CHAPTER 7

A Bid Too Far

DECEMBER 1989 FOUND Malcolm Turnbull propping up a bar in Perth’s Parmelia Hilton, downing whiskeys with David Michael, one of Alan Bond’s former executives. Dubbed ‘The Director: Toys’, Michael had taken care of the billionaire’s cars, boats and planes … and security. But Michael had fallen out with Bond and had been let go earlier in the year. Now, somewhat bitter, he had an incredible story to tell. Knowing Turnbull was acting for the State Government Insurance Commission, and squaring up to Bond in the fallout from WA Inc., Michael called him up, arranged a quiet drink and proceeded to unload. Bond had grown so paranoid about leaks, and the threat of a takeover from Robert Holmes à Court, that he had resorted to illegal phone tapping—Age finance journalist Terry McCrann’s home line had been bugged, as had Holmes à Court’s homes in Perth and London. Michael had been personally involved. Turnbull, who didn’t mind a bit of intrigue, knew the confession was explosive—there was evidence of a conspiracy—and insisted that Michael go to the Federal Police.1 The story soon leaked into the media, causing uproar in Australia and England. More than thirty people were interviewed by police over the next year, and the Director of Public Prosecutions launched a probe, but no charges were laid.²

In case there was any doubt, Michael’s story underlined that Bond was in utterly dire straits. As the National Australia Bank sent receivers into Bond Corporation in December 1989, Turnbull knew a key date was looming large. When Bond Media paid Kerry Packer $1.05 billion for the Channel Nine stations in Sydney and Melbourne in March 1987, only $800 million had been in cash. The remaining $250 million had been in the form of preference shares and options, effectively a form of IOU, redeemable in three years’ time. The fashionable view among commentators was that these preference shares were worthless, but Turnbull thought differently. It was pretty clear that Bond would be unable to come up with the money in March 1990, and this would present Kerry Packer with a powerful bargaining opportunity—perhaps a chance to buy back the Nines cheap.

When Turnbull put the idea to Packer, however, the media mogul was less enthusiastic than he had hoped. Since selling out of television, Packer had learned to relax a little. He was having a whale of a time at high-roller casinos and flying his polo teams around the world. A return to the all-consuming TV business was the last thing on his mind. What was more, Packer knew that reasserting control over Channel Nine, which had grown flabby under Bond’s absentee ownership, would be a thankless task. Programming costs had ballooned. Salaries would have to be cut. People he knew well would have to be sacked. If Packer was going to buy back in, the price would have to be very attractive indeed.

Within Whitlam Turnbull, Malcolm kept the Packer relationship to himself, so when the partners split, his work on Channel Nine was unaffected. Turnbull’s two-pronged strategy was simple and brutal: launch a hostile takeover bid for Bond Media while at the same time starting wind-up action that would push the company to the brink of bankruptcy. As the March deadline loomed ever nearer, Turnbull pushed Bond Media back onto the sword of the banks. He later recalled:

The one thing that’s terribly hard to predict, in war or in business, is timing. It’s like breaking a stick; bending a wand of willow. You know it’s going to crack, but is it going to break there … or there … or there? You don’t know, but you know if you keep putting on that pressure, it’ll ultimately crack.3

In the end, Bond did crack, agreeing to convert Packer’s preference shares into a controlling stake in an expanded Nine Network, thereby avoiding bankruptcy. It was enough to give Packer control without him putting his hand in his pocket. It was a deal that went down in Australian corporate folklore: Packer had sold his TV stations to Bond for $1 billion and bought them back for $250 million. In fact, it was a little more complicated than that: the network was bigger, given it now included Channel Nine Brisbane and Perth; Packer had sold a 100 per cent interest and was getting back less than half; and lastly, Bond Media also had $500 million of debt.⁴ Still, it was a great deal, and it was mortifying to Bond, who could do little more than watch as valuable assets went for a song all across his failing empire—he admitted years later that Packer ‘got the better of me’.⁵

Packer was soon firmly in control of Nine, both feared and feted on his return. As Turnbull rejoined the Nine board, network chief Sam Chisholm quit to join Murdoch. At Chisholm’s farewell drinks, 60 Minutes boss Peter Meakin reflected that Nine’s news and current affairs glory days were now over as Packer’s focus shifted to light entertainment: ‘Kerry’s let everyone know he’s back and good on him. We’re all now back at boarding school. Now he can stop climbing the mast and doing King Kong impressions.’⁶

As the Nine Network avoided receivership, the Seven and Ten networks were struggling under tons of debt. Journalist-cum-entrepreneur Christopher Skase’s Qintex, owner of Channel Seven, failed in late 1989, and the likes of Reg Grundy, Lloyd Williams’ developer Hudson Conway, and at one point even Packer, began circling. Turnbull did some work on a possible bid by Hudson Conway, in which Packer would hold 8 per cent, but Seven was ultimately refloated, with Kerry Stokes on board as a minority shareholder.

