Rio Tinto’s Australian AGM in Sydney on Monday morning will be a very important moment for corporate governance in Australia.
Whilst the proposed $US19.5 billion Chinalco investment will receive plenty of verbal attention, the biggest issue is whether Sir Rod Eddington can save his career as one of Australia’s top 5 professional directors.
Risk Metrics, the world’s most powerful proxy advisor and a New York listed company capitalised at $US1 billion, has recommended institutional clients vote Sir Rod off the Rio board because of his record as an Allco Finance Group director.
Sir Rod appears to have engaged with Risk Metrics and talked at great length about his Allco role in an attempt to reverse the original recommendation. Alas, it didn’t work.
As usual, Australia’s ridiculously concentrated media sector has come into play because Sir Rod just happens to be the lead independent director on the News Corp board, and a former News Corp executive director from his days running Ansett.
John Durie is Australia’s top business commentator and in any other circumstance he would have called for Sir Rod to be defeated after digesting the very detailed arguments presented by Risk Metrics.
Alas, Durie’s column in The Australian yesterday presented some of the detail but stopped short of expressing an opinion.
The same happened in The Australian today with Jennifer Hewett laying out the political arguments around the Chinalco deal whilst observing: “Rod Eddington, for his part, will be re-elected as a Rio Tinto director with an embarrassing percentage of the vote against him.”
What Hewett failed to point out is that Sir Rod will probably only be saved by the 120 million votes cast in his favour by the Chinese Government through Chinalco.
Rio chairman Paul Skinner, who retires with his credibility shredded after Monday’s meeting, told journalists after the London version of the AGM on Wednesday that Sir Rod has been very useful in navigating the politics for Rio in Canberra.
This is what makes the whole situation so untenable. Sir Rod is closer to Kevin Rudd than any other Australian business figure. He is also the Australasian chairman of JP Morgan which just happens to be advising Chinalco on its Rio investment.
As Kevin Rudd and Wayne Swan wrestle with the question of imposing restrictions on Chinalco’s boardroom influence over Rio Tinto, Chinalco will actually be saving the board seat of Labor’s chief business adviser.
Sir Rod and his board colleagues already know whether the Chinese have saved him because more than 99% of the votes have been cast by proxy.
Sadly, Rio has outrageously decided to hide the votes from its shareholders, in stark contrast to BHP-Billiton which flashed up the proxies on the screen when it held its London AGM last year. And whilst BHP webcast its London meeting, Rio refused.
It what will be final piece of off-handed arrogance by chairman Skinner, Rio won’t even advise shareholders who turn up on Monday what the proxies are during the meeting.
Instead, we’ll all be voting and debating in the dark and will have to wait for the ASX announcement of the poll result hours after the meeting has closed. That’s called treating small shareholders with utter contempt.