opinion I’ve never been a huge fan of the appointment of Siobhan McKenna as the chair of NBN Co’s board. While the executive does have experience advising telecommunications companies courtesy of her background at top-tier consulting firm McKinsey, to my knowledge McKenna has no direct experience running telcos, and, in fact, limited experience directly running companies of any kind, aside from her time managing Lachlan Murdoch’s investment firm Illyria, which isn’t precisely your run of the mill venture. Illyria is also certainly a world away from the fundamental infrastructure-building operation which is NBN Co.
It should be obvious that the chair of a company like NBN Co should have direct experience running infrastructure-based companies: Energy utilities, telcos, road and transport, that kind of thing. Direct telco experience would definitely be preferable.
Despite this issue, I’ve been willing to give McKenna the benefit of the doubt up until now. It takes a lot, after all, to become a partner at McKinsey; executives only get to that level once they have gained experience across many different engagements in different industries, and at that level, they are usually experts in sizing up businesses of any kind and business issues of any nature. I have an immense amount of respect for anyone that reaches that level; they are almost universally quality operators, and we’ve had no reason to suspect anything less of McKenna. If anything, McKenna’s tightening of the ship after taking the reins of NBN Co’s board has been welcome, after Harrison Young’s fairly lax tenure.
However, successive news stories published by the Financial Review over the past months about the activities of NBN Co’s board have given me reason to question McKenna’s actions on NBN Co’s board. There were those well-publicised reports in the AFR that McKenna was looking to oust NBN CEO Mike Quigley, which McKenna did nothing to quash at the time. There have been similar AFR reports that NBN Co’s board had already hired executive search firm Egon Zehnder to find a replacement, which McKenna also didn’t address. And now, the AFR has yet another story which appears to be emanating from board level at NBN Co: The simply extraordinary news that NBN Co’s board has hired a power-packed lobbyist firm, Bespoke Approach, to interface with the Coalition. The AFR reports (we recommend you click here for the full article):
“The Australian Financial Review understands Bespoke has been actively meeting with Coalition MPs to talk up the NBN Co board’s achievements.”
Bespoke’s details are fully available online. The company boasts some high-level operators; it boasts former Foreign Minister and Leader of the Opposition Alexander Downer, ex-Hawke and Keating Minister Nick Bolkus and former senior Liberal party staff Ian Smith on its staff roster, as well as former Northern Territory Chief Minister Paul Henderson. If NBN Co’s board has indeed hired the company to speak on its behalf with the Coalition ahead of a potential Coalition election victory, then it’s doubtless costing a pretty penny; these kinds of heavy-hitters don’t come cheap.
In a press conference on Friday associated with the retirement of NBN Co chief executive Mike Quigley, Communications Minister Anthony Albanese was asked about the move. He had this to say:
“In terms of the processes, as you’d be aware, in terms of those issues, the company has Alexander Downer and Ian Smith as its prime operators, my understanding is. That is, of course, a matter for the board, but if Malcolm Turnbull has a problem with Alexander Downer and Ian Smith as well as with other people in terms of Tony Abbott, his own leader, then that’s a matter for Mr Turnbull. I have no intention of interfering in the day to day activities of the board of NBN Co. And I’d suggest that it’s about time that Malcolm Turnbull stopped trying to do that as well.”
Look, I’m not going to beat around the bush here. If NBN Co’s board — and remember, McKenna leads that board — has indeed hired Bespoke to represent itself to the Coalition ahead of the Federal Election … then that represents an extraordinary move, and one which I, for one, and no doubt countless others, simply cannot approve of.
NBN Co is a government business enterprise and takes its orders directly from the Government of the day, using public money to fulfil its mandate. It does have more freedom than a government department, but ultimately it is answerable only to its shareholder Ministers (the Communications Minister and Finance Minister of the day), and other internal government checks and balances such as the Australian National Audit Office.
It just has no business hiring lobbyist firms to represent itself to the Opposition of the day, especially if it is attempting to build a relationship with the Opposition with a view to potentially having to deal with it in power post the upcoming Federal Election. I’ve never heard of a government-owned company spending public money doing anything like this, and I would count such a move as simply out of line for a GBE; to the extent that senior bureaucrats inside the Federal Government are probably checking their rule-books about now for regulations concerning GBEs.
