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Alan Bond
This page considers Alan Bond, sometime owner of Australia's
Nine television network and holdings that extended from
diamond mines and airships to breweries.
It covers -
introduction
Bond has gained notoriety as the most prominent of the
1980s corporate cowboys, distinguished by commercial failure
and what Australian courts have judged to be personal
impropriety but - in contrast to to competitors such as
Christopher Skase, Abe Goldberg,
Alan Hawkins and John Elliott - appears to have largely
"got away with it".
His career is an illustration of what you can do with
boldness and other people's money during a boom. It also
illustrates the importance of complaisant governments
- Bond recurrently owed his survival to support from the
Western Australian state government - and bankers.
At its height his Bond Group and Dallhold (one a public
company, the other private) embraced the Nine television
network, West Australian Newspapers, major brewing operations
in Australia and North America, an airship company, property
development and hotel operations, extensive mining operations
and other interests.
He had bid for - and in some cases acquired - major enterprises
such as Arnott's, Castlemaine Tooheys, British Satellite
Broadcasting, the Santos petroleum group, retailers Waltons
and Grace Bros, UK brewer Allied Lyons, Chile's national
telecommunications company, Lonrho and Argyle Diamonds.
The price paid for many acquisitions appears to have been
too high and the strategic vision was questionable, with
poor day to day management. Bond appears to have been
better at doing deals - and promoting them to journalists
and investors - than extracting lasting value from a disparate
conglomerate assembled on an opportunistic basis.
In 1989 the music stopped, despite access to over a billion
dollars within Robert Holmes a Court's
Bell companies. Bond Corporation went into receivership
with the largest debt in Australian history. Parts of
the group were offloaded to a range of media competitors
such as Packer or became independent entities. Others
were simply, albeit often painfully, closed as commercially
unviable.
Bond served time in prison but, apparently unabashed,
has recently asserted that he was wronged and proclaimed
a commitment to commercial success as an entrepreneur
in Australia and overseas. Receivers meantime state an
intention to discover information about and even retrieve
substantial assets that may have hitherto eluded their
grasp.
Bond
In the Australian version of the presidential log
cabin myth early journalism about Bond highlighted the
start of his career as a signwriter. In 1955 he married
Eileen Hughes, member of a leading Fremantle family. Paint
in the form of signs was apparently not his metier, as
he moved into residential property development around
Perth and Melbourne. In 1970 he bought 20,000 acres of
a failing sheep station for $1.5 million, with an ambitious
plan for development of the Yanchep Sun City resort and
residential area.
Concerned that the landscape would look unappealing in
promotional literature, Bond famously told one associate
that "I've painted the sandhills to make the brochures
look better". Yanchep was well north of Perth and
mooted development costs of $250 million to meet the needs
of a projected population of 250,000 people proved beyond
the capacity of his financiers. Most of Yanchep was subsequently
sold to the WA government and Japanese investors.
He acquired three America's Cup bid yachts from Sir Frank
Packer in 1970, building the
Observatory City resort at Scarborough (promoted through
bids for the America's Cup, which resulted in selection
as Australian of the Year in 1978) and buying retail operations
such as discount chain Norman Ross and midrange department
store chain Waltons. Some sharemarket activity such as
a raid on petroleum group Santos in 1979 (foiled by SA
government action to restrict the size of shareholdings)
appears to have been profitable but failed to deliver
control of the targets.
Neither Waltons nor Norman Ross flourished but presumably
added both cash flow and commercial legitimacy to holdings
such as Swan Brewery, acquired in 1982 for $164 million
(of which around $160 million was borrowed). Swan had
little debt, modern plant and roughly 95% of the local
market. In 1983 Bond gained control of Perth television
station STW 9, echoing Holmes a Court's purchase of TVW
7.
That year saw victory in the America's Cup bid with Australia
II, followed by acquisition of 45% of dirigible manufacturer
Airship Industries and sale of a 5% stake in Argyle Mining
to the WA government for $42 million. (Strangely, the
government then established the WA Diamond Trust, which
purchased the stake for $45 million before issuing 65
million $1 units, with a State Government guarantee of
an 8% return for 7 years.)
