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(generated from captions) This program is captioned live. Welcome to Business Sunday. Good morning. I'm Ali Moore. one good idea to make your fortune Well they say it takes only over a 6-pack and pizza and Sydney-born Mitch Davis had his four years ago. was to put ads into video games His spark of genius York-based company to Microsoft and a few weeks ago he sold his New for more than AUS$500 million. to see his mum This week, he came back to Sydney and we caught up with him. coming out of college I play guitar and back in the day be a rock star that's what I wanted to do, talent that got in my way. It was the complete absence of destined to be a professional muso. Mitch Davis mightn't have been But while he's jamming with friends, what it's like he can only be pondering US$400 million. to be worth a reported

And while you've seen and read a lot of the miners in Tasmania, about the great escape we dig a bit further this morning,

in the business behind Beaconsfield looking at Macquarie Bank's role in a special report. Beaconsfield was a very rich mine, Until the Anzac Day disaster, from the ground since 2002 $40 million in profit had been pulled not a single cent. but shareholders have seen with a skeleton crew since June 2001 It seems the company has been run one mine manager with one administrator, who's also the company secretary. and one director some companies will go to Plus - we'll find out what lengths to keep good staff. changed the game for investors. And ask how the last few weeks have the news with Kellie Connolly. But first - a Sydney court tomorrow A man and woman will face overnight after being extradited from Perth to a double murder in March. to face charges relating woman were arrested on Tuesday The 23-year-old man and 30-year-old by Western Australian police, from their Sydney counterparts. following a tip-off of gunning down two men Farhard Kaumee is accused in Granville in Sydney's west.

was boxer Bassam Shamee, One of the victims before he was to be married. killed just four days of the Bush Administration in Iraq. John Howard's staunch support where a protester heckled Mr Howard That was in Washington,

to hold a press conference. as he tried


has just touched down in Ireland. protesters have recognised Once already on this 2-week trip, of the Bush Administration in Iraq. John Howard's staunch support

where a protester heckled Mr Howard That was in Washington, have already told local news media In Ireland, anti-Iraq War protesters to hold a press conference. as he tried

a public demonstration they're likely to stage by the visiting Australian leader. against the position taken visit - with the organisation of the state are also unhappy Irish opposition leaders

has been given too little notice one complaining the Parliament of Mr Howard's visit, and another suggesting a meeting with the Aussie PM. his party should have been allowed is likely to receive a warm welcome However, John Howard from media owner Sir Anthony O'Reilly who's company, Independent News and Media, whose company, has Australian radio interests. are long-time friends Mr O'Reilly and John Howard a meeting with him. and the PM has scheduled have speculated Already news media in Ireland

Government's planned media reforms the two will discuss the Howard and the possibility cross-media ownership restrictions that a relaxation of the foreign and to increase his Australian holdings. will allow Mr O'Reilly visit with a rest day John Howard will begin his Dublin an address to the Irish Parliament before two days of meetings and later in the week. prior to his flight home

National Nine News. Tim Lester, its controlling stake in Telstra the Federal Government could sell There are reports

in October. a source in the government says The 'Sunday Age' claims is a more attractive investment there are moves to ensure the Telco for its 1.6 million shareholders already stung by loses on their T2 shares. already stung by losses has approval to sell Telstra Finance Minister Nick Minchin by the end of the year. reported $196,000 compensation payout ACTU President Sharan Burrow says the for Beaconsfield widow Jackie Knight is not acceptable in the prime of his working life. for a man killed Bill Shorten's comments Her claim follows Union Secretary State compensation law that the money under the Tasmanian available under a federal scheme. was still more than would be Mr Shorten says far superior to a federal scheme the States schemes are still which is threatening to take hold. will have the first interview And the Nine Network Brant Webb and Todd Russell, with the two survivors,

the Great Escape tonight at 8:30. in a 2-hour exclusive special about speeding in a 40km/h school zone. Federal MP Danna Vale has been caught the Gymea school in Sydney's south The incident happened outside where an 8-year-old girl was killed four years ago. while trying to cross the road

