Crikey would love thousands of Coles Myer shareholders to appoint us as their proxy for the upcoming AGM showdown. Just put Stephen Mayne in the proxy box and send it straight back to the company. As you can see from all sealed section commentary below, I’ll definitely be voting against Solly.

Second sealed Oct 3

Coles Myer CEO John Fletcher held the line today and refused to comment on the board stoush at the annual results presentation. Despite valiant attempts by the ABC’s Rafael Epstein, Fletcher just would not bite.

However, we are very disappointed with the 30-strong press pack for failing to ask a single question about Fletcher’s outrageous $8.6 million payout from Brambles which was only revealed last week.

The results weren’t too bad in the end with the disastrous $22 million loss from Myer-Grace the obvious exception.

Coles Myer shares rocketed 25c to a 6-week high of $6.37 this morning with heavy volumes of 15 million shares worth $100 million. There is some speculation that Solly Lew is about to start increasing his holding now that the result are in the market and the board appears determined to give him the flick.

Further to yesterday’s sealed section pointing out that Mark Leibler and Rick Allert should not be on the Coles Myer audit committee, we should point out that it is even worse that Solly Lew is also a member himself.

A key function of audit committees at big retailers is to monitor the rebates and discounts given to big suppliers. It should therefore be a supplier free zone and this is one thing the board should clean up.

Solly, Leibler and Wallis must leave the board, Allert should leave the audit committee and Allert should also quit the Southcorp chair.

If all that happens we’ll give them a bouquet and also tip that the share price will quickly move back through $7.


Oct 4 sealed

Solly Lew, or one of his mates, has been out there leaking like a sieve about this week’s two day Coles Myer board meeting. Look no further than Terry McCrann in the News Ltd tabloids or the Richard Gluyas splash in The Australian this morning.

Despite getting all the internal board discussions, it seems very odd that neither McCrann or Gluyas had the Fin Review’s line this morning that Solly splurged $60 million yesterday topping up his Coles Myer stake. Gluyas even linked the share price rise to the profit result. Errr, methinks the prospect of a Solly buying spree is a much more important driver.

It is good to see that Rick Allert’s related party dealings through Southcorp finally got a mention on the front of today’s Australian and from Crikey’s point of view he is not an appropriate long term chairman if, as was reported this morning, he plans to remain chairman of Southcorp and Axa.

Solly is clearly digging in for a fight but the board should hang tough and give him the boot. Allert is not the answer so institutions need to get on the phone to either Ric Charlton or Bill Gurry and tell them to step out of the shadows and actually take on a difficult chairmanship for a change.


Oct 7 sealed

Speaking of smaller company AGMs we’d like to attend, Solly Lew’s Premier Investments should be very lively this year. Can anyone help? Premier revealed that it spent $78 million buying 12 million shares last week lifting its stake from 4.9 per cent to 5.9 per cent but we’re curious as to whether the non-Solly shareholders who own the other 50 per cent of Premier are happy to be loading up on even more in Coles Myer shares.

Solly and Lindsay Fox fell out with Kerry Packer in the late 1980s when they lured him onto the Premier share register with 10 per cent promising a diversified portfolio. Then Premier loads up on Coles when Frank Lowy’s Westfield Holdings decided to sell. The debt was too much and this lead to the Yannon fiasco as Solly needed bailing out.

Given that it is largely Solly’s private companies that are benefitting from $60 million a year in related party transactions, we reckon any share raid that drives the price higher should be funded by Solly personally, not Premier. Afterall, when the Coles share price hit $9 in 1999, it was Solly’s private company that sold out, pocketing more than $700 million, which was presumably tax free because he bought that stake in Myer Emporium before Keatings CGT regime was introduced in 1985.

The bloke has stacks of cash, so why does he need to rely on others to fund half his latest Coles Myer buying spree? Then again, Ron Brierley’s GPG owns almost 20 per cent of Premier so they will hopefully keep a lid on any crazy stuff.


Oct 9

Crikey was the first media outlet to cotton on to the problem of Rick Allert remaining chairman of Southcorp whilst taking the top job at Coles Myer.

Clearly, it was untenable to have the chairman of a huge supplier leading Coles Myer so we are delighted that reality has set in and the lad will quit the Southcorp board on October 31.

And as Terry McCrann points out this morning in the final paragraph of his Herald Sun column (which almost certainly will have been cut from all the News Ltd sister papers), how could the Coles Myer board argue against Solly Lew based on related party transactions and length of service when Allert has been on the Southcorp board for 19 years and Southcorp sells more gear to Coles than Solly does.

