Any prison sentence is a life sentence in a sense for someone in your position, in that you cannot sink into anonymity, but it will follow you forever.
Justice Kennedy, sentencing Bond on Manet fraud charges, 20 August 1996
Diana had married Alan in the full realisation that his troubles were not over and that a good portion of their life together might in fact be spent apart. And after only nine months of marriage, her worst fears were confirmed, because on 17 January 1996 Bond was sent for trial on the Bell fraud charges with a damning indictment ringing in his ears.
It was possible, said magistrate Ronald Gething in handing down his judgement at the committal hearing, that a jury would find that Bond and his co-accused Peter Mitchell had been ‘dishonest’, ‘deceitful’, ‘very imprudent’ and ‘irresponsible’ in the way that they had removed $1,200 million from Bell Resources, and that they had shown an ‘absolute disregard’ for the welfare of Bell’s shareholders. It was also arguable that they had engaged in ‘an extreme breach of duty’.1
According to Gething, the alleged crimes had been committed at a time when Bond Corporation had needed billions of dollars just to stay afloat, yet Bond and Mitchell had not only caused Bell Resources to lend the Bond Group $1,200 million without security and without interest being paid, but had then concealed this fact from the authorities. And lest there be any doubt that Alan himself had been involved, Gething drew attention to the fact that Bond had declared in a TV interview that all directors of Bell had taken part in the decision to make the loans.
The committal had originally been expected to run for ten weeks, but was completed in as many days because the prosecution decided to call only a handful of witnesses. One or two of these, however, really packed a punch. For example, David Aspinall, who had been one of Bond’s top executives, did what none of Bond’s loyal lieutenants had done before— he gave vital evidence against his former master.
Aspinall, however, would have been in the dock alongside Bond himself had he not turned witness for the prosecution at the last minute to save his own bacon. In January 1995, the leader of the Bond Task Force, Tim Phillipps, had rung him and Bond to tell them that they were both about to be charged, and Aspinall’s lawyer had quickly rung back to ask if it was too late to do a deal. The next day, on the promise of getting some useful information, Phillipps sat down with Aspinall and his solicitor to see whether the Director of Public Prosecutions (DPP) might be able to grant him an indemnity.
I still remember the first time Aspinall came in. It was the Saturday morning to start the process off. We spent about six hours talking to him about what he could tell us. We were pushing pretty hard. We said, ‘Look this has got to be good, it really has to be the killer punch’.2
Aspinall was potentially a crucial witness for the prosecution, because he had been at the heart of the Bell transactions in 1988 and had voiced concerns to Alan Bond in November during a flight on the corporate jet to Chile about how Bell’s money was being used. He was also inclined to help, because he and Alan had had a major falling out, and he obviously had no desire to go to prison himself for something that he had only supported reluctantly. But he was in a quandary about how much he should say. And according to Phillipps, he was close to panic.
He was such a huge man, he was sitting there, sweat just pouring out of him. I was very concerned actually that the stress would be too much for him, that he might have a heart attack.3
Phillipps and an Australian Securities Commission lawyer called Greg Weekes questioned the former Bond executive until midnight on the Saturday and started again at six o’clock on Sunday morning. From time to time, one of them walked over to Aspinall’s lawyer’s office in the former Bond Tower with a draft or a redraft of what he was prepared to say. And finally, very late on the Sunday night, a statement was signed, which was then despatched by secure fax from Perth to the Commonwealth Director of Public Prosecutions, Michael Rozenes, in Canberra. This was then discussed at great length over the phone until Monday afternoon, at which point Rozenes agreed that the information was good enough to grant Aspinall the indemnity he was seeking.
Whether his evidence would in fact make the difference between acquittal and conviction when the case finally came to trial at the end of 1996 was of course open to question, but Gething’s remarks at the committal made it pretty clear that it would be extremely useful. Before that happened, however, Bond had to face trial on the Manet charges.
