Alibaba founder Jack Ma
While world stock markets rebounded then fell, the Australian dollar slumped and Sydney property prices continued to bubble away, spare a thought for those who made it all possible — and to those who helped make 2014 another memorable one in the business pages …
Collapse of the Year
Always a hard-fought category, but hats off to Greg Westaway, who is facing an insolvent trading claim after his business, Gregory’s Transport, slumped into liquidation leaving hundreds of employees and contractors without pay or superannuation. It is understood that some employees had not received superannuation for almost 12 months. Westaway is perhaps better known as the former president of the St Kilda Football club, which in 2006 claimed that he operated an “incredibly successful” business. One suspects Westaway’s former employees, who weren’t paid for a year, may tend to disagree.
The Lightning Doesn’t Strike Once Award for History Repeating
To former Asciano boss Mark Rowsthorn. Rowsthorn oversaw a share price drop of more than 90% at infrastructure business Asciano. Proving that he’s no one-trick pony, Rowsthorn used some of his inherited wealth (Rowsthorn’s father was the very successful former chairman of Toll Holdings) to purchase a major stake in trucking business McAleese (owner of trucking business Cootes). Rowsthorn led the float of McAleese, and a month after its botched listing installed himself CEO. McAleese’s share price is currently 21 cents, down 86% from its $1.50 float price in late 2013.
Regulator of the Year
Much like the America’s Cup (before 1983), the Australian Securities and Investments Commission has maintained a stranglehold on this award and once again achieved glory this year through its cosy relationship with the very bodies is was created to regulate. A former ASIC lawyer (now one of Australia’s leading corporate solicitors), James Wheeldon, told Parliament that ASIC seconded a lawyer from MLC, who ended up helping to determine whether superannuation funds (like MLC) would be able to hide fees from their calculators. ASIC claimed that the financial calculators were a useful tool — no doubt highly useful to funds like MLC, which were able to dupe consumers into paying them excessive management fees.
Thrifty Executive of the Year
One could forgive Telstra’s David Thodey for lashing out on a luxurious vehicle given Telstra’s splendid share price growth under his leadership. But unlike his predecessor, Sol “The Mexican bandit who wasn’t actually Mexican” Trujillo, Thodey is more of a down-to-earth guy. Famous for driving a Toyota Corolla (RRP: $24,999), Thodey (who was paid $12.8 million in 2014) replaced his old Corolla with … another Corolla.
Arnold Schwarzenegger Award for Comeback of the Year
To Alibaba founder, major shareholder and former teacher Jack Ma. Ma told reporters that 15 years ago he tried to raise US$2 million from venture capitalists in the United States but was turned away by more than 30 firms. This year, Ma returned, dryly noting that this time, he was asking for “a little more”. Alibaba listed on the New York Stock Exchange this year and is now valued at US$271 billion.
Salt in the Wound Award
To former Fairfax and management consultant Fred Hilmer, who told a University of New South Wales talking series that “media companies are more worthwhile for people who want influence, [and] the natural owner of Fairfax is Gina Rinehart”. Of course, the only reason Rinehart was in a position to pick up Fairfax for what amounts to petty cash for Hancock Prospecting is largely because of Hilmer, who while CEO managed to miss the opportunity to pick up Seek, Realestate.com and Carsales (which admittedly Fairfax owned, before briefly selling for a bargain price).
Change of Heart of the Year
To the venerable Fortune magazine, which in the space of less than two years, went from writing adoring profiles of former Target and Apple retail boss Ron Johnson to a lengthy piece on why he was possibly the worst retail executive of all time. The articles, both written by Fortune senior editor Jennifer Reingold, both quoted J Crew boss Mickey Drexler. The first article quoted Drexler as saying that “It’s so exciting that someone’s rolling the dice, putting their own money in, and doing something that hasn’t been done in the department store for 30 years” (at a 2012 launch function). The second article claimed that Drexler actually told Johnson, “Be very careful. You don’t have to be that bold. There’s only one Steve [Jobs].”
