GESB Mutual's blue chip board quits

The state government appears certain to have ended plans for the privatisation of its $10 billion super fund manager, GESB, with the resignation of five high profile directors led by former Alcoa Australia chief Wayne Osborn.

Mr Osborne, Keith Spence, Fiona Harris, Andre Morony and Peter Warne quit GESB Mutual late last month after receiving a draft report from Rod Whithear, who is reviewing the future of the state's superannuation body.

GESB Mutual was to have become the member-owned administrator of the former Government Employees Superannuation Board funds on July 1, 2008.

The mutualisation process was halted at the last minute by then Treasurer Eric Ripper, on advice from his under-treasurer Tim Marney.

While a final recommendation from Mr Whithear has not been delivered to state Treasurer Troy Buswell, the independent directors are understood to have taken the collective view that while the proposed mutualisation was possible, and the issues blocking it could be resolved, the government was very unlikely to choose that path.

The directors had been in limbo for almost a year and half (taking 10 per cent of their agreed directors fees since the GFC) and, under the circumstances, could no longer justify remaining as GESB Mutual board members.

The directors’ credentials were impeccable. At the time of their appointment to GESB Mutual, Mr Spence, a former executive vice-president of Woodside Energy, was a non-executive director Clough and Geodynamics; Ms Harris was a former board member of HBF and Alinta, as well as former chair of the original GESB; Sydney-based Mr Warne was a director of Macquarie Bank, ASX Ltd and Sydney Futures Exchange Ltd; and Mr Morony, also based in Sydney, was a board member of Macquarie Private Capital Group and ABN AMRO Investments Australia, and a former chief economist and chief investment officer at BT Group as well as a former chief investment officer of ARIA.

Another former GESB Mutual director, Harvey Collins, quit late last year to take on the chairmanship of BankWest which is owned by Commonwealth Bank but must retain a WA board.

Mr Buswell confirmed to WA Business News that the five independent directors of GESB Mutual had resigned but would comment on the reasons for their departure.

“I announced the review of GESB’s mutualisation plans in July last year to determine the most efficient and effective arrangements for State Government superannuation that would work in the interests of State taxpayers and members of Government superannuation schemes,” Mr Buswell said.

“Given the Government has not yet received Mr Whithear’s final report and Cabinet has not yet made a decision on mutualisation, it is premature for me to comment on Mr Whithear’s review.”

Lawyers Michael Lishman and Ian Cochrane have been reappointed as interim directors with GESB CEO Michele Dolin to ensure the entity’s governance structure is retained while the government considers its future.

Below is a release sent out by GESB this afternoon:

The independent Directors of GESB Mutual Ltd (GML) have tendered their resignations from the Board, effective 20 January 2010.

GML was established to become the parent entity of the GESB Mutual Group, with transition and commercial launch originally scheduled for 1 July 2008.

The outgoing Directors fully support the transfer of GESB's ownership to its members, as it is in their best interests.

GESB is a significant WA-based financial institution and the State's largest super provider, managing over $10 billion funds under management on behalf of 313,000 members.

It is a top quartile performing super fund and is independently rated for its sound investment returns, low fees and extensive member services.

The transition was delayed and, more than 18 months later, the State Government continues to assess policy options affecting the retirement savings of one quarter of WA's workforce and the future structure of GESB.

In the circumstances, the independent Directors believe it was appropriate to resign.

Throughout their time on the GML Board, the outgoing Directors have always found the GESB management team to have acted with utmost professionalism and in the best interest of members, presiding over strong operational performance.

The outgoing Directors of GML hope the State Government is able to reinvigorate the stalled reform process and ensure that Choice of Fund can be delivered while protecting the interests of GESB members and the State.