To some people it seemed an odd decision to devote so much effort to chasing Bond over La Promenade, for $15 million was pocket money by Bond’s standards and pinching the profits on a painting was hardly serious when compared with the Bell fraud, which involved almost a thousand times as much money. It seemed a bit like tackling Al Capone for tax evasion. But as the prosecution allegations unfolded in court in August 1996, it did not seem such a bad choice after all, for Bond had essentially used his private company Dallhold Investments to cheat the public company Bond Corporation and its shareholders. And the evidence showed that documents had then been forged to cover up the offence.
La Promenade was bought by Alan’s private company Dallhold in 1983 to hang on the walls of his new office in Perth, and was soon given pride of place in the boardroom. Bond was hugely enthusiastic about this new addition to his burgeoning collection, but unfortunately revealed himself to be no great connoisseur. In 1985, he interviewed a cultured Englishman called David Michael for a job as his special personal assistant, and opened the batting by asking him whether he liked art, to which Michael replied that he loved it.
‘What do you think of my Monet, then?’ Bond asked proudly, gesturing at his recent acquisition, La Promenade.
‘It’s a Manet,’ Michael replied.
‘How do you know?’ Bond asked, rather put out.
‘Well, it’s famous,’ replied Michael, ‘it’s called La Promenade.’4
But if Bond was no expert on Impressionist paintings, he certainly did know that it was best to use other people’s money to purchase them, and almost immediately after taking delivery of the Manet he sold it to a finance company and leased it back again, but this time with Bond Corporation’s shareholders footing the bill. Over the next five years, the public company shelled out $100,000 a month in lease payments, or $5.6 million, so that Alan and his important visitors would have a masterpiece to look at.
The board of Bond Corporation was quite properly informed at the time by one of the directors, Tony Oates, that their company would have the right to acquire the painting from the finance company when the five-year lease expired. But when the opportunity arose in mid-1988 to buy the Manet for a fraction of its market value, Bond Corporation failed to take its chance to make a multi-million-dollar profit. And it failed because Alan Bond did not tell his fellow directors that the opportunity was there.
Sensing that there was a killing to be made, he decided to slip the money into his own pocket instead. In November 1988, his private company Dallhold bought La Promenade for $2.4 million. A year later it sold it at auction in New York for more than $17 million. Thus, the shareholders of Bond Corporation were cheated out of almost $15 million.
Alan had done deals like this before, when he was not in such dire straits. But it is just conceivable that desperation played as big a part as greed in his hijacking of the cash. In November 1987, he had paid a new world-record price of US$54 million for Van Gogh’s Irises and had immediately had difficulty paying for it. In typical fashion he had persuaded Sotheby’s to lend him half the money for his headline-making purchase, while borrowing the rest from a bank, and Sotheby’s had refused to give him the painting unless he put up more collateral. In such circumstances, La Promenade was the obvious, if not the only, way out, because it was one of the few things in the Bond empire that wasn’t already hocked to the hilt. It had therefore been vital for Dallhold to get its hands on the picture.
To satisfy the legal niceties, however, it was necessary to give Bond Corporation the chance to buy the painting so that it could formally reject the offer. In fact, this was a condition imposed by the owners of the leasing company, Macquarie Bank, who were clearly concerned about the propriety of what Alan was doing.5 But this obviously posed a problem for Alan and his managing director at Dallhold, Michael Cross, because the board of Bond Corporation was hardly likely to turn down a chance to make $15 million for their shareholders. The answer was merely to recommend to the board that Bond Corporation reject the opportunity on the grounds that it was not in the business of collecting art, and to not disclose either the sale price of the painting or its market value. And this was how Bond played it.
The members of the Bond Corporation board had no inkling of any of these shenanigans, but the company secretary Noel Reed was consulted and objected to the transaction, making it clear that he regarded it as dishonest and not in the interest of shareholders. Reed, however, was ignored, and the transaction went ahead, with everything remaining hunky-dory until the auditors, Arthur Andersen, arrived on the scene ten months later.
