CBD
So much for sovereign risk. Andrew "Twiggy" Forrest's Fortescue Metals opposed the federal government's mining tax in all its incarnations, taking the battle all the way to the High Court (and losing).
The original tax announced by once and future PM Kevin Rudd was "probably the worst hit to sovereign risk I've seen in all my life", Forrest told the ABC in 2010.
So, given Fortescue's craving for stability, it's only logical that the company should start up a brand new subsidiary, African Fortescue, in, er, Mozambique.
Racked by bloody civil war between 1977 and 1992, Mozambique is the only country in the world to feature on its national flag that well-known symbol of peace, the AK-47 automatic rifle.
According to the CIA World Factbook, Mozambique also suffers from high rates of AIDS, illiteracy and poverty, and is dependent on foreign aid for 40 per cent of its government budget.
Fortescue CEO Nev Power was coy about the purpose of the company. "It's just part of our forward scouting on exploration. We have a long-term interest in developing resources around the globe, so we do set up companies and so on to allow that to occur in the future," he said.
Man on a mission
Who was that bloke struggling to wrest his luggage from an unco-operative carousel at Melbourne Airport on Thursday morning?
CBD's spies reckon it was helicopter-crashing, hitman-hiring and sugardaddyforme.com using former bankrupt, jailbird, giver of misleading evidence and struck-off doctor Geoffrey Edelsten, fresh off an international flight.
Back from a quick tour of his overseas investments, which reportedly include hotels, restaurants and a casino in the Dominican Republic? Or was he advising offshore moguls on how to set up chains of medical clinics?
CBD has emailed to ask but Edelsten has yet to respond.
Whatever the reason, the great man appeared to be flying solo, with no sign of dazzling wife and reality TV star Brynne.
Forced exit?
Did the move into the Sydney CBD by Mirvac's nemesis, Winston Sammut, prompt the sudden departure of the group's chairman, James MacKenzie?
Earlier this month, CBD revealed that MacKenzie was looking to take a three-month sabbatical - which has now it seems turned into a permanent goodbye.
Sammut launched his attack on MacKenzie a year ago, focusing on the way Mirvac dumped CEO Nick Collishaw in favour of new head Susan Lloyd-Hurwitz. At last year's fiery AGM, Sammut, from Maxim Asset Management, said up to 13 per cent of shareholders were unhappy with the way Collishaw's exit was handled and communicated to shareholders. (It was suggested that Mirvac started looking for a new CEO way before Collishaw was told.)
Sammut was not alone, with investors including Andrew Parsons at Resolution Capital saying that MacKenzie should have considered stepping down given that some of the earnings and strategic weakness, for which Collishaw copped the blame, happened on the chairman's watch.
At the same meeting the board pooh-poohed Sammut's claims that MacKenzie's $400,000-a-year pay packet was too big, saying it was no more bulging than those of his ASX peers.
REITs' rates
Speaking of payments, it seems real estate investment trusts still know how to reward their directors. Freshly released 2012-13 annual reports show that Dexus head Darren Steinberg was paid a total package of $3.7 million, while the former head of FKP Property, Peter Brown, received $914,808 for his work up until retirement in September 2012.
Stockland's former CEO, Matthew Quinn, left last December after trousering a total package of $2.9 million, which included a $650,000 bonus. His replacement, Mark Steinert, is on a total package of $1.19 million.
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Frequently Asked Questions about this Article…
According to the article, Fortescue launched African Fortescue as part of its forward scouting on exploration. CEO Nev Power said the company has a long-term interest in developing resources around the globe and sometimes sets up companies to allow that to occur in the future.
The article notes that Andrew 'Twiggy' Forrest has previously criticised Australian mining taxes as a major sovereign risk, and it highlights Mozambique’s challenging background — a civil war from 1977–1992, the AK-47 symbol on its flag, and high rates of AIDS, illiteracy and poverty, plus dependence on foreign aid for about 40% of the government budget — all factors investors may consider when assessing sovereign risk in Mozambique.
Nev Power was coy but said the Mozambique arm is 'just part of our forward scouting on exploration' and reiterated that Fortescue has a long-term interest in developing resources globally, so it sets up companies to enable that future work.
The article recalls that Fortescue and founder Andrew Forrest strongly opposed the federal mining tax and even challenged it in the High Court. Given that history and Forrest’s comments about sovereign risk, the piece suggests it’s logical Fortescue would pursue stability and growth by exploring overseas opportunities like Mozambique.
The article reports that MacKenzie had planned a three-month sabbatical which appears to have turned into a permanent exit. Activist investor Winston Sammut (from Maxim Asset Management) had been publicly critical for about a year, saying up to 13% of shareholders were unhappy with how Mirvac handled a CEO transition. Other investors, like Andrew Parsons at Resolution Capital, also questioned whether the chairman should have stepped down given some earnings and strategic weaknesses.
Shareholder concerns highlighted in the article included how Mirvac handled and communicated the exit of former CEO Nick Collishaw and whether the chair, James MacKenzie, should have taken responsibility for strategic and earnings weaknesses occurring on his watch. The board defended MacKenzie’s $400,000-a-year pay as comparable to ASX peers.
The article cites 2012-13 annual reports showing significant pay packages: Dexus head Darren Steinberg received a total package of $3.7 million; former FKP Property head Peter Brown received $914,808 up to his September 2012 retirement; Stockland’s former CEO Matthew Quinn left with $2.9 million (including a $650,000 bonus); and his replacement, Mark Steinert, is on a total package of $1.19 million.
The article’s gossip segment notes Geoffrey Edelsten — described as a former bankrupt, jailbird, provider of misleading evidence and struck-off doctor — was seen at Melbourne Airport after returning from overseas investments (reports say hotels, restaurants and a casino in the Dominican Republic) and the newsletter said it had emailed him but received no response.
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