her $75 fine, Ms Vale is reportedly fighting were too confusing. claiming the varying speed limits after a high-speed chase A man has been charged overnight. through Sydney's western suburbs into a police car It ended when the vehicle crashed to bring the chase to a halt. after road spikes were used for minor injuries A female passenger was treated taken to hospital but wasn't injured. while a toddler found in the car was Police allege the car was stolen. will appear in court today. The 24-year-old driver After months of police wrangling, After months of political wrangling, unity has finally been sworn in, Iraq's new government of national to an era of stability. a move the US hopes will lead was meeting, But even as the Parliament

that left up to 30 people dead. with a series of attacks the violence continued outside

a powerful typhoon has now risen In Asia, the death toll following to more than 100. more than 400 missing fishermen. Rescuers are searching for from the South China Sea. So far, they've plucked 97 people have caused widespread damage Winds of up to 170km/h

in China, Vietnam and the Philippines.

Super 14 rugby, Canterbury has

beaten South Africa's Bulls. The beaten South Africa's Bulls. The

defending champions outscored the

South African side five trys to

tworbgs setting up an all-NZ final. tworbgs setting up an all-NZ final.

The crusade ers will host welgton

after the hurtains beat the

Waratahs. The coach of the Waratahs

is lodging an official complaint

of the ref lee's handling of the match. In AFL, the Sydney Swans have scored their fourth straight victory, defeating the Western Bulldogs at the SCG. The triumph takes Sydney to five wins from eight matches this season. In other results - In the NRL, Newcastle has claimed top spot on the ladder. The 14th-placed Warriors chalked up their first win since round seven by turning on six tries to two at Ericsson Stadium. Taking a look at the weather around the country: I'll be back at 8:30 with an update. But now it's back to Ali. Back in a moment with Mitch Davis - a bright idea over a beer and now he's worth $500 million. I bought every game on the shelf took them home, locked myself into the apartment for the weekend and literally played games all weekend. Ordered a 6-pack of beer and pizza and away we went. Remember when this was a common sight? But not anymore. Not so long ago, this was the accepted norm. But now we know better. And we all know that the way we use water has had to change.

That's why permanent water conservation measures are now here to stay. In other words, responsible water habits are our new norm. For more information, contact ACTEW's Water Conservation Office. What's in a game? Well in the case of Sydney-born Mitch Davis, more than AUS$500 million. His is a classic tale of coming up with a single life-changing idea and in Davis's case, only a few weeks ago, selling it to the world's largest software company, Microsoft. Now 44, Davis is the founder of Massive, a New York-based company that unites advertisers with video game publishers, but this week he was back in his home town, where he spoke to Katrina Nicholas in this exclusive television interview. I play guitar. Back in the day, coming out of college that's what I wanted to do. I wanted to be a rock-'n'-roll musician. It was the complete absence of talent that got in my way. Mitch Davis mightn't have been destined to be a professional muso, but while he's jamming with friends, he can only be pondering what it's like to be worth a reported US$400 million cash. What on earth do you do with that amount of cash? That's a good question. You just threw me for a loop. It's a classic case of having just one good idea that sets you up for life. Davis won't say how much the deal's worth or how what percentage of Massive he owns, but he's the largest shareholder. I'll probably buy a motorbike or something like that. No, the reality is we're just focused on building out the business and see where we go from there. We'll probably do some charitable activities and a few things like that. Do you pinch yourself, though? It's a lot of fun, if you think about it, and immensely satisfying to come up with an idea - and a lot of people come up with ideas - but then to be able to build a fantastic team around it and to execute it and to turn it into something that's real. He's a Sydney boy, born and schooled here in between stints on his family's property near Armidale. And early on he displayed a flair for making money. So you started first business at what? You must have been about six. I was in primary school over near Longueville and I guess I had this predisposition or proclivity for money. My first idea was to start a club. The idea of the club was that everybody had to join and pay a weekly due. And so I was taking people's play lunch money every Monday - voluntarily, I might add - and so I was over a period of weeks collecting shoeboxes full of money. A marketing degree at NSW University didn't do anything to extinguish that spirit. I've always had an entrepreneurial bent. For instance, when I went to university, myself and two other university students started a small business importing toys out of South-East Asia, and we would try and sell those things. And not long after, the bright lights of America beckoned. I got an opportunity to go and work with Encyclopedia Britannica and move to San Francisco. And they were building out an Internet portal. And at first I worked on an educational portal and then they invited me to come to Chicago to run, which was their consumer facing portal. We saw the Internet advertising market really take off. Obviously running ad sales there, we saw the big brands start to move in towards the 1999-2001 period, when the reach of the Internet became very substantive. What this really plays to is the fact that 18- to 34-year-old men have moved away from TV almost in wholesale volume towards video games. So if you look at the usage, about 70% of 18- to 34-year-old men play games and they play games on average about two hours a night versus their TV viewership, which is down to about 27 minutes. Wanting to get a better grip on the emerging market, Davis spent up big, buying video games galore. I was doing some quite "hard-core" research. I wanted to understand the market and find out what kind of games were out there. And the best way to do that is just to play games. So I went and bought an Xbox, I bought a Playstation, I bought every game on the shelf. I took 'em home, locked myself into the apartment for the weekend and just literally played games all weekend. Ordered a six pack of beer and a couple of pizzas and away we went. And it was interesting. About the third or fourth game I played was 'Vice City', which is a Take-Two game. It's the number-one selling game of all time. It's a phenomenal game. It's set in Miami. As you play the game, there are billboards all through the game - billboards and posters and outdoor-style advertising. But all the ads were fake. And I looked at that and thought it would be better if they were real ads because it would make the game look more realistic. And then with my commercial bent on, I said, "Hey, what if we could change those out dynamically?" That was kind of the 'a-ha' moment, if you like. So I jumped onto the Internet to see if anyone was doing it. To my absolute shock and surprise, nobody. And so we decided to go for it. And so Massive was born. Its technology allows real ads to be delivered in realtime. Not that industry execs liked the idea first off. Sceptical. Sceptical's actually an understatement. I think the very first publisher I showed it to - we were very proud of the technology. I gave them a demonstration.

