Wednesday, April 30, 2003
This is going to be another “hit and run” post, not because I’ve gotta go out this time, but because my phone line (and therefore Internet connection) is fucked. Perhaps this is a case of Telstra’s taking targeted revenge on my Indian contractor postings, below. More likely, though, it’s just a shrug-o’the-shoulders fact-of-life in a country just waking up to its bankruptness (fiscal, not metaphorical). Thus, welcome to Oz 2003 – the next Argentina – “downsizing” from long-held first world perks (a point I’ll be blogging on in the near future).
This blog is going to be written off-line, using what I’ve gathered in my ten or so truncated dial-ups so far today. If my connection permits, I’ll post in (after looking them up) the missing URLs as soon as I’ve posted the main body. Otherwise, I’m giving up for the day.
Pan Pharmaceuticals – the Non-Executive Directors play “spotlight the scapegoat”
Only hardcore annual report reader types and corporate lawyers (and me) would have been likely to notice that the two directors coming to Pan’s defence on this evening’s TV news reports – Ross Brown and Colin Henson – were Non-Executive Directors (and you can bet that the third a final NED, Ken Baxter (a former Kennett senior apparatchik) would have been busy behind the scenes on this front too). In fact, all three get a word in in this late-afternoon news story:
http://news.com.au/common/story_page/0,4057,6359683%255E2,00.html
See also:
http://news.ninemsn.com.au/National/story_48095.asp
For those unclear about what a Non-Executive Director precisely is, my rough explanation is that they are 50 y.o.+ men (very occasionally women) who get multiple part-time such, well-paid, gigs on the boards of listed companies. NEDs don’t take any part in day-to-day management of the company; rather, they are “big picture” men only. It sounds like a rather cushy job – and it is, 99.9% of the time. The only real downside is their legal liability, if the company goes badly belly-up – here, NEDs share the same legal liability as their “hands-on”, executive director counterparts. Hence, the furious efforts of Mssrs Brown and Henson today to find someone else – preferably someone plausibly senior – to blame, even as every single executive director went to ground (my speculation is that the latter would have spent all today continuously washing their hands, a la Lady Macbeth).
The weakness of the NEDs 'rogue analyst' theory is that it lacks a plausible explanation of why a middle-ranking (I am assuming) employee would do such a thing, and most especially, why senior management presumably covered this fact up until today. (The NED's line, of course, is that they only this found out just before the rest of us; the “just before” timing necessary, to allow them to dual-purposefully inform us of the scandal in some detail, while absolving themselves of any personal responsibility for either its execution or subsequent management cover-up.
Anyway, you can compare the NEDs dog-eating-homework explanations in the above two URLs, and decide for yourself. For my money, I prefer the much simpler, more logical explanation given on the front page of today’s Australian about how production line staff were “bullied” into cutting quality control corners. This sounds plausible enough – as today’s AFR feature article* (No free URL) pointed out, Pan’s share price has been under intense downward pressure since June 2002. And everyone knows the unvarying, kneejerk response to this – costs must be cut, and production sustained or increased, no matter what. Plausible enough, but unfortunately for the houses, luxury cars etc of the NEDs that are NOT already in their respective spouses’ names, hardly what they want to hear – unless a senior-enough employee can be blamed, all directors will have to carry the can on this one.
On another major front, there is the strange story of Pan Pharmaceuticals' conviction and fine over selling unapproved evening primrose oil in 1995, later overturned on appeal, with a new trial ordered. According to today’s Age the new trial has not, and never will be held, as the defendant company in the case (Pan Laboratories – a company identical in all material respects to Pan Pharmaceuticals) was liquidated, and a new company – today’s Pan Pharmaceuticals – registered. In striking contrast, today’s Daily Telegraph claims that a new trial in respect of the unapproved evening primrose oil matter is still pending before the NSW Court of Appeal:
http://news.com.au/common/story_page/0,4057,6359745%255E2,00.html
Obviously, something to stay tuned on. Also, have a look at convicted insider trader Rene Rivkin’s breathless endorsement of Pan Pharmaceuticals stock (made only last week), up on the Crikey website.
* "Pan falls off pedestal" by Adam Shand, Neil Chenoweth, Katrina Nicholas and Bill Pheasant
Update 1 May 2003:
Re the story of Pan Pharmaceuticals' conviction and fine over selling unapproved evening primrose oil in 1995: today's Australian* (no URL) confirms the "phoenix" company story; thus adding more substance to the aura of shonkiness that is fast enveloping CEO Jim Selim.
