Vale Austin Donnelly – tireless worker for shareholder rights

One of the doyens of the financial services industry, journalist and a tireless worker for small shareholders, Austin Donnelly, died last Friday, aged 84.

Donnelly, the first person to be awarded a dealer’s licence in Australia, had more than four decades of experience across the investment industry, including stockbroking, unit trust management, merchant banking, portfolio management and corporate and personal money management. He also published 49 books that looked at investment and economic topics across a wide range of issues. He was a regular contributor to newspapers, including a weekly column in the “Canberra Times”, and edited several investment newsletters, such as “Investing Today”, “Donnelly’s Investing Today” and “Investing Times”. But it is his staunch advocacy for the rights of small shareholders that many investors will best remember him. If brokers and fund managers often felt they had cause to be aggrieved by his rigorous questioning of their investment assumptions or, more importantly, their failure to disclose relevant information, his fearless pursuit of justice for small investors only endeared him even more to them. Donnelly was born in Port Douglas in Far North Queensland, the son of Austin snr, a sugar chemist who later become a journalist, ending his career as deputy editor of the “Townsville Daily Bulletin”. Donnelly left school in Townsville at 14 to join the accounting firm of the former Prime Minister, Sir Arthur Fadden. During the war, where he served as an RAAF navigator at various Australian bases and Morotai (part of the Moluccas islands in Indonesia), he did accounting by correspondence. It stood him in good stead. As he became more involved in the investment industry after the war, he always looked beyond the spin surrounding investment products and examined the underlying fundamentals on which they were based. It was this forensic approach to investment that made him one of the few investment advisers to call into question the bull market in the run-up to the 1987 sharemarket crash and the property crash that followed in the early 1990s. He also gave expert advice in the number of landmark court cases involving investment failures, most notably in the Chiarabaglio v Westpac case in 1989 that recovered millions of dollars for investors. As he said in a parliamentary inquiry into the financial industry after the share and property market crashes, on behalf of the Australian Investors Association (AIA) that he founded in 1991, “there is probably no other industry which would compare with the investment business in the area of so many widespread fallacies and myths becoming enshrined in the conventional wisdom.” His reputation extended overseas. In 1996, he appeared before the Ways and Means Committee of the US House of Representatives with congressmen keen to get his views on a consumption tax. In 1998, he made his objections to the original proposal for the GST in Australia known in the tome “GST the winners and the Losers”. In the foreword to that book, AIA president Ray Bricknell wrote: “The case put forward in this book is classic Donnelly. Logical, concise, thoroughly and articulately argued and made all the more readable by the down-to-earth approach of this author.” Donnelly was no friend of regulators, either, arguing that their laissez faire approach to the financial industry during the share and property market crashes were a big part of the problem. To quote his submission to the inquiry again: “The underlying theme is that the Australian Securities Commission (the forerunner of the Australian Securities & Investments Commission) and the Insurance and Superannuation Commission, by allowing fund managers and advisers to conceal a good deal of material information which they are required by law to disclose, has caused the retirement years of thousands of Australians to be blighted.” Donnelly is survived by his wife Sheila – they celebrated their 60th wedding anniversary earlier this year – and children Sharon, Melda and Peter and six grandchildren. Melda Donnelly is the founder and chair of the Centre for Investor Education and a former chief executive of Queensland Investment Corporation.