Page 4201 - Week 11 - Thursday, 17 Sept 2009
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The overriding structural objective has always been to clearly remove the government from, and allow the board to focus on, the day-to-day direction and management of the corporation. This is fundamentally the same model that applies to any incorporated company, whether it is publicly or privately owned.
Of course, the voting shareholders have the responsibility to appoint the board. Voting shareholders can also have the ability to issue directions to the board. However, these powers are seldom called upon and must be exercised in a transparent and open way in keeping with the disclosure requirements contained in the Territory-owned Corporations Act.
Certain activities—for instance, the divestment or cessation of a main undertaking by the corporation—are also subject to Assembly approval. In summary, the board manages the business and formulates the strategic objectives. The shareholders, for their part, elect the members of the board specifically for this purpose, while retaining the right to replace the board, and under certain conditions within the strict bounds of the law, to intervene to determine certain issues.
Essentially, the shareholders of an incorporated company, even if they are government shareholders, do not normally exert control over the day-to-day operations of the company. Mr Speaker, I trust my comments will assist in providing a better understanding of the governance framework that applies to territory-owned companies, including the status and purpose of the statements of corporate intent.
I will now briefly comment on each of the statements of corporate intent. As of 1 July 2009, Rhodium had about 1,700 remaining leases maturing out to 2015. As members may recall, the government made a decision last year to wind down Rhodium Asset Solutions.
This Assembly also agreed on 10 February 2009 that Rhodium could divest itself of its main undertakings, including the ACT government fleet contract and various leasing and financing arrangements. As a result, Rhodium’s main objective now is to complete the wind-down as soon as possible and the board has set 31 March 2010 as the target date. It is understandable, therefore, that Rhodium does not have long-term business strategies, targets or performance measures.
Rhodium has engaged a service provider to manage the company during the wind-down, which includes the specific objective of facilitating the transfer of all remaining leases and finalising the trade debtor book by 31 October 2009. Rhodium has commenced a strategy that provides two options to divest the remaining leases. The first option involves transferring the remaining ACT government operating leases to an ACT government department and maintaining the existing financing arrangements through Westpac. However, the terms between the three parties have not yet been agreed.
The other option involves transferring the remaining leases to another leasing company. Whether this proposal will be successful depends on the terms of any offer to be made following due diligence. If this strategy does not succeed, Rhodium will
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