Even then, there might have been no problems had 1989 been a normal year in the history of the Bond group, but Andersens had just copped a lot of flack over their audit of Bond Corporation’s 1988 accounts, in which the company claimed profits of around $150 million that were actually bogus,6 and they were now determined to let absolutely nothing pass without extra scrutiny.
The auditors duly unearthed the Manet transaction (which was showing up in the accounts as a $4 million dollar loss to Bond Corporation) and objected strongly on the basis that it was uncommercial and quite probably illegal, since Alan Bond had almost certainly breached his duty to Bond Corporation shareholders by not giving the public company the opportunity to buy the painting.
A committee was set up under the chairmanship of John Bond to deal with the problem7 and a set of working notes was prepared to chart the history of the group’s dealings with La Promenade. These revealed that it had been decided in 1984 that Bond Corporation would make the lease payments and acquire the painting at the end. The notes were then shown to one of the group’s legal advisers, who advised John Bond that his father Alan had broken the law.
An entirely new set of working notes was then prepared, and backdated, in an effort to cover up the crime. These contained a brand new explanation for Bond Corporation’s failure to buy the painting, which was that there had always been an agreement between Dallhold and Bond Corporation to share the profits on La Promenade between the public and private companies. Alan himself faxed a letter to the Bond Corp board from his schooner XXXX, claiming that this agreement had existed, undocumented, ever since the painting was purchased.
But as now became clear at the trial in Perth, there was not one single shred of evidence that Alan’s tale was true, apart from the second set of working notes prepared ten months after the event. The only witness to Alan’s supposed profit-sharing arrangement was the former managing director at Bond Corporation, Peter Beckwith. And he was dead.
On the other hand, there was ample evidence that Alan’s story was a lie. In the first place, Dallhold had not paid a cent of the profits to Bond Corporation by the time the auditors first raised their objections in September 1989, even though ten months had passed and the financial year had ended. Second, the paperwork from the early 1980s made it quite clear that Bond Corporation and not Dallhold was to buy La Promenade at the end of the lease—as the company had a legal right to do. Third, there was compelling evidence that person or persons unknown had altered the working notes to get Alan off the hook, substituting them for an earlier version in which the profit-sharing agreement had not been mentioned.
But the clincher, if any were needed, was that the sudden promise of September 1989 to share the profits had never been redeemed. Several months after the auditors were sent packing, Dallhold handed Bond Corporation a cheque for $4 million in an attempt to show that the $15 million was being divided fairly between the two companies. But this was no more than a sham. The cheque effectively was met with funds from Bond Corporation, so that no real money changed hands. The judge singled this transaction out for special criticism, describing it as ‘stunning’.
It was therefore no great surprise on 16 August 1996 when the jury of six men and six women found Bond guilty on all four counts. In the words of the judge, the Crown case had been ‘strong … cleverly investigated, and cleverly presented’ and the jury had been astute and diligent in following the complexities of the story.8 They had deliberated for eleven hours and had been unanimous in pronouncing him guilty.
Alan’s wife Diana, who had been sitting in a small side room with his legal team, appeared distraught as the verdicts were announced. Bond, however, cast a glance at one of his defence team, shrugged his shoulders and gave a wry smile. Shortly afterwards he kissed Diana twice and was taken off to the cells. Since it was a Friday, he would have to wait till Monday morning to be sentenced.
Over the weekend, his friends did their best to keep him out of jail by telling the papers that he was too sick to survive another spell behind bars. And come Monday morning his distinguished lawyer, Julian Burnside QC, attempted a similar job, by reminding Justice Antoinette Kennedy that she was sentencing ‘not just anybody … but Alan Bond … a national hero’, whose health was so frail that prison might turn out to be a life sentence. He should be fined, said Burnside, rather than sent to jail, adding dramatically, ‘It is not true that the only way to punish Mr Bond is to destroy him.’
