The dethroning of Fortescue Mining chief Andrew “Twiggy” Forrest as Australia’s richest resident by an elderly American recluse comes at the end of a frustrating few weeks for the iron ore magnate. Fortescue’s share price has slumped 68% in 12 months as the commodities boom petered out with recent production downgrades adding to doubts that the duopoly-busting start-up can ride out the GFC.
But perhaps the most telling personal blow has come from Forrest’s flailing philanthropic efforts.
Frustrated with the Rudd government’s incapacity to solve the Aboriginal unemployment crisis, Forrest setup his own private jobs scheme, the “Australian Employment Covenant”, with the ambitious goal of putting 50,000 indigenous people into work. The scheme is beginning to look like a turkey, with Fortescue philanthropy chief Mal James launching a PR blitz to right the ship in today’s AFR Boss Magazine. James and Forrest have blamed government red tape for the delays.
Then there’s Twiggy’s laudable attempt to provide shelter for victims of the Victorian bushfires. Two Saturdays ago, Forrest’s plan to make a personal difference kicked up a gear with the delivery of hundreds of “dongas” (rudimentary temporary accommodation) from his Western Australian mining operations. Offsider James made the point he was deliberately acting outside of official channels.
He told the Oz:
“We find that if we cut through the red tape and instead use our own corporate contacts we can get practical things done quickly to help get these communities up and running again.”.
But there is evidence that Forrest’s guerrilla tactics are starting to grate, with the dongas delivered to the bushfire-devastated town of Flowerdale likely to rankle with victims. Although structurally sound, the dongas lack kitchens and include a decidedly off-putting design feature whereby the wall curves into the floor to enable easy hosing out. The next 12-18 months could be grim for the inhabitants of these souped-up shipping containers, that while suitable for miners on a booze binge, don’t really seem adequate for families trying to rebuild their lives. Their ability to withstand winter and extreme weather is also questionable as this scary story demonstrates.
The dongas are only one part of Forrest’s bushfire masterplan.
On Monday, Twiggy was in Kinglake to talk reconstruction, but as reported by Crikey, the meeting designed to spruik his rescue package was hijacked by residents keen to vent their anger at the slow pace of the rebuilding effort. His pitch needed to be rescheduled and is set to go ahead at 8pm tonight.
Meanwhile, a rolling controversy in Western Australia over Fortescue’s $12 million sell-off of waterfront land reserved for the local community has been cunningly defused by a Fortescue spinner, who says the proceeds would now be donated, ex post facto, to the bushfire appeal.
Forrest’s strings-laden philanthropy has a long and not uncontroversial past. Fortescue is currently embroiled in a dispute with the ATO over $3.5 million paid in the late 1990s by Forrest’s former firm, the collapsed Anaconda Nickel, to the children’s charity Leaping Joey, run by himself.
And a 2007 donation of around 1 million Fortescue shares and 115 million Poisedon nickel options to the James-helmed Australian Children’s Trust, of which Leaping Joey was a trustee, led to claims that Twiggy actually didn’t donate anything, because as Fortescue shares tanked, the tax deduction was worth more than the shares donated.
In Wednesday’s Financial Review half year profit wrap, the nation’s top CEOs were downbeat about a disastrous profit season, struggling to put a positive spin on the looming recession. The one dissenter was Forrest, who told the doubters that “if you think everything is crook in Tallarook…think again.”