I turned away and I said, "What do you think?" And he said, "Hate it." He said, "Look, I would never pimp out my game "by putting advertising in it." But soon industry dynamics began to change. The primary driver there was that the industry needed a new revenue source. And it was at a time when production costs were really starting to escalate with next gen. So games were moving from costing a couple of million dollars up to $10 million, $15 million, $20 million and margins were being squeezed at the retail. The publishers really needed a new revenue source and here was advertising. When you look at the ad spend against 18- to 34-year-old men on TV in the US last year, it was about $12 billion. So that's a big advertising market. Meanwhile, on the games side of things, as you know, it's a $28 billion plus market growing at about 25% compound. So it's a very, very exciting entertainment market. And I think games over the last few years have really emerged as the dominant form of entertainment, particularly amongst the digital assets.

In-game video advertising is forecast to be a $4 billion market by 2010. South Korea, right - population of 40 million people, and 25 million play games. Its scale has taken even Davis by surprise.

I don't think we ever thought about that. When we first started the company four years ago, we thought this was an exciting market. We didn't realise how big it was going to be. But as the market really started to take off, and it did, we kept recalibrating our expectations. At the end of the day, the advertising industry is $580 billion on a global basis so it's far bigger than the cinema industry, than the games industry, it's far bigger than the software industry, it's far bigger the music industry. So you can think about changed economic models that put very high-quality content in the hands of consumers in an ad-supported fashion. Davis's dough is sitting in the bank. And he says it's still the simple things that count. The first thing you do when you get off at the airport is you go straight to Bondi Beach, throw the gear off, dive into the surf - fantastic.

I think that's one of the reasons why Australians are so successful on the international stage. laconic sense of humour. You've got this ability to do business in a very straight-ahead fashion. I think on the international stage it plays very well. And being a squillionaire by any normal person's standards, he claims, won't change him. I hope not. I don't think you get much of a chance to do that. You come back, hang out with the boys on the weekend, and have a couple of drinks and it's all in perspective. It's all about being true to yourself. When we come back - Budget tax cuts, a hike in interest rates, inflation worries and falling consumer confidence Is it the start of something big for the economy and investors? We talk to market watchers Shane Oliver and Gerard Minack.

Absolutely beautiful.

I'll take it. Excellent choice, madam.

