The Allco Award for Takeover of the Year goes to law firm Slater & Gordon. Named in honour of the inimitable Allco Finance Group, which acquired Rubicon from two of its own directors then promptly went bust, this award recognises excellence in the field of trying to get big too quickly while blowing up the whole show.
Slaters bought the “Professional Services” division of British law firm Quindell in April for a princely $1.3 billion, only to find Quindell was subject to criminal investigation by the Serious Fraud Office.
Its share price was $6.80 when the deal was announced. Drowning in a sea of write-downs, it last closed at $1.
The deal fortuitously deflected attention away from Slaters’ own colourful accounting practices which entail booking revenues based on “probability of success” of their class action lawsuits, or “Fantasy WIP (work-in-progress)” as one scallywag put it.
The inaugural Rams Award for Capital Markets Exponent of the Year goes to Santos Ltd. It would be nigh impossible live up to the suave Rams Home Loans itself, which hit the market at $2.50 and quickly sank to 4¢ after founder John Kinghorn pocketed $650 million from the float.
Santos, however, has displayed ingenuity, flair and uncommonly good fortune in this year. Foundering under the weight of $10 billion in borrowings and floored by falling gas prices, its shares were sinking like a stone when suddenly a mysterious mob from Bermuda sallied forth with a $7 billion takeover offer.
Although sceptics of the bidder, Scepter Partners, think the offer may exist only in the imagination of a few merchant bankers, it did propel Santos’ share price back up above $5.60, whereupon soon came the piece de resistance, a $2.5 billion equity raising.
The Bernie Madoff Prize for Funds Management goes to ANZ and its OnePath investment platform which, for the second year running, dominated the Fat Cats survey of funds and fees. Unlike Bernie, whose returns were excellent but unfortunately not real, ANZ’s returns were real but unfortunately not excellent.
Again, it was not all of the bank’s funds, just dozens of smaller, high-fee stragglers which ANZ insisted last year it was closing down.
The Macquarie Bank Award for Services to Stratospheric Remuneration was a hard-fought affair.
Notwithstanding the low growth environment, resources in perilous retreat, and private sector wage growth falling to 2.1 per cent, boards still managed to gift their CEOs an average pay rise of 5 per cent.
Nick Moore and his squad from Macquarie boasted five of the 20 highest-paid executives in the country, but they did get the stock running again. Their larger government-backed peers held fast to the tradition of zero risk, high reward, with ANZ’s Mike Smith departing after eight years and $85 million in pay, neck and neck with Westpac’s Gail Kelly.
Following in the footsteps of Leighton’s remuneration legend Wal King, CIMIC’s Hamish Tyrwhitt, was third highest of the departees with $15.4 million while Louis Gris of James Hardie picked up $15.3 million.
In other notable contributions to executive remuneration, PacBrands had its rem report thwacked by shareholders, Arrium had a monster strike and Wesfarmers managed to fork out $775,875 to a remuneration consultant. For that, the latter would surely be loath to tell them what they didn’t wish to hear.
The Captain Jack Sparrow Award for Maritime Safety was a lay-down-misere; oil giant Chevron told the Senate Inquiry into Corporate Tax Avoidance that its prolific corporate presence in Bermuda was because of the island’s superlative track record in maritime safety.
This ties in nicely with the Marc Rich Prize for Tax Structuring. There were dozens of worthy candidates for this honour, not least Chevron, pretty well every one of the US digital giants, the entire multinational pharmaceutical sector and the Big Four audit firms.
It is hard to go past American Express, however, for managing, thanks to large “service agreements” with tax haven associates, to pay no income tax for the past seven years.
The Jaws Award for Private Equiteering did not trouble the judges for a moment. Plaudits to Anchorage Capital and its brokers for buying the consumer electronics business Dick Smith for $94 million and listing it on the ASX just 15 months later for a price tag of $520 million.
It’s now fetching $86 million thanks to hefty earnings revisions last month and once again we can pay homage to the abiding maxim: “Thou shalt not buy from private equity lest thee lose thy shirt”.
Dick Smith himself expressed little surprise: “You don’t need to be very bright to realise that a company worth $90 million one moment is unlikely to be worth $500 million 12 months later just because it had a change of ownership”.
The Gordian Knot Award for Services to Impenetrable Structuring was an easy one. Commodities trader Glencore, which had a rough year, pulled off another restructuring that, upon investigation of myriad entities, revealed the company at the top of the corporate tree in Australia is called, obviously, GHP 104 160 689 Pty Ltd.
A few rungs further down the tree, Glencore did laudably produce a set of consolidated accounts, but it insisted the $US21 billion in debt therein was not reflective of the group’s leverage.
The Australian Government Award for Corporate Welfare goes to the Australian Government. In selling almost half its electricity transmission to the Cayman Islands, NSW did well in this category but they were not a patch on the Feds.
Redolent of the 1970s Bolivian juntas of General Jaime Florentino Mendieta and Luis Garcia Meza Tejada, the Coalition fought valiantly for the rights of billionaires and multinationals to keep their business and tax affairs secret.
It bravely maintained fossil fuel subsidies and battled energy innovation, put off for the ninth year the promised money-laundering reforms which would capture real estate agents and Chinese black money, introduced unprecedented surveillance laws on its people.
But it also signed the Trans Pacific Partnership “free trade” deal whose ISDS clauses in the fine print ensure foreign multinationals can sue the Commonwealth overseas if government policies don’t suit their corporate interests. Well done!
The Jordan Belfort Award for Boiler Room of the Year goes to the Australian Shareholder Centre for yet again signing up, churning and spewing out a range of customers who, after a large “establishment fee” for access to ASC’s unique share market research, were then sent off on a roller-coaster ride of high-risk CFD trading (contracts for difference).
Our anti-penultimate prize is none other than the Irving Fisher Award for Economics. Irving was the economist who predicted in September 1929, “Stock prices have reached what looks like a permanently high plateau”.
This prestigious accolade goes to the body which espouses the interests of large foreign multinational miners in Australia, the Minerals Council, and to its consultants Deloitte Access Economics. The Minerals Council and Deloitte held adamantly to their view that taxes should be confused with royalties.
The Leonid Brezhnev Award for Industrial Relations goes hands down to 7-11. With workers paid for half the hours they worked, records and rosters falsified, and head office taking 57 per cent share of the profits – versus the franchisees at 43 per cent _ 7-11 had the lot.
Finally, the JR Ewing Gong for Cartel of the Year. It is always hard to beat the big four banks, whose rates pricing moves in sync like seagulls on a beach, yet this year we bestow the illustrious JR Ewing on the gas cartel. No “invisible hand” here, just an invisible market.
AGL led the scare campaign last year with its “supply cliff thesis” postulating that the dire shortage of gas supply would cause outages.
Meanwhile, retail prices shot up while the cartel was busy getting its gas up to Gladstone for LNG export to Asia. Now the gas price has plummeted, the world faces a supply mountain and the LNG export boom is under threat. That said, thanks to regulated returns and a lack of supply and price information in this “market”, only incurable optimists would expect price relief on their gas bills.