In July 1990, the banks appointed receivers to Northern Star Holdings, the company that owned Channel Ten and was controlled by former radio announcer Steve Cosser, who’d picked it up for a song from Frank Lowy’s Westfield Capital.7 Turnbull & Partners were appointed to advise Westpac, which was owed $255 million, on a restructure of Ten. Hopelessly overcommitted, Turnbull was now tied up in all three networks. He left the Nine board to avoid any perception of a conflict of interest, but when a proposal he’d written for Westpac was apparently leaked to the media, there was an uproar. Turnbull was suspected of being part of a Packer conspiracy, proposing a ‘no frills’ Channel Ten whose audience share would plummet to 10 per cent, leaving Nine to dominate. Under the proposal, reports said, Cosser would be ousted and Ten would be pared back to 24-hour movies and a bare-bones local service. Suspiciously, the Ten signal would be temporarily carried by Nine instead of Cosser’s studios and transmitter. Equally suspicious, part of the plan was that Turnbull, the longstanding Packer adviser who only days earlier had been a director at Nine, would become chairman of Northern Star.⁸

If anyone had thought then federal communications minister Kim Beazley would turn a blind eye to the arrangements, they were mistaken. Beazley went ballistic, publicly calling on the Australian Broadcasting Tribunal to ensure that a full service was provided by Ten as a licensee. He also flagged retrospective amendments to the Broadcasting Act, if necessary, to ensure that separate control of each network was maintained: ‘above all there should be one proprietor, one person in a situation of ownership and control in each of those individual services’.⁹ The Herald reported that the Trade Practices Commission and the tribunal had torpedoed the push to appoint Turnbull as chairman of Northern Star, on account of his links to Packer, and would prohibit Ten from taking programming, broadcasting or other services from either of its rivals.¹⁰ The next day, TPC chairman Bob Baxt wrote to the Northern Star receiver demanding he ‘agree not to use Mr Malcolm Turnbull, or associated persons or companies, for running the Channel 10 network’.¹¹ Turnbull was banned. Pundits were calling it ‘Cosser one, Turnbull nil’.¹²

Turnbull denied there had ever been a proposal that he join the board of Northern Star, and accused Cosser of character assassination: ‘[he] created a straw man—in the spectre of Malcolm Turnbull as chairman of Ten—and then proceeded to knock it down’.13 Turnbull also attacked the TPC, accusing Baxt of denying him natural justice by writing to the receiver without first giving him the opportunity to comment.¹⁴ It was almost a reprise of Turnbull’s defence of Packer against the Costigan allegations, but now he was defending himself. Turnbull dragged Wran and Lucy to see Baxt, and over hours of negotiation repeatedly asked what information he’d relied on to impose the ban. Baxt wouldn’t say—or budge. Turnbull even threatened legal action against the TPC, although it was reported that ‘Mr Turnbull was not clear whether any action would be taken in the Administrative Appeals Tribunal or another court and what the action might be seeking’.¹⁵

It was bad enough that Northern Star’s lenders were themselves divided, with Westpac aligned with Turnbull while Citibank was still backing Cosser. Worse, Westpac itself was divided over who to back, with mixed signals emanating from the bank’s executives and the chairman Sir Eric Neal.¹⁶ The bank was getting dragged into a PR fiasco. When Neal called Turnbull in for a meeting, Turnbull believed he was about to be jettisoned as an adviser and threatened: ‘Eric, if you throw me over the gunwale, I will take you by the throat and you will be coming with me. I have done nothing without your authority.’¹⁷ A story in the next morning’s papers made the clarification that ‘reports circulating yesterday [that] Westpac had cut its ties with Mr Turnbull were denied by both’.¹⁸

Turnbull now tried to turn the tables on the Northern Star chief. The ‘no-frills’ proposal for Ten had been prepared by institutional bank Ord Minnett for Cosser, it seemed, and was different from the reconstruction proposal Turnbull had drafted for Westpac. There was confusion about what role had been envisaged for Turnbull. One report said it was only a monitoring role,¹⁹ but another contained this admission: ‘Although Turnbull denies he ever wanted to run the Ten Network under the umbrella of receivership, he did envisage a major role for himself, effectively replacing Cosser, in the new structure.’²⁰