I'll wrap it for you now. Absolutely beautiful. I'll take it. Excellent choice, madam. I'll wrap it for you now. The past week has seen the biggest one-day fall on the Australian sharemarket since last October, the biggest fall on the US market for three years, a decline in consumer sentiment here at home and growing worries about inflation around the world. Indeed, in recent weeks there's been much to concern local investors. On top of everything else, there's been an interest rate rise and a Federal Budget. To look at what it all means, I'm joined in the studio by the AMP's Shane Oliver, who's still a bull on our market, and Morgan Stanley's Gerard Minack, well-known bear.

Good morning, gentlemen. Gerard, I

will start with you because I know

last time we spoke about a month

ago you telt felt like a party

pooper with your words of caution.

Is there a spring in your step? Is

this the start of the bear market?

I am not sure. Everybody when we

had our panel discussion a month

ago, Shane included, were all

expecting a correction. The panel

got that call right. We all knew a

correction was coming. Whether it

is the start of the big bear market

I am looking for, I am not yet

convinced of T net year will be

the real problem. We may see

turbulence in markets at the moment.

Things may settle down,

particularly if people reduce

thraur fear abouts interest rate

increases. We might get one last

rally. That is when I want to sell

everything and hunger dare for a

very bearish '07. Do you see this

correction with a bit further to go

before that rally happens? I think

so. A correction this one is of an

order of magnitude to what we saw

last ookt. There is more hot money

in the markets than in last October.

We might see another week or two of

turbulence and settling down. If we

get weak data out of the States, we

might see a sigh of relieve leaf,

get back into the market, have a

run to the end of the year. If we

start to get the serious detier

yaition, the fundamentals above all

growth in earnings forecasts that I,

I think '07 could be tough both in

America and here. Shane, I know you

see the correction having a bit

more of a run to G do you say '07

is tough? No. My feeling is that

this is a correction we had to have. this is a correction we had to have.

We had a huge run in markets until

a week or so ago. Markets were very

overbought. We saw a couple of

corrections last year, both of the

order of 8%. We are going through

one of them. We are 5% now? We are

5% down from the top. Global markets, incidentally, a lot more markets, incidentally, a lot more

of them are down from the top:the

Japanese market had a 9.5% fall and

the sish and markets similar. Our

market hasn't fallen as much as

global markets. We are in for

roughness now. I wouldn't be

surprised if we had a rally into

July and August and roughness into

September and October. That is the

pat thaern markets play out through pat thaern markets play out through

the year. As we go into next year,

I would see it as a reasonable year

for markets. I don't see a bear

market on the hor sigh son any time

soon. How much do you think this

correction has to go? I think I

read somewhere thaw think perhaps

even another 10%? We could have a

bit more by the time we get out to

September or October. Last year, we

had a couple of corrections of 8%.

So far we haven't seen that things

this time around are a bit more

overheated if you like. The bull

market has gone on for a bit longer.

Commodity price advice gone up a

lot higher so it is quite

conceivable that by the time we get

to the bottom in a few months we

will have gone down quite a bit

more than those correction wees saw

last year. I would still think that

this is a bull market correction.

It is not the start of a bear

market. My feeling is that by the

time we get to the end of the year,

our market will be making new

highs again. Net Let me ask you

about valuations because one of the

things you have argued that the

market is not overvalued on a PE

basis. They are looking less

acktrack tif? It is still ack tract

tif. We are pushing 5,100. PE is

one of the most common valuation

metrics, the ratio of share prices

to consensus expectations for

earnings over the next is it h12

months is currently around 15 times.

The 10-year average is also around

15 times. It is edging up, isn't

it? It's been edging up. A couple

of years back it was 13 times. We

were are nowhere near where we were

at 1999 at the top of the tech

bubble when the PE was 18 times and

on US shares it was 25 times.

Gerard you would have to concede

that? I do. This is quite a

different market to what we saw in

the late 1990. Then they PE did get

lewd us crews. The earnings are so

high now. We now have earnings at

an all-time high relative to GDP,

returns on equity at an all-time

high and market capitalisations to

GDP at all-time highs. We have

earnings risk and valuations risk.

