David Stewart might be relaxed about the prospect of his long-time boss, Wal King, rejoining the board of Leighton Holdings. It is improbable, however, that Leighton’s independent directors or institutional shareholders would be quite that sanguine.

Stewart, while indicating that he had no knowledge of whether or not there was any prospect of King returning to the company he played such a pivotal role in creating during his 23-year reign as chief executive, said he would “not have a problem” if his directors wanted to put King back on the board.

It is unlikely that the independent directors, having convinced/forced King to announce his retirement last year, would be anxious to see him back. This is particularly so, as almost as soon as King had departed the group was forced to unveil $1 billion of losses and write-downs on projects entered into during his tenure, along with a $757 million rights issue to fill in the hole in Leighton’s balance sheet.

Despite the remarkable achievements during his period as CEO, those losses, which came without any significant forewarning, would have destabilised Leighton had there not already been a change of leadership.

Leighton’s institutional shareholders would almost certainly be opposed to King’s return, because of the losses that spoiled his record but also because it would be a significant breach of corporate governance standards to appoint Stewart’s immediate predecessor to the board after such a brief interlude.

That’s compounded by the fact that Stewart is dealing with cleaning up King’s final legacy. King can’t be allowed to have influence over how that occurs or is presented.

The problem confronting the independents and the institutions is that ultimately their opinions might not matter.

Leighton is about 56%-owned by Germany’s Hochtief, which played a role in King’s departure. Subsequently, however, Hochtief has fallen to a creeping takeover by Spain’s ACS, which only recently took effective control.

While ACS has signed a standstill agreement on the Hochtief shareholding with Leighton’s independents, and committed to a limit of four nominees on the 12-person Leighton board, there is considerable uncertainty as to how enforceable that agreement actually is.

Ultimately, as the majority shareholder, ACS should be able to get its own way. King, who had a poisonous relationship with Hochtief — he was openly contemptuous of the group — has cultivated a strong relationship with ACS’s Florentino Perez. That partly explains why the speculation of his return has been so strong and persistent.

Despite its recent travails, Leighton is the jewel within the ACS/Hochtief/Leighton empire, so ACS may be reluctant to destabilise it further by forcibly inserting King into the boardroom. There are other less direct and less potentially inflammatory ways for ACS to gain access to King’s vast experience and contacts and to use him to help inform ACS’s attitude towards Leighton and that group’s plans.

If it were to insist on King’s return, it would place Leighton’s chairman, David Mortimer, and his fellow independents in a most awkward position. If they weren’t comfortable sitting alongside the man they ousted — and King would have ACS’s backing within the boardroom in that situation — a decision to cut and run would leave the minority shareholders of Leighton exposed.

Retail shareholders, who revered King — and mostly with good reason — might feel differently, but the independents and the institutions would be very concerned if the first big move by their new controlling shareholders was to demonstrate blatant disregard for a key corporate governance principle — and the $1 billion of losses.

*This first appeared on Business Spectator.