Shareholder watchdog calls for Tower board accountability

By NZPA

Friday 6th December 2002

The Shareholders Association is calling for board of troubled financial services group Tower Ltd to be held accountable for a $75 million September year loss.

The company said yesterday soft equity markets, restructuring and $36 million in writedowns at Australian unit Bridges had contributed to the loss, which compares with a $77 million profit for the previous year.

Tower chairman Colin Beyer yesterday levelled much of the blame at former chief executive James Boonzaier, who resigned in July after 12 years at the helm.

He said Mr Boonzaier focused too much on the share price, ignoring structural problems in the company's Australian businesses.

Mr Boonzaier in turn said that the board should take responsibility itself. He noted that when he left the company was reporting profits and since he had gone the share price had lost around two thirds of its value.

Shareholders Association chairman Bruce Sheppard also said the board should also take some of the blame.

"I believe they should all tender themselves for re-election," Mr Sheppard told National Radio.

"It is an absolute confidence issue that needs to be dealt with. They should all tender themselves for re-election. They should all present their case for remaining on the board and before they put their names forward... they should gaze at themselves and determine whether they can actually add any value to the company."

Mr Beyer said yesterday the board did not shrink from being accountable to shareholders. But he was not going to resign and would offer himself for re-election at the next annual meeting in March.

Mr Sheppard said the chairman's criticisms of Mr Boonzaier yesterday were unjustified.

"The job of a CEO, very clearly, is to run the business. The job of the board is to focus on managing the company's strategy and ensuring that it is effectively executed ," he said.

"If they came to the view that he hadn't made the transition (from mutual society to listed company in 1999) -- they obviously knew that four years ago and they had two choices: they could've provided additional resources or training to ensure that the CEO was capable of his duties; or they should have replaced him.

"They have waited way too long."

Tower shares plumbed an all-time low of $1.56 yesterday but recovered to close three cents down at $1.66.

The shares are still a third of their $5.34 January peak and compare with $3.55 before the November 1 profit warning that sent them tumbling 44 percent lower.

Before that warning, analysts had expected a profit slightly below last year's $77 million result.

Excluding the Bridges writedown, the loss was $39 million -- at the top end of the $30-40 million range in the warning. Tower lost $26 million through poor investment markets, $31 million in IT writedowns, $10 million in restructuring costs and booked $44 million from its various Australian operations.

No dividend was declared in yesterday's result, which saw the group's total income plunge 17 percent to $580.6 million, reflecting negative investment income in the second half of the year and the Bridges writedown.

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