* "Sins of drug pioneer's past now haunt the $200m present" by Jennifer Sexton
This blog is going to be written off-line, using what I’ve gathered in my ten or so truncated dial-ups so far today. If my connection permits, I’ll post in (after looking them up) the missing URLs as soon as I’ve posted the main body. Otherwise, I’m giving up for the day.
Pan Pharmaceuticals – the Non-Executive Directors play “spotlight the scapegoat”
Only hardcore annual report reader types and corporate lawyers (and me) would have been likely to notice that the two directors coming to Pan’s defence on this evening’s TV news reports – Ross Brown and Colin Henson – were Non-Executive Directors (and you can bet that the third a final NED, Ken Baxter (a former Kennett senior apparatchik) would have been busy behind the scenes on this front too). In fact, all three get a word in in this late-afternoon news story:
http://news.com.au/common/story_page/0,4057,6359683%255E2,00.html
See also:
http://news.ninemsn.com.au/National/story_48095.asp
For those unclear about what a Non-Executive Director precisely is, my rough explanation is that they are 50 y.o.+ men (very occasionally women) who get multiple part-time such, well-paid, gigs on the boards of listed companies. NEDs don’t take any part in day-to-day management of the company; rather, they are “big picture” men only. It sounds like a rather cushy job – and it is, 99.9% of the time. The only real downside is their legal liability, if the company goes badly belly-up – here, NEDs share the same legal liability as their “hands-on”, executive director counterparts. Hence, the furious efforts of Mssrs Brown and Henson today to find someone else – preferably someone plausibly senior – to blame, even as every single executive director went to ground (my speculation is that the latter would have spent all today continuously washing their hands, a la Lady Macbeth).
The weakness of the NEDs 'rogue analyst' theory is that it lacks a plausible explanation of why a middle-ranking (I am assuming) employee would do such a thing, and most especially, why senior management presumably covered this fact up until today. (The NED's line, of course, is that they only this found out just before the rest of us; the “just before” timing necessary, to allow them to dual-purposefully inform us of the scandal in some detail, while absolving themselves of any personal responsibility for either its execution or subsequent management cover-up.
Anyway, you can compare the NEDs dog-eating-homework explanations in the above two URLs, and decide for yourself. For my money, I prefer the much simpler, more logical explanation given on the front page of today’s Australian about how production line staff were “bullied” into cutting quality control corners. This sounds plausible enough – as today’s AFR feature article* (No free URL) pointed out, Pan’s share price has been under intense downward pressure since June 2002. And everyone knows the unvarying, kneejerk response to this – costs must be cut, and production sustained or increased, no matter what. Plausible enough, but unfortunately for the houses, luxury cars etc of the NEDs that are NOT already in their respective spouses’ names, hardly what they want to hear – unless a senior-enough employee can be blamed, all directors will have to carry the can on this one.
On another major front, there is the strange story of Pan Pharmaceuticals' conviction and fine over selling unapproved evening primrose oil in 1995, later overturned on appeal, with a new trial ordered. According to today’s Age the new trial has not, and never will be held, as the defendant company in the case (Pan Laboratories – a company identical in all material respects to Pan Pharmaceuticals) was liquidated, and a new company – today’s Pan Pharmaceuticals – registered. In striking contrast, today’s Daily Telegraph claims that a new trial in respect of the unapproved evening primrose oil matter is still pending before the NSW Court of Appeal:
http://news.com.au/common/story_page/0,4057,6359745%255E2,00.html
Obviously, something to stay tuned on. Also, have a look at convicted insider trader Rene Rivkin’s breathless endorsement of Pan Pharmaceuticals stock (made only last week), up on the Crikey website.
* "Pan falls off pedestal" by Adam Shand, Neil Chenoweth, Katrina Nicholas and Bill Pheasant
Update 1 May 2003:
Re the story of Pan Pharmaceuticals' conviction and fine over selling unapproved evening primrose oil in 1995: today's Australian* (no URL) confirms the "phoenix" company story; thus adding more substance to the aura of shonkiness that is fast enveloping CEO Jim Selim.
* "Sins of drug pioneer's past now haunt the $200m present" by Jennifer Sexton