Those earnings are unsustainable

across the market. I would look

particularly in Australia at the

financial sector, which after all

broadly define sudden 45% of our

equity market, as the part of the

market most at risk. What about the

one thing that is making people

nervous at the moment - inflation

in the US. How big a worry is it,

Gerard, and why? The inflation

risks are higher today than they

have been for some time. If you

assume - and I do - that central

bankers will be as good a as their bankers will be as good a as their

word, we will not see an inflation

risk. We may see an interest rate

risk. Rates may have to go higher

than we have been expecting to

ensure inflation is under control

in two or three years. If interest

rates go up, that will put a lot of

pressure on what I think is an

overstretched US consumer.

Ultimately I think what is the big

threat to this market is not

inflation or interest rates. It is

the consequences of a big consumer

slowdown as interest rates rise in

the interim. I Shane, your thoughts

on the US economy, I know. Do you

think it will take interest rates

to slow down or is it already

slowing? It is already slowing. We

are virtually at or close to the

top in terms of interest rates.

Inflation is a lagging indicator.

We have seen a flow-on to inflation

from oil prices and het roll prices

generally. We are seeing a slowdown

in the US housing market. It will

take pressure off US interest rates.

It will head off an outbreak of

inflation. I don't see a collapse

in the economy in the US. We were in the economy in the US. We were

concerned a couple of years ago concerned a couple of years ago that it would collapse and drag

down the Australian economy. It has

not happened. Housing and

consumer spending has showned. It

is motoring along at a reasonable

place. It is the same in the US.

Less pressure on interest rates but

by the same token nowhere near a

collapse in the US economy. Is the

difference of opinion on the US a

difference in core on the market?

It is a large part of it. We didn't

slow as much as I expected but we

had the commodity price boom we are

getting excited about. Those price

rises have been a tail wind for us

and a head wind for America. The

housing downturn there will have a

much bigger impact on the economy.

The difference I would see is that

there is a strong corporate sector

in America. You have corporate

earnings in the US running at high

levels. That will underpin

continued business investment in

the US. Let's do this all again in

a month's time. Thank you very much

for joining us. Thanks. Thanks. AMP Capital's Shane Oliver and Morgan Stanley's Gerard Minack. Ahead in our second half hour - Beaconsfield

and the question the Anzac Day rockfall raises for the businesses involved in the mine. And we look at the incentives employers are using to retain staff those stories coming up on Business Sunday.

Coming up - Terry McCrann with his view on the volatility in the economy. But first with a news update, here's Kellie Connolly The ACTU President says the reported $196,000 compensation payout for the widow of Beaconsfield miner Larry Knight is not acceptable. The

union leader Bill Shorten says

the money available under the state

system is more than would be

available under the Canberra system. PM Howard has arrived in Dublin for the last leg of his 3-country overseas trip. Mr Howard will meet the Irish PM and President as well as the country's most prominent media owner. And there are reports the Federal Government could sell its controlling stake in Telstra in October. The move apparently aims to ensure the Telco is a more attractive investment for shareholders stung by losses on their T2 shares. More news in the 'Sunday' program at nine. Ali. Well, before the break we heard from Shane Oliver and Gerard Minack about our changing economy. Here's Terry McCrann's thoughts.

Last week I suggested the single

most important factor in all our

futures was not the Budget but the

16th US interest rate hike and when

and if there would be a 17th. Boy,

just one week and $60 billion of

market wreckage later we can say,

"And now." The important bit, the

really tricky bit, for you to

understand and for you to work

through is the volatility of the

key data and, even more, the

volatility of how people see T the

overriding flavour of the week was

higher inflation in the US so it's

supposedly going like this -

inflation up, interest rates, up,

more and sooner than redrikted.

Rates up, market down. Global

market slower, commodity prices

down, double whammy for our market.

But you have to throw into the pot

that volatility. One day the data

points to higher inflation, the

next it points to almost the

opposite. The US economy slowing.

The absolutely basic key is to try

to look through all that da-to-day

noise, what is really happening,

what is the Fed really like to to

do with interest rates? At this

point, in my judgment, the forces

of a strong economy and so

inflation and interest rate

pressure, are still in the as sen

dant. Finally, all that volatility

my make you appreciate our Reserve

Bank's success in making rate

changes few and far between. Getting

there by tweaking early, as best it can judge. And in the 'Sunday' program today - part two of Attention Deficit Disorders a hidden epidemic or a mass overdiagnosis?

