CHAPTER 7
The Gorton and Connor imbroglios brought home to BHP’s senior executives the need to resurrect the in-house lobbying operation once driven by James Menzies but which had seemed superfluous through the long years of Menzies – McEwen rule. During the 1950s and ’60s, according to McLennan, ‘Relations with the government were substantially handled by the chairman and the managing director. We never did want to go rushing to the government for every little thing that happened. But we did want them to understand our points of view on various things and that was done by personal interview.’ 1
Now, they developed their public-relations facility within the administrative division. They had taken the first tentative step in the mid-1960s by hiring Derek Sawer, a former Melbourne Argus journalist, to advise on relations with the press. Sawer came from a distinguished intellectual family. His brother Geoffrey was foundation professor of law at the Australian National University. Derek was born in Adelaide in 1918 and educated at Melbourne’s Scotch College (by now BHP’s educational alma mater). The Second World War interrupted his studies when he enlisted in the Australian Imperial Force and served in North Africa as one of the famous Rats of Tobruk. He was commissioned in the field and ended the war as a captain.
After demobilisation, he joined ABC Radio Australia in Melbourne before transferring to The Argus as a subeditor. When the paper closed its doors in 1957, he returned to the ABC; then, in 1967, he joined BHP. He had begun a commerce degree at Melbourne University and completed it during his initial months with the company. He quickly became a well-respected figure within the top echelon. McLennan and Syme consulted him frequently.
‘I got on very well with McLennan,’ he says. ‘It was partly the Scotch College connection. He was dux in the same year as my brother Geoff. He was a very decent man. He saw himself as a sort of father figure to me.’ 2
Sawer says that, at the time, ‘BHP was sort of a mystery all of itself’. His role was ‘opening up the company’ and allowing the public to see more of the way it operated. One of his first recruits was Juliana Hooper, a young Brisbane woman who had completed an Arts degree at the University of Queensland before working in McEwen’s department of trade in London and Melbourne.
Sawer gave her the task of advertising manager. ‘But they didn’t call me the advertising manager,’ she said, ‘they called me a public-relations officer.’ Her early experience said much about the company’s ethos. ‘The personnel manager said to me – and he didn’t say it unkindly, he was preparing me – he said, “Women in this company have the status of fluff on the floor ... you had better prepare yourself.”’ She laughed. ‘I had the medical and failed miserably because I didn’t have two testes, which was one of the requirements.’ 3
However, working with Derek Sawer helped Juliana over the early rough spots. ‘I actually found they were a very fair company with a very fair ethos. After two years, they faced up to the fact that I was doing the job without the title and put me on the executive staff. Once I blended in, I was fine. There was a special dining room in the new building and I must say it was a fascinating phenomenon. You’d go to lunch and sit at a big table [where] there’d be people from the shipyards and from the iron-ore mines and the oil-and-gas fields all feeding in bits of information. There was this fabulous cohesive sense of being part of something.’
Her principal task was to help develop the all-important ‘image’. ‘Because the company was so big, it was always worried about being seen as being too powerful and too influential. This was when there was all that anti-cartel legislation in America. It was always a worry that they were earning big profits and that the profits were in proportion to the capital being invested. It was my job to put it all in perspective.’
Another priority was to secure recruits for the trainee scheme, which was now intrinsic to the company’s modus operandi. ‘Corporate image in the 1970s was about trying to attract the best young graduates,’ she says, ‘and you didn’t do that if the literature you were putting out to universities was old-fashioned and fuddy-duddy. I was doing very up-to-the-moment stuff to try to make it attractive – just trying to present the company as a good employer and a good Australian.’
Her own experience with the men at the top reinforced her commitment to the job. Colin Syme, now knighted, personified much that was good about the company. ‘He was the epitome of the old class of director: total probity; not about money; another world altogether. Corporate greed just hadn’t happened,’ she said. ‘[He] drove a very well-polished, well-loved old Holden. I thought it was wonderful that instead of having a very smart car he had a nice old car. He could have had all sorts of things but that wasn’t the way they did it at BHP. Everything was done well, but not flashily. McLennan was the same. They were very solid citizens.’
Another indicator of the ‘BHP way’ was the preference of top executives for the Australian Club in William Street rather than the higher profile (and more snobbish) Melbourne Club in Collins Street. Founded in 1878, the Australian Club became something of a BHP institution. Harvey Patterson, who was elected to membership in 1880, was one of the first BHP directors; he was joined by the first chairman, Arthur Blackwood, and after William Knox signed up in 1888 they established a ‘BHP table’ in the dining room.
