from Crikey .....

The 'three imbeciles' call a Woolies EGM to remove chairman

Stephen Mayne writes:

BRUCE MATHIESON, NICK XENOPHON, PAUL BENDAT, TIM COSTELLO, WOOLWORTHS

Devoted Anglican Roger Corbett always knew he was getting Woolworths into bed with a knockabout larrikin when he formed the 70-30 ALH joint venture with pokies billionaire Bruce Mathieson in 2004.

However, you can only imagine what the former Woolies CEO and the current directors thought when Alan Bond's former business partner went on Jon Faine's 774 ABC Melbourne morning program on Tuesday and declared the anti-pokies movement was driven by "three imbeciles". Have a listen to the extraordinary interview.

The men in question were Senator Nick Xenophon, World Vision CEO Tim Costello and Paul Bendat, who runs the www.pokieact.org website.

Costello in particular was singled out by Mathieson for not concentrating on resolving issues with religion: "Why doesn't he fix up his own?" Mathieson asked. "Is there any trouble in the world with religion? Why doesn't he fix that, get his own backyard in place?"

Faine interviewed Costello yesterday morning and then "the three imbeciles" got together and fired their biggest shot later in the day through this Nick Xenophon press release declaring their intention to call an extraordinary general meeting of Woolworths shareholders that would seek the removal of chairman James Strong and long-serving director Leon L'Huillier.

Strong is an obvious target given his belligerence about there being any problem with Australia's largest pokies empire at last year's AGM while Melbourne-based L'Huillier is presumably copping it because he chairs the ALH audit committee.

L'Huillier's defence will be interesting given that he was last in the public eye for trail blazing with all those hard-hitting road safety messages as executive chairman of Victoria's Transport Accident Commission 20 years ago.

L'Huillier was widely revered for saving hundreds of lives and turning Victoria's roads into the safest in the world. Now he's under attack for being involved in the biggest pokies operation in the world's most gambling-addicted country.

The Sydney-based Woolworths media machine also belatedly kicked into action yesterday when this terse press release was distributed without any ALH branding or quotes from Mathieson.

There was no repeating of the Mathieson claim that the Sunday Herald Sun package about aggressive tax structuring around partnerships with various clubs was in the hands of his lawyers.

Litigation against The Sunday Herald Sun would be a strange course for Mathieson given that Woolworths is News Ltd's biggest national advertiser and the Murdochs have even contracted ALH to run the pokies operations controlled by its Melbourne Storm rugby league franchise.

As was explained during this interview with Lindy Burns on 774 ABC Melbourne yesterday, the key to the attacks on Woolies relates to the Richmond Tavern, a venue that looks very much like a traditional hotel that should pay the 33% pokies tax rate that applies to all Victorian hotels.

However, the pokies at the Richmond Tavern are nominally operated by the North Melbourne Giants basketball club, which has been defunct for several years but still qualifies for the lower 25% tax rate on its pokies revenue.

The Sunday Herald Sun's James Campbell summed it up nicely towards the bottom of this very strong comment piece when he pointed out:

The (North Melbourne Giants) company has only two directors, one of whom told me he thought it was a shelf company that did nothing these days. However, Ross Blair-Holt of the Australian Leisure and Hospitality Group -- the club's landlord at the Richmond Tavern -- insisted to me it has 120 members, though he was somewhat vague when I asked him how I went about joining. Contacting the club is somewhat difficult as ALH is listed as the contact with ASIC and it isn't in the phone book.

Whilst the Woolworths press release denied any wrong doing, it did not address the issue of the North Melbourne Giants, nor the instances where club lease and management payments exceed what the "club" takes out. And it is hard to know the truth of this issue because these club agreements in this supposedly tightly regulated industry are approved in secret and kept secret.

from Crikey .....

Pokies, Gonski, red-faced Woolies, pollsters and censorship

Stephen Mayne writes:

BRUCE MATHIESON, POKIES, TABCORP, TATTERSALL'S, WOOLWORTHS

If ever you wanted evidence that Woolworths is embarrassed about being Australia's biggest pokies operator, look no further than the fact it is still yet to tell the ASX about spending more than $150 million buying new licences in Victoria.

The Victorian government revealed it had raised $981 million from the auction of 27,500 10-year pokies licences on Tuesday afternoon while hundreds of journalists were in the Canberra Budget lock-up.

That didn't stop the story being the splash (You lose on the pokies again) in Wednesday's Herald Sun, albeit inside the Budget lift-out, and the page three lead in The AFR under the headline: "Victoria pokie auction a $1bn lemon".

In its latest half-year results released on February 26, Woolworths declared on page 31 that "the 2012 changes to Victorian gaming are well under way and will be beneficial".

Too right they have been! Woolworths was literally able to scoop up the licenses for its 35% of the Victorian hotels market (4812 machines) for hundreds of millions of dollars less than expected and the ASX still hasn't been informed.

