Liquid Gold

Farmers are selling it and savvy investors are buying it, write Deborah Snow and Debra Jopson.

Tomorrow, savvy Australian businessman Richard Lourey will climb aboard a plane bound for Hong Kong to sell our water to the world. Not water in bottles. Farm water. He wants to bag $100 million from overseas investors in Asia, Europe and North America to buy up permanent water rights along the Murray-Darling Basin, one of the longest river systems in the world. He plans to lease it back annually to those who want it - and can afford to pay.

Lourey is one of the new breed of global investors who see fresh water as business - big business.

Another is John Dickerson, a former CIA analyst in San Diego, who set up one of the first funds in the world dedicated to acquiring water rights.

Dickerson's Australian subsidiary Summit Water Holdings bought up $20 million worth of our permanent rural water rights two years ago and is on the lookout for more.

As Dickerson puts it: ''You might remember the old Will Rogers saying, 'You ought to buy land because they ain't making any more of it'. He could have said the same thing about water.''

Unnoticed by most of us living in the big cities, fresh water in this country has become liquid gold. For many farmers caught at the height of the drought over the past three years, with failed or unsown crops and little ability to fatten stock, selling water rights got them through.

As investors watched, the federal government helped inflate the market 18 months ago by starting to ''buy back'' water for the environment. Canberra's spending spree accelerated after it struck a deal with the South Australian independent senator, Nick Xenophon, to purchase yet more water in return for his support for the stimulus package.

For stressed farmers who grabbed the opportunity to sell to the feds, it has been a wild ride. Once traded for a crate of beer, a decade ago rural water was worth as little as $2 a megalitre. Last year, at its peak, the average tender price for water rights ranged from $1300 to $2400 a megalitre. For many, water was worth more than their land.

Recent rain has coincided with a slowdown in the federal buying frenzy, and water prices (for now) have fallen by 20 to 40 per cent.

But water remains what many in the overseas investment world are calling ''blue gold''. Last year, more than $3 billion worth changed hands across the country as farmers sold water to each other, to the federal government, to super funds and to sophisticated investors at home and abroad. Increasingly, some inland towns are competing for rural water as well.

Few countries have comparable markets to ours, where water rights can be split off and sold separately from rural land. The US, Chile, Spain and Portugal are heading down this track, with limited experiments in China and South Africa. But nowhere does the market operate as freely as it does here. Ironically, this dry continent has developed the largest and most advanced water market in the world.

''When the rest of the world looks at us, they do see Australia out in front,'' says Deborah Kerr, natural resource manager of the National Farmers' Federation.

Admirers of the system say it helps re-allocate water to the highest value users.

''Trading has given irrigators and other water users much-needed flexibility in adjusting to economic and climatic pressures,'' says the National Water Commission boss, Ken Matthews. The commission believes water trading boosted national productivity by $220 million in 2008-09.

But others worry it will ultimately exact a toll on small-scale farmers and rural communities, by allowing big players to build up concentrated water holdings and play the market. Australia, they say, risks ''selling off the dam'' as well as the farm.

''Essentially, buying water now operates like the sharemarket,'' says Kellie Tranter, a Maitland lawyer and commentator. ''In the driest inhabited continent on the planet, with drought conditions exacerbated by climate change, the only way for the price to go is up. Those who can afford to pay for the water will have the luxury of it.''

Andrew Gregson of the NSW Irrigators' Council says his members are generally in favour of the market but he has concerns about how big players might manipulate their stakes.

''It's not that we have a problem with foreign ownership [of water] per se. It's a matter of market dominance.''

He is concerned that in an era when many countries are starting to worry about food security, foreign agribusiness might buy into the rural water market here and use permanent water holdings to dictate how our farmland should be used.

A foreign city state could, he says, ''buy a truckload of water and decide: 'I'm going to lease it to somebody, but as part of that lease I'm going to tell them what to grow, when to grow it, who to sell it to and at what price'. We're opening the door to potentially becoming the old feudal system of peasant farmers - on an enormous commercial scale, obviously.''

Gregson wants the Foreign Investment Review Board to track foreign water purchases as closely as it does overseas investment in real estate.

The Fair Water Use Australia group in South Australia is against the very existence of a water market, questioning whether it was constitutionally legal in the first place to ''unbundle'' title to land and water and then to allow individuals and corporations to turn a dollar from a liquid that is one of the basics of life.

