Saturday, November 30, 2013

GrainCorp decision: Joe Hockey caught between national and Nationals' interest

This whole affair is a heap of rubbish that ignores the elephant in the room.  There is no version of economic rationality  that requires the join-up of two monopolies -- and much against it.  Graincorp and ADM are not strictly monopolies but they are near enough for the same reasoning to apply.  The economically rational decision would have been to split up Graincorp's tentacles -- perhaps on a state-by-state basis -- and forbid any purchases of the resultant entities such that a monopoly or near monopoly was re-created

Just one letter and a tiny apostrophe were all that were missing from Joe Hockey's reasoning when he scotched the bid by the American giant, Archer-Daniels-Midland to swallow up Australia's top listed agri-business, GrainCorp (GNC).

Whereas the Treasurer explained the 100 per cent take-over was not in the “national” interest, the more pressing concern for the Coalition under threat of massive internal hemorrhaging over the issue, was that the acquisition was not in the Nationals' interests. And therefore not in the government's political interests.

It may have escaped the attention of many city voters in recent months, but the ADM move has been huge news in the bush. Tension within the Coalition has been extreme – a delicate situation for any Liberal-Nationals government, but particularly so for one as young and as chest-beatingly pro-business in its rhetoric.

But the decision before the economically rationalist Treasurer was fraught with danger.

Nationals leader, Warren Truss, and his likely successor, Barnaby Joyce had made no secret of their strong opposition to the take-over. Privately, the Nats were incandescent, threatening all kinds of mayhem if the sale was approved.

Truss of course is also Deputy Prime Minister, so his public indications carried a lot of influence. They also raised a few eyebrows because Hockey was being told in no uncertain terms that the junior Coalition partner would not support the approval of ADM's bid.

The American agricultural giant's $3.4 billion bid was generous and came with the promise of hundreds of millions of dollars in infrastructure upgrades.

But growers worried that at just 4 per cent of ADM's total worth, GrainCorp would lack the clout within the multinational to see their interests protected. And they worried that they would wind up paying for those upgrades anyway in higher handling fees and perhaps lower returns.

Weighing heavily on Hockey and the entire government though was the signal a rejection would transmit.

Just a day after floating the alternatives for Qantas of greater foreign ownership, or partial nationalisation, the ADM application sends a potentially confusing message to international investors.

Business attracted by Australia's stability, its triple-A credit ratings, and its pro-business rhetoric, will now have to weigh those symbolic aspects against the reality of a government that has just knocked back a solid bid for a company and a sector that is badly in need of capital investment.

Politically, Hockey has chosen the path of least resistance. That doesn't automatically make it wrong, but it lifts the onus on the new government to explain in a detailed way why this particular bit of foreign investment is against the national interest, when other foreign investment is not.

Government, as the Prime Minister has noted, is about making the tough decisions.

This one appears to have been taken on the easy side of the ledger.

The Nationals are happy because once again their particular brand of protected capitalism – sometimes called agrarian socialism – has prevailed.

Hockey said he would not be bullied by anyone in making his final call on the GrainCorp bid.

Many in the business community may now be wondering what happened and what it might say about the character of the Abbott Coalition government.

Former treasurer Wayne Swan tweeted: “No more sanctimonious Hockey lectures about Australia being open for business or strong economic management, weak populist decision”.

Inevitably Hockey was damned if he did and damned if he didn't.


When Aunty turned a blind eye

WHEN important and difficult stories break, you will hear about them on your ABC. We will not succumb to pressure to suppress or ignore legitimate stories to protect those in power. - Kate Torney,ABC director of news, on the Indonesian phone-tapping story.

THIS year, the ABC has studiously ignored every major development in the Victoria Police major fraud squad investigation into the Australian Workers Union scandal. Even the proceedings of Victoria's courts on the matter - the bread and butter of local journalism - have eluded the national broadcaster's local reporters.

Jonathan Holmes spoke at length on the ABC's Media Watch about legitimate reporting of the story back in August last year. The Australian's Hedley Thomas had just broken the news that one of Julia Gillard's former law firm partners claimed that Gillard had lost her job at Slater & Gordon as a direct result of legal advice she gave to help establish a slush fund for her then boyfriend and client, AWU state secretary Bruce Wilson. There were numerous revelations in leaked documents, including a transcript of her exit interview from the firm, and the subsequent disclosure by the firm's then head partner, Peter Gordon, that it was a very serious matter involving an alleged fraud.

