In the early months of 1991, after duly consulting his financial advisor and mentor, Rene Rivkin, James Packer decided to put a little money into a hot prospect on the speculative end of the market . . . which meant investing several hundred thousand dollars in Rivkin’s struggling investment company, Oilmet. Rivkin, after all, was one of his father’s closest friends. Kerry Packer’s right-hand man, Trevor Kennedy, oversaw the purchase of another two million Oilmet shares by the family holding company, Consolidated Custodians. It wasn’t enough to get Rivkin out of trouble or to turn around the Oilmet share price, but it was nice to have the Packer name on the share register. The golden circle of mateship guided the House of Packer and its satellites. Kerry Packer’s world spanned the gamut of social and political circles in Australia. Packer’s name opened all doors. To understand that world, you must consider one of the men who played a major role in shaping it, the worldly wise former editor whose earlier staff remember him fondly as ‘Our Trev’.
Trevor John Kennedy, two years older than Rivkin, grew up as a good Catholic boy in modest circumstances in Albany, Western Australia. Kennedy senior was a tailor, a vocation that seems to have had a terminal effect upon his son’s dress sense. Trevor Kennedy grew up with a succession of part-time jobs, including holding a professional fisherman’s licence at thirteen. As a teenager his parents sent him to St Aquinas College in Perth, where he was a classmate of Peter Smedley, who would later earn the nickname ‘Pacman’ for his acquisitive ways of running Colonial Group. Growing up poor in Albany shaped Kennedy’s life. His path from Aquinas would be marked by a determination to move as far away as he could, as quickly as he could, from the world of his childhood. The recurrent feature of that journey would be impatience.
The first escape attempt failed. Kennedy worked as a cadet journalist at his local paper, then went on to join the Canberra Times, but this ended badly. By 1964, at age twenty-two, he had sworn off journalism to return home to join his father’s venture into potato farming. He lasted two years there before rescue came by way of a call from the editor of the Australian Financial Review, Max Walsh, whom Kennedy knew from his Canberra days. Walsh put him to work as a Financial Review correspondent, first in Canberra, then in London. He met a dizzying array of famous names; all of them went into the contact book, many of them as lifelong friends. ‘He has met and kept a lot of friends during his life, which says a lot about a person,’ an old acquaintance commented in 2004.
‘I can remember Keating when he was first starting out—we have a long history,’ Kennedy would say later, after he tapped the prime minister to launch Ozemail’s Internet phone service in 1995. Another former West Australian, Bob Hawke, went on a fishing trip with Kennedy in the late 1960s. In the 1980s, Kennedy would give Hawke and his wife a copy of The Journalistic Javelin, a recently published history of the Bulletin. It was inscribed with easy familiarity: ‘For Bob and Hazel, the best people to inhabit The Lodge ever. Cheers, Trevor Kennedy.’
Kennedy had married Christina Miller, the daughter of the legendary surgeon, Sir Douglas Miller, of St Vincent’s Hospital. Christina was blue-blood Establishment, descended on her mother’s side from one of Australia’s early corporate titans, Thomas Mort. While Kennedy usually wore his Catholicism and Irish heritage lightly, it could be evoked when necessary to forge useful links, as with the somewhat pious senior Millers.
After London, Kennedy became Melbourne bureau chief for the Financial Review. Then, in February 1971, Vic Carroll appointed him to edit a new Fairfax weekly, the National Times. He was twenty-eight and the high life was just beginning. A year later he was headhunted by Sir Frank Packer at Consolidated Press to edit the Bulletin. To sweeten the offer, Kennedy would tell friends later, Sir Frank made him a director of Australian Consolidated Press and slipped him some of that company’s shares—Kennedy’s first serious money.
The deal was so good that a story circulated at the time, repeated with relish by Kennedy’s rivals, that Sir Frank had hired the wrong man; that he meant to hire Vic Carroll, who had been overseeing Kennedy at the National Times, but he got them mixed up. Nevertheless, Kennedy was able to tap into a new wave of interest in current affairs to lift the Bulletin’s circulation, which was languishing at 20 000 when he arrived. In this position he mentored a generation of journalists. ‘He was a journalists’ editor,’ says one of his former staff.
