He will have a very rapid comeback once the bankruptcy is wound up. He’d like to go back and buy Bond Corp, put a couple of deals into it and give the shareholders some value. He is a man of incredible vision.
Jim Byrnes, December 19941
By the end of 1994, Bond was not only concerned about the AFP investigation, he was also under increasing pressure from his creditors. In fact, he needed to come to some arrangement with them even if it cost him several million dollars, or he would risk remaining a bankrupt into the twenty-first century.
In the normal course of events, he would have been able to walk free in April 1995 without paying a cent, but the law had been changed in 1991 to allow the Federal Court to extend a bankruptcy by up to five years if it could be shown that a bankrupt had refused to answer questions or might be concealing assets. And Bob Ramsay had made it clear that he planned to ask the court to keep the shackles on Bond until April 2000 for precisely those reasons.
Even more to the point, Alan’s trustee had enough material to be confident of victory, and the Commonwealth Government had agreed to pay all his legal costs on the grounds that it was against the public interest for Bond to be released. If Alan were allowed to go free, he would be seen to have thumbed his nose at the system, just like that other sick tycoon Christopher Skase had done from the other side of the world. But on top of that, all Ramsay’s investigations in Switzerland would cease and there would no longer be any hope of recovering money for his creditors.2
In September 1994, four months after Bond’s farcical performance at his examination in the Federal Court, Bob Ramsay wrote to the forgetful entrepreneur to tell him that he was ‘highly dissatisfied’ with his answers and to lay out the evidence in all its damning detail. In his nineteen-page letter he took Bond through the millions of dollars in cash and assets that had swilled around in Kirk Holdings, the Icarus Trust, Engetal, Juno Equities, Lindsey Trading Properties and Bond’s London bank accounts, asking him in each case to say what had happened to the money.
Piece by piece, company by company, trust by trust, he set out the evidence that the Jersey empire and all its riches had belonged to Bond. And, finally, he asked him to admit it. Characterising his previous denials as ‘inaccurate’, and reminding Bond of his legal obligation to answer truthfully, he asked Bond:
Do you now accept?
a) That Touche Ross Jersey did act in relation to your personal affairs on the instruction of individuals you authorised to act on your behalf.
b) That Robert Pearce and Jurg Bollag gave instruction to Touche Ross in relation to your personal affairs.
c) The above mentioned trusts and companies were beneficially controlled and owned by you.3
Bond’s lawyers, Parker & Parker, wrote back to Ramsay four weeks later to say that Bond was not going to answer these questions because he might incriminate himself—presumably because he might be forced to admit that some of Ramsay’s allegations were true, and thus lay himself open to prosecution for concealing his assets from creditors and, even worse, for perjury. Soon afterwards, Ramsay warned Bond that he would ask the Federal Court to compel him to answer the questions whether he liked it or not.
But the prospect of being forced to tell the truth or risk jail for contempt was not the only reason for Alan to contemplate a settlement, because Ramsay was confident that he could get Jurg Bollag into the witness box in Switzerland, and there was no guarantee that Alan’s mate would stay silent when the pressure was on. By the end of 1994, the Zug Cantonal Court had already ordered Bondy’s banker to take the stand, and Ramsay’s Swiss lawyer was sure that the Swiss Federal Court would soon confirm the ruling.4
Even worse, the Dallhold liquidator, John Lord, was threatening a huge legal action that could strip the Bond family of a large slice of their fortune. Lord had at last decided to attack a whole series of transactions that had shovelled millions of dollars to Eileen and the children between 1988 and 1991 in the form of jewellery, cars, cash, houses, paintings and forgiven debts. And if all these claims succeeded, the Bonds would not only have to fork out $54 million, including interest, but would also lose their magnificent English country estate at Upp Hall.
To win the jackpot, Lord needed only to persuade a judge that Dallhold had been insolvent (or more brutally, bust) by November 1988. This would not only allow him to recover any gifts made after that date, but could also expose Eileen, Alan and Craig Bond to huge damages claims and criminal charges for breaching their duties as directors of Dallhold.
As Bond no doubt knew, John Lord had obtained a senior counsel’s opinion which said that he had a good chance of winning the $54 million and an even better chance of getting some of that money if he didn’t get it all.5
Even in the good times, Alan’s private company Dallhold had found it hard to pay the interest on its multi-million-dollar borrowings, because the dividends paid to it by Bond Corporation, which formed the bulk of its income, had never been large enough. Typically, it had been forced to sell assets (or revalue them and borrow more) so it could make ends meet. But in late 1988, interest rates doubled, asset prices plummeted and the company suddenly needed twice as much money to pay its massive interest bills—with next to no chance of raising it. Before long, Bond Corporation’s share price went into free-fall, the group’s bankers got nervous, and Dallhold was pushed to the brink of disaster.