''Initially, these water rights were established with no electoral mandate … We've got to protect what is ours before it defaults to being totally privatised,'' says the group's national co-ordinator, Ian Douglas.

A few simple but startling numbers explain why water is soaring in value here and around the world. A tiny fraction (0.3 per cent) of the planet's fresh water is easily accessible in lakes and rivers, and on some estimates, two thirds of the world's population will be suffering water stress by 2025.

Climate change, population growth and pollution will add to the competition.

Little wonder the former head of the United Nations Millennium Project, Professor Jeffrey Sachs, warned recently that ''the world is running out of water''.

Here in southern Australia, despite the recent rains, the medium- to long-term news is likely to get worse. US and German scientists monitoring the health of the planet from satellites delivered grim news last year.

Their joint project, dubbed GRACE (Gravity Recovery and Climate Experiment) showed a loss of 200 cubic kilometres of water in the Murray-Darling Basin between 2002 and 2009 - equivalent to 400 Sydney Harbours.

But hard-pressed farmers and irrigators don't need images from space to tell them what has been happening before their eyes.

Many of them remain sceptical about man-made climate change. But drought coupled with the gross overallocation of irrigation permits has drained the vast Basin - the nation's foodbowl - faster than it can replenish.

In the decade to 2007, the amount of water flowing into the Murray was half the long-term average for preceding decades.

With climate scientists predicting less rainfall in the area in coming years, inflows could decline by as much as 30 per cent relative to long-term averages. Professor Quentin Grafton, a water markets specialist at the Australian National University, says what we now perceive as extreme drought could become much more regular in the southern Basin by 2030.

These types of predictions ensure price rises will be inevitable. Those who hold rights to fresh water be will be tomorrow's kings and queens of the global monopoly board.

Just as water scarcity lures long-term investors, the federal government's massive buyback will further reduce supply. So far, it has spent $1.4 billion buying 902,000 megalitres of water entitlements.

The release of the long-awaited draft Murray-Darling Basin plan will also affect prices. It is expected to recommend deep cuts to agricultural water being extracted from the Basin, in a desperate attempt to salvage the riverine environment.

The two main parties indicate they will buy back water licences on the open market rather than impose across-the-board cuts.

But farming communities say removing too much water from productive use will hollow out their communities.

''There is a sense of dread about what is coming with the plan,'' says the National Farmers' Federation's Laurie Arthur. ''People are living in country towns that are nigh on knackered already.''

Ian Shippen, an irrigation farmer who is part of a group of southern NSW farmers who have been embroiled in a long, painful sales negotiation with the federal government to shut down an entire water channel, has committed to staying.

Determined to use the buyback to help survive the imminent Basin plan, he is preparing for the day when the canal to his sheep property runs dry by growing saltbush as a waterwise pasture.

''There have to be some radical changes going on here,'' he says. ''I think we don't get a lot of credit, but there is a realisation among irrigation farmers that we've got to change and we've got to do things differently.''

Meanwhile, sophisticated investors like Summit Global, shaping up to be winners, are already factoring in how the Basin plan might affect their bottom line.

The answer, most likely, is an eventual bonanza for those who can afford to accumulate and hold water rights long term.

Graham Dooley, who chairs the Australian arm of Dickerson's operations, believes the savvy strategy is to hang on to water and not let it go.

He will not reveal exactly how much more the company is planning to invest in Australia or where, saying, ''our investors are intensely private''.

But he told the Herald: ''We have no upper limit [for acquisition]. We have a buy and hold strategy. We are in the build phase.''

Related Links:


Irrigation farmers find buyers drying up


Blueprint on how to save basin trickles slowly from authority

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Australia's water market is in demand: Thirsty foreigners soak up scarce water rights

INTERNATIONAL investors are circling Australia's water market, looking to snap up hundreds of millions of dollars worth of our most precious national resource, with almost no government limit on how much they can buy.

Foreign investors have already bought millions of litres of water rights in our most strategic food-producing areas and are poised to buy more after the massive shake-out tipped to occur when the long-awaited Murray-Darling Basin plan is released.

The head of an Australian fund designed to cash in on future water scarcity leaves tomorrow on a trip through Asia, North America and Europe aimed at raising $100 million from investors to buy water in the Murray Darling Basin.

''There is a chronic supply/demand imbalance for Australian water which will result in higher water prices,'' says the website of the Causeway Water Fund, whose managing director Richard Lourey will scour the world for investors.

