A friend in need is a friend indeed
It was hard when you looked at Bob Ramsay, Alan’s trustee in bankruptcy, to avoid the conclusion that his battle with Bond might be the mismatch of the century.
Here was a quiet, conservative, cautious accountant up against a salesman whose ability to paint dreams had enabled him to borrow more than any other man in Australian history.
Here was a decent, honest, moral man who believed in truth, fairness and moderation, on the trail of a story spinner who had grave trouble telling fact from fiction.
And here was a man who played his golf on a public course, pitched against a spender of heroic proportions, who could give away $300,000 and not remember whom he’d paid it to.
Alan Bond was truly a champion in everything he had done. He had won the America’s Cup against all odds, built one of Australia’s biggest companies from scratch, run up the country’s biggest corporate loss, followed it with the biggest ever corporate collapse, and then capped it with one of the world’s biggest bankruptcies.1
And now this charming, serial self-deluder was about to do battle with an ordinary human being like Bob Ramsay. And to do so, paradoxically, with far more money than his poor creditors would ever be prepared to provide. It did not seem like a fair fight.
Ramsay could have been forgiven for being overawed by his opponent, but it was his lack of spark that gave cause for concern, for he looked like Walter Matthau at his most morose. He was tall, yet you hardly noticed it. And his grey pin-striped suit, matched with grey-striped shirt and purple tie, was doubtless expensive, but looked like it had cost less than Alan spent on dinner.
Insolvency practitioners normally have a certain dash about them, as if they’ve rubbed off some of the gloss from the entrepreneurs they’ve buried, but poor Bob looked as sombre as an undertaker.
Ramsay had not exactly been everybody’s tip for the job, for Bond was the biggest and highest profile bankrupt Australia had ever seen, and Ramsay was hardly the biggest name in the insolvency business. But in fact he had experience of the big time, for he had wound up Ian Johns’s estate in the late 1980s (after Johns had lost a fortune for Tricontinental) and had followed that with Reuben Lew’s company, Estate Mortgage Financial Services. And on both of these he was judged to have done well by the banks who hired him.
There was also a suggestion that he might just relish this contest, for inside Robert Ramsay there was a hint of a flash cat yearning to scratch its way out. He wore a diamond-and-gold ring on his right hand and a chunky gold signet ring on his left, with the initials RR emblazoned upon it. He was also an expert on insolvency, had tough new laws behind him, was stubborn and determined, and had an excellent team of people. And he was not going to stand for any nonsense.
Only minutes after the court had made Bond bankrupt, a letter from Ramsay was winging its way to Bond’s Sydney solicitors to inform him of his obligations, and Bob was jumping on a plane to Perth to talk to Bond face to face. The letter told Alan he had fourteen days to prepare a statement of affairs listing all his assets and liabilities, plus names and addresses of all his creditors. He was warned that failure to do so could land him in prison for contempt.
He was also advised that his worldly goods would have to be surrendered for division among his creditors. All he would be allowed to keep were ‘necessary wearing apparel, necessary household property, ordinary tools of trade, and a motor vehicle’ worth no more than $2,500.
Finally, he was told that he would be forbidden from obtaining credit of more than $500 without telling the lender he was bankrupt, and would be prevented from travelling overseas unless he had his trustee in bankruptcy’s permission.
But if Bond ever bothered to read this letter, he did not seem to be convinced that these onerous restrictions should apply to him. Only a matter of hours after he had been made bankrupt, he met Bob Ramsay in Perth and told him that he wanted to leave Australia the next day to spend three weeks in Europe. He was angry that he had been forced to come back to Australia and interrupt an important business trip. And he now demanded to be allowed to catch a plane to Saudi Arabia, where several sultans and princes were expecting his visit.
Ramsay was clearly aghast at the way in which Bond travelled round the world first class, ‘in the manner that you and I might catch a tram’. And three years later he was still marvelling that ‘the standing of the people Bond dealt with all over the world, the high-level wheeling and dealing, was incredible’.2 But he was not going to be bullied into letting Bond skip the country like that other notorious 1980s entrepreneur had done ten months earlier.
