Terry McCrann: Rio chief Jean-Sebastien Jacques walks away with $26m — $34m
No one will shed a tear over the sacking of the Rio chief who presided over the blowing up of an Indigenous heritage site and the chair should go too, writes Terry McCrann.
Terry McCrann
Don't miss out on the headlines from Terry McCrann. Followed categories will be added to My News.
The silliest headline — over an entirely sensible story — that I’ve seen in some considerable time was “Don’t feel sorry for JS Jacques” in Friday’s Fin Review online.
JS as he is most generally known was — actually, still is (for a few months yet) — the CEO of Rio Tinto, one of our Pilbara Big Three, engaged in collectively digging up and shifting nearly one billion tonnes of Western Australia to the northern hemisphere each and every year.
Over time, that’s got to be also shifting the planet on its axis; or surely doing something to the global climate, to say nothing of the Barrier Reef?
Anyway, back to more important matters: that headline. I have to say I was not aware of and had not anticipated a nationwide outpouring of sympathy for a savagely wronged JS.
Indeed, I doubt that barely even 0.01 per cent of the population would even have heard of him.
But even in such smaller cohorts as the Fin’s readership to which the headline was directed, I doubt that many even there would have been engulfed in grief, and so had to be cautioned.
As the Fin’s esteemed columnist, the always acerbic Joe Aston, and the owner of both the story which sat beneath the headline and the deserved scalp (figuratively speaking of course) of the said JS, explained: that said JS will be walking away with somewhere between $26m and $34m.
Hold your tears, or as JS himself could and should sing: Don’t cry for me, Australia.
JS was of course sacked — in the more literally clubbish circles of London where Rio is headquartered, he was going to “step down from the his role” as CEO by “mutual agreement” – over the comprehensive debacle of Rio’s destruction of the highly significant Juukan rock shelters indigenous heritage site.
As I wrote in another place — the Weekend Oz — it is instructive to compare and contrast JS’s fate with Victoria’s Great Leader, Premier Dan.
JS got — mutually agreed — sacked for his subordinates blowing up a (yes, to stress again, important) cave. The Great Leader has “blown up” an entire state and wants our praise.
Two big substantive points flow from the departure of JS.
As Aston wrote and I agree, the position of Rio chairman Simon Thompson is completely untenable.
Now his position has been completely untenable every day that he has been in the chair and indeed was untenable even before he got the position.
That is to say, he should never have been appointed.
To call him a lightweight would be to insult perfectly effective lightweights everywhere. He had previously risen without trace; he should now disappear without trace. But that’s London’s problem.
There’s a more specific problem for Rio — in its two combined corporate incarnations, the British Rio and the Aussie Rio. It’s the same problem that NAB and Westpac faced.
When you have to get rid of your CEO and your chairman at the same time, you should — you must — do the chairman first.
The new chairman must select the new CEO, not be inheriting one chosen by his or her predecessor.
Only the first can establish the optimum governance relationship. The CEO-first route is a recipe for instability or worse.
Westpac addressed the issue by appointing Peter King acting CEO; John McFarlane became chairman in January; three months later he confirmed King as the CEO.
NAB was lucky to have Phil Chronican able to act as both chairman-elect (until Ken Henry departed) and acting CEO (after Andrew Thornton departed) until Ross McEwan arrived to become CEO. So the new chairman selected his new CEO.
In the case of Rio, JS won’t leave until the end of March, unless his successor is appointed earlier — or, as Rio clubbishly again put it, the “process to identify his successor” got there sooner.
So the fellow directors of both JS and the ephemeral chairman should seize the time and the opportunity provided to extend the “successor identification process” and move more speedily on sacking the chair, appointing a successor and have that successor sign off on the new CEO.
In this process of self examination and change, the board would also be well advised — very well advised — to return Rio to an Australia headquarters and with a majority Australian-based board.
It is absurd that management of a company whose almost entire focus is Australian operations and trade with Asian customers to be run out of London.
It is absurd for Rio as a profitmaking enterprise. It is also absurd for Rio as a corporate citizen in the Australian context.
It is also a flagrant breach of the spirit of Rio’s commitments to retain its critical Australian elements, when it was allowed by Labor treasurer Ralph Willis to take over the locally listed, only partly majority-owned and at times fiercely independent CRA subsidiary, in the dying days of the Keating government.
The old Rio-CRA combine worked much better for both companies and both sets of shareholders. But nobody can go back to it; in the 21st century we — and Rio — need an Australian-centred Rio.
The sheer and indeed, embarrassing hopelessness of the Thompson-JS era makes that crystal clear. It should have made it crystal clear to the separate — Aussie and British — shareholders of the two companies in the structure.
In their own selfish best interests, it should be the shareholders that demand Rio reform itself; not backroom pressure from politicians.
That journey starts with sacking an inept chairman and getting one that possesses a brain.
Originally published as Terry McCrann: Rio chief Jean-Sebastien Jacques walks away with $26m — $34m