The author has been described by News Ltd as an "iconoclast", "Svengali", a pollie's "economist muse", and "pungently accurate". Fairfax says he is a "Renaissance man" and "one of Australia’s most respected analysts." Stephen Koukoulas concludes that he is "85% right", and "would make a great Opposition leader." Terry McCrann claims the author thinks "‘nuance’ is a trendy village in the south of France", but can be "scintillating" when he thinks "clearly". The ACTU reckons he’s "an enigma wrapped in a Bloomberg terminal, wrapped in some apparently well-honed abs."

Wednesday, June 27, 2012

Rinehart: Fairfax editorial charter has been repeatedly overridden

Interesting nuance in the Rinehart statements reported by the AFR today. Contrary to some claims, the legal obligation of an ASX-listed media business is not to produce impartial (or "independent") media products, but, under the Corporations Act (2001), to always serving the best interests of the business's shareholders (ie, its owners). This also extends to employees of any company, and, crucially, to the "fiduciary duties" of the directors, who must always act in the best interests of shareholders. It should be obvious that delegating to editorial staff decision-making control over what content a company produces could easily destroy shareholder wealth, which would not be in the best interests of the company's owners. In this context, I note in the Rinehart quotes below her proxy correctly comments, "We are prepared to acknowledge the Fairfax Media board governance principles (FMBGP) exist subject as they must be, to the overriding fiduciary duties of directors." This is basically legalese for: if notions of "editorial independence" ever conflict with the interests of shareholders, expect the latter to prevail. From the AFR today:

In a statement released on Wednesday, Hancock Prospecting chief development officer John Klepec said Mrs Rinehart’s private mining company supported “journalist integrity and accuracy”.

But Fairfax’s existing editorial charter had been overridden in the past and provided too much protection for its chairman, Roger Corbett, he said.

It is believed that Fairfax directors remain reluctant to grant Mrs Rinehart, the company’s largest shareholder with an 18.7 per cent stake, the three board seats she is seeking.

But observers say the timing of the statement, which coincides with Wednesday’s board meeting, could be designed to assuage the directors’ concerns.

“We are prepared to acknowledge the Fairfax Media board governance principles (FMBGP) exist subject as they must be, to the overriding fiduciary duties of directors,” the Hancock statement said.

“We note that the FMBGP has been repeatedly overridden in the past – for example by ordering journalists to support Earth Hour, when Fairfax was involved with part of Earth Hour, and again when The Age was losing circulation the Fairfax Media board gave editorial direction.

“We note also the FMBGP contains provisions outside of what has been reported in the media, to include special powers for the chairman, who holds less than 0.004 per cent of Fairfax Media.

“We are certainly in support of journalist integrity and accuracy, these are important principles in journalism, and are keen to support an effective charter to endorse this in the interests of Fairfax Media, assuming one can be agreed.”

Mr Klepec said Fairfax had an “abysmal” track record.