Water has become a hot-button topic for the federal rural independents locked in talks over who will form government.

Overseas stakes in our $30 billion market already include:

$20 million worth of entitlements bought by the US-owned Summit Global Management through an Australian subsidiary;

An estimated $130 million worth of water bought by Olam International of Singapore in a deal involving the purchase of almond groves in northern Victoria;

More than $30 million worth of rights in western NSW held by Tandou which has substantial overseas ownership.

Meanwhile, the chief executive of the NSW Irrigators Council, Andrew Gregson, has revealed that merchant banks have approached the organisation for advice on how European investors can pour hundreds of millions of dollars more into Australian water.

In some financial circles water is dubbed ''blue gold''. The online investment journal Investment U recently had the headline, ''The oil of the 21st century … how 'blue gold' can make you rich''.

Australia has spawned the most advanced water market in the world, with more than $3 billion worth of rights changing hands last year.

More than $2 billion of that trade took place in NSW, making this state's water market equal to the entire value of the country's wool exports.

The federal Labor government helped inflate the price by buying more than $1 billion worth of water as drought bit last year, accelerating its $3.1 billion buyback of water in the Murray-Darling Basin.
After good rains and a change to the government's tender system, prices have dropped by as much as 40 per cent this year, hurting irrigators who need to sell their water rights, but making buying into the market more attractive to investors.

''We know that water is a scarce resource in a resource-starved world,'' said Guy Kingwill, the chief executive of the agricultural company Tandou, which has substantial US and British investors.
''We are long-term investors in secure water entitlements and Australia is one of the few countries in the world where you can own those,'' he said.

Yet there is virtually no oversight from the Foreign Investment Review Board.

The federal Treasury says it never looks specifically at foreign acquisition of water licences, and takes an interest only if a foreign player is buying an agribusiness worth more than $231 million.

Mr Lourey rejects fears about ''water barons'', claiming his investment fund will allow ''water to be used in the most productive way possible. We would argue that's in Australia's strategic best interests''.

But farmers' groups are worried that big players could corner areas of the market by buying up permanent rights in whole valleys, or being able to dictate what food is grown where by controlling water.

''We don't have a problem with investment, or indeed, speculation in the water market,'' said Mr Gregson of the Irrigators Council. ''We are concerned about market dominance. It's a recently developed, relatively fragile market.''

FOREIGN OWNERSHIP

ONLY a tiny handful of water bureaucrats in each state has full knowledge of who owns the country's permanent water rights, as water registries cannot be openly searched. Some foreign acquisitions of water that have emerged include:

Summit Global Management, founded by John Dickerson, of San Diego, owns $20 million worth of water through its Australian subsidiary Summit Water Holdings. The company wants to buy more.

The Singapore company Olam International acquired nearly 90,000 megalitres of permanent water along the Murray when it picked up the almond operations of the failed managed investment scheme Timbercorp last year. The land and water were valued at $288 million.

The British investment fund Ecofin owns 20 per cent of Eastern Australia Irrigation, a company with extensive land and water holdings in south-eastern Queensland.

Tandou Limited owns Tandou Farm, near Menindee Lakes, in far western NSW. A fierce takeover battle this year has left the company dominated by the New Zealand corporate raider Sir Ron Brierley's Guinness Peat Group (28 per cent), battling it out with Ecofin (19.9 per cent) and the US company Water Asset Management ( 13 per cent). Tandou's most valuable asset is $30 million worth of water rights.

A Japanese consortium led by Mitsubishi Corporation acquired the Australian water businesses of the British company United Utilities in May.

Causeway Asset Management, of Melbourne, wants to attract $100 million from foreign investors to a ''diversified portfolio of permanent water entitlements'' in Australia.



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Independent MP Andrew Wilkie strikes deal to support Gillard to form Labor government

A key independent MP Thursday backed Australian Prime Minister Julia Gillard to form a government after deadlocked polls, leaving her just two seats short of a parliamentary majority.

Andrew Wilkie, a former Iraq war whistle-blower who represents a seat in Tasmania, said Gillard was best placed to rule after last month's elections returned the first hung parliament in 70 years.

"I have judged that it is the Australian Labor Party that best meets my criteria that the next government must be stable, must be competent and must be ethical," Wilkie told journalists in Canberra.

