Thursday, 27 August 2015

Murdoch paper reports police raid on union that never happened

This is massively off topic, but I thought it deserved a blog. I follow a few Aussie unions, union leaders, activists etc on Twitter and this morning I saw people from the CFMEU tweeting about a story in the Murdoch-owned Herald Sun.

The story said that there had been a police raid at the CFMEU's offices in Melborne. What's more the story stated the following:

Rank and file CFMEU members at the office said there were several police there.

It's clearly fair to infer from this that the journalist spoke to more that one CFMEU member (it says "members" after all) at the office who confirmed the presence of police.

I can't link to the actual news story, because it has subsequently been taken down and replaced with this one. The first para is below:

VICTORIA Police have confirmed that there was not a raid at the CFMEU offices in Melbourne this morning.A report on heraldsun.com.au incorrectly reported that the raid had occurred.
The report said Taskforce Heracles, which was set up to investigate claims raised in the Royal Commission, had visited the union’s Swanston Street offices. The error was made by the reporter.    
Now I'm old enough to know that journos sometimes make up quotes, I don't just mean that they make the quotes sound/read better. Some of those "A close friend of Harry Styles said..." are clearly fabricated. But they typically relate to an event/person/object that actually exists.

What we seem to have in the case of the Herald Sun story are made up comments about a fictional event. Non-existent bystanders have confirmed an event that never happened. This is pretty impressive, and to call it an "error" doesn't do it justice, it's more like a thought experiment - can a fictional event have bystanders? In any case career in chidrens' fiction seems to beckon for this journo.

The background to all this is, of course, the ongoing attacks by the Abbott "government" on the labour movement in Australia, which has been roared on by Murdoch and his mouthpieces. The wheels are already coming off though, just Google Dyson Heydon for details, and helpfully now a Murdoch paper has joined the Keystone Cops by running a clearly defamatory story about something that never even happened.

Look out for a one para apology on page 8.

Tuesday, 25 August 2015

One share, one vote

I've only followed the progress of the Shareholder Rights Directive at a distance, but it strikes me that    it provides a fairly important indicator that something is up. The abandonment of the 'One share, one vote' principle, and the encouragement of alternative structures that actively undermine it, seem to me to be one of the most dramatic shifts in direction in corporate governance policy for some time.

It wasn't that long ago that Charlie McCreevey was trying to push through one share one vote, now the SRD is leading in completely the opposite direction.

I personally don't have a particularly strong view either way on this one. From memory McCreevey's efforts were stalled at least in part because the EC's own research could find no evidence for the economic benefits  of one share one vote (though I have no doubt that other factors were at play in the decision). That seems pretty important to me and added with the wider issues of limited shareholder commitment I lean towards favouring loyalty rewards, but I know most investors hate this kind of thing and even vote against it.

But my views aside, the about turn seems pretty significant. The optimist in me wants to see this as a willingness to think a bit more deeply about governance and the fact that the extension of shareholder "rights" is not comparable with political enfranchisement when the "electorate" is largely comprised of often conflicted intermediaries. It may be a further sign of disillusionment with the US/UK model of corporate governance, and almost certainly reflects the UK's diminished status when lobbying in Europe over these kinds of issues. Maybe, even less positively, it reflects lobbying from corporates who don't want activist funds breathing down their necks.
  
Whatever the mix of factors is, something important in corporate governance has happened here, and it leaves the UK on the periphery again. Perhaps this a good time to reflect on whether this is just corporatist Europeans failing to understand why our system is superior, or we're just making our arguments badly or if, maybe, we need to rethink our own assumptions.  

Thursday, 20 August 2015

Winstanley

"[T]he power of enclosing land and owning property was brought into the creation by your ancestors by the sword; which first did murder their fellow creatures, men, and after plunder or steal away their land, and left this land successively to you, their children. And therefore, though you did not kill or thieve, yet you hold that cursed thing in your hand by the power of the sword; and so you justify the wicked deeds of your fathers, and that sin of your fathers shall be visited on the head of you and your children to the third and fourth generation, and longer too, till your bloody and thieving power be rooted out of the land."   

Friday, 7 August 2015

Private equity is still a "force for good"

A few years back, I noticed that the phrase "a force for good" was being used with remarkable consistency by people in, or working with, the private equity industry. So I thought I'd do a quick google to see if that was still the case. No real surprise, but it is, and organisations ranging from the UK trade body to free market spin tanks still use the term regularly.

A few quick examples -

Here the BVCA uses the phrase in the headline of a press comment in relation to the care sector - one where the industry has faced a lot of criticism.

Here the American Enterprise Institution has an article (co-authored by Kevin "Dow 36,000" Hassett) with the phrase in its title.

Here is a report (PDF) of a roundtable private equity hosted by a PE firm that also uses the phrase in the headline and the text.

There are plenty of others.

Tuesday, 14 July 2015

Caledonia update

I've had a response from the FRC, which has been in touch with the company. Apparently the company "confirms" that it has not made any donations since 2010. However, as of today the two donations are still on the Electoral Commission website and attributed to Caledonia, so I've been in touch with the Commission, who in turn say they are talking to the Conservative Party.

Curiouser and curiouser...

Tuesday, 7 July 2015

Long-termism in executive pay = more pay overall

The news that some companies are sounding out investors about steep increases in base salary in response to longer deferral periods should come as a shock to no-one. Here's The Grauniad from yesterday:
Some of the UK’s biggest companies are sounding out shareholders about pay rises for their bosses in a move that risks reigniting the controversy over excessive executive pay.
The potential increases to salaries would further inflate overall boardroom remuneration as annual bonuses and long-term incentive plans are all hinged on basic pay.
The increases appear to be driven by changes in the way company directors receive their bonuses. Shareholders have insisted bonuses be paid out over longer periods.
The trait of hyperbolic discounting - discounting rewards that are in the future, and discount them more the further away they are - is well-known. So when corporate governance 'reformers' demanded that execs have to wait longer for their loot it was pretty obvious that the knock-on effect would be a demand in response for more reward overall.

Another example showing why performance-related pay for executives is a fundamentally crap idea.

Monday, 6 July 2015

The Walmart of the skies

Last week Michael O'Leary lost an important battle when a Danish labour ruled, if I understand it rightly, that workers at Copenhagen airport can take secondary action against Ryanair.

This is in response to the notoriously anti-union company's latest wheeze to avoid as many workplace protections as possible. Ryanair wants its Copenhagen-based staff to be subject to Irish law, which means that cabin crew get paid far less than Danish employees. The case in the Danish labour court was essentially seeking to determine what action was permissible if the company refused to sign a collective agreement. This time O'Leary lost. In his typically consensual style, in response he has publicly threatened to close Ryanair's other base in Denmark in Billund, though this may just be a bit of sabre-rattling.

In the meantime in response to Ryanair's behaviour several Danish investors have dumped their shares in the company, clearly in response to track record on labour standards. Disinvestment over labour issues is very rare in my experience, and the only comparable case of this happening in relation to labour issues in the global North is Walmart. So by refusing to compromise O'Leary is managing to turn Ryanair into the Walmart of airlines, not just in terms of its reputation, but in terms of the negative reaction from some large investors.

If you look at what has been happening to WalMart two things strike you. First, it has made itself into a target for long-running action, include strikes and sit-ins, by the employees it refuses to treat with respect. Second, in the long run it had to cave in and pay better wages, one of the key issues employees had been fighting over.

Ryanair just took one on the chin, it now has a choice how to respond. It is surely in the interests of all the company's stakeholders that - for once - it tries to work with its employees rather than against them. So if you work in RI and your institution holds Ryanair you might want to take a look at this.