The system of Australia Day honours is far from bullet proof if they can give them out to people like failed businessmen Denis Horgan. Check out this assessment of the gongs that went to business types this year.
Crikey finally had a quick glance through the Australia Day honours last week and it really is sad to see the calibre of business leader getting gonged.
There were only 6 AC’s and one went to Maurice Newman, a mate of the PM’s who successfully created one of the most outrageous gouging monopolies in the history of Australia – namely the publicly listed and profit-hungry Australian Stock Exchange.
Those behind this outrageous monopoly – and the politicians who tolerate it – should be getting strung up for ripping people off rather than formally decorated.
Howard also appointed Maurice to the board of the ABC last year, even though he knows next to nothing about public broadcasting.
Don’t get me wrong, Maurice is a nice guy and the ASX is an efficient operation, but he’s just a humble and wealthy stockbroker, not one of the 6 most notable Australians in 2001. He hasn’t built up some wonderful business, taken a product to the world and or commercialised some innovative invention. All he’s really done is gouge the bejeezers out of Australian shareholders and made 606 stockbrokers incredibly rich in the process. Consumer groups and shareholders should be marching in the street about the way the founding ASX shareholders have made a 100-fold return on their investment in 4 years. Instead, Maurice is being officially lauded.
SOME DESERVING AC RECIPIENTS
Two other AC recipients had a business background, namely Transfield founder Carlo Salteri who is a worthy recipient, and Ross Dunning, the former Evans Deakin CEO who did many years of excellent work running the Queensland railways and will be a very useful non-executive director for Toll Holdings now that they’ve bought the Freightcorp and National Rail Corp.
FAHEY WAS NOTHING SPECIAL
Greg Barns would dispute this but I can’t agree with John Fahey getting an AC having just read Graham Hand’s excellent book “Naked Among Cannibals”, detailing life at the State Bank of NSW.
The fact that Fahey sold the bank on October 1, 1994 for a net price of less than $200 million and then watched as its value surged to about $5 billion in six years, means he is forever tarred by this brush. I can’t think of a major privatisation that has ever been handled more poorly with the possible exception of Keating’s efforts with ANL.
REJECTED BY THE MELBOURNE CLUB BUT GONGED ANYWAY
Neil Mitchell’s manager Tony Beddison from Toorak was rejected from the Melbourne Club last year because he had a business failure in his past but somehow he has just received an AO for his business acumen. Very odd indeed.
JAC NASSER SHOULD HAVE BEEN MORE DECORATED
Sacked Ford CEO Jac Nasser is a worthy recipient of an AO and probably should have been up there getting the AC rather than someone like Maurice Newman. Maybe Jac’s Lebanese background counted against him. Yes, we all know that he’s been sacked with a $200 million payout but anyone who can climb to the top of a global giant like Ford obviously did a lot of good things along the way.
Can you imagine the British or Americans decorating poker machine or casino directors? Well, we’ve just given an AO to Tabcorp chairman Michael Robinson. However, that is a bit harsh because Michael has had a distinguished legal career at Arthur Robs and actually takes being a director seriously – as can be seen by his resignation from the board of Seven Network when Kerry Stokes took control and his withdrawal from the reform ticket at Coles Myer when it became apparent that Solly Lew and his chief supporter Mark Leibler would survive the Yannon scandal.
Given that another Tabcorp director, Dick Warburton, is also on the Reserve Bank board it just goes to show how the evils of gambling have been embraced at the very highest level by the business establishment.
Personally, I wouldn’t work for a gambling company even if they paid more than $1 million a year. There are some things you just can’t do.
SHAFT THE AUDITOR GENERAL AND GET A GONG
Crikey campaigned long and hard against Jeff Kennett’s attempts to neuter his biggest critic, then Victorian Auditor General Ches Baragwanath.
In fact, there is one theory that I’m caught up in this legal war with Corrs Chambers Westgarth and Southern Cross Broadcasting because of my attacks on John Dahlsen (a former Corrs partner and the founder of SCB) for his role is shafting Ches for Kennett.
Lo and behold we now have the Howard Government giving an AM to another person on Kennett’s 3-man Ches execution committee, namely former KPMG audit partner Ken Spencer.
Ken Spencer is a former auditor of Hudson Conway and non-executive director of Crown casino. He also sits on the board of British America Tobacco and the Grand Prix Corporation with so it would not surprise if none other than Liberal Party Treasurer Ron Walker drove the awarding of this gong.