Pokies billionaire Bruce Mathieson, the 30% minority shareholder in the Woolworths-led pokies joint venture which is branded ALH, popped up in Thursday's Herald Sun revealing they won the biggest share of the spoils and declaring that taxpayers "came out pretty well".

Yeah, right. Given that Tattersall's and Tabcorp were entitled to compensation of more than $1 billion for losing their duopoly and are expected to sue for that legislated payout, Victorian taxpayers could be left wearing a net loss from the new venue owner model.

Even if Woolworths paid less than $171.67 million -- the pro-rata share for its 17.5% of the 27,500 licences, which raised $981 million at auction -- the ASX should still require the company to inform investors about what is one of its 10 largest acquisitions since floating in 1992.

Embarrassment about profiting from pokies addicts in the world's most lucrative gaming market on per capita terms, is not an excuse when it comes to keeping investors fully informed. Nor is pressure from the Victorian government to avoid embarrassment about the ineptitude of its auction system.

The ASX is certainly having a strange run on announcements at the moment after censoring colourful pollster Gary Morgan, who doubles as chairman of listed mining wannabe Haoma Mining, in his criticisms about the resources industry tax slug at last Tuesday's EGM.

Ian McIlwraith gave the AXS a decent whacking in the Fairfax broadsheet and Morgan's full chairman's address is available here on the Haoma website.

Given that ASX chairman David Gonski has been copied into the emails arguing the toss on this one, Morgan's latest response included this rather cheeky line:

What concerns us is your fellow ASX Executives or Directors may not be objective. For instance the ASX Chairman David Gonski is the new Chairman of Ingeus Limited, a very profitable business of which Therese Rein (Prime Minister Rudd's wife) is founder and Managing Director. We believe this reply and your letter should be released by the ASX and available to Haoma Mining's shareholders. If not Haoma shareholders are not fully informed.

Surely it wouldn't hurt to let a miner's criticisms be aired through the ASX announcements platform, just as investors would benefit from a frank disclosure about the wonderfully cheap gambling acquisition secured by Australia's biggest retailer.

In other curious Victorian pokies developments, accounting giant Deloitte is being paid by News Ltd to investigate Melbourne Storm's financial affairs, including details of what The Sunday Age described as $1.1 million of sponsorship payments by a Woolworths pokies venues.

Deloitte is, of course, the long-time auditor of Woolworths.

Meanwhile, The Sunday Herald Sun revealed last week that the Victorian Commission for Gaming Regulation has abandoned its own investigation into Woolworths after it ripped the pokies out of a venue it controls in Richmond, which was supposedly operated with a defunct basketball club in order to secure a lower tax rate.

Maybe Deloittes could pick up the slack and finish the investigation as part of the next Woolies audit.

Check out this story in Crikey on Friday which attempted to apply some immediate pressure on Julia Gillard to reverse the government's pathetic response to the Productivity Commission's recommendations on gambling. It included the following lines:

Whilst the anti-pokies movement is no longer focused on defeating Finance Minister Lindsay Tanner, running candidates to help deliver his seat of Melbourne and the sixth Victorian senate to the Greens, the only party with a decent anti-pokies policy, is now being actively considered.

However, it remains unclear whether Gillard will stiffen up the policy response and implement the all-important $1 pokies bet limit as recommended by the Productivity Commission. Pokies are arguably the greatest social scourge in Gillard's working class seat of Lalor, but it is not known if she cares. At least Rudd declared he "hates" the pokies before failing to do anything meaningful.

Lalor takes in the local council areas of Wyndham and Melton where working class people, many of them vulnerable females, lost $79 million and $42 million respectively on the pokies in 2008-09. Australians are the world's biggest gamblers in per capita terms and Victoria has the most lethal pokies in Australia.

Indeed, Gillard's Werribee electorate office is just down the road from The Werribee Plaza Tavern which is notorious for being Victoria's highest gambling losses venue with $10 million dropped by largely struggling Labor voters in the six months to December 2009.

This venue is run by the other Mathieson in Julia's life, pokies billionaire Bruce on behalf of Woolies, and is where a WWII veteran left and was held up just prior to ANZAC Day this year. Its creation offends every law of good planning and Woolies wants to make it bigger.

Meanwhile, check out the full Productivity Commission report into gambling, which is particularly damning when it comes to Clubs NSW. We're not confident Gillard will take any meaningful action as her photo appears at functions held in various NSW Clubs over the years.

Watch this video of Rudd squirming at the Melbourne Press Club back in May when we asked if the government would act on the recommendations of the PC report. We're looking forward to asking Gillard a similar question at the first opportunity.

After the recent Victorian pokies auction fiasco, the issue is once again going to be a major topic in the coming state election.

Above is a full page ad to appear in The Whitehorse Leader, targeting gaming minister Tony Robinson who holds the marginal seat of Mitcham by less than 2% and is a serious candidate for defeat.