Shareholder Activism

A rise in private share ownership has been a striking aspect of Australian political economy over recent decades. So too has the exposure of huge and dubious donations by corporations in their attempt to do business with both state and federal governments.

In a timely call for transparency and accountability in corporate political giving, the Australian Shareholders' Association has stated "...that it is not the role of companies to divert shareholders' funds to political purposes by the making of donations to political entities [and] that when such donations have been made they should be disclosed and explained in the annual report."

The right of all shareholders to ask questions and demand accountability about political donations is fundamental to proper corporate governance principles. It is also a democratic right that should not be undermined.

Although some companies disclose the size and recipients of political donations in their annual reports, there is no legal requirement to do so. The Australian Securities and Investment Commission should be showing a regulator's interest in this aspect of political donations.

Months before the 2004 federal election, Senator Murray surveyed a random sample of 57 of the top 400 corporate donors to political parties to find out whether any company had a shareholder-developed policy on corporate donations. Just seven companies responded in writing and only three of those answered the survey in part or in full.

Not one company was prepared to provide a board policy on corporate donations and not one company of those surveyed had a shareholder-approved policy. Most companies stated that they were apolitical in their decisions to donate and had little or no vested interest in their outcome.

The question arises: Why then were they donating large sums of shareholder money if it had no benefit?

Both the Coalition Government and the Labor Party have voted against Democrat amendments requiring company shareholders (as well as union members) to approve the political donations policies of companies and unions.

Document last updated on: 11:50 24th Mar 2006.