How
stupid is Ron Walker? The colourful property and gaming entrepreneur
has managed to scale the establishment heights to become chairman of
Australia’s most venerable publishing house, John Fairfax – and then
turns around and engulfs the company in a share trading controversy. In
fact, I reckon this looks like a scandal when you consider these facts:

On
Monday, Tuesday and Wednesday last week Ron bought $1.8 million worth
of shares in Fairfax, just as Communications Minister Helen Coonan was
preparing her cabinet submission on media ownership laws which was
publicly announced on Thursday.

Media stocks took off on
Wednesday and Thursday because of one very big surprise in the package
– open slather mergers will be allowed from next year, not 2010 or 2012
as many had expected. Ron Walker has made more than $100,000 or 8% in
just eight days. Spectacular stuff.

One of the reasons for
appointing Walker chairman of Fairfax was because of his close
political connections to both Peter Costello and John Howard after
raising almost $200 million for the Liberal Party as its highly
effective Treasurer for ten years.

Did Ron know about the
impending policy change to allow media mergers and foreign takeovers
from next year? If he did he clearly has to resign and ASIC needs to
investigate because the 7% surge in Fairfax’s share price proves that
this was indeed price-sensitive information. If he didn’t know, then
what use is he to Fairfax if his political connections can’t deliver
the company some insights on forthcoming regulatory decisions by his
fellow travellers in the Liberal Party?

Walker has tried running a defence of sorts through The AFR
today by claiming that market-sensitive information “had prevented
directors from buying shares for months because we were in discussions
over the company’s future.”

These company-changing negotiations
only ended last month, says Ron. The trouble with buying shares last
week is that it was also just a few weeks before the full year profit
announcement. Many companies only allow directors and senior management
to trade shares in a short window after each results announcement.

It
might all be innocent stuff but this is not a good look and Ron must
clear the air and declare that he did not have a clue that the
starter’s gun for media takeovers was going to be fired in 2007.
Similarly, the precise periods in which trading was banned due to
negotiations should also be declared. If months elapsed last year when
Ron passed up an opportunity to buy shares, then you really have to ask
the question: why buy shares in the days leading up to the
market-moving Cabinet decision?

Peter Fray

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