Jon Faine, of 774 ABC Melbourne, said: "The conspiracy theorists are having a ball, the blogosphere's running amok, it's all completely out of control ... why is it on the front page of the paper?"

To his great credit, Holmes said of the Faine view: "Well, I think that's nonsense." He went on to say the story was news, and had been presented in a sober and meticulous fashion by The Australian and elsewhere online.

There was a flurry of reporting in November last year from the ABC. It carried all of Gillard's press conferences and a lengthy interview with Wilson and, separately, his union colleague Ralph Blewitt. Then nothing.

Since the parliament rose last year, it's as if the AWU scandal had ceased to be for the ABC. Yet substantial developments have taken place - although not the sort of developments that would sit well in an Anne Summers, ABC live, Gillard extravaganza.

In January, Thomas reported that Victoria police had travelled to Queensland and taken a lengthy statement from a former para-legal executive at Slater & Gordon, Olivia Palmer (nee Brosnahan). That interview marked a turning point in the police investigation, with a significant increase in the number of detectives assigned to the matter as a result of her evidence.

The ABC reported nothing.

On May 15 this year, Gillard was closing in on her third anniversary as prime minister. By 11am, she had introduced the National Disability Insurance Scheme legislation into the House of Representatives.

That same day, detectives from the major fraud squad visited the Melbourne Magistrates Court to give sworn evidence in an application for a warrant to search and seize documents from Slater & Gordon. Magistrate Lance Martin heard their evidence and duly issued the warrant.

The law does not provide for search warrants to seize documents for background information, or to provide leads for further investigation. Before Martin could issue the warrant, he - not police - had to believe on reasonable grounds that a serious crime had occurred and that the things he specified in the warrant would afford evidence of that crime.

We know Martin's warrant directed police to seize all documents held by Slater & Gordon relating to Wilson, Blewitt, Gillard, the AWU Workplace Reform Association (the slush fund) and a property at 1/85 Kerr Street, Fitzroy, bought with the slush fund's money by Wilson, who attended the auction with Gillard, and put in Blewitt's name.

The warrant described further evidence: Gillard's personnel files; her invoices/billings, time sheets and travel records; personnel files in the name of her former secretary; and any record of the exit interview conducted by Peter Gordon with Gillard on September 11, 1995 (redacted portions of that interview were published in The Australian in August and November last year).

Martin included documents pertaining to Gillard and the AWU, the conveyance and mortgage file relating to the $150,000 loan advanced to Blewitt for the purchase of 1/85 Kerr Street and deed registers involving the AWU.

By May 17, police had seized the documents set out in the warrant, leaving the Slater & Gordon premises with boxes of material.

Search warrants are a regular part of police work - the Slater & Gordon warrant was the 1536th issued by the magistrates court in the five months to May. After police execute a warrant and seize material, they are required to bring the material back to the court for further directions. When it's stolen property or drug material, it's routine: the court orders that the material be held by police pending production in evidence.

But with law firms it's different. A client of a law firm may claim "legal professional privilege" over documents containing legal advice. The "privilege" against production and use in evidence is the client's to claim, not the lawyer's. Blewitt waived privilege, releasing any and all documents concerning him into evidence.

As we enter December, Wilson is still considering his position - seven months down the track. Without that delay, the material seized from Slater & Gordon would likely have been given in to the custody of the police for production in evidence within weeks of the raid. That is, by June, while Gillard was still prime minister.

Our critics have employed a series of arguments, each one weaker than the last. The first argument was that there was no story.

- Torney, on the Indonesian phone-tapping story.

THE fraud squad was as tight as a drum with information about the raid. Nothing leaked. Slater & Gordon was similarly motivated to keep the police visit confidential. But with police contacting the clients of Slater & Gordon the story was bound to surface. On June 17 it was front-page news in The Australian. The next day, The Age and The Sydney Morning Herald followed up with a report noting that police expected to have the issues of client privilege finalised within two weeks.

On July 19, the ABC wrote to a listener in answer to a complaint about the ABC not covering the story, that: "The ABC was aware that an alleged raid had occurred. However, we were unable to confirm it had happened and therefore, we did not report it."

Even the most basic of journalistic skills - making a few phone calls - eluded the nation's largest employer of journalists.

That week, the ABC did publish extensive coverage of allegations about a prime minister and slush funds, but it was the Spanish Prime Minister. The ABC headline reported calls for "Spanish PM Mariano Rajoy to resign over ties to slush fund".

