Some Rare Uncertainty For The Future Fund

Ashby Monk

Six months after Paul Costello announced his intention to leave his post as general manager at the Future Fund, the Australian SWF still hasn’t named a replacement. And now, three months after he apparently told the government that he did not want to continue on as Chairman beyond his five-year term, David Murray has just been re-appointed as Chairman (albeit for a shortened term of only twelve months instead of the normal five years). For a SWF that has been an example of good governance, all this uncertainty is more than a little bit surprising. What’s going on?

Since I’m sitting an ocean away, I’m reduced to scouring the webs for some answers. And, as you might imagine, the Australian press is buzzing with rumors and speculation about all of this. For a taste of the things said, here’s one interpretation of events:

“Today’s announcements of appointments and reappointments to the fund’s board came amidst the backdrop of bitter wrangling within the board and, some say, some disagreement between the Treasurer, Wayne Swan and the finance minister, Penny Wong, over Murray’s fate. Swan is said to have been opposed to his reappointment. In the end a face-saving compromise has been found, with the ministers saying Murray had informed them some time ago that for personal reasons he didn’t wish to serve another full five-year term. So he’s been given an extension of 12 months, although there are suggestions that he might depart well inside the 12 months. It would have been awkward not to reappoint Murray given that the fund is currently without a permanent general manager. The inaugural general manager, Paul Costello, left the fund at the end of last year, reportedly after some differences of opinion with Murray.”

Elizabeth Knight also has a rather provocative take on the situation:

“The big board split over at the $71 billion Future Fund is not the result of a disagreement over the running of the organisation, it is not about investment decisions nor is it about performance – it is about personal ambition.”

It’s hard for me to know what to believe (as there are many interpretations to choose from). So I think it’s only fair to give Murray the last word in all of this:

“I indicated last year that if the fund was in good shape at the end of my five years, I would prefer to move on…I didn’t want to bat on for a long period…But there were some transitional issues. We had four common retirement dates (on the board). And we are going to have to settle in a new general manager.”

That sounds sensible enough to me. Replacing Costello and Murray within a matter of months would create quite a serious deficit in terms of institutional knowledge. Given the fund’s success since its inception in 2006, that would be a shame. And finding someone of Costello’s caliber (who would also be willing to work for a public investor) was always going to be a challenge. So, in a way, Murray is staying on to ensure continuity and certainty, even if his short-term re-appointment appears to outsiders as just the opposite.

1 Response to “Some Rare Uncertainty For The Future Fund”



  1. 1 New Future Fund GM Finally Announced « Oxford SWF Project Trackback on March 24, 2011 at 8:34 am

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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