Independent Newspapers CEO Tony O'Reilly was to face his sternest test yet at
what was likely to be an explosive shareholders' meeting June 13, as a
damning report will cast the spotlight firmly on whether he is the best
man to be running the company, writes Rob Rose in Business Day.

This has a number of implications for SA as the Independent Group is the largest newspaper owner in SA, publishing 15 daily and weekly newspapers including the Star, the Cape Argus and the Sunday Tribune.

It also holds 50% of outdoor advertising network Clear Channel, and publishes three magazines: House & Garden, GQ and Glamour. O'Reilly is a member of President Thabo Mbeki's investment council.

Today O'Reilly is likely to be grilled on whether he is giving minority investors a raw deal by failing to implement proper governance at the company, which is listed in London and Ireland.

The report was commissioned by billionaire Denis O'Brien, who has increased his stake in the Independent Group to 8,3% — possibly positioning himself for a broader assault on O'Reilly, who owns 26% of the company.

The report was written by governance expert Stephen Davis, who serves on UK Prime Minister Tony Blair's committee on economic reform and is a co-founder of the International Corporate Governance Network.

It concluded that the Independent Group "falls markedly short of best-in-class corporate governance when compared with either home or global markets".

"The firm's Achilles heel is a board composed of directors who nearly all have affiliations in some fashion with the principal shareowner, who is also the CEO," it said.

It said this could "undermine investor confidence" as the market "is likely to price the stock at a discount owing to risks investors see in a crony board".

Click here to read the full report, posted on Business Day's website.