To everyone but Turnbull, it appeared, the conflicts of interest were plain. ‘Turnbull, not a man given to much self-doubt, firmly believes that the Chinese walls in his own head are impenetrable,’ observed one report.21 Turnbull’s view was that all conflicts could be resolved by full disclosure: ‘If the client says it’s okay, then you’re absolved.’²² But the fate of Channel Ten, like the other TV networks, was more than another business deal to be stitched up between clients. There was substantial public interest involved. Turnbull nonetheless felt traduced, complaining: ‘I’ve never been so unjustly tarred with other people’s conduct as I have in this circumstance.’²³ It was as though Turnbull, sure of his own integrity, expected everyone to take his word for it, wrote Marian Wilkinson and Paul Syvret:

Having advisory relations with all three stations in the past or present is not, in Turnbull’s view, the same as anti-competitive conduct … Whether Turnbull likes it or not, he is seen in the business world as being Packer’s confidant. It’s a role that can be used to good effect but also has its drawbacks. To many of his recent associates, Turnbull learnt his modus operandi at Packer’s knee. Packer’s use of intimidation and confrontation is emulated by Turnbull.²⁴

Despite the brouhaha, the commercial dynamics were in Turnbull’s favour: Ten was losing millions of dollars a week, Cosser’s hold on the company was tenuous, the banks were calling the shots, and Turnbull had Westpac on side. Turnbull trimmed his sails and rode out the storm, drawing up fresh restructuring plans to oust Cosser by using the ABC’s transmitters—chief David Hill was happy for the extra revenue—and included assurances the network would still provide a full service with news, current affairs and children’s programs as required by the Broadcasting Tribunal. Within weeks, Cosser was sacked and former Nine executive Gary Rice was brought in to run Ten.²⁵ Westpac swapped outstanding debt for equity—it would later sell its stake to Canadian media magnate Izzy Asper.

Turnbull got his advisory fee, but he missed out on his chance to run a media business. He was stung by the realisation that he was seen as a Packer stooge. It would not be for much longer.

Warwick’s disastrous bid had saddled Fairfax with $1.2 billion in bank debt, owed principally to ANZ and Citibank, and another $450 million in debt to holders of the junk bonds issued in the United States in 1988 by Drexel Burnham Lambert. The whole market knew Fairfax was heading for a breach of its loan covenants, with earnings falling below forecast as the economy headed for recession. Fairfax was inching, painfully slowly, towards a restructure of its finances and was considering a discounted buyback of the junk bonds as part of a deal that could see some of that debt converted to equity—a share in the company.26 But the bondholders, themselves under pressure, were not content to wait passively to take their haircut. They had appointed their own law firm, Couderts, and were cooking up their own Fairfax takeover strategy with Robert Holmes à Court. However, disaster struck when the corporate raider died suddenly of a massive heart attack in September 1990. The bondholders were back to square one, and decided to appoint a financial adviser. Ten firms were asked to bid for the job: three were Australian, one of which was Turnbull & Partners. According to Corporate Cannibals by Colleen Ryan and Glenn Burge, Turnbull flew over to LA to make his pitch and was the hands-down winner:

In his written submission, Turnbull showed the most media experience and intimate knowledge of Fairfax from his days as adviser to the company. When it came to personal credentials, Turnbull was not bashful. His CV boasted that he was a lawyer and, following his defence of Peter Wright in the Spycatcher case, ‘probably the best-known trial advocate in the British Commonwealth’.²⁷

Fairfax was violently opposed to Turnbull’s appointment, suspecting him of being a stalking horse for Packer. Bill Beerworth, who had just joined the Fairfax board after Warwick had sacked all the directors, and was given responsibility for the restructure, met with two of the largest bondholders at Couderts’ office in LA. He walked straight into an ambush—one after another, more bondholders came into the room, subjecting him to a volley of abuse. What right did Fairfax have to tell them who they could appoint as adviser? Under pressure, Beerworth made a snap decision to distribute a wad of press clippings he had with him—the ‘Turnbull file’—detailing the recent controversy over Channel Ten.

As the clippings were handed around the table the doors were flung open again. It was Turnbull. He had been left cooling his heels in an empty room as the bondholders raided Beerworth’s meeting. Turnbull’s timing was impeccable. Beerworth had been caught handing around the corporate equivalent of dirty pictures … [his] stomach turned. Turnbull was the last person he wanted to see … Turnbull paced around one end of the room, theatrically asking what Fairfax had against him. ‘Why are you opposed to me?’ he pleaded. ‘Why are you defaming me?’28

Beerworth left seething, and if anything his objections had only stiffened the bondholders’ resolve to appoint Turnbull, who clearly inspired fear and loathing at Fairfax and who, they hoped, would get them the best deal. It was a crucial win for Turnbull, because the bondholders would prove to be the key to the Fairfax deal—kingmakers in the ensuing battle for control of the stricken newspaper company, the biggest corporate game in town.