I noticed at work that I could

actually listen to people and not

constantly kind of being distracted. constantly kind of being distracted.

If adults like Kellie can be

convinced they have ADD, it means

huge potential profits for the

pharmaceutical industry. The drugs

for attention deficit disorders

bring in nearly $3.3 billion a year. And still to come on Business Sunday - the story behind the Beaconsfield gold mine and the involvement of Macquarie Bank. We do not have directors of We are the banker to Allstate. Do you control the mine? Do you control the mine No. (Pigs squeal) ANNOUNCER: It's true!

For a short time at Optus, you can get the latest handsets for unbelievably low prices. Like the Samsung X660, featuring Video Capture, for only $199 on Optus Pre-Paid. Or the Sony Ericcson K750i for nothing upfront on the 'yes' 35 Plan. Plus, with the K750i, you can redeem a free movie ticket to see 'The Da Vinci Code'. So for deals you never thought possible, hurry and fly in to your nearest Optus World before May 31. Yeah! Now that the miners have been freed from Beaconsfield, it's time to find out how the fatal rockfall on Anzac Day could have happened. The Tasmanian Government is yet to confirm the terms of a judicial inquiry but unionists and shareholders say corporate governance as well as mining practice must be investigated. For the past five years the mine manager, Allstate Explorations, has been in voluntary administration as the mine's cash flow was directed to Macquarie Bank. There was no board of directors on hand to review the operations at Beaconsfield, leaving administrator Michael Ran in the hot seat. Adam Shand reports on what could be a corporate minefield in Beaconsfield. TRACY GRIMSHAW: Here they come. KARL STEFANOVIC: There it is. Todd Russell and Brant Webb have emerged from the depths of the Beaconsfield mine, ending their hellish 2-week ordeal. KARL STEFANOVIC: Oh, look at them. What a moment for them. But spare a thought for the shareholders of this mine, like Jeffery Knapp. After five years, he's still wondering whether his investment will ever see the light of day. We felt for a while that we had been in the dark. We didn't get a set of accounts from this company for over 16 months despite the law having a clear requirement for that to happen. And, yes, we still feel like we're in the dark on a lot of issues.

Until the Anzac Day disaster, Beaconsfield was a very rich mine. $40 million in profit had been pulled from the ground since 2002. But shareholders have seen not a single cent. Though it was solvent, the mine manager, Allstate Explorations, was still in voluntary administration under the control of this man, Perth accountant Michael Ryan. For the administration to have gone on five long years, been under investigation by ASIC, ASIC now are saying that they would reopen their investigations, so obviously things aren't quite right. For this administrator to be going forward now running this mine is patently ridiculous. For the past year, shareholders of Allstate have sought the appointment of a special purpose administrator to investigate the actions of Michael Ryan. The tragic collapse which caused the death of miner Larry Knight

has focused further attention on the management of the mine. the Pandora's box. I think it's opened up the Pandora's box There are matters that we raised as shareholders for many years from 2002 onwards. I think these matters will now be properly addressed. What are they exactly? They are in relation to the control - who has control, of this company. who is directing the operations of this company of the company - In terms of the governance of the company who is making the decisions. Why is there only one director? In terms of the accountability - why the financial reports seem to have so many errors. And in terms of the administrator himself - has his decision making been appropriate So where has all the gold gone? Well, Ryan's firm, Taylor Woodings, its lawyers and other professionals have taken $11 million. Another $27.5 million has gone into the coffers of Macquarie Bank, the banker to the mine's manager, Allstate Explorations. Courtesy of an extraordinary deal in 2002,

