ACTU Defends VC Computer Deal

Date: 28 June 2000

The ACTU has revealed it currently has an equity stake of less than 1% in the Virtual Communities venture that provides a PC and internet access to union members for around $10 a week,Workplace Express reports.

However, the peak council's stake will increase, as the deal with Virtual Communities provides for the ACTU to "earn" further equity as the venture grows.

NSW Labor Council secretary Michael Costa has been a strident critic of the VC deal, and has intensified his rhetoric since the NSW peak body recently launched a rival deal, Getonboard.

Costa has made much of the contrast between the ACTU deal and his arrangement, under which the Labor Council has a one-third stake, as does the ALP, while a venture capitalist owns the remaining third.

He also says the ACTU's equity arrangement failed to properly value the community it was delivering to Virtual Communities.

ACTU secretary Greg Combet told Congress that the criticisms of the equity arrangement were "not right".

Combet said workers had a considerable stake in the Virtual Communities/ACTU arrangement, as three super funds (Australian Retirement Fund, LUCRF (the liquor union fund) and SERF (seamen's fund) had 120 million of the 225.6 million issued shares, while five big unions between them held 18 million shares.

The ACTU, he said, initially had an arrangement for earned equity (it was entitled to 35% of net revenue), but had now supplemented that with an arrangement to hold 1.2 million shares, worth about $900,000.

Combet told Workplace Express the Labor Council at this stage had a third of an unknown quantity, while Virtual Communities was a real asset that was fulfilling its objectives and was investing $1 million to upgrade the service.

Combet told Congress that Virtual Communities founder Chris Clarke had made a "fantastic" gesture by donating two million shares worth $1.5 million to union education efforts.

Clarke told Congress that 25,000 union members were now connected via the VC deals. He said the deal was now being delivered at less than cost due to exchange rate movements.

Some unions had close to 20% of members signed up, making VC a valuable communications tool for the unions, he said.

This article was extracted from Workplace Express, a new web-based IR service

For further information

Contact:	Peter Lewis
Union:	Labor Council of NSW
WWW:	http://workers.labor.net.au/

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