After Malcolm Turnbull, David Gonski and Mark Burrows, Crikey rates Mike Tilley as the next most interesting investment banker in Australia and now that he’s become CEO of Kerry Packer’s Challenger Financial Services, it is time to open up The Mike Tilley files.

From the June 23 subscriber-only sealed section

There’s been a further change at the Packer-controlled Challenger Financial Services with CEO Chris Cuffe stepping aside in the next six weeks to concentrate on funds management and former Merrill Lynch chairman Mike Tilley, a man who once told Crikey he was “dead meat”, becoming CEO.

Tilley will resign from his position in Melbourne as JP Morgan’s Vice-Chairman, Investment Banking and move to Sydney. There aren’t many investment bankers who have made it as big company CEOs – just ask Tony Berg about Boral and Peter Yates about PBL.

The three page Challenger statement contains lots of long quotes and explanations but it basically looks like Cuffe was fed up or not up to running the broader group and will instead focus just on wealth management, take a pay cut and quit the Challenger board. Cuffe was a James Packer favourite so all this creates further rumors that Kerry has shafted his son who was only last week replaced as Challenger chairman.

Tilley’s controversial tenure at JP Morgan has only lasted a few months and saw staff leaving the place at a rapid rate. He also recently joined the Orica board but we reckon becoming a line CEO for the Packers creates a conflict of interest because the Packers are one of Orica’s biggest competitors in the Australian chemical industry.

Why on earth would Orica want a bloke inside their boardroom whose main gig and cash comes from working for the family of a competitor?

This is how the Orica website describes the new Challenger CEO: “Mr Tilley has experience in corporate strategy and business including 16 years as an investment banker with Centaurus Corporate Finance and Merrill Lynch. Mr Tilley was head of Mergers and Acquisitions Asia and Australia, and Executive Chairman of Merrill Lynch Australia. Deputy Chairman of Challenger Financial Services Group Ltd, Vice Chairman of JP Morgan Australia, a non executive director of the Visy Industries Group, a Principal of global markets Capital Corporation LLC (New York) and a member of the Australian Takeovers Panel.”

As a full-time CEO Tilley surely can’t retain all these positions.

ends

To understand where Tilley sits in the Australian corporate scene you just have to read this story from the SMH on June 4, 1991. Tilley ratted on Packer in a big way by giving Max Suich and The Independent Monthly a big scoop on some claims that Kerry Packer allegedly made in a meeting with Tilley and the wannabe member for Wentworth, Malcolm Turnbull.

The lad is clearly good at mending fences as this was a dramatic series of claims to make against Australia’s most powerful man.

REVEALED: THE PACKER-MURDOCH ‘GAME PLAN’
By John O’Neill

Kerry Packer and Rupert Murdoch had established a “game plan” for the Australian newspaper industry, Mr Packer allegedly told a financial adviser in late March. Part of that plan allowed only Mr Packer to own The West Australian newspaper; Mr Murdoch would “tear” the newspaper apart under any other owner.

Mr Packer allegedly made the remarks during a meeting with Mr Michael Tilley of Lloyds Corporate Advisory Services, advisers to the Bell Group, which has a majority shareholding in The West Australian.

Mr Tilley says he told Mr Packer that Mr Murdoch had already been aggressively cutting rates, but that had not had a significant impact on earnings.

“Mr Packer suggested that this was bullshit; that he and Mr Murdoch had developed a plan for the newspaper industry in Australia which he described as a ‘game plan’,” Mr Tilley says in a file note of the meeting published today in The Independent Monthly newspaper.

“Under that game plan there was no room for The West Australian to be owned by anybody else or operated successfully in the face of the onslaught that would be forthcoming.”

However, Mr Tilley, who describes himself as a family friend of Mr Murdoch, told the Herald he did not believe the plan extended across Australia to the Fairfax group.

“I know Rupert pretty well … he would much prefer to see (Tony)O’Reilly or someone in there who doesn’t know a hell of a lot about running newspapers,” he said.

“He’d much rather see a guy like John Reynolds from O’Reilly’s running Fairfax and killing it with bureaucracy … than (see) Kerry Packer in there calling the shots day to day on how the newspaper was run.”

Mr Packer was unavailable for comment last night but his staff referred the Herald to the merchant banker Mr Malcolm Turnbull, who was also at the meeting and who said there was no mention of a game plan.

Mr Turnbull, a former member of Mr Packer’s board at Channel 9, represented another shareholder in the paper, the West Australian State Government Insurance Commission (SGIC), at the meeting. He urged a sale to Mr Packer.

“We were holding Rupert up not as a collusive mate, but as a very tough competitor that had to be dealt with on his own terms,” Mr Turnbull said.

“The point Kerry was making is that Rupert is an incredibly effective competitor and in 18 months … you would really have a tiger at your throat.”

Mr Turnbull said Mr Packer had phoned him yesterday. “His recollection is exactly the same as mine,” he said.

In the file note, Mr Tilley also claimed he asked Mr Turnbull how he could recommend Mr Packer’s offer – which he thought was very low – to the SGIC.

“He responded that the SGIC would accept not getting the money back as it had written off its investment … that it would be in the community interest to have an experienced publisher like Mr Packer running a financially sound West Australian and to get rid of the incumbent management who are no friends of the Government.”

Mr Turnbull said he had never commented on the views of the Government.

“Packer expressly offered David Aspinall the opportunity to continue as chief executive.

“The reality is the incumbent management was going to continue under Packer.”

The managing director of News Limited, Mr Ken Cowley, said of the report of the meeting: “It seems pretty reckless stuff to me. I know Kerry doesn’t drink, but if he said all that he must have been smoking something.

“There’s no game plan with Mr Packer in Australia and that’s that,” Mr Cowley said. “If there was I would know about it.

“Mr Packer is a television operator and he would be well reminded to remain a television operator.”

Peter Fray

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