Alan Bond: a risk taking salesman who made life fun

OBITUARY: Alan Bond was the quintessential Aussie entrepreneur made famous by capturing the America’s Cup.

Pic by Alf Sorbello Sunday Times Social & News Hyatt 20th Anniversary Americas Cup Gala Ball Alan Bond

By Paul Barry

Alan Bond, Businessman. Born, April 22, 1938, died June 5, 2015.

Alan Bond was the quintessential Aussie entrepreneur. Brash and confident, a super salesman and champion borrower, he was a daring and determined risk taker. His capture of the America’s Cup, the most coveted prize in yachting, with Australia II in 1983 made him a hero to many Australians.

But his corporate excesses in the late 1980s and the multibillion-dollar collapse of his business empire in 1991 did more than anything to give Australian business a bad name throughout the world.

Paradoxically, Bond’s two main claims to fame were linked, for it was his famous triumph in 1983 that allowed him to borrow the billions of dollars that eventually swamped his empire. After 1983, as winner of the America’s Cup, Bond could walk into any bank in the world and receive a hearing.

And once inside, his charm and chutzpah ensured that he came out with the money. He could sell dreams even to bankers.

At their peak in 1988, Bond’s various companies had assets and debts of some $12 billion or more than $700 for every man, woman and child in Australia. At the end, aside from a few tower blocks in Sydney and Perth, only the debts remained.

Bond was a £10 Pom who came to Australia in 1950 while still a boy. His father Frank came from a Welsh mining family, but escaped the pits to join the army and then worked as butcher, milkman and jobbing builder. His mother, Kathleen, a clerk in the public service, was the daughter of a pharmacist. The driving force in the family, Kathleen Bond was a tough, determined, difficult woman, who was intent on bettering herself at all costs. She was the inspiration to her son, with whom she had much in common.

When young Alan first set foot on Australian soil he was just 11 years old. Trussed up in a tweed suit and pullover in the scorching summer heat of Fremantle, standing at his mother’s side, he stared out at a row of tin sheds and concrete wharves and was none too impressed. “I thought I had landed on the moon,” he later told an interviewer. Ironically, it would be his syndicate’s defence of the America’s Cup off Fremantle 37 years later that would transform the port into the smart and fashionable tourist centre it is today.

Alan’s father had come out six months earlier, suffering from chronic tuberculosis, after his doctors had told him that he wouldn’t survive another smoggy London winter. He had already found them a small rented terrace house in Fremantle where they set up home.

In England, young Alan had been a tearaway, and in Australia it was much the same. Neighbours in London recalled him coming home in a police car on more than one occasion after running away from home. And as a juvenile in WA he was soon starring as a petty thief in the pages of the West Australian Police Gazette. At school he had few friends but would dish out sweets in the playground in the hope of buying popularity. His headmaster said he would go far and hoped it would be sooner rather than later.

In Fremantle he was called “that Pommy kid” and ribbed about his accent. Classmates remembered him as a tubby lad in elastic-waisted shorts, while his teachers had few good words to say about him, if they remembered him at all. He told one of them, Mr Hinchliffe: “When I’m older, I’ll buy and sell people like you.” Or so legend has it.

Imagination was his strong point, particularly when it came to inventing stories of his prowess.Academically, young Alan was no great shakes, and it’s possible he was dyslexic, although he never suggested it. When he later became famous, he would tell journalists he had been a scholarship boy who could speak four languages. But the reality was that he was barely proficient at English: he was near the bottom of the class, had difficulty spelling, and showed little interest in learning. Imagination was his strong point, particularly when it came to inventing stories of his prowess.

Alan left school at 14, with relief on both sides, to work as an apprentice sign-writer at the Fremantle firm of Parnell Signs. But he did not complete his five-year training. Showing signs of early business flair, Bond started pinching Parnell’s customers by doing jobs on the side at cut-price rates. He was dismissed when the boss found out.

Before long, he was also in trouble with the police again. In 1956, at the age of 18, he was convicted at Fremantle Police court for being unlawfully on premises and given a six-month good behaviour bond. Not for the first time his father despaired of him. As his young son wheeled and dealed around town, the mild-mannered Frank forecast that the boy would either become the richest man in Australia or end up in jail.

Fortunately, the old man did not live long enough to see the second part of his prediction come true.

