I must say I find the latest debacle surrounding Telstra quite astonishing. For the board to come out and recommend against a Howard government nominee to the board is extraordinary and must be unprecedented. For the government to foist someone, let alone a political ‘mate’, onto the board against their will on the eve of trying to sell another swathe of Telstra shares is equally bizarre. Despite this apparent vote of no confidence in the Telstra Board by the government, I assume they won’t go the whole way and use their majority shareholding to vote against the incumbent Directors at the upcoming AGM, although the current situation seems likely to leave pretty much everybody seriously dissatisfied.
There is a good piece in Crikey by Stephen Mayne about the latest round of turmoil to disrupt this company, which should be spearheading Australian advancement in the communication age.
Telstra chairman Donald McGauchie tells shareholders the following on the front page of the notice of meeting:
“The board does not recommend voting in favour of the election of one of the external candidates, Mr Geoffrey Cousins, because the Board has not had the opportunity to assess Mr Cousins’ candidacy through the Board’s established processes, which include assessing a proposed director having regard to the independence requirements of the Board’s Charter and the ASX principles of Good Corporate Governance.”
The so-called “T3 peace deal” is clearly no more because Telstra has leaked chapter and verse of what happened to The Australian Financial Review and the government finds itself severely on the back foot.
At one level, the government is perfectly within its rights to insist on board representation, but the PM has made a very poor choice in selecting yet another close political mate and Optus refugee with a chequered record.
If John Howard wants to get T3 away he would withdraw the Cousins nomination or at the very least pledge not to vote on the resolution and let the independent shareholders decide. At the other extreme, he could further damage relations with the directors’ club by voting out the four incumbents up for re-election.
To me, the mess that has been Telstra in recent times is about a lot more than whether it should be privatised or not, and another example of how badly the government has handled the extra power it now has with its control of the Senate. I have to say that when the legislation to allow the full sale of Telstra came before the Senate at the end of 2005, the argument about whether or not to sell really shouldn’t have been the issue. That was always going to happen once the government got control of the Senate, regardless of Barnaby Joyce’s agitations and promises.
The real issue was what regulatory regime Telstra would be operating under into the future. It was an absolute travesty that the Senate, and the wider community, was prevented from properly examining and assessing that regime. Even within the ridiculously short timeframe allowed, it was clear that there were major flaws. The Competition and Consumer Commission was clearly unhappy with it.
It is a disgrace that such an absolutely pivotal industry has been treated with such disdain and the public interest shown such contempt by a government interested solely in short-term political gain and marking a few quick ideological notches on its bedpost. (see this post from my old blog for a reminder of this “corrupted and tawdry process”.)
On a related issue, as Stephen Mayne’s piece in Crikey notes, this is another example of how hopeless the rules are regarding corporate voting for boards and the conduct of AGMs – something he has been trying to draw attention to for a long time. The older I get, the more bored I get with politicians bashing big business for the sport of it, but this is one area where they really do deserve major criticism.