Finger Point of the Year
To Treasurer Joe Hockey, who had a 2014 to forget. The highlight for Joe was when he staunchly criticised the Australian Bureau of Statistics jobs figures in October, noting that they were “extraordinary” and that he “asked the Secretary of the Treasury to look into it. I’m unhappy with the volatility of the series.” While Hockey may have had a point about the reliability, or lack thereof, of the data, it came only months after he refused the ABS’ plea for extra funding as a part of the Coalition’s plan to return the budget to surplus.
The Cher Award for Wishing They Could Turn Back Time
To former Lynas boss Nick Curtis, who just three years ago was flying about as high as one could fly. In 2011, when Lynas was about to enter the rare earths market and end Chinese dominance it was worth more than $3.5 billion — Curtis owned shares and options worth upwards of $70 million. These days, things aren’t going so well. Lynas’ share price has slumped from a high of $2.70 to only 6 cents, while Curtis was effectively margin-called out of his stake when he had to settle a $4.3 million facility with Credit Suisse in March. Meanwhile, Curtis appears to have been frantically offloading assets, including his 120-foot luxury yacht and Woollahra mansion (which was picked up by Rupert Murdoch’s daughter Prudence). Just if you thought things couldn’t get any worse, Curtis’ son Oliver is facing insider trading charges in the Supreme Court over share trading with former friend, John Hartman, who spent a year behind bars.
The Rum Corps Award for Services to Justice
To the Tasmanian judicial system, which no one could accuse of being overly harsh on its own. In December 2009, former Gunns CEO John Gay committed possibly one of the most blatant acts of insider trading ever seen in Australia when he sold 3.4 million Gunns shares when they were trading at around 92 cents. At the time, Gay, as CEO and chairman, possessed detailed information regarding Gunns’ performance — and it wasn’t good (namely, that Gunns’ profits would slump by 98%). When the information Gay possessed became public two months later, Gunns’ share price unsurprisingly dropped 20% — it would continue to fall and by March was half the level it had been when Gay sold his stake. Gay’s well-timed sale saved him more than $750,000. Despite the gravity of the act, Tasmanian Supreme Court judge David Porter felt it inappropriate for Gay to serve any time in jail. In fact, proving that in Tasmania crime really does pay, Porter didn’t even feel that Gay should return his illicit gains. Porter imposed a fine of merely $50,000 — around 6% of what Gay saved by his illegal trade (and a fraction of the $9 million in salary Gay had been paid since 2002). That’s a bit like robbing a bank and being allowed to keep 95% of the loot.
If that wasn’t bad enough, a second learned justice of the Tasmanian Supreme Court, Robert Pearce, found in April that Gay should once again be permitted to act as company director, less than a year after his ban. Comically, Pearce found that Gay’s “management of the companies poses no risk to the public and to the interests of the shareholders, creditors … of the company. [In fact] to the contrary, without the benefit of his experience, knowledge and expertise there is a prospect that their interests may be adversely affected.” Perhaps no one mentioned to Pearce that Gunns, the company that Gay managed for more than two decades, was placed in administration, owing more than $640 million to creditors.
The John Howard Lazarus Rising Award
As they say, fool me once, shame on you, fool me twice, shame on me — as for thrice, well, that honour may well belong to anyone foolish enough to invest in Craig Gore’s alleged latest venture, LTSC. Billed as “tomorrow’s property today”, its website bills LTSC (which for some reason is trademarked, just in case you were thinking of using the acronym) as “revolutionising the way people invest in property, helping investors and future home owners take advantage of long term growth [and] capitalise on profits made in tomorrow’s property market without massive cash outlays”. Gore himself isn’t the face of the venture — the twice-bankrupt son of former bankrupt Mike Gore, is still bankrupt and awaiting a decision by the Federal Court in relation to ASIC’s action against him for siphoning more than $4 million from investors. Instead, the business appears to be led by Matthew Aird, who was described as an “up and coming property investor” — it is understood that Aird’s last job was as a telemarketer.