Keen competition in doomsayer duel

The University of Western Sydney associate professor Steve Keen has come a long way in the two years since he was forced to stroll up Mount Kosciuszko after losing a bet with former Macquarie Group economist Rory Robertson over the direction of house prices.

The University of Western Sydney associate professor Steve Keen has come a long way in the two years since he was forced to stroll up Mount Kosciuszko after losing a bet with former Macquarie Group economist Rory Robertson over the direction of house prices.

Despite Keen's dire predictions on the Australian housing market so far failing to materialise, he has cemented his position in the A-Team of doomsday economists alongside Dr Doom himself, Nouriel Roubini.

Keen's rapid ascent up the Doomsday Economist Top 100 was given a major boost last week courtesy of a disagreement with the Nobel Prize-winning New York Times-writing economist Paul Krugman. Krugman in his widely read blog expressed scepticism over some of Keen's arguments, which are largely inspired by the US economist Hyman Minsky.

"My point is that there seems to be a lot of implicit theorising going on here - and, at least at first glance, the implicit theorising doesn't make a lot of sense," Krugman said.

The criticism does not appear to have dented Keen's popularity. A conversation between the Australian economist and the BBC Newsnight economics editor, Paul Mason, tomorrow at the London School of Economics has sold out. Later this month, Keen will be one of the key speakers at a conference in Berlin hosted by the Institute for New Economic Thinking.

He will deliver the paper at the conference that attracted the scrutiny of Krugman last week.

"I hope someone in Berlin presses Keen on all this," Krugman said in his blog.


What do you do when you want to defend your company against an attempted board spill in the most ethical way? Hit back with a staff survey.

Countering a previous "staff" survey used by the former long-serving director and co-founder of the Australian Ethical Investment Limited Howard Pender in his attempt to replace the struggling company's board, a group of staff at the ethical fund manager have fought back.

"Many staff were upset and angry that you collectively decided to publicly misrepresent the opinion of AEI staff," said a letter from an "elected employee representative" of the company to Pender and two of his fellow coup plotters late last week.

The survey found that only 5 per cent of staff had lost faith in the AEI board and that 78 per cent felt the management team "can run the company", the survey said.

This counters the original letter that noted "staff morale is at an all time low" and that AEI's managing director, Phillip Vernon, had lost the confidence of staff.

The original letter, which was allegedly penned by the "staff of Australian Ethical", and which was promoted by Pender, claimed it was supported by 73 per cent of staff of the fund manager, which invests in companies based on their environmental, social and governance performance.


It also remains unclear what class of ethical investment AEI would be categorised if Pender's attempted board spill succeeds.

Despite Pender's final list of board nominees and 30-odd general meeting resolutions yet to be released, it is not clear how some of the names already put forward will pass the ASX's corporate governance principles.

For starters, not all of the potential directors appear to fit the definition of "independent". One of the names put forward is Paul Ralph, who once sat with Pender on the board of a failed company called Advanced Energy Systems.

Ralph also was found by the Federal Court in 2009 (and again after an appeal in 2010) to have breached his duties as a director of a subsidiary of the listed company Medivac over the payment of $110,000 to a private company in which he had a 99 per cent share.

Another potential AEI director, like Pender, James Thier served on the company's board for about 20 years. And another budding candidate, Stephen Hyam, is a former marketing manager with the ethical fund manager.

But at least Pender's team of candidates are bustling with fresh ideas that could be injected in the ailing company. One of the candidates is the Greens member of the ACT legislative assembly Caroline Le Couteur, who on recent polling could struggle to keep her seat in this year's election. It just happens that Le Couteur is a former long-serving ex-executive director of AEI.

Among some of Le Couteur's ideas while in the ACT Parliament have been to curb greenhouse gases through promoting "natural burials" - with people buried vertically - over cremation and the use of bio-degradable coffins.

In keeping up the toughest of corporate governance principles regarding the independence of a board of directors, another name to have been put forward in Pender's attempted board coup at AEI is the Greens MLA's sister Penny Le Couteur.

No word if the Pender coup plot will use a biodegradable coffin if it fails.


Oh, the rigours of travelling first class. Or, heaven forbid, business class. Rio Tinto seems to appreciate this, given the 30-odd per cent lift in allowances it pays its non-executive directors to jump on a medium or long-haul flight.

The miner's recently released annual report disclosed the "overseas meeting allowance" for flights between five to 10 hours had been increased from #3500 ($5404) to #5000 in 2011. For flights over 10 hours, the allowance was increased from #7500 to #10,000.

That means a return flight from Melbourne to London could see the Rio director and AFL commissioner Mike Fitzpatrick, for example, recoup around $31,000 in overseas travel allowances. It is probably a good thing the allowance is only for flights of more than five hours.

Could be a bit pricey compensating all of those fly-in fly-out workers who work on Rio's various excavation sites around the world.

The miner also saved its directors the hassle of having to chip in for a farewell present for its former board member and News Corp director Sir Rod Eddington, who stepped down in May last year. Rio disclosed it forked out $7000 for a retirement gift for Sir Rod.

BHP Billiton, for the record, also pays its directors a $US7000 allowance for jumping on flights between three to 10 hours. The allowance jumps up to $US15,000 for flights more than 10 hours.

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