Once ensconced at Consolidated Press, with superb timing, Kennedy turned his formidable charm on the forgotten member of the Packer clan, Sir Frank’s hapless younger son, Kerry. With his brother Clyde favoured by his father, Kerry had been left to stooge around in nowhere jobs. In 1972, aged thirty-five, he was working as an ad rep for the Women’s Weekly when Clyde quarrelled with his father and left Cons Press. Eighteen months later Sir Frank was dead. Clyde, now living in Los Angeles, sold his share of Cons Press for $4 million; this left Kerry Packer king of the company: chief controller of the Nine television stations in Melbourne and Sydney and of the country’s biggest magazine group. As Kerry took his first tentative steps on the road that would make him Australia’s first billionaire, it turned out he wasn’t hapless after all.
Kennedy had been supplementing Kerry’s shoestring allowance from his father with secret advances written off as expenses from the Bulletin and helping Kerry whoop it up on the town. Kennedy was in the box seat. ‘By day, Trevor was running the magazine and, by night, he was out with Kerry Packer in the nightclubs and gaming joints of Sydney,’ Carroll later told Bulletin reporter Adam Shand.
With the long boozy lunches and wild nights, Kennedy’s contact list grew ever longer. When Labour Council secretary John Ducker’s former speechwriter was looking for a job, Kennedy put Bob Carr on the Bulletin payroll, where he stayed until he was elected to state parliament in 1983. Kennedy also hired an aspiring Liberal called Tony Abbott. A young Malcolm Turnbull was given part-time work while doing his law degree and then, when he returned from a Rhodes Scholarship to Oxford, Kennedy put him on staff as Cons Press company secretary and later legal counsel. Kennedy’s links to the emerging figures in the New South Wales Labor Right—Keating, Laurie Brereton, Leo McLeay and Graham Richardson—would shape the marriage of convenience that Kerry Packer fashioned with Labor, initially through Neville Wran and his advisor Peter Barron.
Kennedy was not all conviviality and larrikinism. ‘He had another side to him,’ says a former senior Consolidated Press colleague. ‘He was obsessed with money.’ That would not surface until later. In the meantime, he had become a regular share trader, which was how he became friends with the hottest young broker in town, Rene Rivkin. In turn, this was how Rivkin and Brent Potts became Kerry Packer’s house brokers.
The subsets of friends, contacts and associates forming around Kerry Packer at this time would become a network like nothing Australia had seen. The Labor Party was in the process of an historic shift of its funding base, from relying on the unions to bankroll its election campaigns to hitting the big end of town for money. The evolving relationship with Packer would be the key to this brave new world. At the same time, Rivkin would introduce Packer to his own network. The most enduring relationship would be with Robert Whyte, who had returned to Australia in the mid-1970s to run the funds management arm of insurer QBE. He would become one of Packer’s closest friends.
There was nothing extraordinary in this—politics and money have never been strangers in Sydney. What made this alliance different was that it was forged and mediated through a media organisation. Packer had come into his inheritance just as the communications revolution, which would transform economies and societies around the world, was gathering pace. In the milieu around Packer’s offices in Park Street, Labor politicians were mixing with fast money and aggressive young journalists; the new breed of young entrepreneurs, besides cementing access routes to politicians, were discovering how to manage their media profiles; and journalists were forging key relationships not just with politicians, but with stockbrokers. Eventually large swathes of senior Nine management would be taking investment advice from their dear friend Rene. As Graham Richardson found, in Rene’s world his very special clients never lost money. ‘I have never had a losing trade. Ever,’ Richardson told a Rivkin investment forum in 1997.
