Macquarie Airports chairman Max Moore-Wilton has made millions helping the Millionaire Factory double the value of Sydney Airport over the past six years and yesterday he was keen to trumpet this achievement

John Howard’s former chief bureaucrat was in a combative mood at the Macquarie Airports AGM, but the gloating might come back to bite him.

Sydneysiders who get gouged left, right and centre using their Macquarie-run airport will be delighted to know that Max the Axe reckons it is worth “substantially more” than the current book value of $11 billion.

This is a little hard to believe given that MAP shares are trading at a 35% discount to what the auditor PwC and the directors claim are net tangible assets worth $5.06 a share. This supposedly $8.6 billion company is valued by the market at just $5.4 billion. Whilst Max wants to blame short-sellers in New York, he refused to acknowledge the “governance discount” that is being applied to all these vehicles with external managers that rip out huge fees. Either the market doesn’t believe the Sydney valuation or MAP has a massive confidence problem with investors.

Fairfax’s Michael West has covered most of the governance aspects of the AGM but it was amazing the Sydney papers missed this angle on the Sydney Airport valuation.

Monopolists need to be careful about gloating about how much money a highly regulated business is being allowed to make, but this is what Max told shareholders: “I would be quite confident that Sydney Airport could be sold for its current value and substantially more.”

Here we have the man who was responsible for selling Sydney Airport for $5.6 billion claiming that his new private employer has more than doubled its money into what is now probably the second most valuable single asset in Australia after the North West Shelf gas project. And does he really think someone else would pay $12 billion for Sydney Airport when foreign ownership is limited by law to 40%?

It is amazing how Macquarie Group gets away with this stuff. I put it to Max yesterday that it is time Macquarie Airports ditched its Bermuda registration given that Labor Governments don’t like this sort of thing. Max professed that he hadn’t heard any government concerns about this aggressive structuring and Bermuda was a respected global financial centre.

It is the Bermuda rules that allow Macquarie vehicles to make distributions out of capital and the ASX also granted MAP controversial waivers which allow Max to never face election and for the bank to hold super-voting shares which give it board control.

Asked to reveal the full Macquarie management agreement and any termination fees that would be payable if shareholders wanted to sack Macquarie as MAP’s manager, Max gave a very brusque “no and no” response yesterday.

Given that Macquarie Bank has extracted more than $1 billion in fees from airport deals over the past decade and profits exceed $2 billion when you include its direct equity investments, it is not surprising that Max isn’t keen to disclose the various poison pills that are in place to entrench this long-term management arrangement.

Yesterday we learnt more about this $147 million performance fee paid to Macquarie by the unlisted Macquarie Airports Group in 2007. Max reckons it was partly a “termination fee” and that no future performance fees will be paid. He claims the details of all this has been previously disclosed but I’m yet to find where. Over to you, Max.

Former Federal Communications Minister Michael Lee is a MAP director and City of Sydney councillor who will no doubt reassure his Labor mates that everything is above board at the Millionaires Factory. Many others think these governance issues are unsustainable and with pressure on Labor to clean up ASX and ASIC, the institutional mechanisms which allowed the flawed Macquarie Model to prosper are coming to the end of their natural life.

Go here for the edited audio highlights of yesterday’s MAP AGM