The Guardian 20 April, 2005

Road kill

Appropriately placed next to a story about convicted HIH director Rodney Adler, an article in the Australian Financial Review last week announced that Nick Whitlam, former chairman of NRMA Insurance, is now on the Workers' Compensation Insurance Fund Investment Board in NSW. That he was put there by the Carr government certainly will be of no comfort to the state's workers.

Whitlam was convicted for breaching his duty as a director because he withheld proxy votes at the NRMA annual general meeting in the 1998, a conviction overturned on appeal. Following his resignation in 2001 and after leading a ruthless and bullying drive to de-mutualise the motorist body he pursued NRMA Insurance (now renamed the Insurance Australia Group) through the courts claiming unpaid benefits. He was awarded almost $520,000.

"I've had a tough time clearing may name", said Whitlam after taking up the $37,200-a-year post with the Workers Compensation Fund. A brief look back at his time at the NRMA indicates why he had to spend so much time and money making Nick a moniker that could still be put on a company director's door.

What did he get out of the de-mutualisation, which took place in 2000? Whitlam's base salary by April 2000 was $524,000, up from $105,000 in 1998. He gained that 500 per cent increase in part through:

  • his payment of $105,000 as the non-executive chair of SGIO, taken over by the NRMA in late 1998;

  • $80,000 in fees as the non-executive chair of a building society the NRMA bought from the MLC;

  • $72,000 as the chair of NRMA's Project Outlook, the de-mutualisation committee;

  • $90,000 for overseeing the merger of the Royal Automobile Club of Victoria and the NRMA's insurance operations.

    Mutual organisations are owned by the members and return any gains to the membership. In the NRMA's case these benefits were paid as lower insurance premiums to members, and as services, the most valued of which was its world class road-side vehicle service.

    The mergers and buy-outs under Whitlam were designed to set the NRMA up for its eventual float on the stock exchange, i.e. its privatisation. The road-side service was restructured, with many suburban inspection stations being closed. In addition, the lower vehicle insurance premiums from NRMA, which acted to contain premium levels across the sector, went up, much to the glee of the private insurance companies.

    Now Whitlam is overseeing the investment of workers' compensation funds, $6 billion in all, for a number of private insurance giants. The Workers' Compensation Insurance Fund Investment Board, of which Whitlam is a deputy chair, will determine where funds are invested on the money market, the big casino in which companies such as HIH gamble and lose, crash and burn.

    The likes of Whitlam do not get thrown out of their jobs, lose their incomes or their meagre savings invested in the shares of collapsed companies.

    Very occasionally, as in the case of Rodney Adler, the system is obliged to make an example of individuals when things come unstuck and there is criminal behaviour so blatant that it cannot be glossed over.

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