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The farce which is Pacific National spilled into the boardroom yesterday as the feuding directors of Australia's biggest private rail company spent more than 90 minutes in brutal disagreement over the minutes of their meeting last month.
The omens for a productive meeting of PN directors were never promising. PN's two shareholders are in a fierce takeover war and in dispute over whether to break up their $2.8 billion rail-freight joint venture. To make matters worse, just last week, PN chief executive Stephen O'Donnell quit, accusing one of his directors, Toll's Mark Rowsthorn, of threats and intimidation.
By the end of yesterday's four-hour meeting, the four PN directors had not only failed to begin the search for a new chief executive, they had also failed to sign off on PN's 2005 accounts and, potentially, placed the company in breach of the Corporations Act by failing to sign off on the previous board minutes.
Both sets of directors (each company appoints two) arrived with their own distinctly different recollections of the September meeting. Those differences remain unreconciled.
It is also understood that Patrick's Chris Corrigan refused to sign the 2005 accounts because of a dispute over accounting for the costs of further litigation between PN and Queensland Rail over the Acacia Ridge rail terminal.
Toll arrived at PN headquarters with proposals on just who will run PN. It also wanted an independent probe of the freight deal between PN and Toll's Queensland subsidiary, which is at the root of moves by Patrick to wind up their joint venture. It failed to win support on either proposal.
First on Toll's CEO list was Alan Davies, head of Patrick Rail and one of two Patrick men on the PN board (Davies did not attend yesterday's meeting). It is hard to accept Toll was serious in nominating Davies: he didn't want the job on any of the terms contemplated -- full-time, on an interim basis, or in partnership with Mark Rowsthorn. Rowsthorn's nomination too seems an unlikely choice, if winning Patrick over was an aim -- Patrick sought again to have him stand down as a director.
Anticipating that Rowsthorn was not favoured, Toll threw David Marchant's name into the hat. Marchant, head of national rail track owner and regulator Australian Rail Track Corp, is understood to have made a far from flattering submission to the ACCC on Toll's bid for Patrick.
Given none of those candidates was acceptable, Toll moved to appoint an executive search firm to speed-hunt a new boss.
While agreeing, Patrick also lampooned the proposal with what will now be known always as the Corrigan Clause. The Patrick boss backed the proposal only if anyone accepting the job was immediately excluded from it for lack of commercial judgment.
Patrick's firm rejection of Toll's push to hire a retired judge to probe the contentious Toll North-PN freight deal might seem a bit odd. If Patrick claims it has been dudded, why not now find out what went wrong and who was responsible?
On this, Toll would seem to have a point, even though it has come late to the view that a review is necessary. Indeed, it might now regret rejection of Patrick's first push for the probe, which opened the door to Patrick's very public attempt to trigger the break-up provisions of their joint venture agreement. By backing Patrick's move in August, Toll could have delayed the debilitating stoush over the future of PN for months, maybe years.
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