In part II of the 60 Minutes transcript, we look at how Keating persuaded the Commonwealth Bank to participate in an extraordinary cover-up of his ill-gotten millions.

Keating’s weapon was this document. It’s on one continuous roll of fax paper, 19 pages with the Commonwealth bank’s call sign and number on every single page. It was an agreement sent to Al by the bank’s NSW Head Office in May last year for settling his private debts.

But on that same Commonwealth Bank fax there happens to be a deed written by Keating’s lawyer. It demands that Al must forget all about the money that the ex Prime Minister owes him and must sign away all his legal rights against Keating.

JOHN MCLENNAN: Well it’s, it’s an extraordinary document, I don’t think I’ve ever seen a document like this in the hundreds of cases that I’ve been involved in, in bank litigation matters. I’ve never seen a more unusual and extraordinary document.

LYNEHAM John McLennan knows banks from the inside. For 20 years he was with Westpac, ending up a senior executive. Nowadays he appears as an expert witness in cases involving the banking and finance industry.

MCLENNAN: Well it smells. It has a stink about it. Um and you know, I think that apart from anything else, the banks very, well apart from the whole smell of the transaction, my overall feeling in all the cases that I’ve been involved in, I’ve never seen a bank get between two other parties or two customers and broker a deal. Never ever seen anything like that.

LYNEHAM: To understand this document we need to know that Al was burdened by two quite separate debts. As a wheeler dealer back in the late 80’s, he and three partners had a property development go bust. They ended up owing around 3 million dollars to the Commonwealth Bank. Al was left holding the baby, as interest rates soared.

Then there was the debt he took on when he and Keating bought the piggeries – 18 million dollars. And the bank was in danger of losing the lot.

But Al believed he’d been given a clear set of priorities by the bank. Get us out of our $18m hole and for the time being we’ll forget about your personal debt.

LYNEHAM: How did you feel with that tick tick tick in the background of your business life?

CONSTANTINIDIS: It was a continual um harassment, it was like a time bomb, you you really want to set about um settling it and finding a way out of it.

LYNEHAM: Did you try to deal with it or did you just forget it?

Oh it’s, it’s impossible to forget, I tried to deal with it on more than a number of occasions.

LYNEHAM: Now when you went into partnership with Paul Keating in the piggery, did you come to an arrangement then with the Commonwealth Bank, that if you worked hard and got the piggeries debts down, that your personal debt would be set aside and treated favourably in a final settlement?

CONSTANTINIDIS: I can’t answer that.

LYNEHAM: Can’t answer or won’t answer?

CONSTANTINIDIS: I can’t answer that.

LYNEHAM: There is an eleven and a half million dollar reason why Al can’t answer that. With exorbitant interest rates and bank charges that’s the amount his personal debt had grown to. You see, despite what he believed, Al had not bought himself time. His debt had not been frozen nor treated sympathetically. Quite the contrary. The bank was now demanding he pay up in full. It would bankrupt him. Ever one to seize an opportunity Paul Keating was soon on the phone, repeatedly.

LYNEHAM TO AL: Did you in those conversations at any time discuss your personal debt with the Commonwealth Bank?


LYNEHAM: Is it fair to say that in some of those conversations Paul Keating was acting as the go between, between you and the Commonwealth Bank?

CONSTANTINIDIS: You could probably draw that conclusion.

LYNEHAM: Did you think this was unusual?


LYNEHAM: Soon after those conversations, a shrewd Keating brokered peace deal spewed out of Al’s fax machine. It said the bank would accept half a million dollars as full settlement of Al’s debt of eleven and a half million. It was a good deal for Al, he’d been saved from bankruptcy. A fair deal for the bank, they’d at least salvaged something. But a great deal for Keating, because Al was required to agree to this extraordinary clause saying he must not:

“disclose either publicly or privately the terms of this deed and will not make any public or private comment or statement in relation to this settlement , 05.. or any matter relating to the banking transactions and dealings involving the Bank and the Brown and Hatton Group Pty Ltd.”

Now, the Brown and Hatton Group is operational arm of the piggeries in which Keating and Al were partners. And the sting in the tail was that if Al broke his silence about the bank’s role in the piggeries, he’d automatically be liable for the outstanding 11 million dollars.

LYNEHAM: Is that why you are refusing to answer some of these questions?

CONSTANTINIDIS: I can’t answer that.

LYNEHAM: You can’t even tell us why you can’t tell us anything?

CONSTANTINIDIS: That’s correct.

JOHN HOWARD IN PARLIAMENT: “I ask the PM, how the Commonwealth Bank continues to finance his half-owned piggery company which had no equity whatsoever, with a holding company having assets of $18m and liabilities of $24m – how and by whom are your piggery companies being kept afloat ?, 05.”

KEATING IN PARLIAMENT: “Now Mr Speaker, Mr Speaker, can I just say, can I just say, that the honourable gentleman makes clear that or implies in the question that because the Commonwealth Bank is in some way tied up with the Government that there is some er some er benefit for me there.”

LYNEHAM: But let me put this to you again, if Paul Keating had a hand in brokering this deal, he helped the Commonwealth Bank get half a million dollars that its shareholders otherwise would not have received, he hel- helped his former partner reduce his debt from 11 and a half to half a million dollars, everybody comes out ahead.”

JOHN MCLENNAN: Yes but the point is, why would he do that if there’s not something in it for him. What was the pay off? What was the other side of the transaction?

LYNEHAM: Well what if the pay off were Al’s silence?

JOHN MCLENNAN: Well it must be worth a lot of money.

LYNEHAM: The second part of this document John McLennan finds even more disturbing. So do the very senior banking specialists that we have consulted on this.

Still on this same continuous fax roll sent from the Commonwealth Bank offices, is a deed written by Keating’s lawyer requiring that Al and each member of his companies: “releases and forever discharges each member of the PJK Group from and against all claims, demands, debts, accounts, expenses, costs, liens, and proceedings of any nature, 05.”.

Now, the PJK Group is Paul and Anita Keating, and his family trusts, Pleuron and Phalaris. In layman’s terms, the Commonwealth bank had faxed Al the bluntest of messages – that Keating be allowed to walk away from all his debts and obligations, scott free. Not to put too fine a point on it, Al was being gagged and told never to chase the millions he claims Keating still owes him.

LYNEHAM TO AL: If our story tonight leads to a judicial inquiry, are you prepared to co-operate?


LYNEHAM: Well why should people believe you against Paul Keating?

CONSTANTINIDIS: Only because I think people in the end will size up the truth.

LYNEHAM: So even though he’s Paul Keating and you’re Mr Nobody from the Sydney suburbs, you’re going to win?

CONSTANTINIDIS: I’m not saying I’ll win, because I think there’ll be a cost to it but I certainly am not phased by it. I don’t take too kindly to being attacked, I think, in not not in the physical sense but certainly in in business and at a personal level. Um I fully expected there to be a cost there, yes. There’s no, there’s no win in that.

LYNEHAM: So where does all this leave us tonight. Well, the Commonwealth Bank appears to got most of its money back from the piggeries. The business is now owned by Danes, Indonesians and Taiwanese who are planning to vastly expand their operation at Warwick in Queensland. Al Constantinidis, poorer but wiser, says he’s reviewing all his legal options.

And Paul Keating? Well, we’ve been exchanging faxes with him since Wednesday over our invitation to him to appear on this program to discuss his piggery deals. That invitation still stands.

In the meantime, transcripts of this program and the key documents have been given tonight to Federal Labor Leader, Kim Beazley, the Cabinet Secretary and the Minister for Justice.

Peter Fray

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