In 1985 Bond paid around $1.2 billion for Castlemaine-Toohey's,
Australia's second largest brewer. He now had a 42% share
of the Australian beer market. He also acquired Queensland
Television Ltd (controlling Nine network affiliate QTQ-9).
During the following year he bought Pittsburgh Brewing
(Iron City Beer), the tenth largest US brewer and then
spent US$1.7 billion on G Heileman Brewing Company in
the US.
Other activity at that time included acquisition and disposal
of the Thorn EMI film studios and
film library, disposal of the ailing Norman Ross and Waltons
department store chain, property development in Hong Kong,
acquisition of New York's St Moritz hotel (collateral
for a $500 million loan from insurer FAI) and purchase
of a controlling stake in the Chile Telecommunications
Co.
Bell, Takahashi and the Nine Network
Kerry Packer, after selling the
flagship Nine network television stations to Bond, quipped
that you only have one Bond in your lifetime, reflecting
perceptions that the buyer paid too much. In December
1987 Packer offloaded the Sydney and Melbourne stations
for $1,055 million ($855 million cash, $200 million in
preference shares in Bond Media). Bond's other broadcasting
interests included QTQ-9 Brisbane; STW-9 Perth, and TNQ/FNQ
Townsville/Cairns; radio stations 6AM, 6KG, 6KA and 6NW
in Western Australia and radio station 8DN.
Despite clashes with the Australian Broadcasting Tribunal
over questions
of his fitness to hold a licence Bond's reputation was
buffed by reports that he had sold the Sydney Hilton for
around $300 million (a deal that was subsequently questioned),
had funded the Endeavour replica and was the
owner of the historic de Chazal Flinders
portrait. With Japanese property developer EIE International
he founded Bond University in Queensland.
EIE was headed by subsequently disgraced Harunori Takahashi,
aka 'baburu shinshi' (bubble gentleman). He had used US$5
billion loans from the Long Term Credit Bank (later nationalised
after belated official recognition of a US$22 billion
capital deficit) to build a global property collection.
Takahashi famously characterised LTCB lending practices
as like "taking buckets of water from a running tap
and filling a bathtub".
The 1987 financial crisis saw the Australian stock exchange
index drop 25% on October 20, with an overall decline
by 11 November of 50%. In the aftermath of the crash Bond
joined with the Western Australian state government -
through its cash-rich State Government Insurance Commission
(SGIC) - in a attempted rescue of fringe merchant banker
Rothwells and investment in what was hyped as major petrochemical
processing development.
More significantly, he took a controlling stake in Holme
a Court's Bell Group and cash-rich Bell Resources. a Court's
competitors such as Ron Brierley and Kerry Packer held
crucial stakes which prevented Bell from absorbing its
wealthier offshoot and thereby eliminating the parent's
indebtedness.
Bond was ironically perceived as more stable, reflecting
uncritical community acceptance of hype about a national
hero, the weakness of regulators and skill with creative
accounting. Aside from SGIC and other actors in 'WA Inc',
a range of Australian businesses were hesitant about rigorous
evaluation of the group. Merchant bank Tricontinental,
under the umbrella of the State Bank of Victoria, had
loaned Bond some $392 million secured against $285 million
of Bond shares. (Tricontinental's own capital base was
a mere $100 million.) A $1.7 billion 'reconstruction'
of Bond group indebtedness included $510 million funding
from junk bond vendor Drexel Burnham Lambert under Michael
Milken.
The Bell companies delivered a range of media interests,
notably the West Australian newspaper and TVW
7, and other companies such as civil engineering equipment
dealer Waugh & Josephson. Bond never held all shares
in Bell Group and Bell Resources. Courts subsequently
judged that over $1 billion had been improperly employed
by Bond without the knowledge/authorisation of other Bell
shareholders.
collapse and aftermath
Following the crash Bond gained attention for his supposed
purchase for $53 million Van Gogh's Irises, acclaimed
as a record price for any painting but in fact made possible
through a substantial loan from Sothebys.
Bond then sought to take over the UK-based conglomerate
Lonrho, whose founder 'Tiny' Rowland in repulsing the
bid suggested that Bond's corporate clothes were somewhat
threadbare.
Bond Corporation announced a record $980 million loss
before going into receivership. Overall debt at that time
was around $US10 billion, with sales of around $9.5 billion.
