EIG’s Cayman harbour for Santos

Illustration: Rod Clement

For all the talk about FIRB issues, it may be the taxman Chris Jordan who shapes Scott Morrison’s thinking on the $13.5 billion bid for Adelaide’s last local giant, Santos, by Linda Cook’s Houston-based Harbour Energy.

Just have a look at what Margin Call has discovered.

Cook’s EIG-founded and managed Harbour has been nothing but thorough since it lobbed its initial unsolicited offer to the now Keith Spence-led Santos board in August.

News of the approach didn’t hit the market until Spence’s scuttled lunch mate wrote about it in November, but clearly Team Cook has been confidently preparing for a long game.

In early September, EIG reps established a new company, unobtrusively named ACN 621 594 625 Pty Ltd, with Cook, Washington DC-based EIG chief and chair Blair Thomas (who lives in nearby Virginia) and Russian-born, Sydney-based EIG rep Andy Zhmurovsky (the multinational’s man Down Under) as directors.

Harbour Energy boss Linda Cook used to work for Shell

Documents obtained by Margin Call reveal Harbour Energy is the secret vehicle’s major shareholder, with an address that places Harbour’s base as — brace yourself — the Cayman Islands, a notorious corporate tax haven that is certain to pique the interest of The Decider, Scott Morrison.

The Treasurer has the final say on the Foreign Investment Review Board decision, which it seems will determine the fate of the mega deal.

His FIRB chair David Irvine, a former spook, will take a keen interest in the opinion of Australia’s Five Eyes security partners on this investment.

But it looks like the important hurdle will be the Cayman ­crinkle. That’s going to require some studious ironing by Team Harbour — including their lobbyist, Bespoke partner Ian Smith — as they pitch the deal to a Coalition government that has attempted to make multinational tax avoidance a signature issue.

It’s a safe bet Bill Shorten, Chris Bowen and Kyle and Jackie O contributor Sam Dastyari (still a key voice in Team Shorten) will take a keen interest in the Cayman Island connection to the $13.5bn takeover, which needs ScoMo’s approval within 12 months of a federal election.

As Dastyari could tell you (or the nasty fat man and Kyle’s giggling enabler), Chris Jordan’s ATO has been keeping a close eye on the tax arrangements of the oil and gas sector.

Harbour told the market on Tuesday as it unveiled its offer that its “plans (for Santos) are expected to contribute to Australian domestic energy security and economic growth.”

Sure, ScoMo and Irvine will want to make sure that’s the case. Jobs and growth and all that.

But they will also want assurance the corporate structures EIG and Harbour have in mind don’t rob Jordan’s ATO.

There will be a lot more than Five Eyes watching this one.

Bespoke approach

As revealed by Margin Call online yesterday, Linda Cook’s Harbour has signed up accomplished Adelaide-based political strategist and lobbyist Ian Smith to make the case for the $13.5bn bid in Canberra and South Australia.

Smith’s Bespoke Approach has been on the job since August when Harbour lobbed its initial unsolicited offer to the Santos board.

Cook’s Harbour Energy joins the likes of Shayne Elliott’s ANZ, Craig Drummond’s Medibank and Jennifer Westacott’s BCA on Bespoke’s lucrative list of Canberra clientele.

Enlisting Smith makes a lot of sense.

Like Santos, he is that rarest of Australian corporate animals: one based in South Australia.

And in a promising sign for uncertain fund managers and shareholders, the Bespoke co-founder’s powers of persuasion are such that he managed get former Democrats leader and senator for South Australia Natasha Stott Despoja to agree to marry him.

Exactly how remains one of Adelaide’s great unsolved mysteries.

The persuasive Ian Smith and Natasha Stott Despoja. Picture: James Croucher

While married to a Democrat, the former Liberal staffer’s connections to the Blue Team are impeccable. Smith was Alexander Downer’s business partner before the former Foreign Minister set off to London’s Stoke Lodge.

Making his appointment even more logical, Smith and fellow Bespoke partner Andrew Butcher (another one who married way above his station, in Butch’s case to former NBC anchor Sara James) are loosely aligned with Fairfax adviser Sue Cato (previously an adviser to Santos back in the Ken Borda-era) and Street Talk alumnus Brett Clegg’s Surry Hills-based outfit.

Across the table, Domestique’s Jim Kelly was brought on board for Santos over Easter when it became apparent an announcement to the market on a Harbour bid would be necessary on Tuesday. Kelly is working with Santos internal comms specialist Tracey Winters — an ex Canberra staffer whose partner is Craig Emerson, who some will recognise as the former Labor trade minister. Others will know Emo as the. Boy from Baradine

Another in the Santos tent is Freehills lawyers Baden Furphy, who is also working for Rob Scott on the Coles demerger from Wesfarmers.

If you’re lunching with Furphy, make sure he pays. Cha-ching.

Russian for a deal

The Santos bid is the deal of a lifetime for EIG’s longstanding local operative, Russian-born Andy Zhmurovsky, 40, who has been working towards the $13.5bn takeover for almost a year.

The steely energy sector deal maker, fluent in Russian, has made himself right at home in the Harbour City, recently marrying PwC accountant Angelina Zhmurovsky. They have just had a baby and purchased an expansive sandstone home in Palm Beach with uninterrupted views of Pittwater for almost $3m. What’s Russian for La-di-da?

In January, Zhmurovsky joined the board of chairman Trevor Bourne’s Senex Energy, which last year entered into a strategic agreement with EIG that saw the global giant take at least a 12 per cent stake in the group and provide $400m in debt funding to drive Senex’s coal-seam gas interests. Clearly just a warm-up for this week’s mega deal. Also in the EIG Sydney office running the numbers on the Santos deal have been ex-Merrill Lynch banker Benjamin Lee and ex-Barclays adviser David Edgar, both vice-presidents at the group.

Props to the discreet trio and their bevy of bankers in recent weeks, as they traipsed in and out of EIG’s office in the Gateway building on Macquarie Place, where Santos is also based.

Spycraft worthy of Putin’s Canberra embassy.

Steak and chips

Washington, DC-based EIG boss Blair Thomas, 55, jetted out of Oz last Thursday after spending almost a fortnight here getting his latest deal to the due diligence start line.

Margin Call can reveal it wasn’t all smooth sailing during the big cheese’s stay.

During a stint in Perth, where Santos chair Keith Spence is based, Thomas was taken to fussy Japanese restaurant Nobu at gaming billionaire James Packer’s Crown Perth for dinner with the deal team.

Seems the finicky Japanese fare wasn’t to the American’s liking. All the boss really wanted was a foam-free steak, with chips, not artful dollops of miso paste.

So when Thomas came to Sydney last week he and his Harbour CEO Linda Cook were sent to Neil Perry’s Rockpool Bar and Grill, where Thomas got a steak, with a mention in the Fairfax press on the side.

Cook skipped the country soon after, heading home in time to celebrate what will be her 60th birthday tomorrow in Houston with family and friends.

Take note, bankers charged with booking a celebratory venue for the Harbour team should it close the $13.5bn deal. Go with the KISS principle, keep it simple stupid. The boss is American. Give him a steak.

Margin Call understands Harbour didn’t even ask for the inclusion of a break fee or exclusivity clause in its talks with Santos.

They’re confident, these Caribbean-loving Americans.