Transfield Services - Off-Shore Detention Centres - Case Study Example

CRITICAL REPORT OF A BUSINESS CASE Transfield Services – Off-shore Detention Centres Introduction (150-200) Italian born Franco Belgiorno-Nettis founded Transfield Pty. Ltd. in 1956 and along with partner Carlo Salteri jointly managed the business until they part ways 1996. The company was divided into two and the part that went to Belgiorno-Nettis became Transfield Holdings, the company that later floated its operation and maintenance division in the Australian Stock Exchange and now known as Transfield Services. Transfield Services was recently awarded a $1.2 billion garrison and welfare contract to manage the offshore detention centres in Nauru and Manus. However, artist participating in the 19th Biennale of Sydney art festival saw the opportunity to express their sentiments over the mandatory detention of asylum seekers and boycott the event. Their demand is for the Biennale board to cut ties with founder and benefactor Transfield Holdings because it is profiting from alleged Transfield Services’ unethical practices in offshore detention centres. Consequently, pressured by the increasing number of artist expressing their non-participation in the event, the Biennale board announced its disassociation with Transfield Holdings while Luca Belgiorno-Nettis resigned as Chairman of Biennale of Sydney. The following section discusses the details of case study and critical evaluation of the boycott campaign’s effectiveness. Case Study Summary/Background (500-600) In February 2014, the Australian government awarded Transfield Services (a division of asset management firm Transfield Products and Services) $1.2 billion services contract for offshore refugee processing centres located in Nauru and Manus, Papua New Guinea . According to the information provided by the interactive history pages of Transfield Holdings’ website, the name “Transfield” was inherited from Transfield Pty Ltd., a construction company founded by Franco Belgiorno-Nettis in 1956 with partner and co-managing director Carlo Salteri. In 1989, Salteri and Belgiorno-Nettis retired as managing directors and replaced by their eldest sons. Transfield Pty. Ltd owner Franco Belgiorno-Nettis showed his initial interest in art in the 1971 Transfield Art Prize and launched the first Biennale of Sydney in 1973 . However, the partnership between Belgiorno-Nettis and Salteri according to ceased in April 1996 and Transfield Pty. Ltd. was divided into two separate companies. The Belgiorno-Nettis family retained the name “Transfield” and named their company Transfield Holdings while the Salteris named theirs as Tenix. In 2001, Transfield Holdings listed its operation and maintenance division in the Australian Stock Exchange in as Transfield Services and 2003 sold its construction business to John Holland, a subsidiary of the Leighton Group. In 2012, Luca and Guido Belgiorno-Nettis stepped down as directors of Transfield Services making Transfield Holdings a minority shareholder with about 12% share . Transfield Holdings has no representation in Transfield Services board and therefore no influence on the enterprise’s business decisions and activities . The Transfield Foundation on the other hand, the philanthropic organisation supporting the Biannale of Sydney was formed through the effort Transfield Holdings and Transfield Services in 2010 when Belgiorno-Nettis was still directors of Transfield Services. According to , it was the Belgiorno-Nettis family who has a long history of art and music sponsorship and philanthropic efforts in several Australian cultural institutions . However, since a number of Australian and international artist believed that mandatory detention is contradictory to Australia’s human rights obligations and art is part of the cultural, social, and political conditions from where is it created, Transfield’s Holdings connection and sponsorship of the 19th Biennale of Sydney festival triggered a protest from local and international artists . In late February of 2014, a number of artists threatened to boycott the art festival if the funds provided by Transfield Holdings are not withdrawn and by first week of March, nine out of the ninety-two artists already pulled out of the 19th Biannale of Sydney . Consequently, Sydney Biennale Board on March 14, announced its decision to cut ties with Transfield Holdings while Luca Belgiorno-Nettis resigned as chairman of the Sydney Biennale . The campaign to boycott the 19th Biennale of Sydney was successful according to organisers but it seems had done nothing but to shame the Belgiorno-Nettis family and cut the funding coming from the Transfield Foundation . In fact, the Abbott government according to is not bothered by the protest or showing any indication that it will de-militarised its policy on asylum seekers but rather warned arts group or state-sponsored agency of treason if they will criticise its anti-refugee regime. Some saw the artist boycott campaign victory as pointless as mandatory detention is a government policy and public-private