The most interesting figures in this new grouping of politicians, journalists and the big end of town were those who navigated their way from one camp to another. Like Bob Carr, who returned to politics to become NSW Premier. Or Peter Barron who, after helping to set up Wran’s new alliance with Packer, went on to become Bob Hawke’s closest advisor before becoming a lobbyist for Packer. Barron’s closest friend, Graham Richardson, later charted a similar course from politics into the safe harbour of Consolidated Press, but in his case he made it into media as well . . . as did Richardson’s other close friend, Rene Rivkin. In July 1990, two months before he ripped off his father’s Swiss bank account to stave off his creditors, and while the Australian Stock Exchange was investigating a series of suspicious share trades he was making in Stroika, Rivkin signed on as financial reporter with his friend Ray Martin on the Midday Show. As the face of respectability, he would share his thoughts on screen about the latest moves in world markets. The figure at the heart of these new alliances and friendships was, of course, Trevor Kennedy.
Early on at Park Street, Kennedy’s chief challenger in the court of King Kerry was Women’s Weekly editor Ita Buttrose. That Kennedy was able to overcome the advantages that Ita’s close friendship with Packer gave her is no mean tribute to Kennedy’s schmoozing powers. Ita saw the writing on the wall and left before she was pushed, taking a job offer from Rupert Murdoch in 1986. That left only the cocky new head of Nine, the one-time floor wax salesman, Samuel Hewlings Chisholm as a rival. ‘I’m just a heartbeat away from running this place,’ Chisholm would say to Kennedy, to taunt him.
For all the jostling among courtiers, there was never any doubt who was in control at Consolidated Press. Kerry Packer was a 24-hour-a-day, mercurial, shrewd and overbearing boss. His executives and editors had a yellow phone on each of their desks to communicate among themselves; when Packer wanted to speak to them he had a special ring tone, which could be heard even when they were talking to someone else. When the ‘bat phone’ emitted this much feared tone, the editor had better be there, or their PA had better know exactly how to contact them quickly, or someone would be fired. Packer could be extremely generous, but he expected instant obedience.
He carried similar expectations in his encounters with merchant bankers and politicians. In 1977, when Packer was having problems finding playing grounds for the World Series Cricket—his attempt to replace the Australian Cricket Board with his own professional league—Premier Neville Wran ensured the Sydney Cricket Ground ultimately came to the party. In 1979, Rupert Murdoch and Robert Sangster won a valuable concession to run the Pools but, when the deal was finalised, Kerry Packer’s name popped up as an equal shareholder. Packer’s character and operating style became the template for Cons Press management. It could be a little like working for Genghis Khan. Not that there was anything wrong with that. As Packer said of his favourite Mongol, ‘He wasn’t very lovable but he was bloody efficient.’
Packer kept only good people in the Mongol horde. ‘You don’t survive there long term unless you are a good quality executive,’ a senior banker commented in 2004. But with the drinking and the partying it was a blustering, blokey culture—the Shouting and Screaming School of Management Theory. Glenn Barry, who was brought in from New York in 1979 to run Lotto Management Systems, remembers his chairman, Trevor Kennedy, as focused on the politics of the job rather than practical difficulties. When Barry discovered on his arrival that the company had ordered the wrong computer software, Kennedy told him, ‘That’s your fucking problem.’ When Barry tried to explain the technology, he was interrupted: ‘Who do you fucking well think you are, Buck fucking Rogers?’
At Cons Press, Kennedy preferred memos to him to be only one page in length. They would come back with a scrawled ‘yes’ or ‘no’ on them. More than one page and the memos went straight into the file unread, says one former colleague. Kennedy did not believe in paper trails, either. ‘His nickname was Trevor the Shredder, because after a board meeting there were always documents he wanted shredded,’ says Barry.
When Kennedy approached Sean Howard in 1984 about buying into the computer magazine group he had built up, Howard recalls his opening lines were: ‘My name is Trevor Kennedy. I run the company that publishes the Bulletin and Women’s Weekly. You may have heard of us.’ He wasn’t afraid to use power. And he always wanted a discount, whether he was buying rare books, or taking shares in a float. ‘I think you’ve dropped a zero off my allocation,’ he told one broker whom he’d called to complain about the shares he received in a tech stock float in the late 1990s. It may not have been meant that way, but for this broker the inference was that Kennedy, as chairman of several major companies and therefore in a position to direct future work away from him, was asking for his personal allocation to be increased ten times. ‘If there was a commercial gain to be made there is no doubt he would play the cards brutally,’ said a banker who worked with Kennedy. ‘He was guilty of being brutally commercial. The guy had a lot of presence.’