Alan took on an ex-banker to negotiate with the company’s lenders—to flatter, promise, massage and play for time. But as the banks began to sniff the strong smell of failure they either scrabbled for better security or tried to get out completely, so it was only a matter of time before Dallhold started missing interest payments and defaulting on its loans. Or in the legal language of insolvency, ‘failing to pay its debts as they fell due’.
The evidence suggested that Dallhold was certainly insolvent by May 1989, since this was the month when it defaulted on $70 million worth of loans and a flurry of other things went wrong in the wider Bond business empire.6 However, there was a fair chance that Lord could prove that the company had been insolvent six months earlier, which would mean that the Bonds would have to hand back their Christmas presents from Alan that year, which included Susanne’s $350,000 bracelet, Eileen’s $4.3 million worth of diamonds and the Bentley Turbo.
During November 1988, the National Australia Bank had called in a loan of $30 million after Dallhold had missed the interest payment, and an investigative team from the UK company Lonrho had branded Bond’s empire ‘technically insolvent’, with a net worth of minus $4,000 million. Thereafter, Dallhold had only stayed afloat by pinching millions of dollars from the unwitting shareholders of two cash-rich companies that Bond had hijacked, and by siphoning off $160 million that it had pledged to its long-suffering bankers.7
On this basis, it looked like Dallhold’s creditors had a good chance of winning their case, but John Lord knew it would take several years to do so and that they might also lose. He knew, too, that the creditors would be reluctant to risk money if Bond could be persuaded to pay up without a fight. So he resolved to use the legal action as a threat to push Bond into a more generous settlement.
Alan had long been busting to get free and had been talking about a compromise since September 1992, as had his elder son John, who now held the purse strings for the Bond family. So when the two sides met in early November it did not take long to reach an in-principle agreement. By early December, after discussions with Bob Ramsay and the major creditors, a draft proposal was on the table, committing the Bond family to pay $7 million over three years in exchange for Dallhold dropping all legal claims against them. As to where the money would come from, Eileen and John would each contribute $2 million, while the sale of Craig’s house in Brisbane would provide another $1.5 million. The final $1.5 million would come from the Bond family at large.8 The Bonds would also get to keep Upp Hall, the lease of which would be signed over to them by Dallhold Estates UK.
The Bonds’ offer would see Dallhold’s creditors getting a measly 1.3 cents for every dollar they were owed—or $7 million to wipe out $519 million worth of debts—but in cases like this beggars can’t be choosers, and whether this was a good or bad deal depended on one’s assessment of the Bond family’s wealth. Remarkably, they had been bullied into providing an estimate of their net worth, prepared by the big accounting firm Price Waterhouse, even though Alan had told Ramsay bluntly in mid-November that this was completely out of the question, saying, ‘No, can’t do that. PW won’t do it’.9
According to this estimate, the Bonds were worth ‘less than $20 million’. But, as John Lord scathingly pointed out, creditors could ‘place little reliance’ on this figure because the accountants had not been allowed to include any of the assets in the various discretionary trusts, which probably held the vast bulk of the Bond fortune. Nor could they guarantee that they had sighted all of Eileen’s and Susanne’s jewellery. And finally, the Bonds’ booty had been totted up at its book value, which was almost certainly a great deal less than it was worth. So $20 million probably wasn’t the half of it.
However, if the balance of the Bond family’s money was locked up in discretionary trusts, there would doubtless be huge problems getting hold of it, even if Dallhold won the full $54 million in damages. And on that basis, Lord advised creditors that they should accept. John Bond, he said, had most of the money but was only liable for $2 million of the $54 million claim, while Eileen’s net worth was allegedly less than $5.5 million. If that were so, Dallhold’s creditors would be hard-pressed to get more than $7.5 million even if they won.
There was one huge obstacle, however, to accepting Bond’s offer, which was that he was making it a condition that his personal creditors also released him from bankruptcy. And here the deal was far less attractive. With no threat of legal action to buy off, Bond had offered only $1.65 million to settle debts of $600 million, which would work out, after expenses, at roughly $1 for every $1,000 that he owed, or one-tenth of a cent in every dollar.10
Of course it was natural that Bond would try to escape from bankruptcy, because it was the only way he could get the investigators off Bollag’s back, and neither his freedom nor his fortune would be safe until that happened. For precisely the same reason Bob Ramsay was determined that he should not be discharged.