After leaving Parnell, Bond set up a rival company, Nu Signs, and worked furiously hard, charging around Western Australia to paint hotels, cranes, ships and station signs. He claimed later to have employed 100 men and to have built a thriving business, but this was an invention, as was the accountancy training that Bond claimed to have received.

In the seven years Bond operated Nu Signs, he and his company were chiefly famous for watering down the paint and not paying their bills. Despite hard work, the company struggled to stay afloat, and Bond spent much of his time being chased round town by his creditors. But then came the land boom and Bond’s career took off.

In 1960, at the age of 22, he made his first forays into real estate and found out where his talents lay. In the land game it wasn’t a handicap to be loose with the truth or to believe in dreams. Bond’s first bush block on an escarpment 15km east of Perth set the pattern for many to follow. The previous owner had struggled to sell any of the half-acre lots on offer. Bond gave the hillside the grand new name of Lesmurdie Heights, doubled his prices, took out big newspaper ads announcing a land sale and brought in the punters. By lunchtime on the first day half the blocks had gone.

Such was his talent for selling that he could ask twice the price of identical land next door and still shift his blocks twice as fast. Bond had borrowed every penny of the money for Lesmurdie Heights, and was borrowing more before he had even repaid the loan. Desperately short of cash, he took it from the almost insolvent Nu-Signs by the simple device of not paying any bills. His creditors rapidly grew angrier and more numerous. But he was a master at keeping them at bay.

Such was his talent for selling that he could ask twice the price of identical land next door and still shift his blocks twice as fast. When Perth’s businessmen debated whether to make him bankrupt he persuaded them to give him a second chance. Next day, to their astonishment, he laid out several thousand pounds at auction for another huge block. Yet to Bond this all made perfect sense. Having bought the land for say, £10,000 he could then persuade a friendly valuer to say it was worth twice that much, whereupon he could borrow £16,000 from a finance company to purchase the block and pay off his most pressing creditors.

Years later Bond used the same techniques in building his business empire, only with more noughts on the end. He would buy, revalue and borrow, then revalue a second time only to buy and borrow again. And so it went on, with the deals getting bigger and the millions turning to billions after his famous Americas Cup victory. But the crash had to come eventually, for economies are cyclical and Bond always punted his winnings on the next bet.

He nearly went bust in 1963, 1968, 1974, 1978 and 1983 before finally making it in 1991 with what was then the biggest corporate collapse and biggest personal bankruptcy in Australian history. Along the way, Bond had showed himself to be a brilliant deal maker. His purchase of Santos in 1978 was inspired, though he was denied the full benefit by South Australia’s politicians. The takeover of Swan Brewery five years later was a great buy, too, while the capture of the huge Toohey’s brewing empire in 1985 for $1200 million — the biggest takeover in Australian history at the time — was possibly the best of all. Remarkably, in the Toohey’s deal, Bond Corporation swallowed a company four times its size and financed the purchase almost entirely with debt.

The critics couldn’t believe Bond’s nerve. But unfortunately for him and his shareholders, the bouncing entrepreneur showed far less skill in running businesses than in buying them. He was a deal maker and property developer rather than an industrialist. Successful companies such as Swan and Tooheys were soon loaded with yet more debt to pay for the never-ending expansion of the Bond empire.

Bond Brewing, meanwhile, behaved so arrogantly towards its beer sellers that it alienated its customers and lost market share. In 1985, after taking over Tooheys, Bond Brewing sold 48 per cent of the beer drunk in Australia. By 1990 that was down to 34 per cent. Thus, when the 1980s boom finally ended amid soaring interest rates and falling property prices, Bond finally achieved what many joked was impossible — he went bust in Australia running a brewery.

The collapse of Bond’s business empire in 1991 left shareholders, bankers and bondholders some $6 billion out of pocket. It also left the reputation of Australian business abroad in tatters. The sheer size of the losses was bad enough, the fact that the group defaulted on German bonds was no better. But worst of all was the gradual realisation among investors that they had been conned.

In 1988 Bond Corporation had claimed record profits of some $400 million, but these had been a sham. Three big property sales — the Sydney Hilton, Perth’s Emu Brewery site and some land in Rome — on which profits of around $200 million had supposedly been earned, had simply not taken place.