However, there is a big differennce between Solly owning the businesses which trade with Coles Myer whilst Allert was merely the non-executive chairman.


Oct 15 sealed

Like so many embattled egos, Solly Lew just hasn’t seen the writing on the wall.

Despite shareholders, instos and even Gerry Harvey telling him that his time is up, he still insists that the problem is with the rest of the board, not him.

Late yesterday afternoon he issued another statement to the market, claiming that the board was in “turmoil” and it couldn’t resolve its differences.

But is seems to us that the board is unified – if only Solly and his brother in arms Mark Leibler would give up the fight.

At yesterday’s meeting, the board couldn’t resolve after three and a half hours whether to include a statement to shareholders advising them to vote against Solly in the upcoming board election. Solly is squealing about defamation and even making personal threats to sue the directors.

If that is the sticking point, then the problem is Solly, not the rest of the board. Apparently eight out of the ten directors are in favour of the statement, so you don’t have to be Sherlock Holmes to figure out who the two voices of dissent are – Lew and his staunch ally, Leibler.

Solly is really getting desperate, planning on re-introducing the Shareholder Discount card, a plan which surely should put the final nail in his coffin if anyone thought he had solid plans on revitalising the company.

Meanwhile, Terry McCrann is maintaining his spectacular backflip. After calling for Lew to go in about 40 separate columns during the Yannon debacle in 1995 and later copping a writ for defamation from Solly, McCrann is now openly spouting the Solly line.

Crikey’s bet is that Solly’s mate Michael Kroger is the go between. Try these lines from McCrann as an example of disruptive and embarrassing board leaks:

“The meeting opened deep inside the suburban ‘Battlestar Gallactica’ head office, with three of the ‘gang of eight’ absent physically, but present electronically. Former chairman Wallis was on the phone from Vietnam, Ric Charlton was in Washington, and Martyn Myer in London. The line to Vietnam kept dropping out, while one of the callers was backdropped by a continually flushing toilet. Lew opened proceedings with an offer. He would show them his legal advice on two conditions. They maintained confidentiality, and also the opinion’s privilege.”

What a joke. Solly insisting on confidentiality within the boardroom whilst his forces maintain a campaign of leaks to people like McCrann who for some reason appears happy to be used by Solly. It is not enhancing McCrann’s credibility.


Sealed section Oct 16

The Coles Myer board has avoided selective media briefings as it plodded through the Solomon Lew war effort, but you can really tell that Solly and his mates have been getting on the phone.

Stephen Bartholomeusz hailed Lew for his “tactical wizardry” in today’s Age and claims the directors have failed to come up with strong case for dumping Solly.

The reason they have done this is because Solly has been making personal threats against individual directors so they were limited in what they could say.

Bartho, like his old mate and colleague Terry McCrann, is going way too soft on Solly given his baggage.

He should not be on the board given his huge related party transactions, let alone sit on the all important audit committee.

If the company is broken up, Solly is an obvious candidate to bid for parts of it and should not be inside the tent.

Bartho claims the case against Lew is “weak”, but he fails to mention the notorious Yannon transaction in his entire article.

Some of these commentators are so easily seduced by the selective briefing. If you believe in corporate governance then Solly Lew should have been flicked from the Coles board in 1995. It is better late than never.


Oct 17 sealed section

We’ve been having a decent whack at Solly Lew of late but have to give him some credit for at least spending $120 million of his own money lifting his stake to 7.4 per cent this week.

As a Premier Investments shareholder, Crikey hopes any buying spree is funded by the $706 million Solly personally pocketed in February 1999 when he dumped 84.2 million Coles Myer shares at $8.38 a pop.

There is one beautiful irony here. If Solly bids the stock up and then survives on the board, the stock will probably fall in value as the respected directors sprint for the exit. But if Solly gets rolled he’ll probably make a tidy profit as a united board could then get on with the business of breaking the company up.

The only equivalent reverse bet Crikey can recall was the move by Newcrest Mining CEO John Quinn to buy call options shortly before he was sacked in the belief that the stock would rise. He was right and made a tidy profit.

We presume Terry McCrann continues to take calls from Solly lobbyists such as Michael Kroger as he once again has failed to even mention the notorious Yannon transaction in this morning’s column. Instead, he makes a big point about being “uncomfortable” about John Fletcher signing the letter opposing Solly’s re-election.