It was therefore a hard decision for creditors to make, since many were owed money by both Bond and Dallhold, and even John Lord wanted to have two bob each way, telling them:
I would recommend settlement with the family members. I do not recommend the settlement in the bankrupt estate or the release of Alan Bond from claims in Dallhold. However, the settlement proposal does not allow creditors to pick and choose … it is all or nothing.11
Ramsay’s choice was far more straightforward, and in early December he despatched an eighteen-page report to Bond’s personal creditors listing a multitude of reasons why they should reject the offer, the key one being his conviction that more money could be found. Although this stopped short of actually telling them to vote ‘No’, it left them in no doubt that he believed it wrong to let Bond go free while the search for the treasure was still on.
I have accumulated a great deal of evidence connecting Mr Bond to off-shore entities. I am not satisfied with the responses I have received from Mr Bond, and my investigations into this complex set of overseas trusts and entities and the transfers of large amounts of money between them and by them is [sic] continuing.12
Ramsay warned creditors that Bond’s bankruptcy would be annulled if they accepted the paltry amount of money he was offering, and all investigations would cease. The attempt to force Bollag into the witness box would also be abandoned, along with legal action in Switzerland to recover Bond’s assets, and Alan would escape giving answers to the questions that he had been trying to dodge since mid-1992.
Attached to the report was a letter from one of Bond’s biggest creditors, the merchant bank Tricontinental, declaring the offer to be ‘far short of what would be an acceptable amount’, and vowing not to back any compromise until investigations by Ramsay and the AFP in Switzerland were complete. Another letter from JN Taylor, which was one of Holmes à Court’s old companies, and also a big creditor, expressed similar opposition to the deal.
But in spite of this support, it was obviously going to be a fight to keep Bond in bankruptcy, because many of his personal creditors wanted to accept Dallhold’s $7 million payout, and others simply felt sick of the whole process and wanted to throw in the towel.
The Hongkong Bank, for example, were loudly proclaiming that it was a waste of time chasing Bollag in Switzerland, and they were certainly not the only ones who felt that pursuit had become futile. In fact, one had to be a supreme optimist to believe that Ramsay could recover money from Liechtenstein or Switzerland at this late stage even if Bollag did talk. And the record thus far showed that creditors had spent around $3.5 million chasing Bond’s assets but had virtually nothing to show for it.13
By the time the Dallhold vote came around on 19 December 1994, there was huge interest in Bond’s impending escape, and the inevitable media scrum assembled outside the Institute of Chartered Accountants in York Street, Sydney, where the creditors’ meeting was being held. The ubiquitous Jim Byrnes was also in evidence, pacing up and down on the pavement, mobile phone to ear, apparently reporting progress or nudging the last of the stragglers over the line, and happy to declare that he and Bond already had it sewn up.
We have got the money. It is the numbers we are concerned about. We worked all weekend. We bought several of the debts. I don’t think we’ve got anything to worry about.14
It was a quiet meeting, as you would expect from a collection of accountants and solicitors, and a quick one. In less than two hours the i’s were dotted and the t’s crossed, and Bond’s $7 million offer was accepted by a large majority. Bond had secured ninety-eight per cent of the votes by value and seventy-eight per cent by number. In other words, all the biggest creditors, including the banks, had come to the party.
After it was over, Bond and Byrnes emerged from the building grinning like two Cheshire cats, displaying thousands of dollars of dental work in the process. Bond, one could see, had gone for the millionaire’s package, with teeth so straight and well matched that they looked false. He also seemed to have gone a bit wild with a bottle of red hair dye. Byrnes had invested in a great front row, but appeared to have skimped on the halfbacks. Only the biggest smile could have betrayed the point where the money ran out, but both men were wearing one, for they now only needed to win the vote with Alan’s personal creditors two days later and Bond would be out of hock.
When asked whether he was now confident that he would be freed, Bond was suitably cautious, saying: ‘It’s never there until it’s there. There are a lot of technicalities to be ticked off’. But there was no disguising his confidence that he would soon be home and hosed, and before long he had launched into a lecture about the need for Australia to forget the past, look to the future and allow great entrepreneurs like him to go out and ‘create a few jobs’.15
This was a bit rich for a man who had melted his business empire into a $5 billion black hole, especially when he had left three breweries—Toohey’s, Castlemaine and the American company Heileman—making less money, selling less beer, and looking less secure than when he had taken them over. And it was a touch ambitious for a man who had apparently been incapable of running a corner store only twelve months before. Now he obviously had a lot of corner stores in mind.
Before long Jim Byrnes would be telling the world that he had the greatest admiration for his mate and predicting that Bond would rise again, like the man whose birth was about to be celebrated.
He will have a very rapid comeback once the bankruptcy is wound up. He’d like to go back and buy Bond Corp, put a couple of deals into it and give the shareholders some value. He is a man of incredible vision.16
Then, as the journalistic throng scribbled in their notebooks or smiled in disbelief, the two well-heeled bankrupts climbed into Jim’s dark blue Rolls-Royce Corniche, which he had parked on double yellow lines for a quick getaway, and chuckled off.
