The original contract for the M2 was signed in October 1994. John Fahey was the NSW Premier, Bruce Baird the Transport Minister and and Max Moore-Wilton the head of the RTA. On the other side was the sharp suits from Macquarie Bank, which employed John Howard’s brother Stan Howard to chair their bidding vehicle, the Hills Motorway Group.

The 21 kilometre project was fairly simply and was originally budgeted to cost $436 million to build. The construction contractor was Abigroup, which boasted the very wealthy former NSW Labor Premier Neville Wran as a director.

The Fahey Government was paranoid about going into deficit and didn’t feel it could deliver the project with traditional budget tendering and funding, so they went for the controversial BOOT contract which locked motorists into paying excessive tolls for 45 years.

Shortly after winning the deal, Hills Motorway did a compliance listing at $1 a share, valuing the company at $185 million. Many Macquarie Bank executives bought shares and have now made many millions of dollars out of it, after the stock yesterday soared $2.54 to a record high of $12.05.

Macquarie Bank CEO Allan Moss will be delighted with the bid that his fellow Macquarie executive director Laurie Cox, who doubles as chairman as Transurban, has lobbed on the table for Hills. The Moss stake of 390,500 shares is suddenly worth $4.7 million.

Even happier is Macquarie’s investment banking boss Nick Moore, who quit the Hills board last year but still holds 600,000 units worth a tasty $7.23 million based on yesterday’s closing price.

With only $185 million in original equity, there was obviously plenty of debt funding of the $436 million project, plus government contributions of more than $250 million, depending on who you believe. All up, the equity return for those lucky original investors is now at 1200 per cent.

Check out this Richard Jones Parliamentary spray about Hills Motorway which nicely sums up the key issues. How people like John Fahey, Bruce Baird and Max Moore-Wilton feel about these numbers is anyone’s guess but in Crikey’s opinion they should be ashamed of themselves.

Finally, wasn’t it convenient that the walking embarrassment known as John Ducker, he of Aristocrat Leisure fame, resigned as Hills Motorway chairman three weeks ago. The Labor veteran enjoyed his $80,000 a year whack as chairman for more than two years, replacing an equally uninspiring politically connected suit called Stan Howard.

With all sides of politics seemingly covered, is there anyone out there prepared to start speaking out on behalf of the long suffering Sydney motorist?

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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