Christopher Skase had fled justice in 1991 only hours after being made bankrupt for $164 million, having persuaded a tame trustee to give him his passport back. And Ramsay was determined not to make the same mistake, so he told Bond there was no prospect of him getting permission to travel, at least until his statement of affairs had been completed, and promptly confiscated Alan’s Australian passport so that he couldn’t take off on his own.
Bond, however, also had a British passport which he was reluctant to hand over, and he at first refused to reveal where it was, except to say that it was in London awaiting a Saudi Arabian visa. It took more than a week before he agreed to surrender it, and by that time he was loudly demanding the return of his Australian passport so that he could jump on a plane to Europe. In fact, by the end of the month, he had made no fewer than five attempts to persuade Ramsay to let him go, and had even applied to the Federal Court to have the trustee’s decision overturned. Ramsay told the court that he was not only concerned that his charge might not come back, but was also determined that Bond should take his legal duties seriously, which meant helping to decipher his appallingly complex financial affairs.3
Boxes and boxes of documents had by now been shipped across from Perth by Bond and his family companies, and back at Bird Cameron’s office in Melbourne, where Ramsay was based, there was already a huge room of files devoted to the investigation. There, nine accountants were trying to make sense of the vast mass of paperwork and drawing up a list of 100 detailed questions about bank accounts, properties, jewellery, cars and even a storage lockup that Alan had rented in January 1991.
At one extreme, they were asking about $1.36 million that had gone through one of Alan’s accounts that couldn’t be explained. At the other, they were worried about two wind-surfers and an inflatable boat that seemed to have gone missing. In the middle was a tantalising $100,000 in cash that Eileen’s personal assistant had picked up from a bank in Perth, which Bond said had funded the family’s living expenses for a while.
Bob Ramsay was clearly shocked by what his team was uncovering, and flabbergasted at the amounts of money that Bond had given away, and it must have seemed like a nightmare, for he was gradually discovering that Bond had divested himself of the $32 million in gifts and everything else of value, by either placing it in trust or someone else’s name. It appeared that Bond had been planning for bankruptcy for many years. Yet, at this stage, Ramsay was still hopeful that he could overturn some of the transactions, and was probing and exploring to see how it might be done.
It was clear in these first few weeks that his relationship with Bond was going to be prickly at best. But if Bond behaved as if he had better things to do than answer Ramsay’s huge list of questions, he did have other pressing matters to attend to. On 25 May 1992, his trial was due to start on a dishonesty charge relating to the rescue of Laurie Connell’s Rothwells Bank in 1987.
Bond’s alleged crime had taken place in the dark days of October just after the world’s stock markets had gone into a tailspin. Two weeks after the crash, his old mate’s merchant bank faced imminent collapse as depositors rushed to withdraw their cash amid rumours that millions were missing. Bond had been called back from Rome on a Friday night to coordinate the rescue, knowing that Connell would be unable to open the doors on Monday morning unless a $370 million bailout package could be put together over the weekend.
Bond was a ball of energy as they raced against the clock, and his salesmanship was vital in convincing Australia’s rich and powerful to pledge millions in a vast corporate telethon. But in twisting the arm of another old mate, Brian Coppin, Alan allegedly failed to mention the fact that he stood to profit hugely if the Rothwells rescue succeeded.
Bond had gone round to Coppin’s house at seven o’clock on the Monday morning, with only a couple of hours left till the bank was due to open, to tell him that the rescue would collapse unless he pledged his unconditional support. And Coppin had reluctantly promised $15 million to keep it alive. But according to the prosecution, Bond had omitted to tell Coppin that he had negotiated a $16 million success fee for Bond Corporation with Laurie Connell only hours earlier.