As a government business enterprise, NBN Co must necessarily stay out of the political arena. It must take orders only from the Government of the day, and while it may choose to brief the Opposition of the day on occasion, as Quigley has offered to do on occasion with Opposition figures such as Shadow Communications Minister Malcolm Turnbull, it is necessarily limited in the information it may provide. It may also reach no agreements with the Opposition.
But lobbyist firms such as Bespoke are inherently political. They are staffed by former politicians, who specialise in building relationships between commercial entities and current politicians. Their very nature is negotiation: Influence, deal-making, making sure those in power on each respective side have open lines of communication, and the constant sharing of ‘background’ information behind the scenes.
For NBN Co to hire such a firm to build a relationship with the Coalition (or at all, in fact) is an extremely disturbing event which signals that the company’s board, primarily drawn from the private sector, has little understanding of the sensitive dynamics of the relationship of a government business enterprise with respect to the volatile political arena. The board might have hired Bespoke in order to improve NBN Co’s relationship with the Coalition; however, I personally very strongly suspect that it will have the opposite effect. And, the move also fails the ultimate test for a government organisation; in that it’s hard to see how the public at large would approve of their money being spent this way.
Australia Post would not spend any of its budget on political lobbyists; and neither should NBN Co.
My guess is that what we’re seeing here is the confluence of two factors. Firstly, NBN Co’s board is clearly desperate to repair the poisoned relationship which the Coalition has with the company, to soften the blow in the event that the Coalition takes power in the upcoming Federal Election. Secondly, I have no doubt that NBN Co’s board, appointed almost entirely from the commercial sector, is attempting to apply private sector thinking to a public sector company. It would be normal for a commercial company to hire political lobbyists to help repair links with an acrimonious political party.
But this is very far from normal action for a government business enterprise such as NBN Co; and it should stop immediately. Public money should never be spent on political lobbyists; especially lobbyists who trample unwritten laws of the public sector and try to build relationships between government-owned companies and the Opposition. This must stop.
I would make one more point here: For all that he was flat-out-wrong about Quigley being “fired”, Shadow Communications Minister Malcolm Turnbull has made a very good point over the past several days. NBN Co’s board is not communicating well when it comes to its operations. McKenna’s board has been silent on the matter of whether it was dissatisfied with Quigley’s performance, despite reports in the media. It has been silent on the matter of whether it was seeking to replace the executive. Turnbull has been right to question why McKenna and her fellow board members haven’t spoken out on the issue. And now it’s also being silent on the matter of hiring Bespoke to woo the Coalition.
This is just not good enough. These are very serious matters; and it is incumbent upon NBN Co’s board to be transparent with both the public and the Government about its actions and intentions. Right now, it’s letting the media speculate widely about what it’s up to. This isn’t an ideal situation in normal circumstances; and far less so when it’s about something as controversial as replacing its CEO or hiring a lobbyist firm to build a relationship with the Coalition. I’d like to see a deal more openness from what, after all, is a body which should as a check and balance on the NBN, Australia’s largest-ever infrastructure project.
I would also note that I am very surprised by the reaction to this situation given by Communications Minister Anthony Albanese. Frankly, if I were the Minister in charge of a government business enterprise, and I heard that that company had hired political lobbyists to build influence with the Opposition of the day, I would be absolutely appalled. From the Government’s perspective, this should be seen as an extraordinary move on NBN Co’s part. Albanese may protest that NBN Co is an independent company and that he has no intention of interfering with its operations on a day to day basis. But this simply isn’t true. NBN Co must operate as the Government of the day wants it to operate; it is not independent; and its shareholder ministers have a constant, ongoing, say in how it is operated. And that operation clearly should not include the hiring of political lobbyist firms.
I would not be surprised at all if this issue had already come to the attention of Prime Minister Kevin Rudd, who tends to be a stickler for this kind of thing.
Image credit: NBN Co
Another good article and one which, in relation to the Boards actions in hiring a lobby firm, I agree with.
However I do disagree with your criticism of NBN not ‘communicating’ regarding Mr Quigley’s resignation. It is not up to the Board to communicate disclose the full details of Mr Quigley’s resignation. It touches on professional courtesies and understandings at a top level of Board/CEO interactions.
