Winning the main game

INVESTMENT banker Mark Barnaba was looking forward to easing into his latest venture.

The outgoing chairman assured him he’d have plenty of time to adjust to the new post, because little happened in the industry late in the year.

The new role was as chairman of the West Coast Eagles, and Mr Barnaba was hoping for a few slow months to adjust to the demands of the position.

As the co-founder of Azure Capital, his business credentials were self-evident.

However, having only played in the third-string AFL team at his high school, observers were watching closely to see how he performed on the big stage – even if it wasn’t an on-field position.

“My third day in … I’m on national news terminating Ben Cousins,” Mr Barnaba says.

Speaking at a WA Business News Success and Leadership breakfast last week, Mr Barnaba talked about defining economic and personal experiences, which included the difficult initiation onto the West Coast chair.

Well-known company director Tony Howarth joined him on stage.

In late 2007, as Ben Cousins got the sack, Mr Howarth was climbing onto the board of Bank of Queensland. It wasn’t his most high-profile post, with a board position at AWB and former position at Alinta attracting more attention, but the experience has turned into a challenge in its own right.

Litigators are circling the bank, which was a major lender to geared investors who sought advice through the now-collapsed Storm Financial.

Mr Howarth isn’t apologising.

“It’s been about people not taking responsibilities for their own actions who borrowed money years ago, punted the stock market, kept leveraging up, leveraging up, leveraging up until the market went down and they lost their money,” he says.

“Who’s at fault, not me, it’s the one who lent me the money,” Mr Howarth adds, mimicking the investor.

The issue of litigation generally, and the liability of a non-executive director specifically, attracted a fair bit of comment from Messrs Barnaba and Howarth at the breakfast function.

The former has dabbled in public company roles, while the latter has made a career out of it.

Mr Barnaba says at his stage in life – married with two young children – it’s not that attractive to take on non-executive positions (he has served as chairman of Alinta Infrastructure, after being recruited by Mr Howarth).

He considers having to effectively put personal assets on the line in case of litigation is too great a risk.

Class actions have become a viable means of recovering shareholder and investor money, threatening years of headaches for directors – regardless of the end result – who preside over a company’s continuous disclosure requirements.

Many in the business community have long called for the extension of the business judgement rule, which would protect informed office-holders who act in a bona fide way.

Mr Barnaba says boards are acting more cautiously because of the increased risk of legal action and good candidates are sidestepping public positions.

“There are a lot of very, very senior and good business people in this country who are now choosing not to go on publicly listed companies. That worries me because you need those people in a governance role,” he says.

There is a generation gap between Messrs Barnaba and Howarth, with the grandfather quipping he is at the enviable stage of enjoying playing with the grandkids before handing them back to their parents.

Yet, the two share many common views.

Mr Howarth agrees company director posts are becoming riskier, meaning alternatives like joining private equity firms are more attractive.

“The class action activity is certainly not in the interest of non-executive directors, but I don’t think it’s in the interest of shareholders in the long term either,” Mr Howarth says.

The two prominent businessmen agree on other principles, such as having governments limit their intervention into markets. Further, their personal philosophies towards work aren’t far apart.

“You really do have to enjoy what you are doing,” Mr Barnaba says.

“We humans need re-potting … every now and then. You do have to get yourself out of your comfort zone, and move into a different part of the garden and see how you adapt. If you don’t do that, you can get stale. Whenever I get comfortable my own personal alarm bells go off.”

Mr Howarth, who says he is not a person of routine, adds that life’s too short to pursue a career in something you don’t like.

On the evening of October 17 2007, Mr Barnaba may have been questioning just how much he really liked football, preferring instead to be with his wife who gave birth that day.

He fronted the media to announce the Eagles board would sack their star footballer after he was arrested and charged with possession of an illegal drug and failing to take a blood test.

“Ben will no longer be a part of our playing group but we will not abandon him. He has a very serious health issue and we will continue to support him in his quest to regain his health and rebuild his life,” Mr Barnaba said at the time.

An online petition titled ‘Sack Eagles Chairman Mark Barnaba’ instantly emerged on the internet, calling for Ben Cousins supporters to oust the new chairman instead of the star player.

At last count, 17 people had signed the petition.

Mark Barnaba on ...

The role of government:

“I think one has to be very, very careful to have too much government intervention. Unconstrained free enterprise is certainly not good but neither is too much regulation.”

Advice he received before he took over as West Coast Eagles chairman, and subsequently sacked Ben Cousins:

“I remember the final words of the previous chairman … nothing really happens in November, December, January, February.”

Work-life balance:

“If you have preferences, don’t apologise. I like to start work at 9-9:30 and work late.”

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Tony Howarth on ...

How quickly the country has rebounded economically:

“I thought we were in for a deeper recession and longer recession and it just goes to show you can have all the experience in the world and you can get it wrong.”

The role of government:

“I think there is a time for government intervention in markets – it should be short, it should be swift. I feel that the free enterprise system is under a huge amount of threat at the moment. When the government starts to believe that they create jobs I get worried; businesses create jobs.”

Shareholder class actions: “If the risk reward gets out of alignment basically you can run these actions for little cost and no risk. It’s a bit like industrial blackmail at times … they want you to settle.”