vote had delivered 99% for the two board-endorsed incumbent candidates and just 1.55% for the challenger.

“Fit and proper” was always completely hypothetical in this context, so it is bemusing that Macquarie chose to spend tens of thousands of dollars and hours of board deliberation time on a completely moot point.

The meeting itself lasted two and a half hours and produced several illuminating exchanges, although 89-year-old shareholder activist Jack Tilburn was in terrible form, providing regular irrational abuse of the board, the microphone attendant and the security guard who followed him around when he aggressively fronted the chairman immediately after the meeting.

Despite banning phones for the entire meeting (more unnecessary regulation), the meeting was webcast, and a high-quality video archive of every last exchange is available here.

I unloaded  the longest campaign speech in 48 public company tilts at six minutes and 15 seconds (starts one hour and 46 minutes into the video) and gave shareholders chapter and verse on unfair capital raisings that Macquarie is involved with and the dodgy election processes adopted by the board, as was outlined in this earlier Crikey piece.

The best chairman McCann could come back was to allege I’d been “reasonably economical with the truth” because he’d given an earlier answer rebutting claims of retail dilution in this year’s capital raising and that somehow they hadn’t censored my platform because I was happy with the board’s edits.

I understood the policy to remove the names of clients Slater and Gordon and GUD Holdings in the platform published in the notice of meeting, but this was hardly an endorsement of a board-imposed change.

The capital raising debate was the key feature of the AGM and produced the lead for most of the newspaper coverage today.

The fairest way to raise capital is through a renounceable pro rata entitlement offer that treats all shareholders equally.

Instead, this is the Macquarie history of selective capital raising, which was fully outlined to shareholders yesterday and would be completely illegal if tried in the UK:

May-June 2006
$700 million institutional placement at $66 a share, followed by a $5000 share purchase plan (SPP) for retail, fixed at the same price, which raised $9 million.

May-June 2007
$750 million institutional placement at $87 a share, followed by $5000 SPP for retail, fixed at the same price, which raised $79.4 million.

May-June 2009
$540 million institutional placement at $26.60, followed by $15,000 SPP for retail at the lower of $26.60 or a 5% discount to market — 55,000 investors took up $669 million worth of new shares at $26.60.

March-April 2015
$500 million institutional placement at $73.50 followed by $10,000 SPP for retail at $73.50 or a 1% discount to market. Eighteen thousand shareholders took up $170 million worth of new shares at $73.50.

Given that institutions currently own about 65% of Macquarie Group, retail investors should be getting 35% of each raising to retain their collective share of the company.

Yet over those four raisings, institutions have been placed $2.49 billion worth of stock and retail have only picked up $936 million.

This has been substantially dilutive. McCann tried to claim that most of the recent participants in the 2015 SPP increased their percentage stake, but this ignores the 80,000 shareholders who didn’t participate at all and were diluted.

Non-participating retail investors are the biggest victims from Australia’s anything goes capital-raising system. They only get treated fairly when companies do renounceable pro-rata offers that compensate them for their rights.

Yet even this week, Macquarie has advised the DUET Group on its $1.67 billion capital raising,which involves a discounted $500 million placement to insider institutions and then a non-renounceable entitlement offer that is designed to profit from those non-participating retail shareholders. It stinks.