Future Fund chief executive Paul Costello yesterday remained tight-lipped in the face of sustained questioning over the fund's stance, as an investor, on the pending legislated separation of Telstra's operations.
It seems to us completely inappropriate to insert ourselves into a discussion
Future Fund CEO Paul Costello
Former Communications Minister Helen Coonan criticised the Future Fund for its silence on the government's legislation which, if passed, would separate Telstra's retail and wholesale arms. Coonan noted that the fund was not silent over Sol Trujillo's pay.
"It's baffling that you'd be so proactive on some matters," said Coonan, adding that there appeared to be "an eerie silence on the part of the fund" regarding Telstra's separation.
The fund was a government-owned investment body established in 2006 to meet the cost of public sector superannuation liabilities.
"We will continue to work as a shareholder, working with the company, seeking information from the company," Costello said. The CEO made his comments while being questioned at a Senate Standing Committee on Finance and Public Administration yesterday.
Facing earlier questions, Costello conceded that the threat of Telstra's separation "would be a major risk for an investment", but when pressed if he hypothetically would buy shares of a company facing the legislation that Telstra was, he said it would depend on the price of the shares.
Costello said the Future Fund had not had discussions with the government about the legislation forcing Telstra's separation because the fund was set up to operate independently. "It seems to us completely inappropriate to insert ourselves into a discussion," said Costello.
"We took a view that we absolutely should not be involved in being part of discussions with government," he said. "Any approach like that would certainly have been at risk of receiving inside trading information."
Costello said it was a coincidence the fund had sold a third of its stake prior to the announcement.
The Future Fund had taken on Telstra shares in 2007 during the final sell off of the telco, which were held in escrow until August 2008. Its massive sell off took place one month prior to the government's announcement, reducing its ownership of Telstra from 16 per cent to 11 per cent.
Asked whether he knew about the separation deal and whether it was the basis for the Future Fund's decision, Costello said "it absolutely was a coincidence". He went on to argue that it was obvious it might happen — the question was when.
Costello also took a question on notice about when and how often he had spoken to Telstra prior to the sale but clarified "it was some significant time before the transaction we undertook".
Future Fund chair David Murray on Monday said in a statement that its Telstra sell off was a "long-stated intention". The value of its Telstra holdings was around $4.3 billion.