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CBD

27 Nov 2012 SYDNEY MORNING HERALD - BEN BUTLER



Scotland in Genesis boardroom battle

The boardroom of mining minnow Genesis Resources has been all but emptied after shareholders kicked out every director put up for election at its annual shareholder meeting on Monday.

Acting as serpent in the directors' garden is a group of experienced mining types who hold 14 per cent of the company through an exotic array of companies in tax haven the British Virgin Islands.

They're headed by temporary Ivanhoe CEO Ines Scotland, the woman who as head of Citadel turned speculation on a gold mine in Saudi Arabia into a $1.25 billion company. Scotland is backed in the play by the rest of her Citadel team: mining engineer Peter Lester, company secretary Sue-Ann Higgins, geologist Brett Butlin and construction engineer Russell Luxford.

It is understood Scotland's team is interested in the gold prospect in Macedonia owned by Genesis.

More than half of Genesis shares were voted to tip out Deric Wee, John Karajas, Patrick Volpe, John Zee, with the remuneration report and proposals to increase the non-executive directors' pay pool and authorise a share issue of up to 10 per cent also failing.

A motion ratifying the issue of $1.42 million in shares issued to a Malay investor narrowly got up, amid confusion over whether it should have been a special resolution requiring 75 per cent approval.

The day's action exiled so many directors from the boardroom Garden of Eden that it was left with just two - chairman Eddie Pang and managing director Peter Kong - when the legal minimum is three.

Directors fixed that problem after the meeting by appointing Alex Lim to the board.

On the warpath

Slovenly boards have been put on notice: wily investment banker Mark Carnegie is on the warpath, setting up an activist fund that aims to improve shareholder returns.

Stakes in Qantas, Soul Pattinson and Brickworks accumulated by are among the first in the fund, with Carnegie telling CBD his investors want him to build an activist portfolio.

"Without confirming or denying which other ones other than Soul Patts and Brickworks, what they want to see is several of these, not just one, and see whether or not a portfolio of them is going to generate surplus return."

He said the increasing size of super funds meant they could no longer add value by stock picking and would have to turn to becoming more active overseers of the management of the stocks they hold.

"That's not just going to be about remuneration strikes and stuff like that, but actually the issue of how do people generate a huge amount of high returns on capital over a long period of time," he said.

"It's all about trying to make sure that managements don't blow huge amounts of capital on ill-timed acquisitions and foreign frolics and other things."

Through his MH Carnegie & Co, Carnegie on Monday reached an agreement with Perpetual under which the funds management group will follow his voting recommendations when it comes to the 12 per cent it holds in both Soul Patts and Brickworks.

The deal also gives him an option to buy about 1.3 million Soul Pattinson shares and about 797,000 Brickworks shares, if performance hurdles are met. Soul Patts owns about 48 per cent of Brickworks, which in turn owns 43 per cent of Soul Patts.

Perpetual has been trying - and failing - to break up the cross-shareholding for about a decade, and Carnegie is under no illusions that it is an easy task.

"This thing is not an easy get, as you know - it's the last of the Mohicans," he told CBD.

"We've got a lawyer called Robert Mangioni, who we met doing some other stuff, and we think we have a plan in terms of unlocking value, and we'll see over the next two years if we do.

CBD couldn't reach Rob Millner, who is the chairman of both Soul Patts and Brickworks, for comment.

If the price is right

Like sunset over the Pilbara, the glow from Her Roy Hill Highness Gina Rinehart's lightning book-launch tour of the nation lingers on long after the source of the light has fallen below the western horizon.

Rinehart flew off on Monday, accompanied by Angela Bishop, the showbiz reporter at Network Ten, where she is a major shareholder.

Left behind is a warm, fuzzy feeling and the sudden urge to become a "voice of the North" by joining the Rinehart-endorsed Australians for Northern Development & Economic Vision, which is pushing for a special economic zone.

(ANDEV's online forum has just three posts in it, so it could do with some enthusiastic newbies.)

It also leaves behind a bit of confusion over the price of the book.

CBD's spy at the Sydney launch was initially convinced the book was $40, $10 of which got the tome signed by Australia's richest person.

However, both the Sydney Mining Club and Rinehart spokesman Mark Bickerton have told CBD the $40 was a flat fee, signed or not.

With that cleared up, Northern Australia and then some is available cheaper elsewhere.

On Monday, CBD bought two copies at $35 each from the Institute of Public Affairs. The book is published by Executive Media, owned by Melbourne's Haratsis family. It also publishes Australian Resources and Investment magazine, where the essays in the book first appeared.