On August 26, the Supreme Court heard Slater & Gordon's application for the return of eight documents under a claim of privilege in favour of the law firm. There was much discussion in the courtroom, documents were published and The Australian and other media covered the event. The ABC reported nothing.

On September 2, Victorian Chief Magistrate Peter Lauritsen heard Detective Sergeant Ross Mitchell's application for the remaining 360 documents to be handed to the custody of police.

Wilson was represented at the hearing by legal counsel and he sought more time to consider his position in relation to privilege.

During the proceedings, Lauritsen granted The Australian's request for the release of Mitchell's written application. That document included the details of the search warrant clearly naming Gillard. It closes by saying that, should Wilson make a claim of privilege, police will argue the claim should be rejected because the documents seized from Gillard's former office "were made in the furtherance of fraud".

No lawyer wants to find themselves publicly accused by police of being associated with fraud. That sort of accusation about a suburban solicitor would generally rate a line or two in the news. But when the two lawyers concerned are a sitting prime minister and a Federal Court judge (Bernard Murphy) appointed by her government, the question of whether or not it's newsworthy is answered beyond a shadow of doubt.

The Chief Magistrate reinforced the public interest judgment by publicly releasing the police application. It was rightly front-page news in The Australian; The Australian Financial Review, The Daily Telegraph, other newspapers and radio stations carried the story. It was unquestionably newsworthy - a sitting prime minister was named in a search warrant that directed police to seize evidence of alleged crime connected to her former office.

News, that is, unless you listen to the ABC - whose audiences heard nothing.

Audiences must not be able to reasonably conclude that the ABC has taken an editorial stand on matters of contention and public debate.

- Mark Scott, ABC managing director, October 17, 2006.

ON September 16, with the court documents published online, Adam Doyle from ABC News wrote this email in answer to a listener complaint about the ABC's lack of coverage:

"Thank you for your email regarding investigations being conducted by Victoria Police.

"It is a matter of public record that some form of investigation is under way. We know this because the ABC extensively reported the fact that Ralph Blewitt and others took information to the police.

"Beyond this, there are few confirmed facts which would reach the threshold of ABC editorial standards for reporting. We accept that other media may operate to a different standard, but we do not intend to compromise our own.

"Reporting that the prime minister of the nation is under police investigation is an enormously significant call to make. It cannot be made on supposition, on rumour, or on hearsay.

"You have said that Vic Pol have confirmed this in writing, but we have not cited (sic) this media release or public communication.

"According to The Australian they've been collecting files but you would expect any police investigation to gather up this sort of primary documentation. That does not mean Ms Gillard is under investigation. For all we know, the investigation could be into Ralph Blewitt, or Bruce Wilson or Slater & Gordon or any number of other individuals and entities.

"Rather than mimicking other media reports, the ABC is following fine principles of reporting confirmed fact. When such facts become available, you can be sure the ABC will report them.

"Yours sincerely,

"Adam Doyle,

"ABC News"

No questions, no follow-up, no investigative reports. The ABC would await a media release.

News is what someone somewhere doesn't want you to print; everything else is advertising.

- Torney, on the Indonesian phone-tapping story

TONY Abbott's alleged wall-punches from university 30 years ago met the ABC's standards. The Australian public interest in knowing about unsubstantiated allegations against the Prime Minister of Spain and a slush fund met the threshold.

What was so difficult about Gillard and her involvement in the AWU scandal?

The trigger for Victoria Police opening an investigation into the AWU scandal was Blewitt's statement about a power of attorney document Gillard says she witnessed properly. The police took Blewitt seriously enough to allocate scarce and expensive resources from the major fraud squad to the investigation.

The parliament took Blewitt's statement seriously too, with large sections of it read into Hansard.

But the ABC would hear none of it.

The ABC had decided: Gillard good, Blewitt bad. All of Gillard's defensive utterances were reported by the ABC.

The ABC reported Gillard's disgraceful personal slurs against Blewitt.

Perhaps the best insight into its group-think comes from its Canberra-based news editor John Mulhall, responding to (another) listener complaint about ABC failure to report on Blewitt's statements at the time.

"The ABC is aware of these statements but we do not at this stage believe it warrants the attention of our news coverage.

"To the extent that it may touch tangentially on a former role of the Prime Minister, we know The Australian newspaper maintains an abiding interest in events 17 years ago at the law firm Slater & Gordon, but the ABC is unaware of any allegation in the public domain which goes to the Prime Minister's integrity."