When the end for Fairfax came, the banks’ move to appoint receivers was partly triggered by a last-minute proposal from Turnbull, on behalf of the bondholders, to convert their debt into a 90 per cent stake in the company, which could then be sold down in a float, and to appoint Wran as chairman and himself as deputy chairman.²⁹ Turnbull had also held early discussions on making Trevor Kennedy, who was looking for a way out from under Kerry Packer’s thumb, managing director.³⁰ High-powered broker Mark Burrows, advising the banks, had no doubt Turnbull wanted to run Fairfax, and was leery of the bondholders’ plan.³¹ Having zero faith that Beerworth’s reconstruction efforts would lead to a solution, the banks appointed receivers and a provisional liquidator. On the fateful morning, Turnbull joined the throng of media personnel and lawyers packed into the NSW Supreme Court, only to realise they were all in the wrong place—the Fairfax entity being liquidated was registered in Canberra, so they should have been at the Federal Court.32

It is difficult to imagine now but in 1990, when the ‘rivers of gold’ from Fairfax’s near-monopoly on classified advertising revenue were coursing deep and wide, the receivers had a rush of interest from all round the world. Irish newspaper baron Tony O’Reilly lodged an expression of interest in the whole group on day one, as did maverick Chris Corrigan’s Jamison Holdings—a so-called vulture fund that bought into distressed, undervalued companies—and Janet Holmes à Court, Robert’s widow. British publisher Robert Maxwell renewed his interest in The Age. UK giant Pearson, publisher of the Financial Times, wanted the AFR. US publishers Tribune Co. and The Washington Post put in calls.³³ And what would Packer do?

The foreign bidders all faced ownership restrictions and had to jockey for local partners. As a bidding war loomed, there was rising public concern about media concentration in Australia and perceptions the Labor government in Canberra was favouring its mates, Packer and Murdoch. At the end of 1990, two-thirds of Australia’s television stations and half its newspapers were in receivership—partly due to heavy intervention in the media industry by then treasurer Paul Keating, whose cross-media rules and foreign ownership restrictions were widely blamed.³⁴ The fate of Fairfax would soon become a cause célèbre.

By finally appointing receivers, the banks’ strategy was to isolate Turnbull, to leave him buzzing like a bee in a jar.³⁵ Turnbull would not be marginalised so easily: his pitch to the bondholders had relied partly on his credentials as a fearless advocate, and now he had to deliver. The ace up Turnbull’s sleeve was the work Whitlam Turnbull had done for Fairfax four years earlier. On behalf of the bondholders, Turnbull and Couderts filed suits in Australia and in the United States against Fairfax, its bankers and auditors, for misleading and deceptive conduct when selling the bonds back in 1988: cashflow forecasts were overstated; required capital expenditure was understated; valuations were unrealistic. What staggered Fairfax and the banks was that the company valuations used during the Fairfax bond issue drew heavily on work done for a hefty fee by Turnbull’s own firm. Compounding the aggravation, Drexel Burnham Lambert itself joined the suit—the same firm that had sold the bonds in the first place! (Drexel had wound up with a large holding when there was a shortfall, and was now arguing it had been deceived by the financial information supplied by Fairfax, along with everyone else.) It was brazen, but it worked. Fairfax and ANZ, as lead banker, filed a cross-claim against Turnbull in the Federal Court, but it failed. The bondholders’ case had legs, and only Turnbull could make it go away. Turnbull had a seat at the table.

In March 1991, Turnbull got the bad news that his mother Coral Lansbury’s bowel cancer had worsened and she needed emergency surgery. Coral had ignored the symptoms of the disease until the cancer was advanced and she was finally diagnosed in 1987.36 She’d subsequently received chemotherapy treatment,³⁷ but now the prognosis was grim. Turnbull dropped everything and dashed to Philadelphia to be by her side.

As an adult, Turnbull had not had an easy relationship with his mother. A friend of the family recalls how sad it was when Lansbury came to Sydney to stay with Turnbull after Bruce died in 1982. Coral reached out to Malcolm in the only way she knew how, on an intellectual level, and their rarefied conversation only reinforced the distance between mother and son. Lucy Turnbull, who always wondered how Coral could ever have left Malcolm, recalls:

She used to come and stay with us for five or six weeks at a time, which is a long time for a mother-in-law to stay with you, even if it’s been a seamlessly happy and content mother–son relationship … Coral immersed herself in her … rediscovered role as a very involved parent … She liked to cook dinner for us at 5.30 in the afternoon, which was a little bit early for us. As there are with all mother-in-laws and all daughter-in-laws, there were boundary issues … I was happy for Malcolm and he was very happy that she was, you know, playing an active role in his life, but I always wished that she’d done it at a really critical time when he was much younger. I couldn’t impugn her genuineness, but it was … a bit of a shock to have the full thing back again.38

