Subject: ROOT CAUSE ANALYSIS STAGE 1: Optus proposal
From: SP52948 owner (EC member)
Date: 25/9/10, 5:11 pm
To: EC Members
CC: John Fry BCS Strata Management

Now back to business. And here are parts that might not please you but are necessary for your sake.

It is a good business and engineering practice to conduct what is called Root Cause Analysis (some know it by name postmortem analysis) after serious events.

The sad thing is that some committee members failed to understand the reasons for the outcome with the Optus deal. Here is what you said in the latest letter to owners:

"Owners clearly do not wish to receive any extra income from a telecommunication's antennae".

The answer is: owners rejected the BAD and CHEAP deal that was attempted to be rushed through hidden gates. Owners WANT TO MAKE LOT of MONEY for deal like this, so if it is not going to happen, why bother approving poor deal and seeling ourselevs short.

Sincere question to all committee members: would any of you sell your units at 10-year old prices (say 2000)?  If so, let me know, I will buy it off from you tomorrow.  That shows why Optus was so happy with the deal. They would have been gigantic winners had they succeeded.
 
To help the committee and the owners gain full understanding of the Optus proposal, and ensure that nobody can "guess" or assume what happened, I decided to raise several questions.

They need to be answered for your, my, and every owner's sake. After all, we are all liable and responsible for our actions. To be transparent, nobody can walk away from discussions. This should also help you preserve good reputation, and ensure that nobody can have valid reasons to be unfair to you or ANYBODY ELSE. 

For a long time, as a very experienced engineer, I wondered why the Optus proposal was riddled with erratic behavior and why it did not follow common-sense rules of engagement. Why would ANYONE reject calls to discuss it openly, and why would proposal like this not contain any information that talks about its NEGATIVE sides (and there are many of them)...

In every decent proposal, pros and cons are provided to those that need to make a final decision.

We were dealing with the unsolicited proposal (sent to owners who have not requested it). Unsolicited proposals must be especially convincing since the "customer" has not anticipated, planned, or budgeted for the proposal.

The proposal MUST not be BIASED, and MUST allow discussions. On the Fortune 500 list:

* Make it concise and clear. Check for spellings, grammar, and syntax.
* Make it readable and understandable – in simple, clear language that
  does not contain too many technical words.
* Make it believable. Do not praise yourself so much that your client
  is put off, or promise something you cannot offer.
* Give the information from the client’s perspective, not yours.
* Concentrate more on the results rather than the methodology.
  It is the results that your client is interested in.  
* Make sure that all the information you have given is relevant to
  the point.
* After you have written your proposal, wait a day or two, and then read
  it over. Be completely satisfied with it.

So, why did this happen in a totally wrong manner?

There are four possible scenarios (IMPORTANT NOTE - nobody is accused of anything, this is just an engineering analysis):

a) Incompetence
B) Ignorance
C) Corruption
D) Hidden agenda

There is absolutely no other possibility to describe the bizarre behavior that tried to bully the owners, enforced they had no right to speak, and avoided full consultation at the committee and general meetings.

Without any accusations (I base my judgment on facts and mathematics), BUT WITH EVERY RIGHT TO DEMAND ANSWERS, I ask the following questions:

1. Did you, or anyone on your behalf, made the first step to approach Optus (or their representatives at other companies) to submit the proposal for the antennae system in our complex?

2. What was the reason to go for extraordinary general meeting, when one-two months later a regular meeting would suffice? In other words, what was the NEED to RUSH into the decision?

You said in your letter:

"These matters can not wait until the Annual general meeting..."

but your "forgot" to explain why. Good proposal would give some hard-code reasons for these extraordinary activities.

3. Why were the voting papers, with very limited information, sent to owners TWO WEEKS before the extraordinary general meeting: 

Notices sent around 29th of July 2010 for the meeting on 16st of August 2010.

4. Why did you reject any attempt to have an open discussion, both at committee meetings (remember, the total time spent on this was around 15 minutes) and at the extraordinary general meeting?

With what powers did you 'brush-off" respectable owners who came to extraordinary general meeting to ask questions about the Optus proposal? Note, the people who you ignored included professors from universities (with PhD), engineers, lawyers, medical staff, business people, and so on.

5. When I asked for more detailed plans of the antennae system, and also meet Optus (or their representatives in person), what was the reason to exclude me, when I am the ONLY one with world-wide expertise on the subject amongst the committee members? To be frank, eight of you together cannot match my knowledge in the field.