He closed his note by reassuring us that "if any allegation is ever raised which might go to the Prime Minister's integrity, the ABC would of course make inquiries into it and seek to report it".

We're still waiting.


Bogus asylum-seekers sent home from PNG

ABOUT 80 asylum-seekers sent to Papua New Guinea have already returned to their home countries after being found to be "economic migrants" rather than refugees.

PNG Prime Minister Peter O'Neill told The Weekend Australian that this "quite sizeable number" of people had left for Sri Lanka, Iran and other countries.

Immigration Minister Scott Morrison said there were plans to build a "removal centre" at the asylum-seeker processing centre on Manus Island to house those whose claims had failed and were due to be flown out.

Mr O'Neill said that so far, the process had been voluntary.

"Processing in Manus is slowly taking place, but we are finding a large number of them are economic migrants, and as such many of them are now willing to leave the centre and return to their country of origin," he said.

Last Friday, there were 1144 asylum-seekers at the centre. None has so far been found to be a refugee.

But if people were assessed as genuine refugees, Mr O'Neill said, "we would have to take our share, and Australia and other Pacific island countries would have to take theirs - something on which we are working with the Australian government and officials".

The PNG Prime Minister said that members of the Manus community felt "they haven't been given an adequate opportunity to participate in some of the developments" at the centre.

This included complaints about Australia bringing in a floating hotel to house staff, rather than putting them in local accommodation.

"We are establishing a permanent facility, and have always stressed that it's important to establish good relations with the community, with people and businesses there," Mr O'Neill said.

He said that although the rate of boat arrivals might slow down now, "it is likely to continue in the future from time to time, as people are displaced in their own countries and seek refuge elsewhere".

That, he said, was why "we are establishing a centre for the region in Manus, with permanent staff".

"So it's important to build continuing relations there, with people who are among the friendliest in the Pacific.

"In their eagerness to get the facility up and running, the Australians have been trying to get it going without much consultation with the local community."

The issues that have arisen over the construction and management of the centre, he said, hinged largely on cultural differences.

Mr O'Neill said that this would be discussed at the annual Joint Ministerial Forum between PNG and Australia, due to take place in Canberra on December 11.

He said that the PNG team there would also "be seeking from the Australian government a clear understanding that there will be no tapping of phones in our country without express authorisation from our courts".

The Prime Minister said Australian high commissioner Deborah Stokes had already been summoned to his Foreign Ministry for discussions on whether Canberra had been listening in to phone conversations in PNG.


Old Adolf is still causing a stir

A SYDNEY auction house has prompted fury in the Jewish community by selling Nazi war memorabilia including an SS dagger, swastika flags and Hitler Youth armbands.

Leading members of the Jewish community condemned the trade in Nazi memorabilia as "glorifying" the worst genocide in history.

Lawsons, which is based in Leichardt in Sydney's inner west, sold the Nazi relics at an auction on Thursday with the SS dagger fetching the top price of $4,250. The Hitler Youth dagger, armband and belt buckle sold for $800.

Other items included Luftwaffe caps, Iron Cross medals and a red Nazi drape flag with a black swastika, similar to those used at Hitler's rallies, which sold for $600.

NSW Jewish Board of Deputies chief executive officer Vic Alhadeff said: "It is always a matter of concern when memorabilia which evoke the Nazi era are promoted and traded.

"One hopes that those who acquired these items will be using them for educational and historical purposes and not to glorify what the Nazis stood for and the worst genocide in history."

Norman Seligman, CEO of the Sydney Jewish Museum, said: "I don't think they should be a trade in this and as a museum we would not be doing anything to support it.

"When you actively trade in this type of material you are glorifying what happened."

It is not illegal to sell Nazi relics in Australia but it is banned in Austria, France and Germany and online auction sites including eBay have developed polices to restrict trade.

NSW President for the Council of Civil Liberties, Stephen Blanks, said auction houses needed to take a clear moral position when selling this kind of memorabilia.

"Sale of these items has got to be handled in a way that does not glorify the Nazi regime," he said.

Auction houses needed to be clear on the motives of both the buyers and sellers and the history of the items for sale. "Auction houses which don't have these kind of policies risk alienating significant portions of the population," he said.

But Lawsons Managing Director Martin Farrah refused to explain if his company had a policy and hid behind a "no comment".


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