In the last seven years of her life, Lansbury had turned to writing fiction—reportedly after her actress cousin Angela Lansbury had asked her, ‘Darling, are you going to go on all your life writing those dreary academic books that nobody reads?’³⁹ Lansbury responded with four well-received novels, which she described as ‘bedroom farce’: Felicity, Ringarra, The Grotto and Sweet Alice. (A fifth manuscript, Opium, was slated for publication but never finished, a job Turnbull took on but has yet to complete.) The novels built on her formidable body of work, including four scholarly books on Victorian literature that are still cited today. All the while she kept her prestigious academic post at Rutgers University in New Jersey and turned out occasional book reviews for The New York Times. Some were profoundly feminist, like her review of a playful new female dictionary:

At the fundamental level of sexuality … women do not have a language to express themselves. Those ubiquitous four-letter words are all male in origin. Surely one reason men complain that they do not know what women want is this lack of a common language … women have no words that adequately convey their needs.⁴⁰

Another review argued for a reinterpretation of Genesis, complaining Eve had always had a ‘bum rap’ and pondering: ‘Isn’t it possible to see Eve as a rebel instead of a sinner, the first member of the human race to commit an act of civil disobedience?’⁴¹

Lansbury was feminist but not dogmatic. Popular British novelist Fay Weldon paid Lansbury high praise in a review of Felicity, opening with the observation that ‘not many novels manage to be joyful’ and marvelling at her boundary-crossing antics and blinding erudition.⁴²

Lansbury happily gave interviews on her book tours, including in Australia, and revealed she was an extremely proud mother, joking once: ‘I just said to the publishers, forget about putting my name to the book, just say it was written by Malcolm’s mum.’43 She never tired of answering questions about Turnbull, and was not worried she might be defined by her son: ‘That doesn’t offend my feminist principles because as a feminist, I raised a son quite differently from the way most women raise sons.’⁴⁴ Lansbury taught Turnbull maths by playing dice with smarties, and taught him to cook when he was just four years old.

It was terribly difficult to leave him but I knew he had a stable base. There was tension between the two of us when he was in his late adolescence and I think it was because I was a very overwhelming mum—I was on television, radio and a successful academic. Now, of course, the wheel has gone full circle.⁴⁵

Turnbull was always immensely proud of Coral, too. As a young journalist at The Bulletin he’d used one of his law columns to plug her first book, on the legal fiction of Anthony Trollope. They once both had books out at the same time, his first effort The Spycatcher Trial and her The Grotto, and he’d sparkled as their London launches coincided—he had also stormed into her publisher’s office to get her a better contract.⁴⁶ More recently he had been urging her to take an early retirement, come back to Sydney and spend more time with Alex and Daisy, then aged nine and six. ‘I’d love to come back,’ she had said in late 1988, ‘to write books and, yes, spend time with the grandchildren.’⁴⁷

In her visits to Sydney, Lucy told Australian Story, Coral was stoic, but probably knew she was not going to make it: ‘She needed to have massages all the time. She had a lot of back pain. She was really uncomfortable in the last couple of years and it was a horrible, horrible thing to watch.’⁴⁸ Now Coral was dying, and putting a brave face on it. She had a deadline for a book review for The New York Times. Turnbull finished it with her, sitting on her hospital bed:

[I]t was a novel based on the life of Elizabeth Barrett Browning’s maid … Coral had half-written this review and she was so sick and filled with drugs and opiates that she was taking to manage the pain, and she asked me to help her finish that review, too, which I did. Because I was with her for about three weeks just before she died in Philadelphia.49

But Turnbull was not there when she died. Nearly twenty years later, at a charity bike race to raise funds for the cancer ward at Sydney’s Prince of Wales Hospital, a lycra-clad Turnbull broke down just metres from the starting line as the moment came back to him:

When she was ready to die, she wanted to hurry me back to Australia to be with my family … I had left, but was making plans to bring her to Australia. She died shortly after that. I think she probably wanted to spare me. She’s indelibly in my head. I don’t want to forget her. She was a really remarkable, legendary, colourful person.⁵⁰

The love was never far from the surface. Turnbull was overcome again in 2013, when he spoke at the launch of a history of a national treasure, the Australian Dictionary of Biography:

Can I say at the outset how incredibly moved I was—I nearly burst into tears at the end of this room when I came here—because you were kind enough to mention my mother was a contributor … to the ADB. But I was extraordinarily moved talking to you … because I was for the first time I can remember, since my mother’s death, in the company of historians. And I had forgotten what that felt like.⁵¹

Lansbury was not maternal in the normal sense of the word, as Turnbull himself has said.⁵² But Coral was full of life and fun, as was clear when Turnbull shared a delightful childhood memory:

My mother used to write all these scripts, for these radio series, and sometimes she’d have a typist come in and … she used to sit … with these long legs draped over the arm of the armchair, dictating it, and she’d play it out all. So the script would say ‘Portia: George, you have betrayed me, it is one time too many George, this is it, it is the end. Gunshot. George: Portia, I’m dying, I’m dying, I always loved you. Portia: Oh no, George, why did I do it!’ So the typist would be going bang, bang, bang.53

Turnbull flew out from Sydney on Anzac Day 1991 to attend her funeral, alone.