Fletcher is a director and should take a position like everyone else. He’s the bloke who is copping all the interference from Solly in the boardroom.

McCrann should read Bryan Frith’s column in today’s Oz which is a much better analysis of the facts. It spells out the defamation threats Solly has been making and also reminds readers about how bad the Yannon transaction was and how unbelievable Solly’s claim was about the Coles Myer super fund bailing him out in Yannon.


Oct 21 sealed section

Listening to Mark Leibler waffle on about the wonders of Solly Lew was all too much on Sunday morning. The spin is just unbearable. Perhaps it is time we dusted off some counter-spin strategies.

If someone will kindly secure a suitably named anti-Solly website we’ll provide the content. We need to toss around a few ideas first. Given that Solly has gone for, maybe we could run or even

The Aussie names are often difficult to secure so it might end up being a which is no problem. Send in your suggestions folks. Let’s repeat the treatment meted out to Jeff Kennett’s

It was good to see Terry McCrann finally mention Yannon in his Weekend Australian column which was probably written with a big hangover given he was still going strong at 2am at the Westin Bar on Friday morning (see item 7) after his boss delivered the Andrew Olle lecture.

McCrann brought up the notorious Joseph Brender transaction which saw Solly pick up his 2 per cent stake in Coles Myer personally and then flick it into Premier Investments for an additional $78 million without properly disclosing this to the market.

Oh dear, there are just so many skeletons that could be brought up. Why on earth would Solly leave himself so open.

Solly is known to be a keen user of private investigators and one commentator even once suspected he was bugging their home phone although we don’t make that allegation, have no evidence to support it and don’t believe it.

He’s also sued for defamation before and was making some hysterical threats against the board along these lines.

Whilst all the newspapers are enjoying the tens of thousands in advertising revenue that he is sending their way, Crikey is completely independent of Solly and his various spinners and lobbyists. Not one has even tried to call or email yet. How long will it take?


Oct 24 sealed section

The Empire Is Striking Back. Seething Coles Myer board members and ASIC investigators with long memories of Yannon, Etiket, Luft Aviation and over a billion dollars of other related party transactions over the last decade are finally holding Solomon Lew’s expensive PR machine to account.

ASIC is investigating Lew’s claims about the discount card in response to complaints made by various institutional shareholders and some members of the board who have had a dialogue with ASIC about Lew for many years.

They are certainly willing to give Lew the benefit of the doubt but given his assertion on that he opposed the scrapping of the discount card and his signature on a document approving the scrapping of the discount card, Lew certainly has more explaining to do.

Could it be that Lew’s high-priced PR spin-doctors are getting him into even more trouble than he’s previously got himself into? Terry McCrann must have taken another call from Lew’s mate Michael Kroger yesterday as he penned another grovelling pro-Lew column that did him no credit this morning.

Spinning can be counter-productive, especially if those being spun against hold you to account as appears to be the case.

Of course the argument about whether Lew really supported or opposed the card is not really the issue. The issue is that reintroducing the card would destroy the credibility of the company with institutions. It would punch a big hole in the share price. Little wonder Lew has been buying millions of put options to enable him to offload his Coles Myer shares effectively at today’s price.

If Lew ever implemented his campaign promise, the effect would be devastating on everyone else.

If Lew wins, according to press speculation there would be resignations from the board all the way up to the CEO. Possibly the high-priced senior managers brought in from the US would leave in disgust too.

It’s time Lew made a decision. If he wants to control Coles Myer, he should get the money together and make a takeover offer. When you own a huge yacht called Texas, drive around in a Bentley, live in a mansion in Toorak, when you promised to buy Ansett and then walked away for no good stated reason, when you were involved in “controversial” transactions called Yannon and so on and when you voted to scrap the shareholder discount card, relying on a popularity contest with small shareholders is really a bizarre strategy. It seems like one of those crazy ideas that PR companies come up with that are so complex they require a very large amount of billable hours.

So if he wants control, he must pay a control premium. He must get the finance to buy control or just accept his role as an investor. The bizarre exercise of running a corporate election campaign, asking for this support of the people some might think you’ve made a career out of screwing seems utterly unlikely to succeed and will only lead to embarrassment all round.

Shareholders just want the company to start making decent profits, to have a totally united, devoted board and for the era of related party transactions to end. Lew’s promises to “end his connection to suppliers” are unspecific, will probably rely on trusts or family members or nominees and are like much of his campaign simply too little, too late.

