ARA moves to clear Gary Weiss’s Cromwell path

ARA says it will remove one of the main points raised against Gary Weiss’s election to Cromwell Property Group’s board.

Corporate raider Gary Weiss Picture: Chris Pavlich

Proxy advisers have lined up against the election of Gary Weiss as he seeks a seat on Cromwell Property Group’s board with the backing of dissident Singaporean shareholder ARA Asset Management.

But in a dramatic turn of events on Wednesday, ARA said it would remove one of the main points raised against his election, with the prominent corporate raider to stand down from the board of Straits Trading Company, which has a 21 per cent interest in ARA.

The move is designed to blunt criticisms of him lacking in independence. But in a sign of the entrenched conflict, ARA said current Cromwell independent non-executive directors Andrew Fay and Jane Tongs also were ­associated with Cromwell’s competitors.

ARA said Mr Fay was a consultant to Dexus Property Group and Ms Tongs chaired the investment committee of the Lendlease Australian Prime Property Fund.

Cromwell chairman Geoff Levy entered the fray saying it was baffling that ARA was arguing it did not agree with the company strategy it had endorsed last year.

Cromwell’s invest-to-manage strategy had produced better returns than the funds ARA itself ran, Mr Levy said.

But his primary objection has been the ties that Dr Weiss holds with ARA.

He said it had been difficult to have an “open and frank” discussion inside the boardroom when ARA’s previous representative, David Blight, sat on the board and Mr Levy argued that Dr Weiss would face the same problems.

“We need to act in the best interests of all shareholders, not one group or another,” he said. Mr Levy said ARA was a competitor to Cromwell in buying property, leasing and setting up funds.

The fight for the future of the group, which controls about $11bn of real estate across Australia and Europe, will come to a head at a meeting this month. But on Tuesday, Cromwell also won a court case about how proxies are to be handled, with an approach by ARA for proxy information received ahead of the meeting rejected by the NSW Supreme Court.

The court issued orders that Cromwell is not required to disclose proxy information of Cromwell securityholders to ARA.

The three major proxy houses, including ISS and Ownership Matters, were on Monday joined by CGI Glass Lewis, which recommended against the election of Dr Weiss.

This may give momentum to the Cromwell camp. However, sources close to ARA said its campaign was founded on direct meetings with funds managers who were disgruntled with Cromwell’s recent strategy drift.

Some analysts have also expressed concern at the company’s rising gearing, as it takes on a greater exposure to the Polish retail property market.

Dr Weiss has privately sought to convey a desire to help improve Cromwell’s boardroom governance and impose a stricter investment regime.

CGI Glass Lewis said the nomination of Dr Weiss as a “sufficiently unencumbered” director unfettered by perceived or actual conflicts of interest was “fundamentally flawed”.

The Australian Shareholders’ Association last week also lined up against the prospect of him being elected to the Cromwell board.