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tls vs australian government Telstra boss put in frame
Mathew Charles, Geraldine Mitchell and Gerard McManus
03sep05

THE outspoken amigo who plunged Telstra into crisis this week insists everything he said had the blessing of chairman Donald McGauchie.

Phil Burgess - right-hand man to Telstra chief Sol Trujillo - told the Herald Sun yesterday that he was toeing the company line pushed by Mr McGauchie.
"You don't do things that aren't supported by your board and your chairman, for God's sake," Mr Burgess said.

Comments from Mr Burgess that Telstra was being treated like a loser - revealed exclusively in the Herald Sun - put the company on a collision course with the Federal Government.

Relations became further heated when Mr Burgess said he would advise his own mother against buying Telstra shares.

This is believed to be the first time in Australian corporate history that an executive has deliberately talked down the share price of his own company.

Telstra's share price immediately plunged, falling to a 16-month low of $4.58 - well off the $5.25 the Government wants for its remaining stake in the telco.

Mr McGauchie - who sacked Mr Trujillo's predecessor, Dr Ziggy Switkowski, for reasons that were never fully explained - declined to comment yesterday.

But pressure is building on Mr McGauchie to end the growing feud between his senior managers and the Government.

It is believed Mr McGauchie has talked to senior management by phone, but has yet to show up to the office in person.

Treasurer Peter Costello avoided criticising Mr Burgess yesterday, but the Prime Minister told the ABC the Burgess comment was a "careless, foolish thing to say".

Mr Burgess claimed he was unaware his actions had attracted the Prime Minister's ire.

"I don't know what he said, so I really can't comment," Mr Burgess said.

In an internal Telstra email, Mr Burgess told staff that he was not ready to be silenced.

"Over the coming weeks, we will be communicating with our shareholders, customers, employees and others," he said.

Mr Burgess said Telstra's agenda was to "better inform stakeholders" about how regulations were hampering the company.

But Mr Costello said regulations were a concern for politicians, not businessmen.

"Those are matters for the Government; the matters for the directors are to run the company and to preserve value and increase value for shareholders," he said.

Opposition Leader Kim Beazley accused the Government of a "massive betrayal" of small shareholders and called for it to intervene.