Unless he and his family immediately and publicly sell up Playcorp, Voyager Solo and shares in Country Road, Colorado, Housewares and many others, the perception of a conflict of interests will linger, the very perception eight of ten directors, including the CEO, the Myer family, recently appointed and long-time directors have all agreed needs to be fixed quickly in order for Coles Myer to move forward with confidence and credibility.


Oct 25 sealed section

Solly Lew is being very sneaky with those Coles Myer how to vote cards he is advertising in full page ads across the country. He wants shareholders to appoint him as their proxy whilst also voting for him and Mark Leibler. This would maximise the yes vote for Lew and Leibler before the meeting whilst also maximising the number of open proxies Solly would personally hold to vote against all of the other candidates.

This is another classic case of poor disclosure because Solly is not revealing what he would do with all those open proxies he is soliciting for.

He is hoping to walk into the meeting holding a stack of open proxies which he can line up against the open proxies held by the board. If, for instance, he held 20 million shares as open proxies, he could horse trade with someone like outside candidate Peter Sheppard during the meeting and exchange yes votes or an endorsement.

Crikey will definitely be attending the Coles Myer meeting and therefore would love all Coles Myer shareholders to appoint Stephen Mayne as their proxy. I’ll be voting against Lew and Leibler, for Peter Sheppard and the others remain undecided.

Sheppard is a successful shoe retailer with a $20 million a year business and we love this line from a press release he sent around today:

“Mr Sheppard, closely scrutinising the Myer/Grace promises for change, was appalled to see that the Myer Bourke St windows for the month of October were devoted to cosmetics. The biggest clothing purchasing period anywhere at anytime in Australia happens in CBD Melbourne leading up to the spring carnival.”

Meanwhile, we just love Solly’s call for Stan Wallis to surrender his $1 million retirement payout, Given he’ll be getting a $2 million payout from AMP, Stan can well afford this.

But if Solly wants some sacrifice then how about he donates some of the $706 million he raised by dumping the stock three years ago at $8.38 a share. Afterall, Coles Myer is still many millions out of pocket thanks to the Yannon affair and a big donation from Solly would help get the share price up.


Oct 29 sealed section

Anyone pondering the Coles Myer election is entitled to ask what attitude Solly Lew has to the stewardship of public companies.

One of the key elements to good corporate governance is ensuring that there is a strict division between the company’s activity and the private interests of those who run the company or serve as directors of it.

Premier Investments Ltd, is a public company and is a tenant of 101
Collins Street, according to the directory of the company which owns the building.

But when you call Premier Investments’ office, it is answered “Century Plaza.” Why is that? That’s one of Sol Lew’s private companies. A visit to the office shows a Premier Investments sign adorning the front door. How complicated.

Also, an individual called Solomon Lew advertises his phone number and fax number and they are the same as Premier Investments. Even though Lew makes a point of not being a director of any other public company other than Coles Myer. He even states this on a press release on his website where he has his personal letterhead indicating the office and phone number of public company Premier Investments.

Lew is not a director of Premier Investments but his chief strategist and former Crean staffer Michael McLeod is. So is former employee Frank Jones.

So is his mate Lindsay Fox. And in fact Lew’s private company Century Plaza owns more than half of Premier.

It is also believed that Lew has a large corner office in the 53rd floor office. Some will remember that when Lew met with representatives of the Australian Shareholders Association that they met with Lew in the Premier Investments’ 101 Collins Street offices.

This is all the more puzzling when you consider that Ron Brierley doesn’t even have an office there. Premier shareholders are also entitled to know whether Premier staff or resources are being used in Lew’s election campaign or in any other way to benefit Lew. Also Premier’s Company Secretary is known to be involved in a number of Mr Lew’s other companies, presumably there is a separate payment made for this service which doesn’t occur on company time.

According to its recent annual report, Premier Investments’ non-financing expenses for the year totalled $520K with one employee (the Company Secretary) totalling $188K in salary. The rest is believed to be rent and minor administrative expenses.

Please explain, Mr Lew. In a year when profits of Premier Investments have slumped 75%, shareholders are entitled to know what is going on inside company offices.


Oct 29 second sealed section

Solomon Lew really is going to bizarre lengths to get re-elected to the board of Coles Myer.

A subscriber tells us that he fielded a call last night from a company representing Solly who asked whether our subscriber would mind answering some questions.

They were:

1. Have you received the yellow proxy form from Sol Lew?

2. Have you voted yet?

3. We urge you to vote – will you be voting for Solomon Lew?

4. Can I ask you why not?

Our correspondent said that it was “because I have found his behaviour over recent years quite reprehensible”, whereupon phone was quickly hung up.