Wilkie's vote gives Gillard 74 seats in the 150-member lower house, just shy of an absolute majority of 76.

However, Tony Abbott's opposition coalition remains in the hunt with 73 seats and three independents still undecided.

Wilkie urged the three remaining "kingmakers" to make their move soon after nearly two weeks of political paralysis following the cliffhanger polls.

"I hope that this sends a signal to the other three independents and they move as soon as they can to make their decisions, and to decide to support a party or parties in a way that will bring stability to the parliament," he said.

The final three independents -- rural MPs Tony Windsor and Rob Oakeshott, and maverick Queenslander Bob Katter -- have pledged to begin formal negotiations on Friday.

Momentum is now firmly behind Gillard, Australia's first woman prime minister, after she confirmed the support of parliament's lone Greens MP on Wednesday.

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The US economy's glass jaw

If you’re looking for a single anecdote to sum up the demise of the American economy, you could do worse than The Wall Street Journal’s excellent front-page story this morning on glass and Toledo.
The paper’s James T. Areddy reports that a museum in Toledo, known as the “Glass City,” had to go to China to buy glass for a new expansion.

The Toledo Museum of Art’s $30 million Glass Pavilion is a symbol of America’s “Glass City,” and reflects the legacy of its local glassmakers.

A smudge on the image: The pavilion glass was imported from China, the new global powerhouse of the glass industry.
No one in the U.S. had the capability to satisfy cutting-edge architectural specifications for the curving pavilion, even though the 2006 job involved techniques advanced decades ago by Toledo inventors: bending and laminating glass.

Here’s the nut graph:

For years, the West focused on the threat from China’s low-tech exporters like clothing and furniture makers. Glass represents how an even more potent challenge has arrived: sophisticated, capital-intensive businesses that boast high-tech expertise.

In industries where global demand has shifted to China, the pattern is repeated, from steel to locomotives and turbines to specialized glassworks. Chinese companies that have gorged on growth in the domestic market have managed in just a few years to close the gap on decades of technological innovation in the industrialized West.

Meanwhile, the soaring trade deficit slashed 3.4 percentage points off American GDP in the second quarter—the most in sixty-three years.
(h/t Felix Salmon)

— I haven’t been able to figure out the bullish arguments for the economy or the stock market, for that matter, in the past few years.
The economy was massively out of whack and saved (or at least temporarily reprieved) from 1930’s-style collapse only by unprecedented trillions of dollars poured in by the Fed and the stimulus package. Markets were shored up by said trillions and mark-to-myth, extend-and-pretend accounting. Deleveraging from a decades-long debt-fueled orgy is a long, nasty affair.
Planet Money’s Jacob Goldstein points to a new paper that shows just how much uglier recessions that follow financial crises are than ones that don’t.

Unemployment rates are “significantly higher” in the decade after crises, compared to the decade before. In 10 of the 15 post-World War II crises they looked at, unemployment rates never returned to their pre-crisis levels.

Median housing prices are 10 to 15 percent lower during the entire post-crisis decade, compared to their prices just before the crisis. Of all of the home-price data points they looked at from post-crisis decades, 90 percent showed prices lower than they were before the crisis.

Good times!
— Speaking of extend and pretend, American Banker reports on how banks are delaying foreclosures to stay afloat.
Even as serious delinquencies have continued to soar, foreclosures and default notices have fallen.

 postponing the date at which they lock in losses, banks and other investors positioned themselves to benefit from the slow mending of the real estate market. But now industry executives are questioning whether delaying foreclosures — a strategy contrary to the industry adage that “the first loss is the best loss” — is about to backfire. With home prices expected to fall as much as 10% further, the refusal to foreclose quickly on and sell distressed homes at inventory-clearing prices may be contributing to the stall of the overall market seen in July sales data. It also may increase the likelihood of more strategic defaults.

It is becoming harder to blame legal or logistical bottlenecks, foreclosure analysts said.
“All the excuses have been used up. This is blatant,” said Sean O’Toole, CEO of ForeclosureRadar.com, a Discovery Bay, Calif., company that has been documenting the slowdown in Western markets.

Make sure to check out the chart.

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What happens next in Canberra: 75 all

Such is the uncertainty in Canberra that there's been something missing over the past week – the press gallery hasn't been chancing its arm to tell us what they think will happen next the way the gallery normally delights in doing.

