Paul McIntyre: Ringside at the great Telstra punch-up

Prime Minister John Howard is about eight weeks away from getting that big gorilla called Telstra off his back via the A$8 billion T3 share sell-off. It won't come a day too soon.

The Government was banging heads again this week with Telstra's two naughtiest monkeys - chairman Donald McGauchie and chief executive Sol Trujillo - as they openly revolted against moves by Howard to get one of his old pals on the Telstra board to essentially serve as a corporate spy for the Government.

At least, that's how Telstra's board saw it on Monday when it rejected the Government's nomination of former Packer company board director and Liberal Party advertising guru Geoff Cousins to join its boardroom table.

The unprecedented display of defiance from Howard's turncoat chairman McGauchie, and Trujillo, has the Prime Minister fuming.

Howard may want to get out of public ownership of Telstra but he's equally keen to maintain some influence over what he sees as a defiant and reckless board.

Two weeks ago Howard told McGauchie he would insist on Cousins' appointment to the board, a move its directors saw as overt interference in a public company.

The official line from the Telstra board on Monday - a week after it held an urgent phone hook-up to gauge individual director reactions to Howard's demand - was that it had not "the opportunity to due diligence" on Cousins and "having regard to the independence of the board's charter".

Cousins' history includes serving as a one-time board director for the Packer-controlled PBL and as chief executive of the failed Pay TV operator, Optus Vision.

He was also the long-running chairman of one of Australia's oldest and biggest advertising agencies, George Patterson, and has served as a chief election advertising strategist for the Liberal party, although not all of his political propaganda has been successful. He was the mastermind behind the Liberals' failed 1990 federal election campaign under then leader Andrew Peacock - the slogan was "The Answer is Liberal", even though the party knew before the campaign started that the public was not going to buy Peacock.

Paul Keating ridiculed the idea at the time with this: "If the answer's Liberal then it must have been one helluva question."

Telstra's board clearly agrees with the former Labor Prime Minister and if the official Telstra statement was not clear enough on Monday about Cousins' arrival, Trujillo pushed the barrow even further.

He had his spin doctors ensure a pack of journalists were on hand to ask him questions on his way into a corporate lunch at a swank Sydney hotel.

The journalists predictably asked the questions Trujillo wanted.

He told them the Government's handling of Cousins' appointment was "unfortunate" in the context of Telstra's T3 sales process. "I think it raises a lot of questions in the eyes of many investors and potential investors," he said.

Still, Cousins' appointment is a no- brainer after the Government said it would use its 51.8 per cent stake to ensure its man gets the gig.

And the Government got its own payback on Trujillo and friends a few days later when revelations of the chief executive's A$8.7 million pay cheque bounced out of Telstra's annual report - Trujillo received a short-term bonus of A$2.58 million despite Telstra's share price slumping since he started in July last year.

It was an opportunity Howard and Treasurer Peter Costello could not resist. Costello challenged Telstra's directors to justify Trujillo's A$8.7 million package when Telstra's stock was trading at an all-time low and he and Howard again used the issue to sledge Trujillo's defiance on the Cousins' appointment.

"Chief executives of companies are answerable to boards and don't normally comment on board appointments," Howard said on Tuesday. "But our position is very clear: we're supporting Cousins and we are doing that because he is a very qualified person."

The Government's attack dogs were also briefed about their role - led by Victorian Liberal senator Michael Ronaldson.

"You have to wonder who is the organ grinder and who is the monkey when it comes to the CEO and the chairman," he said. "Trujillo would be doing the shareholders of Telstra a big favour if he concentrated on running the business rather than sticking his nose into board appointments."

And so the great Telstra punch-up continues and most likely will go on until November, when the Government will no longer have a controlling share in the company. But with Cousins' appointment, Howard has ensured he still has one ally among the Telstra revolutionaries.

In the world of espionage, Cousins would be called a spook.

* Paul McIntyre is a Sydney journalist.