partnership in Australia . Moreover, assuming that Transfield Holdings statement is true, the funding for the Biennale of Sydney is only coming from Transfield Holdings because Transfield Services chose to support the Australian Indigenous Mentoring Experience and two order charity organisations . Critical Evaluation of the Effectiveness of the Activist Campaign in Early 2014 (1200) The Reasons for the Boycott The common reasons for boycott campaigns according , are ethical reasons such as ecological and humanitarian considerations thus many organisations are taking active measures based on ethical grounds and act at the right moment. The activist campaign against Transfield Services was generally about its participation in mandatory detention of asylum seeker that many artists think violates international human rights. Since Transfield Holdings is a shareholder in Transfield Services that was headed by the Belgiorno-Nettis brothers until 2012, the artists feels that their long history, personal relationships, and contributions in Transfield Foundation, a known benefactor of the Biennale of Sydney made them intimate allies and will often work together even on separate projects . Consequently, the boycott organisers came up with a strategy to demand the abandonment of funding arrangement between Biennale of Sydney board and Transfield (a company they alleged profiting from the cruel policy) in exchange for artists’ participation in the upcoming event. In an open letter to the Biennale board dated February 19, 2014 as cited in the group specifically asked the board to cut ties with “Transfield” (Noted in the letter as a name referring to three branches of the Transfield brand: Holdings, Services, and Foundation). This is because they do not want to be associated with unethical and inhumane practices such as the mandatory detention of asylum seekers. The Effectiveness of the Boycott Campaign Based on the above reasons provided for the boycott, the campaign clearly succeeded in disassociating the Transfield brands from Biennale of Sydney particularly the funding from Transfield Foundation. However, since the real problem is the mandatory detention of asylum seekers and resulting human sufferings rather than loss of artist dignity over questionable funding, the campaign from this perspective accomplished nothing. Instead, the campaign only managed to shame the part-owner of Transfield Services, provoked the Australian government to restrict any future artist protest against its anti-refugee policy, and create policies that would penalise those art organisations that would refuse funding from corporations . Success Criteria and Boycott Campaign Strengths and Weaknesses A successful boycott campaign has two main characteristics – finding an acceptable substitute and it affected the target sufficiently to induce change . Moreover, there is greater probability of success if the target experienced economic distress and political instability . Potentially successful boycott select publicly visible targets to facilitate identification of violations and focuses on the social implications if demands are not complied . Based on the above criteria of successful, the artist groups did not managed to find a solution to the problem but rather discourage funding from potential corporate sponsors. It did not induce change of any sort particularly those associated with mandatory detention of asylum seekers. Instead, it merely managed to pressure the Biannale board to cut ties. In reality, the pressure merely persuaded them to momentarily take side because these are the same people who after publicly ending the partnership openly expressed that their loyalty to the Belgiorno-Nettis will prevail over ambiguous claims . In terms of distress and target instability, it was very clear from the reports that although Luca Belgiorno-Nettis resigned as Chairman of Sydney Biennale, it was reluctantly accepted by the Biennale board and Luca himself regarded the accusation abusive, naive, distasteful, and completely unfair . It is somewhat evident that the target identified by the boycott organisers was not economically and political affected after the campaign mainly because the Australian government is on their side and there is no solid evidence to prove that a member Belgiorno-Nettis family participated in the decision to take the garrison and welfare contract . In the last criteria for successful boycott, the artist group was correct in selecting the Belgiorno-Nettis family and the famous Biennale of Sydney as visible targets but they failed to clearly identify the violation and effectively attract public attention on the social implications of mandatory detention. For instance, the boycott organisers overlooked the fact Transfield Holdings is not Transfield Services in many ways and they possess no credible evidence but mere assumption that Transfield Holdings and Transfield Services are still connected by their long history, relationship, and contributions to the Transfield Foundation . It is somewhat clear that the artist group was