Lawyers of course have a duty to do their best for their clients, but it’s hard to see how this speech can have been delivered with an entirely straight face. In a world where judges send the poor to jail on a $100 shoplifting conviction, it’s a bit rich to expect that someone like Bond should get away with a fine for a $15 million fraud.
Yet, as one listened to Toni Kennedy deliver her sentencing remarks, it seemed that Burnside’s pleas might have hit the spot, for she was clearly deeply sympathetic to the fallen entrepreneur. For a start, she felt it necessary to mention the ‘vicious, hate-filled … insatiable’ members of the community who wanted to make an example of Bond. Then she urged people to realise that prison was no picnic.
Time in prison goes a lot slower than time outside … Having a TV set and turkey for lunch on Christmas Day—features of the prison system dear to the hearts of sections of the media—are no substitute for freedom … Any prison sentence is a life sentence in a sense for someone in your position, in that you cannot sink into anonymity, but it will follow you forever.9
After that, she reflected on Bond’s heart condition, the stress he had suffered, the disgrace he had experienced, and the spitefulness of some sections of the media. These, she said, meant that he had already been punished. He had been a wonderful employer and an inspiring leader, and he was still a loving and caring father and a man with many fine qualities. His tenacious pursuit of the America’s Cup had been admired by all Australia.
So how had such a wonderful citizen come to be responsible for a $15 million fraud, one might well have asked? Justice Kennedy had an answer for that one, too. Putting the best possible face on things, she said, she could only assume that Alan’s passion for Monets or Manets had got the better of him, and he had forgotten that Bond Corporation was no longer his private fiefdom. Though, in fact, it had never been.
At the end of this eulogy, it would have been no great surprise to hear her say that Bond had already suffered enough and should instantly be set free, for she had said earlier that there was a limit to the punishment that any man could take. But Justice Kennedy did no such thing. Emphasising that Bond’s crimes were extremely serious, she said she had no option but to send him to jail, and duly sentenced him to two years on the fraud charges and a year on the dishonesty charges, making three years in total.
Bond looked bemused when the sentence was passed, perhaps because Justice Kennedy’s paean of praise had promised greater leniency, but he could hardly have felt aggrieved, for he had been facing a theoretical maximum of fourteen years in jail and a $60,000 fine, and with this sentence he could now expect to be out within twelve months. Diana held his hands and kissed him before he was taken away. Outside the court she told reporters in a short and dignified statement that she and many other Australians were upset that he had been sent to prison, but that she was grateful for Justice Kennedy’s comments about his contribution to the community. A few months later she told the ABC’s Australian Story that the trial had been especially painful and difficult for her. ‘Alan and I felt like we were alone against the world because …’— she paused for a moment, trying to find the words—‘… It felt like a conspiracy. It was hard.’10
There is a comical, and possibly apocryphal, twist to this tale that has never been reported, which is that La Promenade may not have hung on the wall of Bond’s boardroom for long after Dallhold filched it from the public company. In late 1988, with the entire Bond Group sinking deeper and deeper into financial difficulty and Sotheby’s getting increasingly nervous over the millions it had lent for Irises, Alan began to worry that the Manet might be repossessed, so a local printer in Perth was commissioned to make some expensive colour copies. One of these was then coated with lacquer by a restorer to make it look like the genuine article, and swapped for the real thing on Bond’s wall. The pukka La Promenade, meanwhile, was consigned to the National Australia Bank’s vault in St Martin’s Tower, where it was assumed to be safe from any bailiffs that might come to call. Finally, it was surrendered to Sotheby’s and sold in New York. Remarkably, no one ever noticed the difference.
