Sound silly? Not when you look at last week’s statement from South Australian Premier, Mike Rann, and cross-reference it with the charity work of Santos, Australia’s second biggest petroleum producer.

The importance of matching the two positions cannot be over-stated because unless a meeting of the minds is achieved, Santos might be doomed to another 30 years as “the prisoner of Adelaide”.

The original deal, which saw the SA Government impose shareholding restrictions on Santos, dates back to 1979 when the company was under takeover threat from Alan Bond, a Perth entrepreneur determined to build a business empire comprising everything from breweries to airships.

As he wasn’t from Adelaide, and preferred beer to wine, Bond was classified as an unacceptable owner of the biggest business in SA – hence the artificial cap of 15% being the maximum any one person can own in the company.

Over time, it has been argued this shareholding limit has been good for SA, but bad for Santos.

In fact, as far as Slugcatcher can see, that’s not quite right. It’s actually only been bad for the shareholders in Santos because an artificial cap limits trade in the stock. Management, safely entrenched behind a government-approved takeover barrier, has had a wonderful time using the cap as an excuse for a lack of corporate growth, and as a reason for Santos to become the biggest donor to “causes” in SA.

Separating “state and company” is proving to be a tricky process.

New management at Santos says it’s important, and a few months ago the Government seemed to agree, hence a decision by Premier Rann to review the shareholding cap at the request of the Government.

But as the review gets down to a time when it must make a decision, it looks as if the Government is not convinced Santos ought to be set free.

Last week’s statement by Rann could easily be interpreted as an extension of the prisoner status for the company.

Consider these extracts from what the Premier said:

• “The cap has served South Australia well”;

• “The downside of any removal would, of course, be the potential for a takeover”;

• “While there would be major benefits for Santos shareholders in the removal of the cap there are also risks for SA”;

• “…driven unashamedly by maximising benefits to SA”;

• “The review will have to show, and the company will have to provide, clear benefits to SA”; and

• “We are currently in discussions ... about securing a significant corporate presence, even in the event of a takeover of the company … and a significant contribution by the company to development in this state.”

Slugcatcher enjoys reading tea leaves, and he reckons the leaves in the bottom of Premier Rann’s teacup say, “No deal”.

He reckons Rann is saying Santos has not convinced him of the benefits of lifting the cap, and that’s why he issued last week’s “softening up” statement for the hard decision when it is handed down in a week or so.

What can Santos do to change Rann’s mind?

Well, that’s where the charity stuff comes in. The company already lists 21 community activities that it supports, ranging from the Adelaide Symphony Orchestra, to the Undurana Camel Farm, to the Save the Bilby campaign.

If Rann is to be convinced there’s something in the Santos shareholder cap removal for the state, then now is the last chance for the company to trot out a few new “cuddly creature” donations.

The problem for the Santos board is that giving money away is the easy bit. Creating a structure that commits a future owner to supporting Adelaide’s worthy causes (and having everyone believe it can be made to stick) is the challenge.

Whatever happens, the next stage promises to be a great example of business meets politics.