The papers have given Solly Lew’s farewell spray at the Coles board a big run today, but the lucky retailing billionaire really deserves a bucketing for the sheer chutzpah of his attacks.
By selling his residual 5.9% stake in Coles, held through Premier Investments, Solly has forfeited his right to be taken seriously as a legitimate player in the debate about what happens to the retailing giant.
His arguments are also easy to demolish. If appointing a non-retailer like John Fletcher as CEO was such a folly, why did Solly do precisely that shortly after becoming chairman in 1992 when he installed former Foster’s CEO Peter Bartels.
And apart from himself, exactly which retail experts did Solly recruit to the board? He preferred to stack the board with mates such as former ANZ CEO Will Bailey and his personal solicitor, Mark Leibler, who then backed his campaign to destroy Yannon whistleblower Philip Bowman.
Hiring Bowman as finance director was the best thing Solly did, but Bowman’s ethics wouldn’t tolerate Yannon so he was fired. Bowman went on to be an outstanding CEO of UK drinks giant Diageo and is now running Scottish Power. If Solly had simply paid back the Yannon losses and then replaced Bartels with Bowman, the company would not have been so comprehensively out-pointed by Woolworths.
For mine, Yannon destroyed Solly’s credibility. Premier Investments bit off more than it could chew by spending $450 million on Coles shares in 1989 and then Rodney Adler’s FAI Insurance was called upon to help Premier come up with $100 million of the cash.
Solly welched on a sub-underwriting deal with Rodney to personally chip in $40 million and eventually Coles finance director John Barner was prevailed upon to bail out Solly in a deal which cost Coles shareholders $18 million.
Get Crikey FREE to your inbox every weekday morning with the Crikey Worm.
ANZ shareholders also bought $225 million worth of Coles Myer shares from Premier at $9 a pop, a 16% premium to the market, in June 1990. This was just Will Bailey looking after his mate and trying to avoid a bad debt write-off.
It is true that Solly has profited greatly from his Coles investment and is a highly successful retail wheeler dealer. However, he’s also been a huge part of the problem at Coles. Remember the folly of Coles launching World 4 Kids to fend off the Australian push by Toys R Us. The biggest winner from that fiasco was Solly’s privately owned toy supplier Playcorp.
Such related party transactions, which averaged about $70 million a year for a decade, weren’t even disclosed until Rodney Adler hired the late Laurence Gruzman QC to give Solly some stick in the early 1990s.