Markets hate uncertainty, so it was no surprise that investors are fearing the worst after Allco Finance Group indefinitely delayed the release of its half year result and ANZ identified three specific problem exposures which generated additional provisions of $363 million.

The Allco investor briefing at midday was shaping up to be a brutal mauling, not unlike what ousted MFS CEO Michael King copped when he sprung a surprise $500 million capital raising on investors exactly one month ago.

Alas, Allco wimped it, failing to strike a conclusive deal over the weekend and cancelling today’s briefing, repeating this effort from Valentine’s Day.

The Rudd Government claims to have a Minister specifically responsible for corporate governance, Tasmanian Senator Nick Sherry, although he’s kept a very low profile throughout the first 100 days. It also claims to have Sir Rod Eddington chairing the government’s business advisory panel.

Given that Sir Rod is one of two remaining independent directors of Allco, he would be well versed in giving Senator Sherry some first hand advice on why we need better enforcement of our continuous disclosure laws.

Allco’s disclosure over the past few weeks has been nothing short of a disgrace. The same applies to MFS and Centro, which keeps discovering billions in additional short-term debts.

If Allco really trying to offload its share of a $US1.55 billion power station deal then this should be publicly disclosed, not through Karen Maley in The AFR. And when those 20 million additional Allco shares were pledged as margin loan security by the executive team last year, it shouldn’t have taken a month for this to dribble into the public domain.

If there is one corporate governance problem and one article of faith that Labor should adopt in coming months it is that conflicts of interest are rife and regulators should not be motivated by profit.

Alan Kohler had a reflective column about ethics and conflicts on Business Spectator this morning which even took a gentle swipe at the media buyers who fund his business.

His main beef is “the practice of getting fees from both sides – that is, the pervasive culture of the kickback.”

The ASX has fallen well short of the mark in recent weeks and it has been a prime exponent of such a conflicts, pocketing fees every which way whilst lowering overall standards.

Look no further than this fascinating story on Inside Business yesterday about the structuring of Lehmann brothers sub-prime exposures which took down a range of Australian councils. This comment by litigation funder Hugh McLernan says it all:

These companies are very unusual structures in as much as they only have $1 in capital. They normally have $1 of extra assets. They have a situation where the shares are not held by the bank but by unnamed charitable organisations, so again I’m surprised that ASX permitted these issuer companies to be listed on the stock exchange.

Finally, there’s the ratings agency. Duncan Andrews, who used to run Australian Ratings, has nailed them good and proper in this Business Spectator column.

Check out this Mayne Report video on last week’s AWB AGM.

Peter Fray

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