Peter Costello yesterday confirmed that cranky David Murray, the recently retired CEO of the Commonwealth Bank, will be installed as chairman of the Future Fund, whenever the Treasurer finally gets the structure settled and legislation through the Parliament.
The powers of the Future Fund board are a vital issue as, over time, there will be no bigger or more influential investor in the Australian share market. David Murray has already enjoyed that position as CBA’s $9 billion purchase of Colonial, something he later publicly regretted, did make him responsible for the largest pool of investment funds in Australia.
However, that $100 billion pool was spread around the world, in different asset classes and for millions of investors. Murray was too busy running his financial conglomerate to worry about how Colonial First State voted its stock at various AGMs.
Things will be very different at the Future Fund where Murray will be the single most powerful figure, especially if he decides to create an in-house funds management team, something that would save taxpayers billions of dollars in fees, but could lead to lower investment returns.
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Murray will be guided by the legislation but don’t expect current and past federal public servants, whose superannuation savings will comprise the Future Fund, to be given any say whatsoever over the investment mandates or individual voting on major issues. The Government is even preventing the Future Fund from controlling investments or appointing directors, so it sounds like they will have their hands tied.
Murray’s own record on corporate governance and disclosure isn’t that great. Remember that $7 million bonus for ten years of good performance which wasn’t disclosed until the very end. And what about personally doing that debt forgiveness deal with Paul Keating over the piggery when Keating had personally intervened to get him appointed CEO ahead of Macquarie Bank’s Tony Berg?
The Senate Finance and Public Administration Committee, most notably Democrat senator Andrew Murray, had a detailed session with Finance Minister Nick Minchin on the Future Fund last Monday and Tuesday which is well worth a read.