Sydney view: Selloff mires Brambles in controversy

John Fletcher has been called the most successful Australian chief executive never to have given a press interview.

It's a nice line, even if not quite true. The Brambles chief executive did meet the press on a handful of occasions, and his affable manner was broadly similar to that of his predecessor, Gary Pemberton, who offered long and meandering replies without actually finishing a sentence.

What they proved, however, was that as long as a company and its senior management perform well, it does not matter a hoot whether they have a line open into the newsroom or if they employ a battery of public relations executives.

In Brambles' case, there are no spin doctors, nor has there been any need for one - the stock has been one of the most successful on the Australian Stock Exchange in the past decade.

Mr Fletcher has more than trebled the stock price since he took over the top job from Mr Pemberton eight years ago, and Brambles has been one of the most spectacular beneficiaries of the April tech rout, more than doubling its market capitalisation over the past six months to over $A12 billion.

That is not a bad return from a company in the unglamorous business of renting pallets and other equipment.

It was a cruel irony, therefore, that Mr Fletcher's last appearance before grateful shareholders on Friday should be overshadowed by controversy over the sudden plunge in share price last week.

AGMs are typically used to reassure investors that the company is ticking along nicely, or to confess that there has been a downturn of sorts.

Brambles planned to do the latter on Friday, but word got out beforehand and the company was forced to rush out a statement on Wednesday evening after a flurry of selling had wiped 7 per cent, or more than $A1 billion, off its market value.

Accusations have flown in all directions since then, but most of the talk has centred on a meeting with senior Brambles executives and an analyst from Credit Suisse First Boston a week earlier. CSFB clients had been the biggest sellers of Brambles stock on Wednesday, according to brokers. The company has insisted that no discussions about profit outlooks took place in the meeting with CSFB.

On Friday, Brambles was given a grilling about the stock, the sudden departure of its finance director and the investigations launched by the Australian Stock Exchange and the Australian Securities and Investments Commission.

The response from Brambles' new chairman, the former boss at NAB, Don Argus, was that he did not have a clue why so many people in the market were able to anticipate the company's announcement and sell their shares beforehand. (Brambles stock slumped sharply again on Thursday, but recovered slightly on Friday.)

It will be an interesting test of the powers of the Stock Exchange and securities commission to limit the abuse of market information that happens so regularly on the Australian market. It is commonplace to note a sudden (and correct) movement in share prices before an announcement, but the commission has hitherto been powerless to act.

It is ironic because the exchange is one of the few bourses in the world that insists on keeping a monopoly on the information provided by companies to their shareholders.

It insists that it must be informed and allowed to distribute the information before it can be dispersed elsewhere and, unlike the New York Stock Exchange, does not accept that a general announcement to the press is adequate disclosure.

As a happy coincidence, the Australian exchange makes money out of its monopoly by selling company Stock Exchange announcements to anyone who feels in need of the information before buying or selling the shares.

Interestingly, as the exchange probed the Brambles situation last week, it also announced it was establishing a new company, with an independent board, to review its supervisory roles and ensure there were no potential conflicts of interest with other companies and its other commercial interests.

* Giles Parkinson is deputy editor of the Australian Financial Review.