Macquarie bought Allstate's debt of $77 million for just $300,000. Allstate was broke at the time so the deal allowed the mining to continue. But the anger was rising even before the mine disaster. Would you invite them back to dinner again? No, I don't think so. Under no circumstances? Under no circumstances. I don't want to ever hear or see Macquarie again if I could get out of it. Is that a common view around these parts? Oh, Macquarie's name in this area is very bad. The mine is a joint venture between the operator Allstate, with 51.5%, and Beaconsfield Gold, the junior partner, with 48.5%. In 2001, the mine's gold extraction plant broke down, sending both companies to the wall. Under the joint venture, the first to emerge would become the manager of the mine. That was Beaconsfield Gold. But for reasons never explained, Allstate remained in control though it was still under administration. It seems this company's been run with a skeleton crew since June 2001, with one administrator effectively, with one mine manager and with one director, who is also the company secretary. Though Allstate was solvent, the administrator stood in place of the board. Allstate could not be returned to its directors until Macquarie had been paid back in full. If Beaconsfield Gold with a full board of directors had become the manager, the corporate governance of the project would have been quite different. Will Matthews is a shareholder of both partners in the mine. If Beaconsfield Gold had taken over the mine, as I understand it, on the board of directors of Beaconsfield Gold there are two senior mining engineers. And the manager director of - not managing director. I think it's the chief executive of Beaconsfield Gold is also a senior mining engineer. So would you have had two layers of So you would have had two layers of extra mine management and experience to discuss issues about should we be going into a dangerous area a rockfall. where there's within been where there's been Now instead there is confusion as to just who controls this mine and who might face liability for the events of Anzac Day. This week Allstate's number one creditor, Macquarie Bank,

tried to distance itself from its client. We are not a shareholder in Allstate.

We do not have directors of Allstate. We are the banker to Allstate. REPORTER: Do you actually control the mine?

No. Throughout the Beaconsfield crisis, Macquarie Bank has strenuously denied it controls the mine or influences management decisions. It's threatened to sue any media that makes that claim. But the administrator, Michael Ryan, took a different view back in March 2002 when he met creditors to discuss the bank's proposal to buy Allstate's debt. In the minutes of the meeting, Ryan was quoted as saying the deal was an unusual one that creates an environment of an ownership role by the bank. Certainly as owners do, Macquarie Bank has reaped the benefit of that deal ever since.

The two Macquarie executives responsible for the original transaction with Michael Ryan attend almost every Beaconsfield mine joint venture committee meeting. I think they are held on a quarterly basis. There's also been a Macquarie geologist who has turned up to a couple of meetings and there are regular telephone hook-ups. Michael West of the 'Australian' newspaper has followed the Beaconsfield saga through its many twists and turns. If there is a judicial inquiry held into the disaster, he says corporate governance must be included in the terms of reference. I don't think you can attach blame but I think these issues must be addressed. How can you have a mining company, especially with a mine so technically intricate as Beaconsfield - a deep underground project - where it is ultimately run by one guy who lives in Perth?

In the light of my last three weeks that I've spent at Beaconsfield and listening to AWU members, I have no doubt that the company structure is a vital question in determining was there - did that contribute to any lack of safety at this mine? Did it contribute in some fashion to the fatal Anzac Day rockfall? Australian Workers Union chief Bill Shorten has already raised concerns about the culture of safety at Beaconsfield under the administrator. Lessons learnt from a rockfall last October were apparently not put into effect. A lot of miners did have concerns in the weeks and months immediately preceding Anzac Day. We think this is disturbing. We don't know why this wasn't picked up. But talking to all of the miners, including the rescued heroes themselves and their rescuers, we're hearing there was a sense that issues wouldn't be followed up.

And whether or not this is fair has to be tested by an inquiry. One of the points, though, I have noticed is that since the October rockfall, the administrator never met with the actual workers themselves. Ryan's appointment will also be probed in the Allstate class action. John Walker of litigation funder IMF, which is running the case, says Macquarie would have preferred the court appointed administrator running Beaconsfield rather than its own receiver manager. A receiver would have given Macquarie direct liability for the running of the mine. It would have also meant that Macquarie and the receiver were at risk in respect of the mine, of, as a principal, mining gold and also would have exposed Macquarie to reclamation expenses in the event that they couldn't get a sale away. So a receiver at that time wasn't seen to be appropriate. Macquarie has made an offer to donate $47.5 million, the balance owed on its Allstate deal,

