Daily Bulletin


News

  • Written by Clinton Fernandes, Professor, International and Political Studies, UNSW

The attention being given to possible covert influence being exercised by China in Australia shouldn’t distract us from recognising that very overt foreign influence now occurs through investment.

Read more: Inside China's vast influence network – how it works, and the extent of its reach in Australia

Right now US corporations eclipse everyone else in their ability to influence our politics, through their investments in Australian stocks.

Using company ownership data from Bloomberg, I analysed the ownership of Australia’s 20 biggest companies a few days after the 2019 federal election in May. Of those 20, 15 were majority-owned by US-based investors. Three more were at least 25% US-owned.

Worried about agents of foreign influence? Just look at who owns Australia's biggest companies https://datawrapper.dwcdn.net/x0ODc/2/ According to my analysis, all four of our big banks are majority-owned by American investors. The Commonwealth Bank of Australia, the nation’s biggest company, is more than 60% owned by American-based investors. So too are Woolworths and Rio Tinto. BHP, once known as “the Big Australian”, is 73% owned by American-based investors. In the 1980s BHP advertised itself as ‘The Big Australian’. Now that’s all history.The ASX’s top 20 companies make up close to half of the market capitalisation of the Australian Securities Exchange. Such a concentration of foreign ownership should be a concern regardless of how much we see the US as an ally committed to liberal-democratic values, and appreciate that US corporate interests are not necessarily monolithic or necessarily exercised in accordance with a government agenda. Nonetheless, under so-called investor-state dispute settlement (ISDS) clauses, which the US government has systematically pushed in its trade deals with other nations, US corporate investors are getting unprecedented rights in foreign markets. ISDS provisions mean a foreign investor can sue a government for compensation in an international tribunal if the government makes any change in law or policy that “harms” an investment. This is something no Australian citizen can do. Philip Morris’ smoking gun Since I did my analysis, the composition of the ASX top 20 has changed. The bottom four companies – Unibail-Rodamco-Westfield, Fortescue Metals Group, ResMed and Newcrest Mining – have made way for Insurance Australia, Suncorp, Amcor and South32. This, however, has not signficantly altered the dominance of US investor interests. It should also be noted that US investment firms also manage the wealth of foreign clients. But data from CapGemini and Merrill Lynch suggest the majority of assets the firms manage are American-owned, even if the precise number cannot be determined. There are arguably good grounds to include ISDS clauses in free-trade agreements, but the potential downside is exemplified by the case of tobacco giant Philip Morris, which challenged Australia’s plain-packaging laws for cigarette packs. The US company did so by moving ownership of its Australian operations to Hong Kong and then using the ISDS clause embedded in an investment treaty between Australia and Hong Kong. It used the clause to argue the Australian government’s law amounted to unjust confiscation of trademarks and intellectual property. The ISDS clause gave Philip Morris privileges no Australian company or individual had. Even though it lost, having its case thrown out on the grounds it was an abuse of process, it only had to pay half of Australia’s costs, which added up to almost A$24 million. Jonathan Bonnitcha and his co-authors argue in their book The Political Economy of the Investment Treaty Regime that when states take legal action against each other, they have an incentive not to advance legal arguments that may backfire on them down the track. They have defensive interests. Under ISDS clauses, though, private investors don’t have defensive interests. States cannot commence proceedings against them. They can attack with adventurous legal arguments, and not worry about defending themselves from those same arguments down the road. Unlike courts, ISDS arbitrations lack standardised rules of procedure. Predictability of outcomes is much lower. Proceedings are private, not public. Only the final outcome is routinely available, and only if the parties agree. Transparency matters Under foreign influence transparency laws that came into effect in March, “foreign principals” must declare their role in influencing governmental and political decision-making. Foreign principals include governments, organisations, individuals and “entities”. A company falls within the definition of a “foreign government-related entity” if its directors are accustomed or under an obligation to being influenced by a foreign government or political organisation, or if these governments and organisations hold more than 15% of the company’s shares or voting power, or can appoint at least 20% of the company’s board of directors; or otherwise exercise substantial control. Read more: Agents of foreign influence: with China it's a blurry line between corporate and state interests All well and good. Australian democracy benefits when foreign efforts to influence policies are conducted in an open and transparent manner. But should not there be equal accountability and transparency over who owns our most powerful companies, the privileges they have under ISDS provisions, and what happens in any dispute proceedings?

Authors: Clinton Fernandes, Professor, International and Political Studies, UNSW

Read more http://theconversation.com/worried-about-agents-of-foreign-influence-just-look-at-who-owns-australias-biggest-companies-123343

Writers Wanted

Ancient sponges or just algae? New research overturns chemical evidence for the earliest animals

arrow_forward

Silky oaks are older than dinosaurs and literally drip nectar – but watch out for the cyanide

arrow_forward

Scott Morrison's message to China: Don't pigeonhole us

arrow_forward

The Conversation
INTERWEBS DIGITAL AGENCY

Politics

Prime Minister Interview with Kieran Gilbert, Sky News

KIERAN GILBERT: Kieran Gilbert here with you and the Prime Minister joins me. Prime Minister, thanks so much for your time.  PRIME MINISTER: G'day Kieran.  GILBERT: An assumption a vaccine is ...

Daily Bulletin - avatar Daily Bulletin

Did BLM Really Change the US Police Work?

The Black Lives Matter (BLM) movement has proven that the power of the state rests in the hands of the people it governs. Following the death of 46-year-old black American George Floyd in a case of ...

a Guest Writer - avatar a Guest Writer

Scott Morrison: the right man at the right time

Australia is not at war with another nation or ideology in August 2020 but the nation is in conflict. There are serious threats from China and there are many challenges flowing from the pandemic tha...

Greg Rogers - avatar Greg Rogers

Business News

InteliCare triple winner at prestigious national technology awards

InteliCare triple winner at prestigious national technology awards Intelicare wins each nominated category and takes out overall category at national technology 2020 iAwards. Company wins overal...

Media Release - avatar Media Release

Arriba Group Founder, Marcella Romero, wins CEO Magazine’s Managing Director of the Year

Founder and Managing Director of the Arriba Group, Marcella Romero, has won Managing Director of the Year at last night’s The CEO Magazine’s Executive of the Year Awards. The CEO Magazine's Ex...

Lanham Media - avatar Lanham Media

5 Tips For A Successful Blog Layout

There’s far more that goes into making a blog successful than simply having a way with words. How you display your content will have a huge impact on how easy it is to read, and whether people a...

Wayne Burden - avatar Wayne Burden



News Co Media Group

Content & Technology Connecting Global Audiences

More Information - Less Opinion