The Financial Review’s Rear Window reported today that “Dame” Margaret Jackson held a gathering for 140 of her closest friends earlier this week to commemorate her departure from the ANZ bank board. Luminaries including Charles Goode, Jeff Kennett and former Foster’s boss, Ted Kunkel, joined to celebrate the career of one of Australia’s most prolific non-executive directors.

While the Director’s Club might object, Jackson, along with ANZ Chairman-elect, “Teflon” Rod Eddington, are living proof that to corporate Australia “accountability” is about as foreign a concept as latex is to the Vatican.

Margaret Anne Jackson was a partner in KPMG’s consulting division until becoming a full-time non-executive director in 1992 at the age of 39, when she was appointed a director of Qantas. It was her stints as a director of BHP and Pacific Dunlop however which cast most doubt upon the Dame’s stellar reputation. Mentored by former Pac Dunlop Chairman, John Gough, Jackson was not only a director of the diversified industrial company but also chaired its audit committee as its share price slumped from more than $6.00 in 1994 to $1.40 in 2000. Pacific Dunlop later spun-off its manufacturing and brands business to a private equity consortium, led by CVC Asia Pacific, which promptly made several hundred million dollars in a couple of years before floating the business as Pacific Brands.

Jackson was soon after appointed to the board of BHP (alongside Gough) and also chaired the miner’s audit committee in the mid-1990s. During the period in which Jackson was a non-executive director of BHP, the company lost several billion dollars after acquiring dud US company copper miner Magma, and lost another billion on its disastrous HBI project in Western Australia. The debacles led to the departures of Chairman Jerry Ellis and CEO John Prescott, but audit committee boss, Jackson, escaped unscathed.

Then there is Jackson’s controversial Chairmanship of Qantas, and specifically her endorsement of the 2006 private equity bid for the airline. Jackson, who infamously embraced former Qantas CEO, Geoff Dixon, at the announcement of the takeover offer, told shareholders they had a “mental problem” if they did not accept the APA offer. Jackson also noted that she would have been “disappointed” if the APA bid for Qantas failed.

While Qantas shares have subsequently slumped to less than $2.00, Jackson’s psychological assessment of the people paying her fees was not entirely correct. Qantas shares actually peaked at more than $6.00 nine months after Jackson’s comments, giving shareholders an ample opportunity to sell their Qantas shares for a far higher price than what was offered by the private equity consortium. There is also a serious likelihood that had the APA deal succeeded, Qantas would likely have needed to be re-nationalized due to shrinking cash flows and burgeoning debt.

However, Jackson is not the only director who has shirked responsibility for the failings of their employer. “Teflon” Rod Eddington was this week re-elected as a director of Anglo-Australian mining company, Rio Tinto, despite being involved in corporate calamities at Allco, News Corporation and of course, Rio itself.

While Eddington received one of the greatest ever repudiations from shareholders (63% of Australian shareholders rejected Teflon’s appointment), he still received an overall “for” vote of 65%. Removing Chinalco’s 9% stake, 53% of Rio shareholders voted to support Eddington’s re-election.

However, that Eddington was able to be re-elected to Rio despite his performance at Allco and the company almost imploding after its US$38 billion takeover of Alcan proves that it is near impossible for a director to be dismissed by shareholders.

One suspects the Houdini himself would have trouble getting out of Australia’s Director’s club.

Peter Fray

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