They had called it ‘Project Falcon’. Turnbull had been working for some time alongside stockbroker Neville Miles, who was looking to coin a fat underwriting fee if Fairfax was relisted on the sharemarket. Turnbull brought the bondholders, Miles brought the backing of Ord Minnett. First Turnbull sounded out Tony O’Reilly, whose APN consortium had no cross-media barriers to overcome, but O’Reilly wasn’t interested in partnering with the bondholders.⁵⁴ The next stop was Packer.

Much has been written about the Tourang consortium and its successful bid for Fairfax. The key meeting occurred in Kerry Packer’s permanent suite in London’s Savoy Hotel on 3 June 1991, when he had a long lunch with Conrad Black, publisher of London’s Daily Telegraph. Also there was James Packer, Black’s right-hand man Dan Colson, Telegraph editor Max Hastings, plus Neville Miles and Turnbull, who had flown in from Sydney for the occasion. Hastings’ recollection of the meeting is priceless:

From the outset, the occasion defied parody. Packer was flanked by his son, a lanky youth whose head appeared to have undergone some bizarre longitudinal experience in a cider press, and who sat mute throughout the proceedings … As we talked, we were treated to a performance of Fawlty Towers inadequacy. Waiters clashed china and dropped food around us in a fashion that would have dismayed Manuel. Finally, the exasperated Packer was driven to tell the waiters: ‘Put the fucking food down there, put the fucking bottles here, and get your useless fucking asses out of here’. The waiters beamed broadly, nodded amiably, and continued as before …

I had never listened to a big international tycoon discussing a deal before. Packer’s dialogue was borrowed from the script of Dallas: ‘Right, Conrad. We’re all agreed, then. I shall take a back seat on this one. You’ll lead the band. I’ll fix Canberra. I’ll deal with the state government. I’ll square the banks. All I want out of this one is to see certain people’s heads so deep in the shit that the tops of their heads will only be visible through a powerful microscope!’55

Packer’s desire for revenge over the Costigan affair ran deep and gave birth to the Tourang bid. Black and Packer immediately saw the value of having the bondholders in their consortium, but they played hardball with Turnbull on price: they would get 30 cents in the dollar. It was certainly better than nothing. Whether it was more than Fairfax might have offered originally, that was moot.

Back in Australia, the very next day, the Independent Monthly magazine published details of a sensational leaked memo of an April meeting between Packer, Turnbull and two investment bankers. In the memo, Packer revealed he had met with Murdoch the previous day and the two had a ‘game plan’ for the newspaper industry.⁵⁶ The report stoked every fear about moguls carving up the media and swelled the tide of community concern now flooding the debate. The Friends of Fairfax, a lobby group set up by concerned journalists, launched an unprecedented campaign: the so-called ‘associates test’ was tightened to ensure cross-media rules weren’t breached by asserting control through intermediaries, along with a ‘tripwire’ allowing the Broadcasting Tribunal to conduct an inquiry; the Senate called an inquiry into print media, which took sensational evidence from a defiant Packer; Gough Whitlam and Malcolm Fraser buried the hatchet to join rallies to save Fairfax. Any deal would need federal government approval, but Tourang’s prospects weren’t helped by the febrile atmosphere in Canberra, where Paul Keating—backed by Packer mate Graham Richardson—was blasting Bob Hawke out of The Lodge. It did not dispose Hawke kindly to the bid. In addition, the O’Reilly camp was pressuring the Broadcasting Tribunal to conduct an inquiry. The hurdles were piling up in front of Tourang.

Packer denied it long and loud, but there is no doubt he badly wanted control of Fairfax. It was Packer who had brought the Tourang consortium together and Fairfax was his deal, as Turnbull told Glenn Burge: ‘He was the only person who knew all the players … he was the linchpin.’57 According to his biographer, Packer ‘hated above all to be beaten when he had set his heart on something. As his opponents had increased their campaign to stop him getting Fairfax, so his determination to beat them had risen.’⁵⁸ Evidence of his determination was not hard to find. Commercially, Tourang kept lifting its offer price. At a personal level, Packer showed he was prepared to ditch his most loyal executives. Already, reasserting control over Nine, Packer had seen off Sam Chisholm. Now, as political opposition to the Tourang bid for Fairfax grew, Packer ditched Trevor Kennedy, who had been hired at The Bulletin by Sir Frank in 1972, had given almost twenty years of loyal service, and considered himself a friend.

