Michael Pascoe writes:
This isn’t the first time Dick Pratt has been in a spot of bother. Let’s not forget the Regal and Occidental Insurance scandal that eventually saw one conman do time, but only after a lot of other parties paid most of the debt owned by Pratt’s Battery Group to the ANZ and Commonwealth Banks.
Legend has it that Dick Pratt’s then-mate John Elliott convinced Richard in the swinging 1980s that making cardboard boxes was pretty boring and the real fun was to be had by wheeling and dealing with other people’s money in the booming finance industry.
Whatever the legend, Pratt found himself with a listed company called Battery Group whose main assets where a pair of ho-hum insurance companies, Regal and Occidental. But post-1987 and going into the recession we had to have, the Battery Group was in trouble and Pratt was desperate to sell Regal and Occidental. A court was later told that Pratt said he’d deal with the devil to unload them, but no-one in the insurance business was remotely interested.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
Suddenly and mysteriously, enter one Phillip Carver in 1990 with a $2 company prepared to pay $132 million for Regal and Occidental. Trouble was, Phil didn’t have the money.
In a strange late Friday night settlement in the offices of the Bank of Melbourne in front of a gaggle of lawyers and bankers, Carver apparently pulled one of the all-time-great pea-and-thimble tricks by somehow getting hold of Regal and Occidental’s protected reserves with which to buy the companies – a surprising achievement for a minor spiv, to say the least.
Regal and Occidental executives discovered the fraud on Monday morning before Carver could get his hands on any cash, but by then Battery’s debt to ANZ and the Commonwealth had been paid and they were in no mood to give it back.
Aside from Carver’s criminal trial (he claimed he was a bit player in a bigger game, but the court didn’t believe him) and a lot of head-banging by the Insurance Commissioner, there was also a long and very expensive series of legal claims and cross claims involving everyone in the Bank of Melbourne offices that night.
In the eventual settlement, the Bank of Melbourne carried most of the can, kicking in $65 million, while Dick Pratt paid $10 million. The Commonwealth and ANZ gave back just $8.5 million and $1.5 million respectively.
The bottom line was that Battery Group owed the ANZ and Commonwealth $132 million less than they had at the start of the process and it had only cost Dick Pratt $10 million, plus legal fees.
Of course Occidental and Regal were finished as companies. Their employees lost their jobs in a recession, and Battery went into receivership a couple of years later.
Sometimes you can just be lucky with the way things turn out. Or unlucky.