He took no prisoners. Greg Pynt, a former merchant banker with Deutsche, told journalist Angus Grigg of the time he surprised Kennedy with his presence in a secret meeting with Merrill Lynch bankers ahead of the Oil Search merger with Orogen Oil in Cairns in 2002. ‘What are you doing here, you little bastard?’ Kennedy said mock seriously, before grabbing the bemused Pynt in a headlock and marching him out of the terminal and across the road. ‘You’ve seen nothing,’ Kennedy told him sternly with deadpan humour, then walked off.
It was through running Kerry Packer’s affairs that Kennedy got his introduction to offshore banking. Sir Frank Packer had set up the family holding company in the Bahamas back in the 1960s and the network of Packer companies in tax havens had grown considerably since then. ‘When I worked for Consolidated Press there were a lot of companies that were established in the Turks and Caicos, and Netherlands BV, Liechtenstein, Switzerland, et cetera,’ Kennedy would later tell the Australian Securities and Investments Commission. That was how, at some point in the 1980s, he came to be talking to some ‘smart London lawyers and accountants’ about setting up a little operation of his own, called Brampton. If only he hadn’t subsequently forgotten every single aspect of who set it up, who ran it, what it invested in, and where the money went, Kennedy’s conversation with ASIC could have been quite interesting. But then, as he told the Zurich District Attorney, ‘I have never had a particularly good memory.’
There was nothing particularly novel in this. In the fast money world of the new entrepreneurs, offshore banking was often de rigeur. When you looked closely enough at the takeover battles that transformed Australia’s business landscape in the 1980s, offshore money streams and tax havens popped up in deal after deal. Not that anyone was talking about it, except at Elders, after the Elliott boys discovered the delights of Monaco. In one of the debt reshuffles that marked John Elliott’s transformation of Elders IXL from a pastoral company with a nice line in jam into a multinational empire, a handful of mystery investors made a fortune from Elders bonds issued in Switzerland and held through Monaco. The lucky investors were Elders executives, but when the details came to light and charges were laid against them in the mid-1990s, only one of them was convicted. That unlucky one was Ken Jarrett, the former Sunday school teacher who confessed and testified against his former friends. The charges against the others were dismissed.
Faced with slick operators like this, Australia’s great families could only watch in bewilderment. In most direct fights with the entrepreneurs they were outgunned and outmanoeuvred. Fending off the new boys wasn’t their only problem. For many leading families, the succession issue had become a time bomb, exacerbated as inflation placed an intolerable pressure on family fortunes.
The Fairfax family empire imploded after Warwick Fairfax’s ill-fated bid in 1987 to seize the family’s destiny back into its own hands with a tragic privatisation (though Warwick’s stepbrothers have built a major new newspaper chain in Rural Press). But similar succession dramas were playing out across Australia.
The Gowings had transformed Sydney’s best-known discount department store into a successful investment company with a sideline in retailing. But Gowing senior made a critical mistake when his eldest son joined the business in the 1970s. He decided his heir would have to work his own way up in the store from the bottom, winning promotions without any favouritism. His son finally made it to ladies underwear, a prospect he found so daunting that he threw in the towel and decamped to Queensland.
The Darling family had two branches. The elder brother, John Darling IV, was the dashing one. He was a fighter pilot who flew with the RAF during World War II, then went on to found Darling & Co, the merchant bank that became Schroders Australia. But in the 1970s he lost his way. By 1979, a failed wheat deal with Iran left him bankrupt for the second time. His younger brother Gordon was more staid. He fought in the infantry in World War II and followed a stolid corporate career on Establishment boards. Gordon’s son Michael founded a financial services company that he sold in 1987 before the Crash to Clayton Robard for $170 million.
