Key's uranium shares - gone by lunchtime, but what about the rest?

There's no scandal in the PM's uranium shares, but there is an opportunity for John Key to mine the politics of the situation by providing an example to New Zealanders on ethical investing

As Fran O'Sullivan has written in today's New Zealand Herald, it's remarkable that Prime Minister John Key had a bunch of mining shares in his own name, rather than in his blind Aldgate trust.

Key was caught short on Q+A on Sunday morning as an investor in a company that mines uranium in Australia and Argentina. His shares were gone by lunchtime. (Sorry, cheeky I know, I just couldn't resist that). But within a couple of hours Key had decided to divest himself of his shares.

What are the facts? Simply that Key had declared in the Register of Pecuniary Interests that he held shares in his own name in a company called Jackson Mining. Last year, Jackson Minerals Ltd (we're assuming that's the same company) merged with Scimitar Resources Ltd to create Cauldron Energy Ltd.

As per its 2009 annual report:

"Cauldron is a leading Australian uranium exploration company which retains an experienced board of directors and management team, with proven success in the resources sector...

Cauldron controls over 17,000 sq km of uranium prospective tenements across three states in Australia and large projects with defined uranium mineralisation in Argentina This allows for diversification not only geologically but also with regard to differing political sentiment and policy within each region towards uranium exploration and mining.

Exploration of these 100% owned projects continued in the financial year with drilling completed in all three states. The Company is well placed to take advantage of renewed interest in the uranium sector by the change in Policy of the new Liberal government in Western Australia to allow uranium mining."

What was fascinating about Key's response to the questioning was that he obviously retained details of the company in his memory, as well as his personal portfolio. He thought he bought the shares in 2001, that its share price had fallen to just 13 cents and that it owned a small mine in South Australia. He obviously has a magpie's mind for detail.

The Cauldron share price is actually at 38 cents today, so he won't be as badly off as he thought when he sells in the next day or two. It's just raised $10m in China to expand its operations.

I'm left wondering whether Jackson was involved in uranium mining when Key bought the shares and whether he knew that. Despite the impression given that Jackson only came to uranium recently, it seems to have had uranium rights in Argentina before last year's merger. The annual report says:

"Cauldron through its wholly owned subsidiary, Jackson Global Limited, has the right to earn 92.5% of the Rio Colorado uranium-copper-silver Project in Catamarca, the main mining province of Argentina."

Perhaps it moved into uranium between 2001 and last year. It's not a question of any great import; Key bought the shares before he entered politics. I'm just curious.

Indeed, the entire question of Key's shares in a uranium mining company has nothing to do with substance. The companies have no interests in New Zealand that he could have aided and Australian uranium, as O'Sullivan points out, only goes to nuclear power stations. No-one was harmed in the making of this money.

What it's about is political perception and leadership. As leader of a nuclear-free country, he represents the nation and, to some extent, its values. To quote Bill English, it's "not a good look" to have your personal finances at odds with one of your nation's most dearly held foreign policy stances.

So, no scandal. And yet there's a question of judgment still about why Key kept that small parcel of shares in his own name. Mining has long been a contentious industry, and in the socially responsible/ethical investment sector is often snubbed. In 2008, environmental concerns prompted Norway's state-run pension fund to sell its Rio Tinto shares, for example.

Looking again at the interests register, I'm wondering why Key has anything held in his personal name. Even with the Jackson shares gone, it would seem he still owns shares in Bank of America and a property investment company called Little Nell, plus he has a controlling interest or directorship in a commercial property company, Earl of Auckland.

Why has he kept those out of the blind trust? Why not clear the decks in the interests of clean political management? The political risk is small, but why take it at all.

If Bank of America comes into disrepute once more in its dealing with the US taxpayer, does he want to have an interest in that? As he prepares to make major changes to property taxes and tries to tell New Zealanders to invest less in the property market, does he want interests in that sector?

That's all hypothetical. Of course he has the right to own property, and indeed his overlooked declaration on Q+A that he pays the top 39 cents tax rate on his trusts, rather than arranging his affairs so that he pays on 33 cents, is admirable. But politically he could make it a lot easier on himself if everything just went into that blind trust.

What's more, he could then instruct those who run the Aldgate trust to stay away from certain sectors, such as uranium mining. O'Sullivan says it's "bizarre" that the PM should have to consider New Zealand's laws and interests when it comes to his own investment portfolio. I'm not so sure.

There's precedent for such an approach in New Zealand public life: The New Zealand Superannuation Fund won't buy shares in companies that trade in cluster bombs or whale meat. And as noted, he's urging New Zealanders to get back into the stockmarket for the sake of our own economic growth.

Why shouldn't the PM lead the way with a socially responsible portfolio? Such investing has grown rapidly in recent years, with both ordinary investors and large funds withdrawing their money from tobacco companies, arms manufacturers, gambling companies and the like. Trillions of dollars worldwide are now invested along ethical lines.

A prime ministerial portfolio full of socially responsible funds? Now that would be making a real statement.