Trust

If I didn’t know better, I’d think that Peter Hartcher, whom I usually read with respect, was somehow embedded in the Telstra privatisation dream. His argument in today’s SMH is purely emotive and somewhat extraordinary. (http://smh.com.au/articles/2005/09/08/1125772637244.html)

He points out that it has been the decade-long goal of John Howard to privatise Telstra. Howard's big chance came with the last election “when he asked Austalians to trust him” and “the country responded by giving him an extraordinary vote of trust”.

Evidently, things began to unravel just as implementing legislation was being introduced to the John Howard controlled House and Senate because the Telstra management felt the need to point out that the company was burdened by legacy issues and new technologies and political obligations. He points out that the two prior management teams at Telstra had also wanted to disclose this to the market but had come under political pressure when they did so: "The past two Telstra chief executives have gone through the same cycle." But the August 11 private audience that Telstra had with the Government majority shareholder evidently did not just canvass the state of Telstra's business and books. It also reportedly contained the revealing assessment that Telstra board members had formed the opinion that the company's use of borrowings to support dividend payments "is not a sustainable policy or practice".

With the latest “pronouncements” from the “arriviste American management team”, the market knocked $10billion off the market capitalisation. Breathing the same smoke that hissed out of John Howard's ears, Hartcher fumed, "The mandate of the Government [to sell Telstra] will have been frustrated not by the voters, the political process, the media, the Opposition or the Senate, but by the management of a business enterprise of which the Government is the majority owner. " The message: if the management had something material to say which could adversely affect the market price, they should have kept it to themselves, and not bothered those nervous nellies in the marketplace with it. They would alway trust Honest John.

I have already canvassed the obligation of management to tell it like it is. (http://guambatstew.blogspot.com/2005/09/full-fair-and-timely-disclosure.html) Isn’t that a better thing than having the company sold on a “trust me” promise?


And whilst on matters Telstra and SMH, I'd like to point out it "looks like" Mike Seccombe was reading my blog (I know, wishful thinking). Compare my post yesterday, "The Prime Minister outlines plan to divert attention from the Telstra sale embroglio" which included a link to a story about the new Howard terror laws, and Mike Seccombe's "notebook" in today's SMH which concludes a discussion about the Telstra transparency tango with the following: "No wonder the Government moved quickly into smokescreen mode, coming out with plans for new anti-terrorist legislation as a distraction." (Apologies, I can't get a link to the story; the SMH search engine won't release it for some reason.) Even the Government is denying the charge: http://smh.com.au/news/National/Govt-denies-terror-laws-a-distraction/2005/09/09/1125772671197.html.