Another shareholder said “tell him to pay back the full $20 million lost on Yannon and then I’ll vote for him.”

Crikey is tipping Solly will lose badly and all this will be money wasted.


Oct 30 sealed section

[email protected] writes:

“Push polling is a discredited practice where political parties use telemarketing firms to ostensibly assess public opinion but in fact leave strongly negative messages about opponents and attempt to influence voter behaviour.

In the Coles Myer campaign, the desperate re-election bid of super-wealthy Solomon Lew has been using telemarketing firms to heavy small shareholders into proxying to Lew.

Shareholders have been asked whether they think the current board of Coles Myer is doing a good job, whether the current board did the right thing by scrapping the discount card and whether they realise that Solomon Lew opposed removing the card and that a vote for him will give shareholders a discount card once again.

They emphasise that Lew is an experienced retailer despite Crikey not being aware of him ever working in or managing a retail business directly. As Allert made clear in his Business Sunday interview, Lew is a successful investor, not a retailer. And when Alan Kohler asked Solly’s last remaining board supporter, Mark Leibler, two Sundays ago on Inside Business, he was unable to give any specifics of Lew’s retail experience, either.

Someone like Peter Sheppard is a retailer and a very skilled one at that. For full disclosure, Lew should explain exactly what his “retail experience” is.

Lew’s telemarketers have asked whether the shareholder has received material on the election and to discard all of it (it’s all so confusing isn’t it?) except for the yellow proxy form which simply needs to be completed, signed and posted. By doing that, they’ve voted for Lew of course.

This is bringing discredited ALP and Mark Textor-style election tactics to corporate elections. Lew is known to have employed Michael McLeod as his spindoctor – former chief of staff to Labor Leader Simon Crean – and has recently made him a director of Premier Investments. Old habits die hard for Labor’s machine men. Lew doesn’t restrict himself to Labor types, as his use of Michael Kroger as a lobbyist demonstrates.

Lew is bringing political tactics and ethics to a company election and that has distressing implications for shareholders everywhere given the level of honesty evident in most election campaigns. When McLeod asserted to Kohler that “Sol is running for office,” he was right and its implications are clear.

ASIC should be conducting a thorough investigation into what representations are being made in this campaign, not just on the discount card. Lew is in no position to deliver a new discount card without a majority of the board to support him, and he knows it, so his promise is disingenuous. Lew has not responded to the clear indication from the CEO Fletcher that he would resign if Lew was elected. Shareholders increasingly have a choice between stability and anarchy, unity and crisis, corporate governance and corporate electioneering.


Oct 31 sealed section

What is wrong with Terry McCrann? He continues to take the Solly Lew bait hook line and sinker. Since when do you have an independent inquiry into board deliberations about the possible break-up of a company? Why doesn’t McCrann just hand his column over to Solly or one of his side-kicks such as Michael Kroger. What would they call him? Solly McCrann? Terry Lew? Michael Lew-McCrann perhaps.

Lovely yarn off the front of today’s Fin about Solly’s push polling gurus Mark Textor and Lynton Crosby bussing in underpaid pommy backpackers to the Sydney suburb of Artarmon to bombard shareholders with questions on Solly’s behalf. Since when has the Fin published a front page quote from a pommy backpacker saying: “The work is sh*te, but at least it is pretty easy.”


Subscriber Susie Constable has taken Solly Lew’s bizarre campaign to cling to the Coles Myer board to the appropriate authorities. She writes:

“Hi Stephen

Just to let you know that I have made a formal complaint with the ASIC re Solly’s statements:

1. That he will restore the discount card and

2. That he has 40 years retail experience.

I have asked the ASIC to make a public statement as I believe that these statements are misleading and/or untruthful and the shareholders should be informed of this.

Regards, Susie Constable”

As an exasperated sole subscriber reports:

“Aussie Post and Telstra must beloving Solly Lew. Today I received my
seventh envelope from Solly, even though I only hold one small parcel of shares.

And last night I received my third phone call. Maybe I’ll place a call to the Telstra Call Harassment centre.

Desperate measures and all that.”

CRIKEY: Shameless Solly has met his match – an enraged Crikey Subscriber. We will watch ASIC’s response with interest. Meanwhile, the press have given the Myer family’s statement of the bleeding obvious a big run today, even though they effectively made this statement when Martyn Myer signed the gang of 8 letter three weeks ago.

Peter Fray

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