In July 1991, Kennedy had stepped aside from CPH—‘Chainsaw’ Al Dunlap, who’d acquired his nickname through ruthless cost cutting, took his place—to become chief executive first of Tourang, then of Fairfax, assuming the bid got up. But as the bid progressed, Kennedy was increasingly at odds with Dan Colson, and with Brian Powers from consortium partner Hellman and Friedman, who brought extra money to the deal and was a former employee of Packer friend James Wolfensohn. Kennedy and Turnbull mocked Colson and Powers as the ‘Diet Coke brigade’ for their fondness for soft drink, but found themselves on the outer. At a lunch in Canberra involving Black, Kennedy and Kim Beazley, the communications minister pointed out Kennedy was a problem for Tourang. Black turned to Kennedy and joked, ‘You’re sacked.’ As it turned out, Black wasn’t joking. By October, Kennedy had been forced out by Colson and Powers, who purported to rewrite his contract—and Packer didn’t lift a finger to stop it.

Turnbull was mortified, not only at Packer’s treatment of his friend and mentor Kennedy, but at the implications for his own position. What Turnbull wanted most was a seat on the Fairfax board—it was a condition of the exclusivity agreement that joined the bondholders to the Tourang bid. Yet he, like Kennedy, could easily fall afoul of the tougher associates test. During the print media inquiry, Packer himself had confirmed the new rules could easily knock out Turnbull and, asked whether there was any continuing role for him once the bondholders were paid, had said: ‘No, not really, except he wants desperately to be on the board of Fairfax.’59 Turnbull later told the Australian Broadcasting Tribunal that Packer’s evidence on this point was ‘entirely unjust and inaccurate’.⁶⁰ Turnbull had worked for Packer on and off since 1977, had stuck by him through the trials of the Costigan commission, had served him brilliantly from the 1983 privatisation to the triumphant 1990 repurchase of Channel Nine from Alan Bond. But he had no confidence Packer would stand by him now.

Having dispensed with Kennedy, Colson and Powers shifted their focus to Turnbull. They were convinced he was a liability and believed his presence on the Fairfax board would ensure Tourang lost the bid. Turnbull argued he was the only independent board member who hadn’t been appointed by the consortium. ‘Who appointed you? God?’ one of the bondholder representatives shot back.⁶¹ Packer, who had jetted off for some polo in Argentina, would not return his calls. As Turnbull said soon afterwards, ‘It wasn’t the conduct of a friend. It wasn’t the conduct of someone that I’d been friends with for seventeen years. Now that’s his call, he’s entitled to make it. But each of us live with the consequences.’⁶² Turnbull pleaded his case every way he could, insisting there was no evidence his presence on the Fairfax board would be a problem for the Broadcasting Tribunal. He appealed to the receiver. He accused Colson and Powers of not wanting a genuinely independent director and tried going over their heads—directly to Conrad Black, and to Powers’ boss Warren Hellman. He threatened to pull the bondholders out of the bid. Leaks indicating divisions inside Tourang started appearing in the media, spelling out Powers’ links to Packer. Fingers were pointed at Turnbull. Everything he did only dug the hole deeper, underlining how volatile he was and making Colson and Powers more determined to kick him off the bid. By now the feud was bitterly personal.

It all culminated in a meeting between Turnbull and Colson on the afternoon of Friday, 22 November. Turnbull insisted they be alone, on neutral ground, so they met in Sydney’s Botanic Gardens. On his way there, Colson wondered whether Turnbull was paranoid enough to believe his office was bugged The two men’s recollections are at odds: Turnbull insists the meeting was calm, but Colson ‘couldn’t believe he was sitting there listening to this wild-eyed man before him. This is like watching second-rate theatre in the park, he thought.’63 The conversation dragged on, but it boiled down to this: Turnbull was considering relinquishing his seat on the board, but he was concerned to protect his fee. Colson could give no assurances. The rest of the Tourang crowd was waiting for Colson at the Ritz-Carlton, slightly worried about him, imagining the two men wrestling on the ground in their $1000 suits. When Colson finally got back, he had what they all thought was good news for Tourang: Turnbull was going to resign.

