Embattled ABC chairman Justin Milne has avoided a potentially ugly showdown with shareholders of ME Bank after notifying the company that he will not seek re-election to the board at the annual meeting next month.Milne has been a director of ME since 2012 when the bank's former chair, Bernie Fraser, handpicked the Sydney businessman because of his deep experience in nurturing digital enterprises.However, the corporate scandal that erupted yesterday over Milne's conduct as chairman of the national broadcaster has riled shareholders of the Melbourne-based bank.Three industry superannuation funds that have stakes in the bank told Banking Day that Milne stood little chance of being re-elected to the ME board had he decided to renominate.The industry fund sources said they were "appalled" and "disappointed" by media reports that Milne had instructed former ABC chief executive Michelle Guthrie to sack journalist Emma Alberici, who he claimed was hated by the federal government.Milne's controversial direction, which most likely constitutes a breach of the broadcaster's charter of editorial independence, was contained in an email he allegedly sent to Guthrie earlier this year. The email was sent after former prime minister Malcolm Turnbull and his communications minister Mitch Fifield submitted written complaints to the ABC about the accuracy of Alberici's reporting."If the content of that email is verified, the fund that I represent would be seeking Mr Milne's removal from the ME board," one of the industry fund sources said."That sort of behaviour from a board chair is really a failure of governance and it would reflect poorly on ME's reputation and brand if he continued to sit on the board."Another industry fund source was more blunt about Milne's prospects had he decided to renominate as a director of the bank: "He's lucky to be going of his own free will because he wouldn't have lasted much longer at our bank.""After he was appointed ABC chairman he took extended leave from ME board duties, so his decision to leave the bank didn't come as a surprise."In addition to presiding over the ABC's operations, Milne wears many hats in the corporate world.He chairs the boards of MYOB Group and Netcomm Wireless Limited, which are both listed on the Australian Securities Exchange.He is also a director of ASX-listed gambling business Tabcorp, the federal government's national broadband provider, NBN Co and SMS Management & Technology.A senate inquiry has been set up to investigate whether Milne acted outside the limits of his authority at the ABC.Articles published by Fairfax and News Corporation newspapers this morning allege that Milne instructed Guthrie to take disciplinary action against other senior journalists at the national broadcaster.The alleged hit list included Canberra political commentator Andrew Probyn and Melbourne talk-back radio host, John Faine.Milne told ABC radio yesterday afternoon that he planned to continue as chairman of the corporation.