At the Australian Club, they could promote the company’s interests with fellow industrialists in relaxed surroundings, and by the 1970s Colin Syme and a later chairman, Sir James Balderstone, became presidents of the club. It was a measure of the esteem in which Derek Sawer was held that he too was invited to join.
The club was a significant element in the continuing development of the company’s image. So too was the fact that many of the top executives had started their working lives as BHP trainees. Both Brian Loton, who followed McLennan, and James McNeill, the chairman after Sir Colin Syme, had begun as trainees. According to Juliana Hooper, ‘At the time I was there, a lot of very senior management were people who had started with the company virtually when they were 14, so it wasn’t patrician – a lot of the management was actually meritocracy. Sir Colin was a lawyer, whereas the next two chairmen [McNeill and McLennan] were company officers who had come up through the ranks.’ 4
Throughout the 1970s, the whole public-relations strategy would become one of the most potent forces in the company’s armoury. And by the end of the decade, when once more they had the friendly ear of a coalition government, under Malcolm Fraser and McEwen’s successor, Doug Anthony, they had built the image of the company to commanding heights.
Derek Sawer left in 1982. ‘When McLennan retired,’ he said, ‘it was expected that Fred Rich would follow him as CEO. He was general manager administration and we all wanted him to take over. But he went home one night, sat on his sofa and died. The board insisted on bringing in one of those British headhunting firms to find the successor. I wasn’t inclined to wait around.’ 5 He bought a sailing boat and a home at the coastal town of Portsea. ‘He became a ship’s chandler,’ Juliana Hooper said. ‘He loved his boats.’
While the company sought Sawer’s replacement, his role was filled temporarily by Ian Crawford, who began with the company in the 1960s as the public-relations officer for the oil-and-gas division. ‘He was in a very different mould,’ Juliana Hooper said. While he had reported to Sawer, Crawford’s American connection through Esso meant he enjoyed a measure of independence. He also had a more aggressive approach to the task. However, he was passed over for the permanent role in favour of Sydney-born journalist Peter Maund, who had arrived in Melbourne in 1954 to work on the Herald. He transferred to the infant Channel Nine in 1956 as director of news and current affairs before crossing the fence to public relations with the State Electricity Commission in 1972.
When he applied for the BHP job, he had a lengthy interview with chairman Jim McNeill. It revealed the comparative naivety of the company in presenting itself to the world. ‘We talked about this and that for some time, which amused me because it didn’t revolve around what the real business was,’ he says. ‘So finally I said, “Should I take up this position – or you appoint me – what would you expect me to do?” And he said, “Well, we expect you to tell us what to do!” That was the sort of relationship that was expected at the beginning.’ 6
In fact, senior executives and the board would soon be swept up in a sharp learning curve as the company became embroiled in a takeover battle. But in April 1982, Maund looked forward to a relatively peaceful life as director of public affairs and government relations. The chief public-relations concern was with the steel factories, which were shedding workers in an attempt to stay competitive with their international rivals; but with a change of government in 1983, Prime Minister Bob Hawke and Treasurer Paul Keating created a new paradigm ... or so the PR team believed.
‘It became pretty apparent that we had to step up our dealing with government,’ Maund says. Despite Keating’s present-day protestations that he gave the company ‘special consideration’, Maund says that publicly at least, ‘There was no love lost between Keating and BHP. He always used to have a go at BHP whenever he could. Paul Keating thought BHP was the epitome of evil and the people who ran it were evil people who were rapacious. So we appointed Jock McGregor full-time in Canberra. He later became company secretary of BHP.’ 7
In fact, Keating says, ‘I did BHP an inordinate number of favours in Bass Strait as treasurer over the years. Bass Strait was characterised by these small hydrocarbon pinchouts outside the main reservoirs. And what the Commonwealth used to do was second-guess the production costs and put on differential excises per field. That meant that some gas reserves would be left. They wouldn’t do them because it wasn’t worth their while to do them. So I did them a big favour, I thought, in terms of efficiency in that I changed the tax treatment of Bass Strait so that the fields were taxed as one so they could make their own choices about whether they developed this field or that field. And this brought far more rationality into the development.’ 8
Nevertheless, the perception was that Keating was hostile to the company, and McGregor was joined in Canberra by Peter Laver, who had been with BHP since 1959 as a trainee. Laver would spend several years associated with the public-affairs unit in its various guises. He attended Melbourne University on a BHP fellowship and took a degree in metallurgical engineering. Soon afterwards, he was awarded a special cadetship that allowed him to visit all of the company’s operations around Australia, including spending six months at the Port Kembla steelworks. Back at headquarters, he worked for two legendary general managers, Mark Pitt and Jack Richards. This brought him to the notice of Ian McLennan, whom he assisted for the next two years.