To serve out his sentence on the Manet conviction, Bond was sent to Karnet Prison Farm in the hills an hour south-east of Perth, where he was pretty much free to do what he liked, apart from go home. There were no bars on the windows, the cells were left unlocked at night, and he was given a hut to himself in which he installed a computer, a stereo and a small TV set along with a few books, files and personal possessions. In a letter to a well-wisher, he said that he was studying French, computing and creative writing, and was feeling better than he had felt for many years.
Indeed, far from looking like he might die in jail, as his lawyers had suggested to the judge, he was now reported to be thriving. Photographs published in Perth’s Sunday Times showed him sitting cheerfully in the prison grounds with Diana and a couple of friends, the irrepressible Rose Hancock and her husband Willie Porteous. The accompanying story suggested, in a style that Justice Toni Kennedy had so deplored, that for Bond prison was nothing but a picnic:
Bond looks like he’s having the time of his life … looking younger than his 58 years, [he] does not seem to be feeling any pain from the experience. He certainly doesn’t look like he’s dying, a prospect given great weight by his lawyers when they pressed for a non-custodial sentence.11
Fellow inmates reported that he was not only cheerful but was also bursting with health. He was riding an exercise bike for half an hour every morning, playing tennis two or three times a week and observing a vegetarian diet. As one Karnet prisoner put it: ‘He’s twenty years older than me and he’s fitter than me. He leaves most people for dead, he’s that fit’.12
Also in the picture was a friend that Alan had made since his arrival, who was probably a useful ally in case he struck trouble with the other prisoners, as he had in his first stint in jail in Wooroloo in 1992.
The balding, smiling figure in the back row is former NSW charter pilot Anthony John Pinkstone who, on his own admission, used to work for an international syndicate involved in drug smuggling, money laundering and murder … He and Bond are the leading lights in a ‘barbecue club’ which has started up in the prison.13
But the lazy days in Karnet would not last forever, because in December 1996, after serving four months behind bars, the Bell charges finally came to trial and Bond was faced withthe prospect of sitting in the dock for several months while the case was heard. For years he had protested his complete innocence of the misappropriation of any of Bell’s $1,200 million and had branded the charges as a political conspiracy against him, but having had a few months in jail to contemplate the matter, he now decided to go quietly. Given the way in which the magistrate had summed up the evidence at the committal hearing, where it was suggested that he was almost certain to be convicted, it was probably a wise decision to do a deal. Bond’s defence would have cost him a fortune in legal fees, and the six-month trial would have been an ordeal for everyone, including the jury. By agreeing to plead guilty to two Companies Code charges, he was able to persuade the prosecution to abandon the far more serious charge of conspiracy to defraud and four other lesser charges. In addition, the DPP was persuaded to end his attempt to have Bond’s sentence for the Manet fraud increased. Bond was therefore convicted of two charges of acting dishonestly as a company director with intent to defraud, each of which carried a maximum sentence of five years in prison.
A month later, he was back in court for sentencing and three days of mitigation pleas in which friends, doctors and psychiatrists lined up to say how dreadful it would be for him to receive another jail sentence. The climax of this was an address by his counsel Ian Callinan QC, now a High Court judge, who waxed lyrical about what a decent person Alan was and about how his downfall marked the end of a sorry chapter in Australian history. Bond’s guilty plea, he said, was ‘born out of a strong element of contrition and remorse’, and it was absolutely ‘unthinkable that he would ever commit offences of this kind again’. Finally, said Callinan, the public humiliation, mockery and contempt that Bond had suffered had already sent a clear signal to others of the dreadful consequences of such crimes—which were presumably that if you stole $1,200 million you could expect some people to tell you this was wrong.