There's a good reason for this – they don't know - but that has rarely stopped journalists from speculating before. Perhaps it's more a matter of not being foolish or brave enough to risk looking foolish or brave by getting it wrong. There's also the little matter of a likely outcome being too hard for the professionals to countenance.

So in this vacuum (and long-since realising that fear of foolishness is very foolish), here's what's going to happen: 75 all. Labor and the Coalition each have 72, the Green and the WA National effectively make it 73 each, Andrew Wilkie and Rob Oakeshott lean to Labor, Bob Katter and Tony Windsor lean to the Coalition and this really is a dead heat.

And that's when it becomes very interesting indeed. There will be enormous pressure on each of those independents to be the game breaker, to give one side 76, but by keeping the scores deadlocked, the independents have the opportunity to extend and enhance their present power and influence for the life of the Parliament. If you're sick of hearing what the independents do and don't like, this could be just the curtain-raiser.

The professionals will quickly howl down such a scenario as unworkable and that we are indeed off to the polls again very shortly - but they might underestimate both the great temptation it would be for the independents to continue to exercise great power after being denied it for so long and the desperation of politicians to cling to the higher pay packets that come with being in government, never mind having Kirribilli House as your weekender or family residence.

By convention, the current Prime Minister has first crack at advising the Governor-General that she can form a government, advice that would be open to testing on the floor of the house, so work with me on this and accept that Quentin will tell Julia: "Go for it girl, and I'm not remotely swayed by the idea that Bill Shorten can therefore become a minister of the Crown and be better able to provide for my daughter than he would on a backbencher's pay."

We'd have to assume that Gillard at least has an agreement with Windsor or Katter that they wouldn't block supply and that they'd need severe provocation to support a no-confidence motion. In return would be the already offered promise of a three-year term. Such agreement might only be worked out as the term unfolds, but without that possibility the game is over immediately thanks to the matter of electing a Speaker of the house.

There are various conventions that govern what the Speaker can and can't do. While the Speaker has a casting vote when the chamber is tied, he or she has no deliberative vote and so, by giving up one of its own to be Speaker, the government is reduced to 74 v 75. (And there's no way the opposition would reduce its leverage by offering up a member for the role and the independents have, so far, said they're not interested.)
Yes, that's very precarious indeed. For any piece of legislation opposed by the Coalition, Labor would still need the support of one independent to achieve a tied vote and so a win with the Speaker's casting vote. And government members in marginal seats had better stay away from the front wheels of buses and keep a very good ear cocked for the sound of division bells.

In this scenario, the Mining Resource Rental Tax would need Windsor's approval, as would the NBN, but that would still be the case if the official split was 76-74. Neither Nauru nor East Timor looks like becoming a staging post for refugees on their way to Australia. And the needs and wants of the four independents' seats would be just as important to the prime minister.

And those four independents, even the more agrarian socialist of them, become very important to business and every other lobby group in the nation. Pushing your barrow with the relevant minister will be just one step in the lobby process. All policies and legislation will receive a double sieve through both government and the independents. And this is without considering the Senate from the middle of next year.

Any government would hate it, but they'd hate losing control of the white limos more.

By coincidence or remarkable foresight, one of the pay TV channels last night ran the movie, Swing Vote, a show built on the premise of the US presidential election coming down to the vote of one man, New Mexico trailer trash played by Kevin Costner. (There's a trailer for it here.)

It's not much of a movie, but Australia's present circumstances made for several enjoyable moments as the incumbent Republican president and his Democrat rival cajoled and courted the small-town hick, turning policy somersaults to try to win the single voter's approval. The Republican turned green, the Democrat anti-abortion, both evinced common interests with the unemployed boozer and promised whatever it might take.

None of our king-or-queen-making independents fits the Costner description, but, jeez, in a certain light, if you squinted a bit, there could be similarities. In Swing Vote though, the movie ends when Costner casts his vote. In this Australian election, the fun just continues.
Michael Pascoe is a BusinessDay contributing editor.

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How bizarre? Sea Eagles get shock to the system as Chooks come back from dead

A more bizarre game of rugby league you will never see. The longer you follow this amazing sport you learn nothing comes as a shock. Poor form, great form, form reversals, thrashings and unbelievable comebacks - no one can tell you where they come from, no one knows where they go. The magic of this game is that the unexpected becomes the norm.

Well, the Sydney Roosters and Manly yesterday set a new standard for ''out of the ordinary''.

