There was an interesting juxtaposition of views in The AFR today. Starting from the back page, Chanticleer columnist Alan Jury suggested my current tilt for the ASX board is “redundant” because the monopoly exchange released this Guidance Note last week which will supposedly clean up the whole governance and disclosure mess surrounding various Babcock & Brown and Macquarie Group listed vehicles.

He also claimed the following:

ASX directors standing for election are Russell Aboud and Trevor Rowe, both formidable and experienced securities markets practitioners who are being overtly supported by the ASX. Other ASX directors might have been more vulnerable, but their terms aren’t up.

This final line is presumably a reference to Michael Sharpe who has just quit the Babcock & Brown board, where he chaired the audit committee, for “health reasons” which curiously haven’t yet triggered a resignation from the ASX board.

The picture is very different on page 56 of The AFR where Brendan Swift led the financial services section with a story headlined “Babcock pressed on disclosure” that began as follows:

Investment house Babcock & Brown remains under pressure to reveal the management agreements that govern its listed satellite funds as it overhauls their structures in an attempt to bolster their flagging shares prices.

The story goes on to quote the respected chairman of Babcock & Brown Capital, Kerry Roxburgh, as having been rebuffed by Babcock & Brown when he requested disclosure of the management agreements.

This is the whole point of the ASX board tilt where the platform published in the notice of meeting includes the following:

Mr Mayne is standing on the single issue platform that ASX rescinds waivers granted to various Babcock & Brown and Macquarie Group listed vehicles that allow them to not fully disclose their management agreements.

The ASX Guidance Note talks tough on future floats but this is largely irrelevant because the “Macquarie Model” is a dead parrot. The key point is forcing disclosure by the existing vehicles, which has so far been resisted.

Stephen Bartholomeusz had a good column on Business Spectator this week about the proposed $17 million sale of the Babcock & Brown Communities management agreement. How can these things be valued and sold when they are not public documents?

Unfortunately, the ASX board is dominated by various old boys from Babcock, Macquarie and UBS, the three finance house which have pocketed the most cash from these opaque, Bermuda-registered, conflicts-ridden and poorly governed structures.

Indeed, the “formidable and experienced” Trevor Rowe is chairman of Brisconnections, the new tollroads float in Brisbane which debuted at $1 in July and hit 11c yesterday. So here we have a situation where Macquarie has pocketed more than $100 million in fees promoting a structure where investors have dropped $350 million of the $400 million committed so far. ASX shareholders have a chance to reflect on this at the AGM on September 24.

*Check out this package on the ASX tilt with links explaining all the key aspects.

Peter Fray

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