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Topic:Corporate Governance
Money and power often go hand in glove. (AAP: Patrick Hamilton)
"Power tends to corrupt and absolute power corrupts absolutely."
Those words, penned by the English aristocrat, politician and academic Lord Acton in the 19th century have never been more salient.
Since he famously wrote the phrase in a letter to an Anglican bishop in 1887, it has been frequently employed to illustrate the consequences of unfettered power in politics, matters of state or the military and its role in global conflicts.
In more modern times, it has been used to highlight the inequities caused by power imbalances across society, including everything from gender relations to wealth disparities.
Money and power often go hand in glove.
And throughout history, individuals have strived to build business empires over which they exert absolute control.
Think Elon Musk, and to a lesser extent the other great tech entrepreneurs, all of whom wield enormous individual influence over the structures they have created.
Elon Musk speaks at a Trump campaign rally at Madison Square Garden in New York. (AP: Evan Vucci)
Occasionally, they are hugely successful — at least for a couple of generations.
But, just like a modern nation state, businesses ultimately are overtaken by a push for democracy and the limitation of individual power.
For the past 30 years, there has been a push to limit individual power, particularly when it comes to public companies — often family or individual enterprises that have raised money from investors.
Running a business a founder owns outright is one thing.
But when other people's money is involved, the balance of power shifts, leading to internal conflict.
Occasionally, as we saw in 2024, the wheels fall off in spectacular style.
WiseTech, Mineral Resources and even what once was the most powerful media company in the world, Rupert Murdoch's News Corporation all encountered trouble.
Kerry Packer figured it out early in his career.
You didn't need to own anything outright, you didn't even need to have majority control — you just needed to be the biggest shareholder.
But times have changed and the Packer family, while still exceedingly wealthy, are no longer captains of industry. (Reuters)
It was a strategy he employed throughout his life even with his core media business.
He made the decisions and, if you didn't like it, he was more than happy for you to leave via the nearest exit.
But times have changed and the Packer family, while still exceedingly wealthy, no longer are captains of industry. A new generation of entrepreneurs has taken their place.
WiseTech is not the only publicly-listed company to face allegations of bad behaviour. What's the role of boards?
And while corporate laws are stronger now, disclosure requirements much more stringent and stricter governance rules are in place, the misuse of power remains the same.
Richard White's transgressions appeared largely to loom over his personal life.
The focus quickly shifted to investigations over whether there had been any inappropriate use of company funds once it was discovered White had been romantically linked to former employees.
As the sideshow gathered pace, and big shareholders expressed their anger, White was forced to step down as chief executive.
The WiseTech board ordered an "independent" review, which cleared White of bullying and intimidation accusations and found no evidence of financial impropriety.
White moved sideways, giving up the role of chief executive and instead taking on management of the group's key division.
But given he remains the company's biggest shareholder with almost half the company, he remains the most powerful voice in the organisation.
During the great 1980s stock market boom, often called the Decade of Greed, the rising band of entrepreneurs often liked to confer the title of executive chairman upon themselves.
But their demise at the end of the decade heralded in a new philosophy. The chairman should be independent of management and the board should oversee management.
While it delivers more accountability, It is far from a perfect system, and as the WiseTech experience illustrates, when you own most of the company, you can be called the doorman and still call the shots.
Similar problems emerged within Mineral Resources, the company brought to life by mining entrepreneur Chris Ellison.
In 2024, problems emerged at Mineral Resources, the company brought to life by mining entrepreneur Chris Ellison. (Supplied: Mineral Resources / Composite image)
A series of damning revelations in the Australian Financial Review rocked the company in late 2024.
Worse still, it emerged that he had failed to disclose an alleged tax scheme reported to the board or shareholders after quietly settling the matter with the ATO.
Ellison has since pledged to leave the company, at a date to be determined, within the next few years.
At 93, Rupert Murdoch remains as controversial as ever.
The newly remarried News Corp founder remains at war with his family — having just failed to change a family trust to install eldest son Lachlan as the legal heir apparent — and has again fought off rebel shareholders opposing his voting gerrymander that delivers vice like control over the company.
Rupert Murdoch remains a controversial figure decades on. (Reuters: Fred Greaves)
Three decades ago, News shareholders approved a voting system that deems Murdoch shares in News carry more weight than most other shares.
The family trust controls 41 per cent of the company, even though it only owns 14 per cent of the stock.
At the time, it seemed a good idea to ordinary punters.
Rupert had the smarts and News was a dynamic organisation that was feted globally by kings and queens, presidents and prime ministers.
That influence is now waning with the advent of social media, although Fox News still packs a punch in the US.
According to the New York Times, which has seen the judgement, probate commissioner Edmund Gorman delivered a scathing assessment of Murdoch's bid to alter the trust, describing it as "a carefully constructed charade".
The problem for shareholders is that the absolute power they delivered to Murdoch all those years ago may backfire once Murdoch senior shuffles off this mortal coil.
Where once shareholders consolidated power in a strong and singular leader dedicated to maximising profits, News shareholders could soon bear witness to a civil war at the top of their company.
Unless Rupert and Lachlan raise the cash to buy out James, Elizabeth and Prudence beforehand, the entire power structure could come to an inglorious end.
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