‘Over the years, I found myself doing a lot of work with the public-affairs people,’ Laver says. ‘I was seconded to the area as a “steel man” in 1983 and with Jock McGregor I developed the “roadshow” for bureaucrats and legislators at a time when the steel business was under cost pressures. Malcolm Fraser wanted us to wear a hair shirt. And when Hawke came in, he and [New South Wales premier] Neville Wran wanted to fix the steel industry in a hundred days. They had inquiries going in Sydney and Canberra; I practically lived between the two.’ 9
When Robert Holmes à Court made his raid on the company in 1984 (covered in detail in Chapter 8), the pace and intensity of Laver’s work multiplied overnight, while Maund’s annual budget leapt to $9 million in an all-out public campaign against the raider. And in 1985, Derek Sawer returned part-time to oversee the publication of the massive book Australians in Company to mark BHP’s centenary. ‘They wanted to make it a great and glorious thing,’ Sawer says. ‘So we spared no expense.’ The result was a coffee-table-sized tome. ‘When I read it recently, I thought it was corny,’ he says. 10
By the mid-1980s, BHP was able to point to a trebling of group sales over the previous decade to $5.4 billion annually. At the same time, shareholders’ funds also trebled and by the end of 1984 stood at $5.3 billion. Group profit had passed the magic $100 million mark in 1972. Now, it had leapt to an astonishing $639 million. The company employed more than 59,000 Australians and, with an average of three dependants per wage earner, that meant BHP alone supported almost 250,000 people at a time when the population of the Australian Capital Territory and the Northern Territory together numbered fewer than 300,000.
Meanwhile, ‘The Big Australian’ tag had entered the language. ‘It was one of Derek Sawer’s coups actually,’ Maund says. ‘The Herald newspaper and others were a bit sour about BHP – particularly its size – and there was a great hubbub, for example, when the first profit of $100 million was announced. It was sneered at, and this phrase, “The big Australian”, was used by the Herald in a derogatory sense. However, Derek thought, “Let’s make the best of it,” and he turned it into something to make people feel good about BHP.’ 11
Maund entrenched the concept with a change of company logo. At the time, it featured a ladle pouring molten steel. ‘A lot of the senior executives had their grounding at Newcastle or Wollongong,’ he says, ‘so it was not only the outward symbol of BHP but it was indicative of the general culture.’ His new logo – a stylised map of Australia incorporating the BHP initials – signalled a radical change. ‘It was a different colour for each of the divisions – red for steel, blue for petroleum and so on – but it was also an attempt to change the thinking.’ It had the great advantage of reflecting a new reality. With the acquisition of several highly profitable global assets in coal and copper (explained in detail in Chapter 9), BHP was becoming a significant international player.
Peter Maund was succeeded by the first woman to hold a high executive position in the company, Carol Austin. Melbourne born and with science and economics degrees from Monash and the Australian National University, she was chief economist at the Australian Industry Development Corporation when recruited in late 1989. She found her gender much less a problem than it had been for Juliana Hooper. ‘My biggest problem was that public affairs didn’t have a lot of credibility on my arrival because it wasn’t given a high status and didn’t have a lot of influence,’ she says. ‘It hadn’t been central to policy making. In changing the focus, I had the support of the board, Brian Loton and the senior-executive team. I got on very well with them. I restructured the staffing to give it much more of a public-policy perspective.’ 12
She was also determined to recast the company’s image, which at the time was driven by a massive advertising campaign featuring the character actor Bill Hunter in macho mode. ‘I canned all that Bill Hunter stuff,’ she recalls. ‘Harry Miller rang me up and said that I was destroying the reputation of the company and damaging the image of BHP. But we weren’t a consumer brand; you don’t do mass advertising for an organisation like BHP. My focus was on building images in the communities where we operated.
‘The money that I saved on that I put into upgrading the science awards, into exciting children about science and encouraging them to be scientists and engineers.’ 13
She says her science training alerted her to the greater environmental issues: ‘I could see that the environment was going to be a major area of concern, so I set up an environmental task force to do an audit of the status of environmental management within the company.’ The problems varied between the divisions. ‘Carbon taxes were on the table even back then,’ Carol Austin says, ‘as was energy efficiency, pollution, remediation of mine sites – that was important, not walking away and leaving it for some other group to clean up the mess.’