As noted above, assets across the group were progressively
disposed of or liquidated. Packer for example, gained
a majority stake in Bond Media's Sydney, Melbourne and
Brisbane stations in 1990 after the group was unable to
pay out the $200 million preference shares. The receivers
floated WA Newspapers as an independent
company in 1991 for about $220 million. Eva Presser's
Sunraysia Television bought STW-9
for $95 million. Van Gogh's Irises was claimed
by Sotheby's after Bond failed to pay the loan and was
sold to the J. Paul Getty Museum in 1990.
Bond was declared bankrupt in 1992, paying his personal
creditors $3.25 million to settle debts of over $500 million.
It would appear that provision had been made for his family
and personal associates over several years, through family
trusts and other mechanisms beyond the reach of the receivers.
His children for example are estimated to be worth over
$30 million.
In 1992 Bond was jailed for 30 months after a jury convicted
him of dishonesty relating to an Australian Securities
& Investments Commission (equivalent to the US SEC)
investigation of Rothwells. He was released after retrial
but jailed by the West Australian District Court for three
years in 1996 over the Edouard Manet painting La Promenade.
In 1983 Bond's family company, Dallhold, had bought La
Promenade for $4.6 million then leased it via an
intermediary to Bond Corporation for around $100,000 a
month for five years. Dallhold subsequently sold La
Promenade for $17 million.
state of amnesia?
In 1997 Bond was jailed for a further four years after
pleading guilty to deceptively siphoning $1.2 billion
from Bell Resources. During the trial Bond claimed to
be suffering from depression and brain damage, making
recollection of the details of his activities impossible.
Those ailments inhibited provision of details about offshore
payments and transfers, eg through accounts in the friendly
Swiss canton of Zug.
Concern over the sentence's leniency was reflected in
a federal government appeal, which saw the court increase
the sentence to seven years. He was released
from prison on parole in 2000 after the High Court ruled
in his favour on a constitutional technicality.
The Sydney Morning Herald tartly commented
A
couple of days before he was released after less than
four years' jail for a fraud involving $1.2 billion,
a Northern Territory man was sentenced to one year's
jail for stealing $23 worth of cordial and biscuits.
Had the same formula been applied to Bond, he would
have been in jail for 50 million years.
Another critic noted that
Just
one fraud committed by businessman Alan Bond was worth
the same amount as every single household burglary committed
in Australia over 18 months.
He
has since been promoting deals in London (where The Money
Centre proved a failure) and in exotic locations such
as Kazakhstan and Western Africa. In 2003 he took part
in a parade to celebrate the America's Cup win, which
might lead an unkind observer to conclude that both Bond
and the people of Perth are suffering from amnesia.
Biographer Paul Barry acerbically commented
that in the course of his career Bond
broke
all records .... He notched up the biggest corporate
loss in Australia of around about $1 billion. He then
produced the biggest corporate collapse with Bond Corporation
of around $4 billion. He then proceeded to the world's,
or almost the world's biggest bankruptcy, it was in
fact the second I think around $600 million and he romped
away with the title of Australia's biggest fraud with
$1,200 million. For twenty years Alan Bond plundered
his public companies. He paid himself huge fees that
he was not entitled to, he took huge private profits
of public deals with other people's money and he sold
things into the public company at inflated prices and
he borrowed money that he was never going to pay back
and never did pay back. At the end of it he left a black
hole of around $5,000 million, $5 billion Australian
dollars which was losses borne by shareholders, creditors,
bankers and the rest. He then managed to hang on to
a private fortune of something like $100 million. Some
of that legally because of the way in which the laws
operate and the trust laws operate and some of it clearly
illegally in the sense that it was concealed offshore.
He had the usual things that tycoons collect. He had
artworks, English country mansions, houses in London,
a ski lodge in Colorado, horses, paintings and all sorts
of other trinkets. Indeed he still has them, or most
of them or he has the money that came from them. I must
say I hope that Kerry Packer is right - that we only
get one Alan Bond in our lifetime, because I think what
he did in the 1980's and the 1990's was a disgrace to
this country and brought us into disrepute throughout
the world. I think more to the point what happened in
the 1990's was that he made a fool of the legal system
and made a fool of all of us too. In the 1990's he managed
to hang on to a fortune despite the fact that he was
bankrupt and despite the fact that his creditors, the
police, the taxman and a whole bunch of other people
were chasing him for the money.