In the inevitable clashes between new money and old, the Mort family found itself one of the casualties. Thomas Mort was one of Australia’s great corporate giants of the nineteenth century. The Goldsborough Mort wool stores and the statue of Mort outside the Australian Stock Exchange are just faint echoes of the way one man’s vision and character transformed an economy and a country. In the 1840s, Mort, with his brothers William and Henry, revolutionised the way Australian wool was sold and marketed, then did the same thing for livestock. Mort made shrewd investments in pastoral property, railways and mining ventures and helped found two Australian institutions: the Australian Mutual Provident Society and Elders. He built a huge dry dock to turn Sydney into a major port, then pioneered the use of refrigeration to ship chilled meat to Britain. He set up the first dairy company on the south coast at Bodalla, where he had a huge estate worked by share farmers. More than this, Mort was remembered for a rare generosity of spirit, a man who understood better than most the nineteenth-century idea of the social contract. Mort offered shares in his businesses to his workers and was a major philanthropist. In 1878, he attended a funeral for an employee in blinding rain and used his umbrella to cover the grieving widow. He subsequently caught pneumonia and died a legend in his lifetime, and then left his house in his will to be the home of the Anglican archbishop.
Mort fitted within a broader stream of social conscience. While corruption in its many forms has been a recurrent theme in Sydney history, there has been a parallel tradition of the Good Family: deeply religious dynasties like the Fairfaxes who believed in the social responsibilities of wealth. It’s a somewhat faint echo of this noblesse oblige that made Kerry Packer and Rupert Murdoch so solicitous of long-term employees, along with Packer’s tradition of providing every employee with a lavish Christmas hamper each year—a very generous decision even after modern tax laws on deductibility helped reduce some of the pain.
A century after Thomas Mort’s death, his descendants were not doing so well. Their active holdings had been reduced to Bodalla, the dairy company that was now run by Mort’s grandchildren, Charles and Thomas Laidley Mort, both in their seventies. This sleepy company in 1987 was a natural target for a takeover bid by Sam Gazal’s Panfida Limited. Gazal offered $5 million for the company but met some spirited resistance. The Morts weren’t without resources. In fact, one member of the family, the husband of Charles and Thomas Mort’s niece, was a major power in Sydney.
Kerry Packer’s right-hand man, Trevor Kennedy, had married into the Mort family through Christina Miller. Earlier in 1987 Kennedy had strengthened his business links with his wife’s family when he and Rene Rivkin invested in a travel agency business run by Kennedy’s brother-in-law, Adrian Miller. At the height of the takeover battle for Bodalla, Rivkin and Kennedy helped convince HSBC, the bank that owned half of Rivkin’s broking business and which was bankrolling Gazal’s bid for Bodalla, to loan money to Miller’s company, The Traveller’s Organisation. But not all his activities favoured the Mort family.
Eventually, the opposition to Gazal’s bid for Bodalla ran out of steam. The dairy business was still dependent upon share farmers, who did not own their farms but had lived on them for generations. The general feeling among them was that smarter, younger management might do wonders for the business. In the end Gazal had to raise the price to $7.3 million before the family folded their cards. But, instead of revitalising the business, Gazal embarked on a classic asset strip. In 1989, he sold off the farms, the post office and most of the town in a massive auction. Farmers who had worked for Bodalla for fifty-five years and more had their farms sold out from under them. Gazal raised $17.3 million from the sale—small beer in the heady days of the boom but enough to ensure the old community ceased to exist, at least in its former state. The surprising thing here was that it turned out that Trevor Kennedy, in addition to running Kerry Packer’s empire, had been moonlighting as Sam Gazal’s advisor. He was paid some $700 000 for his role in the takeover. Part of it was in the form of Horse Island, a magnificent island in the Tuross Lakes that had been part of the Bodalla estate. The title deeds show the seventy-hectare island was valued at a modest $370 000 when it was transferred to Kennedy’s company, Golden Words. Four years later, Kennedy would put its value at $3 million. So at least someone did well out of the dairy business.