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Issue #1535      15 February 2012

Behind Rinehart’s swoop on Fairfax

Two weeks ago Gina Rinehart, Australia’s richest person (in terms of money) bought 10 percent of the Fairfax Media shares. She was already a shareholder, and her total holding in the company is now just under 15 percent.

At first glance the purchase might seem odd, for someone obsessed with profits. Fairfax is certainly not making anything like the gargantuan profits from Rinehart’s mines ventures, and according to some reports the Fairfax newspapers are losing money.

However, the purchase is intended to secure the profitability of her major mining investments, with particular regard to the proposed resources rent (“super profits”) tax and any potential restrictions on mining activity which are intended to mitigate climate change.

A pox on your tax …

Although the current super profits tax is likely to have little impact on mining companies, Rinehart has waged a long and bitter campaign against it, arguing that companies involved in mining ventures should actually pay less tax, not more.

She supports the notion that Northern Australia should be a special economic zone, with tax reductions for mining companies, and the employment of workers from poor countries for rock-bottom wages. She advocates the use of nuclear munitions to create new mines and dams.

Her biggest holdings are in iron ore mining, but she also has interests in coal mining, and is a passionate advocate for the mining industry in general. She absolutely rejects the scientific consensus that human activity, including the use of coal-fired power generation, is a contributor to climate change.

Rinehart has sponsored lecture tours by climate change deniers, including the execrable Lord Monkton, who insists that climate science is a communist plot, and by another notorious climate change denier, Adelaide University’s Professor of Geology, Ian Climer.

A calculated move

Rinehart’s purchase of shares in Fairfax was carefully calculated, with a view to influencing the editorial policy of Fairfax media businesses, particularly its newspapers, which have been much more willing to publish criticism of the mining industry than rival Murdoch publications.

Fairfax representatives have claimed that influencing the company’s editorial policies is impossible, because of its charter of editorial independence. That’s a very unconvincing argument. The editorial policies could be influenced covertly, and an uncooperative editor could be replaced. If need be the board could amend or simply dump the charter.

The current federal cross-media rules forbid any person or company from controlling newspapers, radio stations and television channels in any one market.

At the moment Rinehart is a director of Sydney’s Channel Ten, with approximately 10 percent of their shares. Fairfax Media publishes newspapers and broadcasts on radio in both the Sydney and Melbourne markets.

However, the rules define a controlling interest as 15 percent or more of the total shares, and a directorship is not classified as a controlling interest. With her current percentage of Fairfax shares, or a slight increase, she may be able to acquire a directorship in the company, without contravening the cross-media rules. If all else fails she could relinquish her dominant position in Channel 10 in order to gain a seat on the board of Fairfax Media, a principal source of criticism of the mining industry.

If she gains a controlling interest in Fairfax Media, an indication of the company’s future is provided by her involvement with Channel 10. Her acquisition of a seat on the company’s board followed the introduction of the super-profits tax. Not long after she gained her directorship, the channel’s current affairs program, presented by former ABC personality George Negus, was replaced with a program run by rabid right-winger Andrew Bolt.

Predictably, Rinehart’s defenders have claimed she had nothing to do with these events.

A sinister threat

Rinehart is the daughter of mining magnate Lang Hancock. She inherited part of his fortune, and all of his greed and ruthlessness. Her total wealth is now estimated at $20 billion. That figure may rise to $80 billion within the next two decades, because of the booming trade in minerals with China, India and other Asian nations.

Her financial prospects recently rose with the signing of a contract to supply a South Korean corporation with vast amounts of iron ore from her Western Australian mines. She is widely expected to become the richest person in the world.

Media attention has been stimulated by Rinehart’s acrimonious personal life. After her father died notorious legal battles ensued with her stepmother over the family fortune. Three of her children recently took her to court, claiming that her skyrocketing wealth has put them and their families in danger from criminals and the insane. They want her to pay for continuing security guards for the family members, and they want her removed as head of the trust that owns 24 percent of the very lucrative Hancock Prospecting.

In turn, she threatened to cancel the abduction insurance she took out on their behalf, unless they support her application for suppression of media coverage of the court case.

However, the current focus on Rinehart is misleading, because her attempts to gain media influence are only part of a far wider campaign by the minerals industry to muzzle its critics.

Other mining tycoons, including Andrew Forrest, are also interested in gaining media influence. Clive Palmer has suggested an “east-west” tactic with Rinehart to take over the Fairfax board. Sections of the mining industry are already paying for media advertising, for example the coal seam gas industry’s TV blitz in the eastern states. The industry has already proven its power by its massive media campaign against the super profits tax, which resulted in replacement of the nation’s prime minister and the watering down of the tax by his successor.

The Gillard government is considering replacing the cross-media rules with an independent media commission. That’s pretty worrying. The history of the stricken Murray-Darling Basin Authority has shown that a truly independent commission can always be replaced with one whose findings are likely to be entirely different.

In the meantime, the Rinehart saga is revealing the mining industry as the most powerful, ruthless and avaricious section of Australian capital.  

Next article – CPA campaign for Port Adelaide – step towards left unity

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