... The police eventually gave up the chase against
Bond after 4 or 5 years and the reason why, or one of
the main reasons why they gave up, was because they
met a brick wall in Switzerland. They were confronted
by a series of legal actions that Bond and his lawyers
took that frustrated their progress at every step in
the attempting to get documents out of Switzerland in
particular. Bond fought 13 separate legal actions over
the space of some 4 years. He and his lawyers lost every
single one of those 13 actions, they didn't win a technical
point in any of them and yet by fighting them they essentially
won the war in that they outspent and outlasted their
pursuers.
Bond
subsequently complained
that
Some
people think they can say whatever they like about me.
They throw mud and they hope it sticks. Well, it hurts,
I can tell you. It hurts. I know it's not true, which
is why it hurts all the more. I was never charged or
convicted of being a con man. I'm not a con man and
I'm not a deceiver. I made mistakes. I went to jail
because of them and I'm genuinely sorry for having hurt
so many people. But I've paid my dues. I've served my
time. I'd just ask people: 'Isn't it about time they
gave Alan Bond a fair go?'
studies
Paul Barry's lucid Going For Broke: How Bond Got Away
With It (Sydney: Bantam 2000) updates the story in
The Rise & Fall of Alan Bond (Sydney: Bantam
1991) and Trevor Sykes' The Bold Riders: Behind Australia's
Corporate Collapses (North Sydney: Allen & Unwin
1994). Bond appears in studies highlighted in profiles
on Packer, Murdoch
and the Seven network.
Conflict with Lonrho features in Tom Bower's Tiny
Rowland: A Rebel Tycoon (London: Heinemann 1993).
Some of the most interesting material appears in reports
by parliamentary enquiries, by corporate regulators such
as the Australian Broadcasting Tribunal and ASIC, and
court reports following the group's collapse.
Tricontinental is discussed in Tricontinental: The
Rise & Fall of a Merchant Bank (Carlton: Melbourne
Uni Press 1995) by Hugo Armstrong & Dick Gross. For
Milken and the junk bond milieu see in particular Connie
Bruck's The Predators' Ball: The Inside Story of Drexel
Burnham & the Rise of the Junk Bond Raiders (New
York: Penguin 1989). We have discussed
the role of easy money in a detailed examination of the
1980s boom as a precursor of the turn of the millennium
dot-com and internet bubble.
Henry Bosch's The Workings of A Watchdog (Port
Melbourne: Heinemann 1990) and Of Manners Gentle:
Enforcement Strategies of Australian Business Regulatory
Agencies (Melbourne: Oxford Uni Press 1986) by Peter
Grabosky & John Braithwaite offers insights into contemporary
regulatory failures, as does Anne Lampe's Media Coverage
of Complex Commercial Fraud paper.
For Takahashi and LTCB see Peter Espig's 2003 The
Demise of a Banking Dinosaur: Long-Term Credit Bank
(PDF),
Peter Hartcher's The Ministry: How Japan's Most Powerful
Institution Endangers World Markets (London: HarperCollins
1997), Christopher Wood's The Bubble Economy: Japan's
Extraordinary Speculative Boom of the '80's and the Dramatic
Bust of the '90's (New York: Atlantic Monthly Press
1992) and Samurai in the Surf: The Arrival of the
Japanese on the Gold Coast in the 1980s (Canberra:
Pandanus Books 2005) by Joe Hadju. Other than Lonrho:
Portrait of a Multinational (Harmondsworth: Penguin
1976) by Suzanne Cronje, Margaret Ling & Gillian Cronje
there has been no major study of Lonrho. A sidelight is
provided by Richard Hall's My Life With Tiny (London:
Faber 1987).
The former mogul's Bond (Sydney: HarperCollins
2003) with Rob Mundle reflects recent media appearances,
with corporate collapse being attributed to "greedy
little banks",
ailing/incompetent executives and clumsy regulators.
Although he had he pleaded guilty to charges of breaching
directors' duties with intent to deceive and commit fraud,
in that book Bond comments that he agreed to the accusation
of fraud only because he considered he would not get a
fair trial and maintains "I was not guilty of fraud".
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