Manly began this match with all the aggression and intent they usually reserve for occasions of such importance. The stakes were high and they played accordingly. They dominated the Roosters in every facet of the game. They dished out the punishment with and without the ball. In defence they intimidated with their ferocious tackling. They swarmed in numbers, winning every collision and invariably driving opposition players back metres at a time. Their kick-chase was hungry and attacked the Roosters' ball receivers with brutality. They easily won the battle of the hitting and the Roosters really failed to come to terms with it.

In attack, Manly also had the Roosters' measure. Their big forwards charged onto the ball leaving a path of destruction in their wake. The Manly halves, Trent Hodkinson and Keiran Foran, were assertive in their contributions. They had time and space on their side and took full advantage to feed their attacking ball runners down the edges.

They successfully targeted the Roosters' right defence with a number of rehearsed attacking raids. They posted two tries in this area and threatened to score a few more.

In the middle of the field, the combination of quick play-the-balls and repeated inside passes tested the mobility of the Roosters' forwards. It seemed like only a matter of time before the points would really start to flow.

The play was isolated exclusively to the Roosters' end of the field as Manly owned the mortgage on field position. This game was the most one-sided affair you could ever imagine.

However despite their obvious supremacy, the Sea Eagles only led 14-0 after 39 minutes. The flow of the game suggested a score of 30-0 was probably more appropriate.

To make matters worse for Manly, a freakish individual effort from Roosters centre Sean Kenny-Dowall on the stroke of half-time produced an amazing try that narrowed the margin to only eight as the players marched to the dressing rooms.

Still, dominance is dominance.

There was nothing in the first half that gave us a hint of what would unfold in the second 40 minutes.

At this point, let me introduce some statistics, regarding the Manly season so far. Manly have scored 384 first-half points this season, that's the best in the NRL. But they have scored only 173 second-half points, that's the worst in the NRL.

Five times this season, Manly has been held scoreless in the second half of games. Twelve times this season they have lost the second half to their opponents.

Five times this year they have led at half-time, only to surrender their lead and eventually lose the match.

On several occasions this season when reviewing their performances I have asked the question, ''Are they fit?'' It seems that both physically and mentally they are incapable of sustaining their best for a full 80 minutes of NRL football.

Well, it happened again yesterday.

They lost the second half 24-0.

Their discipline deteriorated.

Granted, a number of crucial calls went against them, but their reaction of showing obvious frustration and then playing ''angry'' football is hardly the response of a team with professional attitude control. The crisp attacking play of the first half was now replaced with a panicked rabble as they frantically tried to arrest their alarming slide.

Manly were also confronted by a Roosters team that had suddenly found its confidence. The hosts looked meek and mild in the first 40 minutes. Their attacking execution was awful and their defence looked as brittle as a toothpick.

In the second half the Roosters tackled like demons and some of their attacking play was breathtaking.

I was left stunned at the final score of Roosters 30 Manly 14. Did the Roosters win or did Manly lose?

With one game left before the finals, I suggest it's very important that both teams answer this question honestly if they have aspirations of challenging for this year's title.

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Speed: Pakistan must be suspended from international cricket immediately pending Scotland Yard investigation

Former International Cricket Council (ICC) boss, Malcolm Speed, says there is a "compelling" case to suspend Pakistan from world cricket.

Speed, the Australian who was chief executive of the ICC from 2001 until 2008, said suspension was a "serious" option for Pakistan.

"It looks as though it is endemic that several of the team members are involved and have been for some time," Speed told ABC radio on Monday.

"So perhaps they need a rest.

"It looks a fairly compelling case."

The man at the centre of an alleged betting scam involving Pakistan was on bail Monday as police, governments and authorities probed the scandal rocking the sport.

Mazhar Majeed, 35, was released from custody having been arrested on suspicion of conspiracy to defraud bookmakers following a newspaper's claim he took money in return for exact details on no-balls in the Lord's Test match between England and Pakistan.

Scotland Yard detectives have also grilled Pakistan captain Salman Butt and two of their strike bowlers, Mohammad Aamer and Mohammad Asif.

Speed said corruption still surrounded cricket.

"Corrupt book makers and gamblers are still out there," he said.

"(It's) great that they've been caught in England where there is a very sophisticated legal system that deals with conspiracy and specifically with cheating in sport.

"So I see that as a major positive.

"I would have liked it to have happened when I was involved with ICC but it didn't happen at that time."

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