OTHER BUSINESS GONG-GETTERS
Moving down to the large number of OAM recipients, the only business name I can recognise is another wealthy stockbroker and Liberal supporter in John Elliott’s great mate and fellow Carlton director George Varlamos. Before whinging that George is past it and his glory days were with Elliott in the 80s, the award is for “service through fundraising (for the Libs?) and philanthropic activities for health facilities, education, welfare and sporting organisations (Carlton!)”. Great stuff George, there is life after stockbroking. More business types should do this.
IS THAT LYNTON CROSBY’S RELATIVE
Can anyone help out with other gong getters such as South Australian property developer John Daniel Crosby. I can’t find him in Who’s Who and am just hoping he’s not related to that other South Australian Lynton Crosby, the Federal Director of the Liberal Party. We’ve already had this very detailed answer:
I would bet that this is the same John Crosby who used to head up Elders Lensworth Finance. Not sure whether he is related to Linton, although Linton did have a short career with Elders when it was shutting up its rural operaton. He always swore that there was no relationship between him and “Uncle John”.
Elders Lensworth was one of the many disasters in the Foster’s Brewing stable and eventually went “broke” because of a land deal it did with Joe Emmanuel – a South Australian developer – to enter into a joint venture with him over pine forests he bought from APM. The company is still afloat within the Fosters stable and is developing one of those pine forests into Mango Hill, just north of Brisbane.
Their other disastrous dealings were with Pat Zarro and his developments on the Gold Coast. Two of their executives – Peter Greer, the Queensland State Manager, and Noel Jaenche – finished up in the courts for taking payments from Zarro after a loan was approved on his development at Coolangatta. Zarro sold them units for $100,000 less than they retailed for. If my memory is correct, they steered clear of lending on Zarro’s Arrow.
My recollection was that Crosby did not oppose them dealing with both of these guys. They were well outside guidelines. When my mate joined the company they wouldn’t lend on the Gold Coast, yet twelve months later they were up to their ears in Zarro. I also took the block of land to them that later became Forest Lake and they wouldn’t fund that either, nor any of the other pine forests owned by the Hancock family in South-East Queensland, yet Emmanuel got $100 million, no questions asked for the same sort of security.
This was way back in 1986 or thereabouts, so I suppose Crosby has had enough time to redeem himself?
Who is this gonged tree-lopper
And what about this Victorian tree-lopper Thorold Gunnersen. He’s got the Geelong Grammar and Melbourne Club pedigree that the Libs like but are the Gunnerson companies really good enough to be gonged.
Alan Finney is well regarded in the film game but thankfully he left Village Roadshow a few years back and has cleansed his record enough to get a gong for services to the film industry.
GONG-GETTERS AT THE BOTTOM OF THE HARBOUR
Failed businessman Denis Horgan is a classic example of Australia’s highly questionable system of Australia Day honours. In 2001, the Howard Government gave one to the party’s former Treasurer in Western Australia for “services to tourism” – presumably recognising his efforts around wine and the Margaret River region south of Perth. But should a bloke who cost taxpayers across the country more than $100 million in bad debts to various government-owned banks really be allowed to receive such a prestigious award, especially when one of his earlier companies Metro Industries went to the bottom of the harbour 20 years ago courtesy of a certain Perth powerbroker called Ron Woss.
Well if I can just draw to everyone’s attention this article that appeared in the Herald Sun on October 16, 1991 by a pimply faced cadet journalist. How can the system ignore a collapse of this scale.
BARRACK FALLS DOWN THE SHAFT
Herald Sun, October 16, 1991
By Stephen Mayne
THE DEMISE of Denis Horgan’s Barrack Mines Ltd has been astonishingly quick – and it has wreaked untold damage on Australia’s corporate reputation abroad.
Alan Bond and Christopher Skase damaged Australia’s international standing, but they were entrepreneurs over which the investment community could see the dark clouds gathering.
Denis Horgan did take some risks. But which business person didn’t? But essentially Barrack Mines was a real business – a going concern with real assets in Australia’s basic industry: mining.
It wasn’t another paper shuffler – another cowboy outfit from Australia’s “Wild West.” As one merchant banker described it yesterday: “Denis Horgan was credibility – he survived the crash and was never considered likely to fail.”
The decline into self-liquidation of Barrack Mines was out of the blue matched only by the speed of the demise of Abe Goldberg’s Linter group.
