I read with
interest the Street Talk article on page 18 of yesterday’s AFR regarding
Austock Ltd placing stock with some of its key corporate
clients. I admire what ABC Learning founder Eddie Groves has achieved, but am puzzled
why he would place himself in such a conflict of interest and why the
chairman would allow it to happen.

Consider
this:

  • Eddy Groves owns
    4.2% of Austock;
  • ABC Learning has
    paid tens of millions of dollars in corporate fees to Austock over recent
    years; and,
  • Bill Bessemer,
    Chairman of Austock, is on the ABC Learning board.

How big is the
conflict of interest? I read the company’s Governance Statement and
according to their policy, any director with a conflict must leave the
meeting. This puts the company in the situation where two directors
(including the CEO) must leave the meeting when discussing capital
raisings, or acquisitions that could lead to a capital raising given it is
highly likely Austock would again get the business.

I have also just
finished reading the notice of meeting for the forthcoming AGM. The board comprises just
7 individuals. Three executive, and 4 non-executive – but one of those is
Bessemer. Also, look at the stock Eddy and Le Neve are issuing themselves
without any hurdles or targets.

All these issues
raise the question whether the chairman is on-the-ball, or a lackey to
Eddy? It is time for ABC
Learning to grow-up.


Stephen Mayne writes:

The ABC Learning AGM is on Wednesday, 23 November at noon in Brisbane’s
Convention Centre. Crikey owns the mandatory $500 worth of stock and
would love to appoint a local to go as our proxy and ask a few
questions. Besides, former Children’s and Youth Affairs Minister Larry
Anthony is up for re-election and presumably looking forward to his
first 95%-plus victory.

All up, there is plenty to debate so please email [email protected] if you’re up for it next week.