Had Brian known that Alan had a nice little earner lined up he might well have decided not to risk his cash, but the prosecution needed only to prove that Bond knew about the fee and then acted dishonestly by concealing it. And according to Western Australia’s Director of Public Prosecutions, John McKechnie, there was no other way to describe Bond’s behaviour.
Despite being legally broke, Bond had assembled a defence team comprising no fewer than three QCs that would have given him little change out of $25,000 a day. And he had clearly spent a great deal more on an army of solicitors to brief them, because his legal bill for May and June 1992 would come to nearly $700,000. But even this amount of money was not enough to get him acquitted. He was found guilty and sentenced to a maximum of two-and-a-half years in jail, which in practice meant he should be out on parole within twelve months.
There were gasps in the court when the verdict was handed down, and his now ex-wife Eileen burst into tears. Outside, she told reporters that Alan had taken it ‘like the man he is’, and soon afterwards a press statement from the family was issued to say that they could not understand either the verdict or the severity of the sentence.
Bond served his time at Wooroloo Prison Farm, fifty kilometres east of Perth. It is a minimum-security jail, with no bars on the windows or locks on the doors. But for all its free-and-easy atmosphere, it was a world away from the one that Alan was used to, in which there were limos and first-class travel, five-star hotels with marble bathrooms, and servants at his beck and call.
Like all the other inmates, he was sent to work for eight hours a day in the prison workshops or on the farm, ate his meals in a communal canteen with 200 other prisoners, and took his showers in a communal block that everyone used. His sleeping quarters were in one of six old tin-roofed buildings with rooms that opened onto long verandahs. And he had to share this bedroom too.
He later confessed that it was not an easy time for him. ‘For the first few weeks in jail it was difficult because I was ill. It was very cold. I was in a dormitory with eight other people: four aborigines and four white people. The windows had been broken. It was about zero degrees at night.’4 His aboriginal cellmates stole his blankets, he said, because he was too sick to stop them, and it was then too cold to sleep. According to a psychiatrist’s report in 1994, Alan was still preoccupied by the ordeal two years later:
He was shattered by the unexpected incarceration. He was threatened. He was attacked by someone with a knife. He thinks recurrently of the experience … He recalls it with distress and is tearful. He has tended to avoid discussion of the events, even with close family. He has a morbid fear now of prison … the experiences of court represent a constant threat and reminder to him.5
Bond told journalists that prayer and a bit of business acumen helped him survive, and that he wrote letters for other prisoners to get himself ‘a clean shirt or whatever it was that I needed: an extra orange, just simple things’.6 But luckily for him, he did not have to serve his full sentence. Ninety days after he had been imprisoned, his conviction was quashed on the grounds that Laurie Connell’s evidence could not be trusted, and a retrial was ordered (at which he was acquitted in November 1992).7
He walked free into the winter drizzle to be greeted by waiting camera crews and reporters, his normally plump face drawn, his eyes hollow, his usual rosy cheeks grey and unshaven. He seemed to have aged ten years and lost a lot of weight, and the old confident smile was gone. He struggled to complete a few sentences about his innocence, the unfairness of his treatment, and his desire to spend time with his family. Then he all but broke down and cried, and had to seek refuge in the dark blue Mercedes in which son John had come to collect him.
