ALP calls for ASIC investigation into 'gag' on Telstra execs

Stuart Corner
Sunday, 27 August 2006 18:24

IT Policy - Regulation

The ALP is claiming that Telstra is in danger of breaching the Corporations Act if its directors accede to the Government's request that its executives refrain from adverse comment on the regulatory environment during the sale process.
Shadow minister for finance, Lindsay Tanner, and shadow communications minister, Stephen Conroy, have written to the chairman of ASIC, Jeffrey Lucy, alerting him to recent newspaper reports suggesting, in particular that outspoken Telstra regulatory chief, Phil Burgess, will be gagged.

The announcement of the Government's decision on the sale of its Telstra shares  came just a day after Burgess (a long time associate of CEO Sol Trujillo brought into the company by him) hit the headlines and embarrassed his employer by threatening, in answer to questions after delivering a speech, that Telstra would continue to be critical of the regulator even while the sale was in train.

In the wake of the sale announcement Telstra moved swiftly to distance itself from Burgess and his loose tongue. Chairman Donald McGauchie said: "I make it plain that comments attributed to Dr Burgess in today's press suggesting an ongoing campaign during the sale process to change the regulatory regime do not represent Telstra's position."

Tanner and Conroy claim that this series of events "indicates that the Federal Government is seeking to pressure Telstra executives and directors to refrain from expressing the company's view of the impact of the Australian regulatory regime."

And they suggest that, because company directors have a legal obligation to act in what they believe is the best interests of the corporation, "these directors would be acting contrary to their directors' duties as set out in the Corporations Act 2001 if they were to remain silent on this issue."

They have called on ASIC to "stop government interference with Telstra management." Specifically, they want ASIC to "issue a public statement informing the government and Telstra of Telstra directors' obligations under the Corporations Act 2001," and "investigate any potential accessorial liability under the Corporations Act 2001 on the part of the members of the Government and staff who may have been seeking to influence Telstra directors to act at odds with their legal obligations."