The whole question of analyst independence in Australia has been opened up by Deutsche Bank’s former News Corp analyst Mike Mangan and his explosive whistleblowing effort in Eureka Report. Mangan alleged regular intimidation and manipulation by the Murdoch machine which eventually led to his sacking after he issued a report with another “sell” recommendation on the stock – you can read that report here.
The mainstream media’s reluctance to touch the story when it really should be triggering a wide debate about analyst independence and regulation says a lot about the power of Rupert Murdoch
As usual, ASIC and the major political parties are saying nothing about an issue which causes grief for either the Murdoch or Packer families. A subscriber has revealed another interesting example of the analyst system at work, although this time, it relates to the Packers:
There is also the case in takeovers where one company does not like the research being written in regard to a deal and they then employ the corporate advisory department of an investment bank or stockbroker to effectively control or stop any research being published.
A prime example was the Packer family’s play for Burswood Casino last year. PBL didn’t like the research coming out of WA broking firm Patersons. Although they had UBS advising, PBL later also retained Patersons in an effort to quash the Patersons research which was basically talking up the price to be paid for Burswood.
This theory makes last year’s giant three-way merger between Westfield Holdings, Westfield Trust and Westfield America Trust all the more interesting when you consider that the Lowy family engaged virtually every investment bank in town. One Dow Jones wire story on the Westfield merger concluded as follows:
Deutsche Bank, UBS and Grange First Provident are joint lead advisers on the transaction. Other advisers include ABN AMRO, Merrill Lynch, JP Morgan, Carnegie Wylie, Investec Wentworth, Citigroup, Goldman Sachs JBWere, Credit Suisse First Boston and Morgan Stanley.
Naturally, this prevented any analyst at these firms pointing out that the Lowy family was getting a sweetheart deal swapping their tenuous management contracts (just ask Lend Lease about losing the GPT management rights) for shopping centre bricks and mortar. It also precluded all the said firms from acting for anyone planning to play the spoiler. Check out Crikey’s story at the time on this issue here.
So there you have it folks, Australia’s three richest and most powerful families, the Lowys, Packers and Murdochs, have all worked our analyst system to their advantage over the past 18 months, yet we still can’t have a mature debate on the subject. Sad, isn’t it.