The precipitous downfall has received relatively little attention in Australia. But financial players from distant shores have been left shaking their heads in disbelief.
Barrack was one of Australia’s top 70 companies in January 1990 with a market capitalisation of $446 million as its shares traded as high as $2.40. Seven months later the shares had free-fallen to 3c.
As recently as December 1989 the company completed an equity raising of $48 million after a successful roadshow to American and European institutions.
But more recently, foreign investors watched in horror as the realisation dawned that they too had jumped on board another corporate casualty from Australia.
“It was the most dramatic and unexpected collapse of any major mining house since Poseidon collapsed in the mid 1970s,” one broker said.
More than 50 per cent of Barrack’s shares are owned by unknown and obviously disappointed Belgian shareholders.
And European shareholders had a full view of the demise because the stock was listed on the Brussels Stock Exchange in 1988 as part of Mr Horgan’s scheme to take Barrack Mines to the world.
Mr Horgan was a former director of CRA and the AIDC and treasurer of the WA Liberal Party in the early 1980s.
His (since sold) Leeuwin Estate winery’s chardonnays are world famous. It pioneered the development of a thriving premium-quality wine industry in WA.
The Estate was the scene of a prestigious annual event that was high on the WA social calender. Each year it played host to black-tie, open-air concerts which featured Dame Kiri Te Kanawa, Dionne Warwick and the London Symphony Orchestra. The events were complete with helicopter taxis and other extravagances.
Mr Horgan was the toast of WA society. At one stage Mr Horgan bought 40 ha of land near Fremantle to build Australia’s first Catholic University.
But all these are fading memories now.
For the (mainly foreign) banks, the reality is grim. They will now take a bath and recover as little as 1.2c in the dollar.
While the Westpac-owned Chase AMP Bank was the biggest lender, the exposures to Barrack’s $100 million SIMCOA silicon project read like a Who’s Who of world banking.
Germany’s biggest bank, Deutsche Bank had 17.5 per cent of the $152.6 million exposure, Britain’s biggest bank Barclays had 13.5 per cent, the big Japanese bank Fuji International had 13.5 per cent, France’s biggest bank Credit Lyonnais had 9.5 per cent, as did Belgium’s biggest bank Bank Brussels Lambert, and the HongKong Bank.
Barrack Mines chairman, Melbourne accountant Barry Capp, yesterday conceded the SIMCOA plant was still losing money.
SIMCOA is Australia’s only remaining silicon plant and 90 per cent of its produce is exported. The lenders to SIMCOA were also the major lenders to Barrack Mines Ltd which on Monday agreed to a scheme to write off about $140 million in debt in return for some token new equity in Barrack Mines worth less than $1 million.
But a separate syndicate of largely Australian banks led by the AIDC will also lose the majority of a $120 million loan to Denis Horgan’s private vehicle Barrack House.
The AIDC, Tricontinental, The R & I Bank, State Bank of SA, ANZ, HongKong Bank and the Industrial Bank of Japan are all exposed for between $10 million and $20 million with the major security being the virtually worthless Barrack Mines shares.
Total bank losses from the Barrack collapse are expected to blow out to more than $250 million, with more than half suffered by the foreign banks.
Barrack Mines company secretary Jose Martins believes the demise of the group is attributable to a number of factors.
“Too much debt, high interest rates, the high Australian dollar, falling commodity prices and too many development projects all led to a big cash squeeze,” Mr Martins said.
Barrack invested $40 million in its Horseshoe gold and copper mine when a pit wall collapsed and put it out of operation last year.
And shortly after the AIDC forced Barrack House to put his 46 per cent Barrack Mines stake up for sale, the bottom fell out of the silicon market as SIMCOA was spending millions increasing operating capacity.
Barrack Mines has become just another casualty of the great Australian corporate tragedy.
But foreign banks and shareholders will long tell the tale of the so-called rock solid mining house.
Send in your dodgy gong nominations
Crikey will give a free subscription to anyone who can list three people worthy of being on our list of “People who should not have been gonged” list.
For instance, disgraced anti-drugs campaigner Marion Watson was convicted in 1999 for making $800 a week selling heroin to addicts she once counselled. This was just months after was awarded an Order of Australia award.
Tarnished hero Alan Bond was stripped of his prized Order of Australia in the wake of his conviction and jailing for fraud and the same thing presumably happened to disgraced Coles Myer CEO Brian Quinn.