Mr Turnbull is attempting to destroy those tenets of professional conduct purely for political self interest. And in doing so he is making claims for which he has no evidence. They are merely assertions and supposition. And a large portion of his grounds for making such claims is it that ‘no-one has denied it’. Obviously that is a ludicrous failure of logic.
Essentially he is saying that because no-one has denied it, it must be true. He is switching the burden of proof from the accuser to the accused, and as he is an ex lawyer, I’m sure he must be very aware of the tactic.
Well sorry Mr Turnbull. It’s not good enough. You are the one making the claim, you need to provide the proof. An absence of evidence to the contrary does not constitute proof.
Excellent article Renai, you’ve nailed the issues down 100%!
Cheers, much appreciated!
I love when you work the weekend Renai!
I suspect that if Bespoke are being used, this week will see an interesting “please explain” meeting or two in Ministers’ offices. You’re right, Renai, a GBE has no place hiring lobbyists.
I agree it’s peculiar that Albanese and Wong are allowing this to happen. I wonder why they are.
Great write up Renai, though I don’t agree that McKenna needs “infrastructure” experience, it’s not the role of a Chairman to run the company like that, that’s the CEO’s role. ( http://www.iod.com/MainWebSite/Resources/Document/roleofthechairman_1006.pdf ), the main role of a Chair is actually more a support role, and is to make sure the board is effective and running as well as it can, and communicate more widely with those outside the company.
Where I believe she is not being effective, is in these roles of the Chair:
1. “as well as being chairman of the board, he/she is expected to act as the company’s leading representative which will involve the presentation of the company’s aims and policies to the outside world.”
2. “to ensure effective communication with shareholders.”
As the Australian public are effectively “the shareholders”, I don’t think she is doing a very good job in this regard at all…
I’d also add, that I really don’t trust the AFR all that much, I think if they really had hired Bespoke, the CEO would know about it, as he’d have to sign off on the expense(?):
“Mr Quigley said the he knew nothing about the board’s move. “As far as I know they are not working for NBN management,” he said.”
Same, ever since the AFR hired that chap from Noise limited to run their paper they’ve been nothing more than a business tabloid!
+100
Yes they have been on a slippery downhill slope to join the unOz in the gutter since then
I ment for this post to go here:
http://delimiter.com.au/2013/07/13/nbn-co-paying-lobbyists-to-woo-the-coalition-this-madness-must-stop/#comment-616823
I agree Renai, if the board of NBNco have indeed hired a lobby group then this is totally against the remit of a GBE and as such the board should be sacked immediately and replaced. Government funds should never be wasted on lobby groups it should only ever be used to run the business in the way that the government of the day directs.
If it is true (and given the AFR’s track record on reporting on the NBN I wouldn’t take that as a given) it is indeed appalling. You are absolutely right that the board should not be spending public money on political lobbyists. It should be executing on the direction of the government of the day, and that surely does not include cuddling up to the opposition.
Is there any actual evidence that NBNCo engaged Bespoke “to try and secure the jobs of its directors in case of a change in government.”?
The AFR says “AFR Weekend understands Bespoke has been meeting with Coalition MPs to talk up the NBN Co board’s achievements. ”
Which Coalition MP’s? LNP MP’s have not been to shy to step forward on situations that embarrass Labor before, why now?
Mike Quigley said he knew nothing about Bespoke and believed that management had nothing to do with the lobby group. If they were retained on behalf of NBNCo, wouldn’t the CEO know of it?
The only official line from the company has been ““NBN Co often retains strategic advisers for various areas of the business,” she [a spokesperson] said.”, which is pretty general, and sounds more like a PR line delivered by someone who doesn’t actually know.
Everyone else in MSM just refers to the AFR articles, which site no sources, or any evidence, just the assertion that the board has done this.
The story seems to basically be an echo chamber between the AFR (David Ramli in particular) and Malcolm Turnbull.
I guess well have to wait and see if Mr Ramli has anything more solid to back this story before we can declare it “lobbygate” :o)
I’d giggle if Quigley’s paid for it out of his last year’s pay….
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