6. Since this is a trade-based proposal, why was not anything said about tax payable on the earnings (minimum tax that we expect to pay is 25%)? Some owners are not really aware that we pay tax on term deposits, so we should explain that in clear terms.

7. Although you were fully aware of the fact that Optus bluntly told us that they were not prepared to negotiate the offer's value, you said in your letter that:

"The ability to negotiate the rent is constrained by the need to
be authorised at a general meeting to lease in the first place
so that the lessee knows the authority level. Naturally if this
can be improved we will do so."

This statement is incorrect. Why was it published?

8. In your letter, you said that: 

"The committee recommend that the use of common property
in this way be authorised..."

This is incorrect statement. The MAJORITY of the committee recommended it and it was your obligation to tell them that. Why did you present this information in such a way that was supposed to paint 100% approval rate by the committee?

9. Ruling 6. in the legal proposal clearly says that:

"The Lessor consents to the Lessee and persons authorised
by the Lessee without the need for prior notice and with or
without materials, plan or other apparatus and vehicles
entering the Land of the purpose of using the Premises
and exercising its rights under the Lease at
all times of the day and night during the term".

You were warned about access to the premises by me in person, so why did you ignore it?

9. If you wanted to get everybody to vote for the deal, why did you refuse to show real benefits of the Optus project to EACH owner? After all, we all vote for own benefits in the first instance. That is a natural process.

Same way like Bill and you rejected the initiative to increase strata fees by more than 3% next year (proposed by Stan and seconded by me) because it affected Bill in the first degree. Bill, and I do not blame him, very clearly said that he was against it because he already paid too much. So, we think about others ONLY when we fix our problems firstly.

The problem is that due to the age of the complex and some very poor build and design practices by Meriton, just in last several months we have experienced some severe and unexpected costs:

Around $100,000-$120,000 for new power feed to the complex

Around $50,000 for the two-phase blowup for the power supply to the lift in Block A

Massive 80-10 meter window frame being "blown" by winds in a unit on level 5 in Block C. That will probably cost us around $15,000-$20,000.

Even if the last two items get covered by insurance, it will mean our premiums will go up significantly from next year. The insurance companies do not like customers who claim...

That comes on top of extremely high rises in power, water and gas expenses (more than 50-60% in accumulative terms over several years).

Therefore, why did not your proposal contain the schedule that showed how much owners would pay with and without Optus contributions? Something like I sent to you TWO TIMES.

10. Rulings in 5.x in the legal proposal clearly work against the owner's corporation and ensure that the lessee can work in the complex almost without any right to challenge them in the future, as long as they conform to "legal" regulations. The problem is, corporate and legal systems are often favoring big guys only.

Why do you think that is good for us?

11. Read carefully item 8.2 about future constructions and alterations. Do you see anything wrong with it?

12. Read carefully item 9(a) about the emergency power supply (power generators) in case of major disasters. In other words, we will give them right to operate noisy generators in the complex if we suffer from power supply failure.
  
Do you agree with it?
Do you really support it?

13. Item 14.4 says:

"The Lessee may sublet, part with or share its rights to possession of
the Premises upon written notice to the Lessor."

In other words, they can do it ANY time they wish, without our CONSENT. All they commit to do is "notify us".

Do you really support it?

14. The drawing provided in the proposal was diagrammatic only and was NOT scaled.

Why do you think the owners should have accepted it without proper design?

Can you build a house without full documentation? Or a hotel?

15. You claim that you wanted to help owners earn money and provide relief to their budgets. That is a very noble action and we all support it.

Why then, as you were asked, didn't you support request for a tender to telcos and see who offers more money and then discuss it further?

16. You said on several occasions that the Optus offer was good in financial terms (industry practice). I showed you through several examples that it is not. A small place like Gerard's bowling club gets around $27,000 for the similar deal. I also have two other pieces of information about telco deals at other places.

Why did you decide to ignore it?

17. If you feel that you "suffered" from misleading campaign, isn't it right for you to clear it up?

This is not an attack. This is an attempt to HELP YOU.

I am looking forward to the answers to the first group of questions. Whatever you decline to answer now will be forced upon you at the AGM. As the old committee disassembles, we will have a short but civilized discussion to ensure that the best people represent us and that there is no "old unresolved baggage" that hurts your future actions.

Best wishes and have a nice weekend,