The initiative led to the development of an environmental department in the company. When the company’s Ok Tedi gold and copper mine in Papua New Guinea began to attract critical publicity, ‘I was greatly in favour of defusing it ... of managing these things by making them understandable,’ she says. ‘It’s always better for journalists to write from knowledge than scant information.’
Her unit, with a staff of 12, did not have a major government-relations focus. ‘When we would go to government to lobby a minister,’ she says, ‘I would accompany the head of the relevant division and would work with him on a strategy to handle that. Where there were group issues, or where the issues were very high level, I got involved; where they were considered operational divisional issues, the division handled it. Steel had its own government-relations unit. Steel had a lot more issues with state government.’ 14 The power of the New South Wales unions ensured that steelmaking, which dominated the economies of Newcastle and Port Kembla, would always be high on the state government’s agenda.
She says that, during her five years with the company, ‘Every year, there was a senior-management meeting and the flavour became much more international; it became a more globally focused organisation.’
Peter Laver returned from an operational role in the Pilbara iron-ore development in 1992 to take over the role of general manager external affairs, which then incorporated government-relations and public-relations functions. Carol Austin reported to him, he said, until she left in 1994. Carol recalls that, aside from an annual performance review conducted by Laver, she dealt directly with chief executive officer Brian Loton and the then chairman Sir Arvi Parbo.
The operations of BHP’s corporate image makers and in-house lobbyists were becoming progressively more sophisticated. Peter Laver says he also developed an economic team that worked on developing forecasts for exchange rates and commodity prices in conjunction with the chief executive officer. But a hard core of trained journalists would be tempted away from their vocation to burnish the company’s image by releasing stories favourable to BHP and deflecting those that put it in a poor light.
The process gained a new dimension when Laver and chief executive officer John Prescott recruited Graham Evans in 1995. Evans was born in Melbourne, raised in Colac and Ballarat, and graduated from the University of Melbourne before embarking on a bureaucratic career in the Commonwealth Public Service. He was seconded to be principal private secretary to Prime Minister Bob Hawke for three years from 1983 before serving in a number of senior positions, including secretary of the departments of primary industries, resources and energy, and transport.
Laver had met him during his time with Bob Hawke. ‘That was when I spent all that time in Canberra,’ he says. ‘When Graham joined BHP, his operations would come increasingly under the office of the chief executive.’ 15
Evans says, ‘I didn’t have any background in the media, and in communications, for that matter. And I certainly didn’t see my role as a lobbyist. What I was concerned to do was get a much closer identification of the external-affairs function with the business direction of the company.’ 16 Working with John Prescott, he developed the economics group to forecast global and domestic economic activity. ‘We started doing country risk analysis, and this had both economic and political dimensions,’ he says.
In doing so, he revived the company’s association with Australia’s intelligence organisations. ‘We talked to people in government, we talked to academics but we relied mainly on foreign affairs, [which] gets an input from the intelligence agencies.’
However, despite his underplaying the role, Evans’s group was vitally concerned with lobbying both state and federal governments. And invariably the ministerial door was wide open. Paul Keating says, ‘I think the question about what is in the interests of BHP and its shareholders vis-à-vis the interests of Australia often coincides.
‘And often the political system would do them a favour but the favour would more often than not scrub up as good policy. In other words, they were not given a favour out of bad policy, they were given a favour out of good policy.
‘And whenever they pushed the limit too much – and they do this occasionally – then sometimes they’d stub their toes and get a “no”. But they always took the opportunity of discussing their circumstances before they moved on things. Often, a “no” for BHP would not be a bald, public no, it would be a soft, private no, way ahead of anything they might otherwise have done. But it’s probably true to say that both political parties have had an upbeat view of them. Certainly, the Labor Party has. And for those in the Labor Party interested in building businesses – and I was one – the background thinking which we would do with them would be friendly and conducive to their benefit.’ 17
In the Howard years, BHP Billiton operatives such as Bernie Delaney, whom Evans recruited from the steel division, would develop networks within government and among like-minded lobbyists that would have a profound effect on government policy, not always to the ultimate long-term benefit of Australia. Indeed, as detailed in Chapter 22, BHP Billiton would take a leading role in the behind-the-scenes struggle to reverse government policy and abandon the agreement to ratify the Kyoto Protocol. In so doing, Australia became a major impediment to the international effort in the battle against climate change, the quintessential political and environmental challenge of the twenty-first century.