Corporate rebirth not without pangs

By Peter V O'Brien

Friday 25th June 2004

Business historians might one day track the cycles of pontificating rubbish that regularly afflict pronouncements about New Zealand business. The week ending Monday, June 21, could be seen as a vintage period in the cycles.

It centred on the announcement that struggling tele- communications minnow Rocom Wireless had entered a heads of agreement with Cynotech Securities and Newmarket Securities, companies associated with former Equiticorp chief Allan Hawkins.

The agreement covered the board appointment of Hawkins as chairman and chief executive of Rocom and the related appointment of Cynotech and Newmarket as underwriter for a rights issue, the latter requiring shareholder approval.

Hawkins was convicted of fraud and declared bankrupt in the early 1990s after Equiticorp's collapse and was a jailed guest of Her Majesty for some time.

A lot of "investors," most of whom were carried away with greed and pre-1987 crash mania, saw the value of their grossly over-priced Equiticorp shares reduced to nothing.

Hawkins was a media and broking industry darling in pre-crash days. He became a pariah among the same groups when desperate attempts to keep Equiticorp from drowning (including the transfer of control to an overseas-based holding company) failed to supply cashflow and debt control buoyancy.

What was left of the 1990s gurus hit back last week, happily ignoring the point that Rocom's shares went from 8¢ to 16¢ in the week ended June 18, a gain of 100% on a week's turnover of 1.38 million shares.

Some people saw merit in Hawkins, because turnover was massive. The biggest nonsense came on Friday morning when TV One's ASB Business programme had a discussion between presenter Michael Wilson and the nation's protector of investor transparency and small shareholders, Brian Gaynor.

After ritual tut-tutting and acknowledgement of Hawkins' business acumen, Gaynor wondered what the new Rocom chief knew about modern telecommunications, given his age (now early 60s) and the fact that many systems were non-existent when Hawkins was in his heyday.

Gaynor could have equally pondered what the research departments, which he headed, of the then Jarden & Co broking firm knew about the intricacies of mining exploration when the firm was involved in glossy prospectuses floating pre-crash share issues.

The road to investment Damascus seems strewn with people who managed to retain their golden livery as they heard voices wanting repentance after falling from horses.

Daily newspaper the Dominion-Post was next in the lists, with a floppy lance on Saturday, June 16.

"Some experienced businessmen are not happy to see Mr Hawkins back running a listed sharemarket company, Rocom, especially as both CEO and chairman."

We read about Hawkins' bankruptcy, conviction and jailing and the comment that some others from the 1980s "probably deserved a spell inside."

Indeed. In the words of the Gilbert and Sullivan song "I have a little list," but the lack of prosecutions and convictions would result in massive (unjustified) damages claims, with equally massive defence costs.

We then had the Dominion- Post say: Hawkins was a "different kettle of fish."

Fraud was not the same as being caught with too much debt on the balance sheet.

Funny how the same paper's constituent predecessors extolled the 1980s investment companies and drank their wine before and after knowing there were feet of clay.

It smacked of a similar TV One attitude. It seemed to have a memory lapse about its 1980s' "fly-on-the wall" documentary showing Hawkins and troops plotting a (without hindsight) obviously misguided attempt to take over the then BHP.

Securities Commission chairman Jane Diplock managed to get in on the Rocom act. She was reported as saying it was contrary to good corporate governance principles for the same person to be chairman and CEO.

Perhaps Diplock and her colleagues could train their watchdog on local and overseas-based companies with majority shareholdings in listed companies.

Those groups often place a subordinate executive as CEO in New Zealand and use their voting power to ensure the chairman is their choice.

We thus have a new duality, where there are two persons but one deity.

The corporate rebirth of Hawkins could, hopefully, lead to previously unconsidered attitudes among media and regulators.

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