What happened next was kept secret for another seventeen years, until it was revealed in 2008 on the ABC’s Four Corners program.⁶⁴ On the Sunday night following his meeting with Colson, Turnbull called the chairman of the Broadcasting Tribunal, Peter Westaway, asking to meet him. They decided on a back street in North Sydney. There, Turnbull climbed into Westaway’s car and handed him a copy of a document written by Trevor Kennedy. Called ‘The story of my departure from Tourang: notes for possible litigation, memories etc’, the document set down Kennedy’s version of his falling out with Packer. It included his understanding of the chain of command at Tourang, and confirmed that Packer was in a position to influence Kennedy. In Westaway’s hands, it was a bombshell, certain to detonate the Tourang bid, because it showed Packer had been lying all along—in public and under oath, before the Senate inquiry—when he said he was not going to control Fairfax. Turnbull told Westaway: ‘I fear for my myself, for my family, for my career.’

A year after that Four Corners broadcast, Turnbull spoke publicly for the first time about what led him to leak to the tribunal, saying that when he’d finally got Packer on the phone, they had a major row and Turnbull threatened to get him thrown out of the deal:

Kerry got a bit out of control at that time. He told me he’d kill me, yeah. I didn’t think he was completely serious, but I didn’t think he was entirely joking, either. Look, he could be pretty scary … and I said to him: ‘Well. You’d better make sure that your assassin gets me first because if he misses, you better know I won’t miss you’. He could be a complete pig, you know. He could charm the birds out of the trees, but he could be a brute.65

The morning after he met Westaway, the tribunal, which had already asked Kennedy for diary notes pertaining to the Tourang bid, rephrased its request to include any notes made after his departure from the consortium. They were immediately supplied by Kennedy, and Colson and Powers knew they had a problem. A tribunal inquiry would take months, causing a delay in Tourang’s bid that would be unacceptable to the receiver or the other parties. Packer chose to withdraw completely: there was no way he was going to front another public inquiry. Tourang went on to win Fairfax, bringing in extra capital from local institutions to replace Packer, and securing a relaxation of foreign ownership restrictions so that Conrad Black—now firmly in control—could own 25 per cent. The $1.5 billion bid price was high enough that the bondholders were repaid, and Turnbull collected a whopping $6 million fee—most of which he ploughed back into Fairfax shares, making another killing when the company was refloated.

Packer accused Kennedy and Turnbull of treason, and they were cast into the outer darkness.⁶⁶ Powers launched an hysterical attack on Turnbull, telling him that he and Packer and Black would destroy him, and he would never work again in any English-speaking country. Turnbull shot back: ‘Why only English-speaking countries?’⁶⁷ Packer retained a stake in Fairfax, and uncertainty over his intentions towards the company would persist for a decade. But his big chance had come and gone. Sydney University media academic Rod Tiffen opined: ‘I think the first thing that should be said is that what Malcolm Turnbull did helped Australian democracy. It stopped Packer getting control of Fairfax. Whether he did it for that reason, for that motive, we’ll never know.’68

Turnbull would later say it was the most acrimonious deal he had ever been involved in, and he remained extremely sensitive about the role he had played. When Herald journalists Colleen Ryan and Glenn Burge wrote their definitive account of the Tourang saga, Corporate Cannibals, Turnbull got a galley proof of the manuscript from the book’s publisher, Heinemann. Heinemann was managed by Turnbull’s friend Sandy Grant, and had made a fortune from Spycatcher and published Turnbull’s own book on the trial. Burge recalls he copped an abusive call from Turnbull, who began: ‘It’s Malcolm here, you little cunt, did you think I wouldn’t get to see that book before it was published?’ He proceeded to object to certain passages and push for his own corrections to be made. Burge was outraged that the proofs had been given to Turnbull. Grant remembers he had been preparing to demonstrate he was an independent publisher, standing up to his friend, but got an earful from Turnbull, who argued that he had only ever agreed to give access on the basis that he would get a chance to review the draft prior to publication, and faxed correspondence to Grant to support his claim. It was enough for Grant, who handed the proofs over. Burge insists he had only ever promised in writing to ‘treat Turnbull fairly’, or words to that effect, and had never agreed that Turnbull would see a copy of the draft. He still sees it as a breach of trust with his publisher: ‘It was extraordinary that Sandy Grant would give the manuscript to somebody without the author’s permission,’ he says. ‘It is outrageous and in Australian publishing history it’s highly unusual.’⁶⁹ In the end, the changes Turnbull wanted were minor, and the book was modified in a last-minute panic at the final stages of production to include half-a-dozen quibbling footnotes, like ‘Malcolm Turnbull denies that he made these comments’ and ‘Turnbull says that the meeting with Colson was cordial and calm’. Adding insult to injury, Ryan and Burge were told the changes were made at the authors’ expense. Burge went on to edit the business section of the SMH and rose to editor-in-chief of AFR and says there were many times he had to defend reporters against Turnbull, or found out that Turnbull had gone over even his head to complain about stories. As a former journalist, Turnbull certainly knew how to make enemies in the media.