The sales had been concocted to make the accounts look good and to conceal the truth from investors. In fact, the group was almost certainly making losses.

Investors were also shocked to discover that Bond had for many years made money at their expense, taking out huge and unjustified fees or profits for his private companies from deals that the public had financed. Australia’s corporate regulators had known about these crimes or misdemeanours (and sometimes forced him to pay money back) but had lacked the will or the resources to prosecute. Only in 1990, after the money had gone for good, did investigations begin.

In May 1992 Bond was jailed for two and a half years for dishonesty over a $16 million fee he was to have received for helping to rescue Laurie Connell’s Rothwells merchant bank. But after serving three months he was released, retried and acquitted. In 1996 he was jailed again — this time for three years — over the $15 million sale of a painting by Manet called La Promenade, where the profits had ended up with one of Bond’s private companies, even though the lease payments had been made for many years by Bond Corporation and its shareholders. And in 1997 he was sentenced to a further four years in prison for stripping $1200 million cash from Bell Resources in 1988-89 in what was the biggest fraud in Australian history. He was released in March 2000 after serving 1298 days behind bars, or roughly one day for each $1 million that he had taken from Bell shareholders.

Despite these setbacks, Bond hung on to his belief that he had done absolutely nothing wrong. He blamed journalists, politicians, regulators, the banks and his former managing director Peter Beckwith for his demise, but never himself. He remained convinced that investigations of his business affairs were a witch hunt and that he was being made a scapegoat for the excesses of the 1980s.

Despite being made personally bankrupt for $600 million in 1992, Bond and his family still managed to hang on to a fortune. A network of family trusts set in the 1970s held property and other Australian assets worth perhaps $70 million, which helped to pay Bond’s bills and keep him in the style to which he had become accustomed. Meanwhile, mysterious “friends” from overseas with companies in obscure tax havens contributed generously to his legal and other expenses.

Properties overseas, owned by such “friends”, were made available for Bond and his family to enjoy. Yet Bond managed to persuade his creditors to settle for around 0.6 cents in the dollar, because they despaired of getting more. In 1994, Bond was confronted in the Federal Court with evidence of bank accounts and companies holding money for him in Jersey, Switzerland and Liechtenstein, but famously claimed he was brain damaged and could not remember a thing. Luckily for him, his memory soon returned.

Shortly after his release from bankruptcy in 1995, Bond married his loyal, long-time girlfriend, Diana Bliss, in a glitzy ceremony at Sydney’s Museum of Contemporary Art. He had met her in the early 1980s while she was an air hostess. She later became a popular and prolific theatre producer in London, where they spent much of their time. After many years together, Diana tragically took her own life in 2012 while suffering from depression.

To some, he will always remain a champion, a likable Aussie battler who brought us to the attention of the world.

Alan’s first wife, Eileen (nee Hughes), whom he married as an 18-year-old back in 1956, was unable to make it back to Perth in time to be by his bedside this week following his triple bypass operation, which she told The West Australian “had not gone well”. She had added: “We are all hoping and praying.” The couple had remained good friends despite their divorce in 1992. Three of their four children, John, Craig and Jody, also survive their father. The fourth, Suzanne, died suddenly in 2000.

Bond did not rebuild his business empire after it collapsed, not least because the banks no longer wanted to lend to him, but he dabbled in property, mining, diamonds, gold and oil, often in Africa, and at times looked like becoming a billionaire again. But most of his dreams eventually fell apart, leaving another wave of angry investors. His best quality was that he never gave up. His worst was that it was generally other people’s money that he lost

After Bond’s America’s Cup victory in 1983, an emotional Bob Hawke, Australia’s new prime minister, praised him to the heavens and declared an unofficial national holiday. Five years later in 1988, Hawke sought Bond’s political support, commending him to his countrymen as a “great entrepreneur and risk taker”. But by the 1990s Hawke’s enthusiasm for Bond had waned. And so had the adoration of much of the Australian public.

To some, he will always remain a champion, a likable Aussie battler who brought us to the attention of the world. To others he typified all that was wrong with the 1980s, that famous (and now almost forgotten) decade of selfishness and greed. But one way or another Bond will be remembered by almost everyone who lived through that era. He may have been an arrant rogue, but he made life fun.

Paul Barry is the author of The Rise and Fall of Alan Bond