green and babcock remain at the scene of crime

Green and Babcock remain at the scene of the crime
Crikey
Adam Schwab writes:

Most criminals don’t hang around at the scene of the crime. However, former Babcock & Brown executives, Phil Green and Jim Babcock, appear to be the exception. The former high-flying duo will continue to loiter around the body of their victim as it writhes in pain, from wounds that it will never recover from.

It is inexplicable that Phil Green, who was the heart and soul of BNB, is remaining a non-executive director of the investment bank. Green founded the bank’s Australian office, pioneered and drove its risk taking culture and engineered many of the atrocious deals that have been the bank’s undoing.

While BNB remains listed and continues to trade on the ASX, like Allco and MFS before it, with no reputation, it will be existing in a state of de facto liquidation as a "new" executive team, along with professional insolvency experts and banks, try to slowly wind-down the business.

Expect a steady stream of bad news and massive write-downs over the coming months as the board and its auditors start realizing the billions in shonky real estate and infrastructure assets which sit on the company’s balance sheet.

Amazingly, Green has managed to gain a few positive comments, even Michael West, one of the first to question the appalling Babcock model, had a few kind words for the embattled former lawyer. Westie last week noted that:

Phil Green [is] a likeable, knockabout sort of bloke, he dislikes the limelight and friends say he is devastated by the havoc now playing out in the empire he built.

The destruction is especially galling to Green, as he is intensely loyal to friends and associates whose fortunes are now imploding.

The image of Green being a likeable, knockabout bloke contradicts the predicament faced by BNB’s loyal shareholders and employees. At its peak, Babcock staff owned $4 billion worth of Babcock shares -- that is probably worth a few hundred million now and will be down to close to zero by next Christmas.

While 400 of Babcock’s 1600 staff will be given their marching orders in the coming weeks, the remaining 1200 are hardly looking forward to a lucrative future.

Then there's the appalling $15 million cash bonus that Green received in 2006. At the time, the Babcock Annual Report claimed:

STIP rewards are dependent on the overall annual performance of the Group and the individual’s contribution to that performance. This approach ensures a direct and strong link between the Company’s annual performance and Executive reward.

Elizabeth Nosworthy was one of the Babcock directors and was on the Remuneration Committee at the time that Green was paid his $15 million cash bonus. Conveniently Nosworthy last week managed to get herself appointed as Babcock’s interim Chairperson. Nosworthy has been Babcock director since 2004, during which time Babcock allowed its executives to continue to borrow excessively and overpay for a myriad of assets.

Admittedly, Nosworthy is well suited to managing a company in trouble -- she is also Chair of Commander Communications (now in administration) as well as GPT (which has lost billions on an appalling joint venture with none other than Babcock & Brown).

As for Green remaining a non-executive director, Nosworthy responded that "Phil has behaved absolutely impeccably ... he has a harsh judgment of himself. He’s incredibly supportive of the team."

But she would say that, wouldn’t she. Nosworthy owes her professional directorship career (in which she was earning more than a million dollars annually) to Green -- it is no surprise that she was unwilling to force him out of Babcock last week, instead allowing him to remain a non-executive director of the firm he largely destroyed.