more parallels

this is a bit funny. looks the chairmans a standard operating procedure when it comes to AGMs..
Deborah Snow
March 13, 2009
THE NRMA knew that its car rental subsidiary, Thrifty, was in deep trouble as early as the middle of last year and stands accused of failing to disclose this clearly to members at its annual general meeting last November.

An internal staff memo written last July by Thrifty's then managing director, John Walker, warns that "we have lost a substantial amount of money in the past two months and we are concerned about the next few months".

At the time Mr Walker owned 25 per cent of Thrifty, with the NRMA holding the remaining 75 per cent under a deal engineered by Mr Walker.

The memo, a copy of which has been obtained by the Herald, was circulated to all staff on July 7 and talked of tumbling revenues the preceding May and June. It also said that the acquisition of the New Zealand branch of the business was adding to the company's woes, as "residual losses from the previous ownership … are proving difficult to overcome".

A former NRMA director, Richard Talbot, claimed this week that despite the apparently wide circulation of the memo, members of the motorists association were not briefed on the dire outlook for Thrifty at the most recent NRMA annual general meeting.

"All they said was how great they were going and that investment returns were down," he said yesterday. "The whole AGM was little more than a propaganda exercise, with some tea and bikkies for the 300 largely retiree members who were in attendance."

An NRMA spokesman, Nic Frankham, disputed this, saying that " in November group chief executive Tony Stuart did report to members that Thrifty had performed below expectations".

There have been redundancies announced at both Thrifty and the NRMA in recent days. Bryn McGoldrick, Thrifty's new chief, has warned staff of "significant reductions" to come.

The NRMA has yet to reveal the results of an investigation it began into Thrifty's accounts mid-last year, although it has admitted in a statement to the Herald that it called in a "team of investigative accountants" to pore through the car rental operator's books late last year.

One inside source says up to 30 accountants were involved in the exercise, which took a particular interest in franchises acquired by Thrifty in the period after August 2006, when the NRMA became involved with Mr Walker as a partner in the business.

In its statement to the Herald, the NRMA says: "In the final quarter of that [07-08] financial year, the board of Thrifty became concerned about cash flows in the business and immediately took action to assess the full financial position of the company.

"Consequent upon the initial investigation, the NRMA-appointed directors on the board of Thrifty raised their concerns with the board of NRMA, following which it was jointly agreed that NRMA would install its own financial team into Thrifty."

Mr Walker left as managing director soon after and resigned as a director of Thrifty in mid-December. The Herald recently revealed that Mr Walker was bought out of the business by the NRMA for $1, despite the fact that the NRMA had previously committed to buying him out for at least $2 million.

Mr Walker has not returned the Herald's phone calls. The NRMA has not yet revealed the results of the accountants' investigation.

In his memo of last July, Mr Walker acknowledged that the expansion program he had embarked on, buying out Thrifty franchisees, had driven up costs.

He exhorted all staff to submit one cost-saving and one revenue-raising idea each, saying " I need your help at this time - every one of you".