Poor Governance Performers On Rise

The Age

Thursday June 26, 2008

Ruth Williams

A NEW survey has recorded a rise in big listed companies performing poorly on corporate governance issues, with Premier Investments, Prime Television and a slew of mining stocks among those marked down.

Ten companies in the ASX250 were given the lowest rating of one star in the latest WHK Horwath Corporate Governance Report, up from six last year and four the year before. Five of those ranked lowest were resource companies, and the others included Diversified United Investment, Lynas Corporation and Reece Australia.

But 40 companies scored the highest five-star rating, up from 35 last year and 37 the year before. The report's criteria were based on the ASX's Corporate Governance Guidelines and "international best practice".

A notable decline this year was National Australia Bank, which slipped from five stars to 4 1/2.

The report's author, Associate Professor Jim Psaros from the University of Newcastle, said this related to a several issues, including that the "magnitude" of one non-executive director's transactions with NAB "was more than of a trivial or domestic nature".

NAB's last financial report showed that entities related to NAB director Danny Gilbert had business loans worth more than $22 million with NAB. Mr Gilbert is a partner in law firm Gilbert and Tobin.

NAB spokesman Brandon Phillips said the bank would review the Horwath report and "consider the points they have raised". "NAB places a high level of importance on corporate governance," he said.

The survey comes after this week's report by Federal Parliament's Joint Committee on Corporations and Financial Services, which said there was "room for improvement" in Australian corporate government standards. Other recent governance studies have highlighted lingering shortcomings, despite the substantial improvements of recent years.

Last week, an Australian Securities Exchange study showed there had only been a marginal increase in corporate governance reporting levels year on year, and consulting firm BDO Kendalls found four top 20 companies that followed five or fewer of its eight criteria for good corporate governance. NAB won a perfect score in the BDO survey.

Dr Psaros said the latest survey revealed an "increased polarisation" of the corporate governance performance of Australia's biggest listed companies, with most performing well and a lagging "tail" of companies with "significant deficiencies".

LINK

? See the full report at www.whkhorwath.com.au

© 2008 The Age

Back to News Index | Back to Home