to a trust benefiting the miners. If Allstate is liquidated and the mine closes, the deal is rendered worthless. Whatever happens, the lustre has certainly gone off what was until recently a golden deal. It's looking like a very ordinary deal right now. More than anything else, it's reputations. For Macquarie this is something they just do not need. This is a very large global organisation now and they should have come to a resolution and left the situation a long time ago. A judicial inquiry with wide-ranging powers must now decide who made those fateful decisions at Beaconsfield and who must pay the cost. In my experience with organisations and corporations, when it comes around time to pay high executive salaries and bonuses, everyone can explain to you how they contribute. My concern here - and this inquiry may or may not bear my concern out - is when it comes down to who made crucial decisions, I just hope it is not the tea lady or an underground miner who get blamed for these catastrophic events. B who get bl AWU Secretary Bill Shorten ending Adam Shand's report. We did ask Macquarie Bank to appear on our program but they declined. And don't forget Nine's exclusive interview with the Beaconsfield miners will go to air at 8:30 tonight. After the break - the unusual things companies are doing to keep good people.

I think the best thing is that it brings everyone together from senior management down to the people doing the grunt work. It's no secret Australia is facing a skills shortage and with the average cost of replacing a high-level executive now sitting at around $70,000,

staff retention has never been higher on the corporate agenda. To try to ensure they keep their staff, companies are providing some innovative and unusual incentives. Joanna Townsend reports. Luc Bondar is the national business development manager at Carlson Marketing, spending most of his time drumming up new business for the firm. At Carlson's conference last month, every employee got a drum or percussion instrument, then had to use it. I've always felt that I had a drummer in me and it bought it out.

But more than anything, it was just great to make that sound together. It sounded fantastic. I never would have thought that as a team we could do that, so it was very cool. The best thing about it is that it brings everyone together, from senior management

right through to basically the people who do all the grunt work. And it means that everyone is doing the same thing. Everyone is working together to do that same thing. Yeah, it's definitely a good outcome. And did you work up a sweat? I did, yeah. And there's more sweaty work for the iron chefs from Alcon. They've decided to try their hand cooking together at the Cheeky Food Group.

They'd already been through all the usual corporate bonding activities, and they wanted something different. We had done all the high and low ropes courses, all the outdoor team challenges, things like that. We were looking at something to bring the team together as a whole. I think now people are looking for things that are more experiential, where people can really learn some new skills. I think people are looking for something where they actually get to genuinely create something together that they can be really proud of. And it's an immediate reward. They get the immediate hit of having done something together. And the better they do it together, then the better the reward is. In a strong work market and with a national shortage of skilled workers unlike anything ever seen in this country, employers are dreaming up bigger and better activities and incentives to ensure staff retention, moving away from the traditional lucky door prizes or incentive weekends in Fiji and the Great Barrier Reef. Well done. The publicans from Independent Distillers usually work behind a bar but today they have gone for the ultimate hands-on experience - strapping themselves into the V8s for a spin around Eastern Creek.

It was the best ride of my life. I nearly lost it at the back corner over there. Just pure adrenaline. Nothing but adrenaline. It is unreal. Yeah, I'll be back. Peter Brock, watch out. If you are talking about experiences,

it doesn't get much better than this - driving your very own V8 race car at speeds of up to 200km/h. But critics of these kind of events say it only gives a short-term loyalty hit. Nick Waterworth is chairman of Ambition, a recruitment company that specialises in career development. He disputes spending big money on corporate bonding events saves you the even bigger costs of finding a replacement worker. I think probably companies are either perhaps looking for the lazy way out or overrating it. Is it just a short-term hit?

It possibly is a bit like a sugar hit in that in the days or couple of weeks afterwards there's a lot of good vibe, but it's not a thing that is going to last for 6 or 12 months. So this begs the question - how else do you ensure staff retention? I think people stay in a job because they've got respect for senior management, because they feel they are well coached by their immediate boss. None of it is, "I've been out on a great party." Well, all of that may be true. But I don't see any of these folk handing in their resignations just yet. That's Business Sunday for today. Transcripts of today's stories and those from past weeks can be found on our website. Just log onto: 'Sunday' is next, featuring a major interview

the Australian Workers Union Secretary Bill Shorten. I'm Ali Moore. See you next week. Supertext Captions by the Australian Caption Centre. you'll love new Just Right Berry & Apple Flavour, with apples, strawberry pieces and the goodness of wholegrains, it's a perfect balance of the fruit you love KNOCK AT DOOR Is it still possible to get a table? Inspired recipes that will turn your home into a restaurant.