Corporate watchdog to investigate Telstra sell-down

By Ben Grubb on Oct 27, 2009 2:20 AM
Filed under Telco/ISP

Was the Future Fund "tipped off" on Telstra separation plans?

The Australian Securities and Investments Commission (ASIC) will investigate whether the Future Fund was "tipped off" on the proposed separation of Telstra by Communications Minister Stephen Conroy.

The Future Fund, which dumped $2.4 billion Telstra shares just weeks before Stephen Conroy announced the proposed separation of Telstra, will be investigated by the corporate watchdog ASIC after Family First Senator Steve Fielding successfully moved for an inquiry in the Senate as to why the fund had sold a "huge chunk" of its stake in the telco.

The commission will examine the disposal of all Telstra shares in the past 12 months and report back to the Senate by November 16, Senator Fielding said.

“I don’t know if the Future Fund had any unfair advance notice or not, but there are certainly quite a few people out there who are sceptical," Fielding said.

He said that "mum and dad investors" had the right to know if the Future Fund had an "unfair advantage" beyond knowledge that was already in the public domain.

“This inquiry is only fair to make sure all parties involved are squeaky clean and there was no funny business involved," Fielding said.

On October 20, Senator Fielding said he had "concerns that the 1.3 million mums and dads who invested in Telstra in good faith may have been hung out to dry".

On ABC's Lateline a month earlier, Communications Minister Stephen Conroy said he "knew nothing" about Future Fund chairman David Murray's plans to decide to move from a 15 percent to 10 percent stake in Telstra.

"David Murray and I have had no conversations at any stage about the Government's plans to move in this direction," Conroy said at the time.

He added that the ASX and ASIC were "welcome to look at anything they want to around the basis of David Murray's decision and the basis of the Government's announcements".

Corporate watchdog to investigate Telstra sell-down

5 comments in this discussion

"@mick09, perhaps you should read the Future Fund policy a bit more carefully. As you point out in your first post, the "long term" asset allocation policy of the FF is for a particular mix. Only ..."

By anonymous

Tags

asic, steve fielding, family, first, stephen conroy, telstra, future fund

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Comments: 5

mick09 Oct 27, 2009 9:44 AM	The Future Fund is a curious creature. It states that its "long term asset allocation" policy is to hold 20% debt securities (to Government and Corporate) and 0% cash (FF Statement of Investment Policies - April 2009). As at 10 October 2009, the FF is holding $19B cash (32% of fund total ex $4B in Telstra) and $14B in debt securities (24% of total). Despite the investment guidelines, FF was awash with cash, missed 50% rise in share prices over the last 7 months, and had no need to sell Telstra. One cannot but wonder if the FF is planning to invest big in NBNCo - and how that will sit with its investment guideline yield of CPI plus 4.5% pa.
cootified Oct 27, 2009 10:09 AM	I like how we pay special attention to the mum and dads who invested in Telstra in good faith? How about everyone else dealing in shares who technically invest in good faith? There are risks involved in investing in anything. Australian mum and dads do not get preferential treatment.
anonymous Oct 27, 2009 11:33 AM	It's not curious that the Future Fund has the current mix of assets. It's early days for the FF, and even mick09 may have looked up from Telstra long enough to notice the recent global financial tremors, which the FF seems to have responded to very appropriately. Saying that the FF had no need to sell down Telstra seems rather silly, given that FF was seriously overweight in that stock and needed to act to diversify their portfolio.
mick09 Oct 27, 2009 2:11 PM	@cootified the article is about the Future Fund and an investigation whether anyone acted illegally. @anonymous FF had $7B of Telstra which it sold down to $4B (round figures, of a total of $64B) just weeks before the Govt publicly announced they were taking the axe to Telstra. FF had $21B cash at 31 March and $19B cash at 30 September, despite its own guidelines of 0% cash. While the ASX indexes (All Ords, S&P) have increased in value 50% over 6 months the FF has managed a 10% increase only - largely because it is not following its own policy. Go read it, it's all on the public record, unlike the NBN fiasco.
anonymous Oct 29, 2009 11:35 AM	@mick09, perhaps you should read the Future Fund policy a bit more carefully. As you point out in your first post, the "long term" asset allocation policy of the FF is for a particular mix. Only a Telstra droid would take that to mean that no short-term deviation is possible to meet current needs. What is it about "long term" that you do not understand? Perhaps a reason for the asset performance of the FF is that they originally were seriously overweight in Telstra shares. So it was a very good move indeed for them to rebalance their portfolio. I think this is where we came in. . .