United Credit Union Ltd has confirmed that it paid the legal fees of objectors to StateWest Credit Society Ltd's demutualisation, saying it did so with the interests of the industry in mind.
United Credit Union Ltd has confirmed that it paid the legal fees of objectors to StateWest Credit Society Ltd's demutualisation, saying it did so with the interests of the industry in mind.
United CEO Ian Williams said the group had agreed to provide a form of limited recourse loans to dissident members, led by StateWest founding chairman Pat Kirwan, in order to test the adequacy of new disclosure standards implemented across the board a few years ago.
Home and StateWest have jointy condemned United's move and questioned its motivation.
Mr Williams said the StateWest demutualisation - the first stage in a proposed merger with Home Building Society - was the first such move since the new rules were added to constitutions industry-wide.
"This is really important, in that it is the first time ... that there has been a listed entity buy a mutual and this constitution is being used," he said.
He described it as a "test case" of the new disclosure rules and the United board felt that StateWest's disclosure had been inadequate.
"I in no way wish to impugn the motives or otherwise of the StateWest board," Mr Williams said.
"They clearly would have been advised that this constitutes adequate disclosure."
The legal action led by Mr Kirwan has thrown a spanner in the works for the StateWest-Home merger.
StateWest plans to appeal a decision earlier this week in the Federal Court which refused the grant the society orders to convene a meeting to vote on the merger with Home due to issues regarding disclosure to members ahead of a previous vote to demutualise.
The court found that StateWest had provided inadequate disclosure to members when it did not reveal StateWest head Greg Wall's proposed remuneration as proposed managing director of the merged entity. Home shareholders were provided that information in documents two weeks later, ahead of their vote to merge with StateWest.
Mr Williams said the cost of the legal action amounted to less than $10,000.
He said Mr Kirwan and former StateWest executive Lew Louthean had agreed to pay back some of the legal fees from any monies received if the merger eventually took place.
Mr Williams also dismissed any suggestion that United's move was about industry rivalry, saying that he would probably gain commercially from the merger if former StateWest members sought to find another mutual and that his real competition was the banks who dominate 90 per cent of the market.
Below is the full StateWest statement on the matter:
StateWest Credit Society and Home Building Society condemn the interference in their friendly merger
process by United Credit Union, a Perth-based credit union.
United has contributed financial, legal and other corporate assistance to a small group of StateWest
Members that have agitated to prevent the StateWest-Home merger from proceeding.
This is despite a recent overwhelming 90% YES vote from StateWest Members on the demutualisation
of the Society, the first part of a two stage merger voting process. Home shareholders also voted
overwhelmingly in favour of the merger on the 28th of November.
StateWest and Home were informed of the United role and put the matter before the court but chose to
refrain from public comment. However, given United has today revealed the existence of their role in
The West Australian, StateWest and Home consider it is appropriate to comment.
For reasons best known to United Chairman Danny Cloghan, his Board and CEO Ian Williams, United
has actively supported and funded dissident StateWest Members to run a media campaign and a legal
action to attack the merger process.
StateWest Chief Executive Greg Wall said that with both StateWest and Home fully committed to the
merger process - and Members and shareholders voting overwhelmingly in favour of merger resolutions
put to them to date - United's actions have served only to delay the merger vote and to add substantially
to the cost of the merger process.
Mr Wall said United's activities had been confirmed directly to him by Mr Cloghan and Mr Williams at a
meeting in November.
"I voiced my disappointment at that time but Mr Cloghan and Mr Williams insisted United's funding of a
dissenting campaign was in the best interests of United's members. We simply don't agree. Our merger
proposal is none of their business," said Mr Wall.
Home Managing Director Craig Coleman said United's funding and support was breathtaking for a
financial institution under the modern regulatory, compliance and corporate governance regime.
"I'll be very interested to know how United will defend this expenditure to its own members. We would
not spend our shareholders' money funding and supporting activities which have the effect of interfering
in a competitor organisation" said Mr Coleman.
The Boards of StateWest and Home remain committed to the merger process and their ambition to build
a great new WA financial institution that will provide genuine competition to big banks.