Alan had been ill in prison, and when he came out he went straight to the old family home in Dalkeith, where Eileen nursed him back to health. He had suffered a heart condition for around five years and this had suddenly become more acute. After only two weeks in Wooroloo, he had nearly fainted from an angina attack that had given him a savage pain in his chest and right arm, and had been taken by ambulance to the Royal Perth Hospital, where tests had shown him to have a swollen heart and a leaking heart valve. He was now seen by a couple of heart specialists and booked in for open-heart surgery to fix the problem. His operation in February 1993 proceeded smoothly and without drama, and once again it was his ex-wife who looked after him. According to an old friend of the Bonds, Tony Weatherald:
When he was ill Eileen used to go round every night and cook his meals for him, she’d go round and get breakfast for him, she waited on him hand and foot. Do you think she still loved him? Yes, of course she did. There was nothing she wouldn’t do for him. When he wasn’t with Diana, she was with him whenever she could be.8
In the aftermath of Alan’s spell in prison and subsequent illness, Eileen clearly had qualms of guilt about divorcing him at a time when his world was falling apart. In 1994 she told author Susan Mitchell:
I still feel I’m Mrs Bond … He still is a prime consideration. What happened to Alan was grossly unfair and I didn’t even want to add to his struggles. Had I known what was going to happen, I don’t know if I would have gone on with it. I don’t think I would have piled that on top of Alan as well as everything else.9
It was not clear, however, that Alan always repaid her in kind or that she always felt so warm towards him. On one occasion in 1993, Weatherald was on the telephone to Bond from a London hotel while Eileen was in the next room, and was asked to fetch her so Alan could give her some news: ‘He was laughing down the phone. He says: “I’ve gone and sold Watkins Road, I think I’ve done a good deal on it too”’.
A few minutes later, according to Weatherald, Eileen came back ‘bawling her eyes out, saying: “What will that bastard do to me next? He’s gone and done it to me. He’s gone and sold my house. What am I going to do with all my furniture?”’.10
In the time that Alan had been in Wooroloo, Bob Ramsay had been working hard to get money for the creditors, and in November 1992 he won a major victory by gaining control of Bond’s $2.7 million superannuation fund. This had been set up for him in September 1990, when he had been forced to quit Bond Corporation, and had been designed to be proof from attack. But for once Bond’s legal eagles had failed to work their magic.
One problem for them was that the law had been changed since the fund was set up, and this had made it easier for Ramsay to get his hands on the money. But Bond’s trustee had also persuaded the courts to strike down a special clause in the trust deed that was intended to divert all monies in the fund to Alan’s family if he went bankrupt. And on top of that, the court had overridden a special resolution of the fund’s trustees (made after Alan’s bankruptcy) that the $2.7 million should not go to Bond’s creditors.
The victory promised to be a landmark decision, because super funds had always been safe from creditors and spouses, but it was just the first round in what was bound to be a long battle, because Bond would now appeal all the way to the High Court and it would be two years before the outcome was confirmed.
Bond’s tactics in this regard were the same as Field Marshal Haig’s in World War One when he had waged trench warfare against the Germans. Just as Haig had believed in trading lives one for one until his opponents ran out of men, so Bond believed in trading dollars hundred for hundred until his pursuers ran out of money. As a result, Ramsay and the creditors faced constant legal actions and massive legal fees whenever they tried to do anything. Every point of fact and every point of law was disputed. In this case, even the date of Alan’s departure from Bond Corporation had been contested, while the hearings had been moved from Melbourne to Perth in a manner that the judge described as ‘totally unwarranted’, apparently to make life difficult for Ramsay.11
But this was not the only legal battle brewing, for Ramsay was also taking a swing at Alan’s lifestyle, using new powers known as the Skase amendments, that had come into force in July 1992. The aim of these was to prevent bankrupts from living the high life while their creditors got nothing. And they could well have been tailor-made for Bond, as the explanatory memorandum to the new legislation made clear:
Some bankrupts manage to put their assets out of the reach of creditors, and to channel income away from themselves through the use of associated individuals, companies, partnerships or trusts … These associated entities may, and usually do then provide the bankrupt with substantial non-cash benefits, such as free or low-cost housing, motor vehicles, boats or payments of expenses … The Bill tackles these difficulties.12
The new law set a limit of $24,000 on what a bankrupt was allowed to earn as income, and defined this to include benefits in kind. Above the limit, any bankrupt was now required to hand over half to his creditors. Or so the theory went. But Bond wasn’t going to be constrained by this sort of nonsense.