attacking the wrong target because the real people behind Transfield Services garrison and welfare contract is Graeme Hunt and its eight Board of Directors with unknown relation to the Belgiorno-Nettis family or the Biennale of Sydney. The Difference between Holdings and Public Corporation It seems so difficult for the boycott organisers to understand the difference between Transfield Holdings and Transfield Services. Holding companies are generally large business organisations that owns the controlling shares in other corporations and responsible for directing the affairs of these subsidiaries such as Transfield Services. A public corporation is one owned by shareholders and governed by shareholder elected board of directors and appointed CEO . It is therefore clear that lack of controlling shares in Transfield Services prevented Transfield Holdings from controlling or directing its business affairs. By analysis, the resignation of the Belgiorno-Nettis brothers in 2012 effectively deprived them of representation and with 12% minority shares, the probability of influencing and directing Transfield Services to acquire and operate the garrison and welfare contract is significantly low . By definition, a substantial credible evidence is one that can provide substantial cause to conclude that a particular violation occurred . The assumption therefore that Transfield Holdings participated in Transfield Services business affairs mainly because of their long history and relationship is not substantial credible evidence. This is because it cannot provide believable reasons to conclude that a holding company with no control over a large public corporation can actually direct its affair. Another noticeable difficulty experienced by the boycott organisers is the recognising the fact that Transfield Services was the operations and maintenance division of Transfield Holdings that was sold to the public in 2001 . Therefore, if Transfield Holdings is interested in this type of business then why its share in Transfield Services is so small? In fact, as mentioned earlier it is not even interested in directorship or control of Transfield Services. This implies that Transfield Holdings lack of concern in operations and maintenance business and therefore unwilling to take responsibility over Transfield Services management. Summary The artist group’s boycott campaign was partly successful mainly because it only managed to eliminate the funding being provided by Transfield Foundation to the Biennale of Sydney. The boycott campaign appears did nothing but to disgrace the Belgiorno-Nettis family that in reality has nothing to do with the workings of Transfield Services. It did not induced change but rather increased government desire to curtail criticism and create policies detrimental to arts organisations. The boycott organisers seem overlooked some facts about Transfield Holdings role in Transfield Services operation and in the process missed the real target and purpose of the campaign. It failed to recognise the difference between holding companies and public corporations and pursue the campaign using assumptions, false information, and allegations they cannot support. Conclusion (250-350) The artist boycott campaign was successful if the criteria are based on artist disassociation with suspected business organisations doing unethical practices, calling the attention of Bienalle of Study organisers to cut ties with its Founding Partner, and implicate Transfield Holdings on the activities of an entirely different business entity – Transfield Services. Unfortunately, the criteria for a successful boycott is none of the above but rather clear evidence of induced change, public appreciation of the violation and target compliance to demands in order to avoid social implications. The artist boycott campaign barely moved the people behind the mandatory detention of asylum seekers mainly because it selected the wrong target. It could have been a very successful campaign if the organiser researched well on the relationships between Transfield Holdings, Transfield Services, and Transfield Foundation. Instead, the organisers took them as brands of Franco Belgiorno-Nettis’ Transfield inseparable by history and enduring relationship. The artist turned activist did not realise that the owner of public corporation formed when Transfield Holdings’ floated its operation and maintenance division in the Australian Stock Exchange in 2001 are shareholders. More importantly, control of this public corporation is in the shareholder with the largest share that Transfield Holdings evidently do not have. Similarly, the board of directors creates business decisions, a position abandoned by the Belgiorno-Nettis in 2012. Finally, the boycott campaign did not achieve its aim mainly because Luca Belgiorno-Nettis’ association with Transfield Services was not established. The Transfield Foundation connection was not an effective strategy because it was founded when the Belgiorno-Nettis brothers were still directors of Transfield Services. Reference List Read More