Jim grabbed me by the shoulder of my coat and dragged me across the room to meet the NRMA’s then vice-president, Dame Leonie Kramer, who was also part of the so-called NRMA board succession committee. “Richard,” she asked, “where did you go to school?” I answered: “Meadowbank Boys High, Dame Leonie.” To which she replied “Meadowbank? Where’s Meadowbank?” I answered: “Its in the western suburbs, Dame Leonie. Doubt if you’ve ever been there.”
Well, it all seemed to go down hill from that first meeting. I didn’t fit the mould. I wasn’t a private-school-educated accountant from the lower North Shore or an eastern suburbs lawyer. Apparently the NRMA members who had voted for me – in the largest election of its kind in Australia outside of a federal or state election – had made a big mistake in choosing a road surveyor from the burbs.
A few years later, with increasing voter interest being shown by the member/owners of the NRMA, the born-to-rule crowd became so worried about losing control to the general membership that they sought to demutualise the entire NRMA operation – both the road service and the insurance company – and put it under the grip of large shareholders.
I was glad to be able to sink that attempt by having the prospectus declared misleading and deceptive in the Federal Court. More than $60 million of members’ funds ended up being wasted on this dud attempt to float the member-owned organisation. I had to use my own resources to fund the case while my opponents still used members’ money.
While I was at it, my lawyer, John Garnsey QC, was approached by AMP to vet its upcoming prospectus. John asked me if I wanted to fight the AMP demutualisation, too. I had taken out an AMP life insurance policy at 18, when I was starting as a trainee surveyor with the Sydney Water Board. I had to tell John I didn’t have the resources to fight both. So he took the job. The AMP ended up being demutualised, too.
Now, as a long-suffering AMP shareholder, I look at its current sexual harassment scandal and wonder how its board and management could get it so wrong. It was initially obstinate; then it reacted at snail’s pace to demote AMP Capital chief executive Boe Pahari.
My shares, by the way, are worth about 20 per cent of what I paid for them a couple of decades ago. Maybe a good place to start is by appointing some truly independent directors. Certainly not the old procession ushered through the revolving door by succession committees.
It is still social connections that drive board appointments. And more than two-thirds of directors in Australia’s 200 largest public companies are on the boards of multiple companies, according to RMIT research, and often they collect eye-watering fees from each.
It’s a small gene pool with few outsiders. It leads to “group think”, under which directors become more concerned with being liked and connected. In Sydney they cluster in the eastern suburbs. They go to the same schools, then mix with the same people in legal firms and big accounting firms. They get onto boards at the Art Gallery of NSW, the Opera House and the Museum of Contemporary Art. Melbourne has its own club network. And they network like fury for that next board job. They scratch one another’s backs.
Greater gender diversity at the top is critical to address problematic cultures such as that at AMP, but the boys’ clubs are hard to crack.
Directors are disinclined to rock boats. Boards sign off on questionable business practices, as we’ve seen from the banking royal commission.
Need more convincing? Check out my board papers, correspondence, court papers and meeting diaries from the 1990s and 2000s which are stored in a 100-box collection at the State Library of NSW. Little has changed.
Richard Talbot is a former NRMA director.
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