It was clear, however, that the meeting of Alan’s personal creditors two days later would not be such a snack. In fact, Bond was already convinced that he did not have the numbers to win and would be struggling to get them unless he had Bob Ramsay’s blessing. So, in typical fashion, he resolved to do something about both these problems.
An hour or so before the creditors’ meeting, the inner cabinet, or Committee of Inspection, was assembled in Bird Cameron’s boardroom in the Stock Exchange building on Melbourne’s Collins Street to hold its customary cabal. Suddenly, the doors flew open and Bond burst in, closely followed by the receptionist whom he had nearly knocked off his feet in the rush. It was the sort of scene that a playwright or novelist would die for: angry tycoon confronts his enemies in their lair, nervous lawyers and accountants shrink in their seats. Would Ramsay support his proposal, Bond demanded to know. Well, no, he thought he would not. Would another million dollars change his mind? Well, yes, he supposed it might. Exit tycoon whence he came. Accountants and others exhale.
It was the sort of tactic that Bond was famous for, as was Murdoch in his younger days and Packer while he still cared about business, and it appeared to have blown the opposition away. An hour or so later, Ramsay was telling the full creditors’ meeting that he would now be prepared to back Bond’s offer, provided the entrepreneur signed a guarantee that he had disclosed all his assets. This was perhaps like asking a lion to swear that he would not eat meat, but Ramsay and the major creditors were convinced it would make it easier to reopen the bankruptcy if any money was found.
But guarantee or no guarantee, Bond still needed to get one of his biggest creditors, the Arab Banking Corporation, on side if he was to win his freedom. The Bahrain-based bank, which had a crucial 22 per cent of the vote, had accepted a personal guarantee for $133 million from Alan in October 1989 and now stood to be paid a mere $133,000 for releasing him, because it was not going to share in the $7 million pay-out from Dallhold. Not surprisingly, its lawyers had refused to settle for this meagre amount of money.
Needing time to win them around, Bond resolved to ask his creditors for a month’s grace. And this he did with typical aplomb. Turning on the full salesman’s charm, he promised his unlucky audience an extra $1 million if they were prepared to wait. Soon afterwards, he was wishing them all Happy Christmas and promising to see them at the end of January. Then he was off to run the gauntlet of around fifty TV cameramen and reporters waiting in the lobby downstairs and to tell them that he had absolutely no intention of going to live in Canada or Switzerland. He was confident, he said, that everything was on track. All that was needed was a little bit of patience.
While the great persuader was holding forth in Melbourne, Justice Sheppard was sitting in the Federal Court in Sydney listening to Bond’s lawyers argue why Bob Ramsay should be denied access to the documents the police had seized from Bond’s home in September. Ramsay had been trying to get his hands on these since mid-November and was convinced that they could have the power to sway creditors. Glancing at the clock, Justice Sheppard mused that it might now be too late to make any difference.17
The following day, Sheppard was back in court to pass judgement, which had been given new import by the month’s delay, and to deliver a stinging rebuke to the recalcitrant entrepreneur. Bond had argued through his counsel that the documents should remain private because they might incriminate him, which was a strange argument from someone who still maintained that the charges against him were absurd. Sheppard would have none of this, and ordered Bond to tell the police to hand them over.
Unwilling or uncooperative bankrupts must make available documents against their will or be in contempt of court or in breach of the criminal law. Cooperation can and will be compelled in appropriate cases. If this were not the case bankrupts could make a laughing stock of their obligations … Mr Bond is required to do many things he is probably unwilling to do. This is but one of them.18
It was a shame that Sheppard had not read Bond the riot act back in May when the entrepreneur was feigning brain damage and memory loss, and a shame that he had not supervised Bond’s famous bankruptcy examination himself, for he might have cut through the nonsense. It was now a bit late to get tough.
Sheppard had also been asked to rule on whether Bond should give Ramsay details of the myriad phone calls he had made from the Sheraton Wentworth Hotel during his Federal Court examination in May 1994, when he claimed to have forgotten all about his offshore fortune. And here, too, he decided that Alan must do as he was asked, by revealing who he had called, what he had talked about, and the business or banking transactions that had resulted.
The inevitable appeal by Bond would delay compliance with this order for two weeks, but in early January, Bond would be forced to dredge his dodgy memory for dealings with the D’Jamirze brothers, Whaka Kele, Roger Bryer and others, and to explain why he had spent such a long time talking to someone in a phone box on Zurich’s railway station. This, too, offered Ramsay a glimmer of hope that creditors would give him one more chance to get his hands on Bond’s Swiss fortune.