It seemed doubtful, however, that any of this sob stuff had made an impression on the judge, because Justice Murray opened his sentencing remarks the following day by launching into a savage attack on Bond’s business ethics, or lack of them. Bell Resources shareholders, he said, had been exposed to ‘severe and ultimately disastrous commercial risk’ by transactions that were to Bond’s ‘very great personal advantage and benefit’. Dallhold and Bond Corporation were in a parlous financial state, could not possibly have got hold of the money elsewhere and had little or no prospect of paying it back. The loans, he said, had been ‘audacious raids … made with an intention to defraud … in virtually complete disregard of (Bond’s) duties of honesty and integrity’.14
Throughout this verbal assault, Alan sat in the dock unmoved, occasionally sipping from a glass of water. But when Justice Murray moved on to the reasons for treating him leniently he may well have perked up a bit for, like so many other judges who have dealt with Bond, Murray found abundant reason to go easy. Bond, he said, was not far off sixty years old, had benefited the community over the years, had been a good family man, and had inspired great loyalty among his friends and employees. He had also suffered humiliation and a stain on his character, as well as a proposal to strip him of his Order of Australia, which could all be regarded as significant punishment. He had saved court time by pleading guilty and had expressed a desire to make reparation and devote himself to the community. And to cap it all, he had apologised through his counsel Ian Callinan. Murray concluded that this apology ‘was not a sham but was genuinely meant’, even though Bond had long protested his innocence, attacked the prosecution case and derided the charges as politically motivated.
There would of course be some ‘hate-filled members of the public’, to coin a phrase, who would suggest that getting your lawyer to say you were sorry might be a small price to pay for pulling off the largest fraud in Australian history, but Justice Murray was clearly impressed, for he now let Bond off with an absurdly light four-year sentence, or less than half the maximum penalty of ten years available to him. If this was all one received for defrauding thousands of shareholders of $1,200 million, it was hard to imagine what one had to do to receive the full punishment.
With luck and a following wind, and time off for good behaviour, Alan Bond would serve less than two years for his crime, or roughly one day for every $2 million, which seemed like one hell of a bargain. Even after serving the seven months that remained of the La Promenade sentence he would almost certainly be free before his sixty-first birthday on 22 April 1999, which would mean he would serve only two years and eight months of the seven years that he had been dealt for the two convictions.
Bond must have been thrilled with this outcome, even though it meant being transferred to Western Australia’s maximum-security prison at Casuarina, where conditions were a great deal tougher than at Karnet. But the Commonwealth DPP was less than pleased, and immediately appealed against the leniency of the sentence, saying that Australians would be stunned that Bond had got off so lightly. And as news filtered through to the radio talkback shows, it was clear that the DPP had called it right, because there was hardly a caller who was not keen to collect $2 million if the only price was to spend a day behind bars.
Diana Bliss invoked the shock of ordinary Australians by protesting that her husband was to be stripped of his Order of Australia. Alan, she said, was heartbroken because his yachting triumphs had been hugely important to Australia and had no connection at all to his corporate crimes.
Look, it’s just devastating for him at the moment, that they would do it. He won the Order of Australia for a sporting achievement which united the country and all Australians were proud that day.15
But while it may have been harsh to take away his medal, there was an argument that it was merely poetic justice, for Bond’s America’s Cup triumph had made the world’s bankers beat a path to his door and, as a consequence, his victory and his crimes had become inextricably linked. If Australia II had not won in Newport in 1983, Alan Bond would never have been able to borrow the sort of money that had allowed him to gain control of Bell Resources in the first place. Nor would he have been able to buy Irises, the purchase of which was one of the reasons he had been so eager to grab the profits from Manet’s La Promenade.
It was also in Newport in 1983, to stretch the point a bit further, that Alan had met Jurg Bollag. And if that had never happened, Bollag’s Swiss employers, the Dow Banking Corporation, would never have lent money to Dallhold and Alan would not have had yet another posse of police on his tail, chasing him for alleged bankruptcy offences.
But he had met Bollag, and the Australian Federal Police were still struggling to get his banker on the stand, even though Bond’s bankruptcy was long since over. In early 1997, two and a half years after the AFP had first sought help from Switzerland, the battle to make Bollag talk was still not over. Bond would have to keep fighting the threat of yet more criminal charges from jail.