When Ramsay first made an assessment of his income in July 1992, Bond told him that he was receiving only $22 a week, from sewing mailbags or tilling the prison gardens, and was spending some of that on soap. But now that he was out of jail, he was obviously enjoying something nearer his normal lifestyle. The Australian public was allowed a glimpse of this when his younger daughter Jody got married in Perth in May 1993, and TV cameras were there to record the occasion. Alan was snapped in the front seat of a huge white Bentley, dressed in a black morning suit with dazzling white shirt. He beamed at the cameras, his skin shining, his chubby face restored and glowing with health. Eileen sat in the back, glittering with diamonds, her red hair piled high, with the two of them and their grandchildren looking for all the world like Perth’s answer to the royal family.
The party at the house in Dalkeith, with smoked salmon and champagne, was a relatively modest affair compared with the extravaganza for Susanne’s wedding back in 1985, when there had been gold medallions for the guests and an orchestra floating on the Swan. Nor was the cost anywhere near the $750,000 that had reportedly been lavished on his younger son Craig’s reception, when revellers had been flown across from the eastern states at the Bond family’s expense. But the family’s shining white Bentley and the perfect-teeth grin were still not a good look for a man who was meant to be skint. This wasn’t humble pie, it was lording it.
Nor was Alan slumming it when he wasn’t at family functions. The boats and the Merc had gone, and he was no longer living at Watkins Road with its resort-sized pool and myriad bathrooms, but he had settled into a comfortable new house down on the beach at Cottesloe, where Diana was an increasingly frequent visitor. This had cost around $400,000 to buy and another $200,000-or-so to renovate, and had been provided by one of the Bond family cash boxes, the Green Place Trust, which allowed him to live there without paying rent. In his driveway stood a $60,000 Alfa 164, generously provided by his son Craig.
Bankruptcy hadn’t forced him to stop travelling either. His son John had coughed up $14,000 for four round trips to Melbourne, so Alan was clearly still sitting up the front of the plane and staying in five-star hotels. And if all that weren’t enough, he also had free office space in Adelaide Terrace and a secretary, provided by the family company Armoy.
For a man on his uppers it wasn’t half bad.
Ramsay had assessed the cost of all these things and, in the style of all accountants, had come up with the remarkably precise figure of $206,129 that Bond now needed to contribute to his creditors, as half of his ‘income’ over and above the statutory $24,000. But like everything else, Bond merely announced his intention to fight the assessment in court. So this, too, was dropped into the pot with all the other legal actions.
Ramsay had in fact grossly underestimated what the various court cases were costing Bond, but when he did ask the question, it raised a fascinating line of inquiry. In the six months before his bankruptcy, Bond’s legal fees had been running at the rate of $2 million a year. And since then the pace of legal actions had quite probably accelerated. So where had all the money come from?
The answer was that Bond’s bills were being paid by a number of extraordinarily generous friends. Robert Quinn, a stockbroker mate from London, had coughed up $200,000 from a Swiss bank account at Credit Suisse in Davos. British entrepreneur Graham Ferguson Lacey, another old mate, had also kicked the tin, sending $150,000 from one of his Bermudan companies, Hemisphere Management. And a former Bond Brewing executive, Murray Quartermaine, had contributed $100,000 that he had borrowed from Armoy, which ran the Bond family’s Alpha Trust.
But the lion’s share of these legal fees had been picked up by a shadowy Swiss gentleman called Jurg Bollag, who had sent $600,000 from an account at the Zuger Kantonal Bank in Zug, Switzerland, on behalf of his Panamanian company called Juno Equities.
In August 1992, Ramsay wrote to Bond asking him who was paying his legal fees and why. Bond wrote back to say that he had no idea who had paid them in the past or who would pay them in the future, but that he ‘hoped for support’. He claimed to be unaware that Quinn and Bollag had been so generous.
But finally, Bond was asked why Mr Bollag would want to spend a fortune on actions that Alan was fighting. Bond replied that Mr Bollag was a good friend. But as the investigators would discover, he was a great deal more than that.