CHAPTER TWENTY-FIVE
THE HURLINGHAM HORROR SHOW

Decisions become tragic because you don’t correct them.

Nick Street

Over the coming year in London, the crises in Gordon Barton’s world would mount one on top of another at an increasing rate. The situation was all the more tragic given he was well aware that most had been precipitated by his own ill-advised actions and errors of judgment—hard for a man of his stature to have to admit even to himself. His costly lifestyle was abruptly frozen, his relationship with Mary Ellen, his partner of seventeen years, would crumble, his remaining businesses would fail and every significant asset would be repossessed by the lenders on whose back Barton had ridden for so many decades.

Hurlingham Lodge now had two mortgages over it—one with Coutts and one with TNT, both in Mary Ellen’s name. The few short years the pair shared in this house Mary Ellen admits were ‘very very difficult’. Fifteen years later, mere mention of Hurlingham causes her to shudder.

To cover the Bartons’ London rent, TNT was agreeable to continue paying him £10,833 a month for another eighteen months as IECC chairman and effectively TNT’s spy in the courier market. Over three-quarters of this salary was retained in interest repayments on the enormous Hurlingham mortgage.

However, after eight years in the role, Barton’s term as IECC chairman was about to expire. TNT’s main competitors wanted more control over the group and by October of 1991 Barton would be forced out.

Barton’s depression had worsened. Cindie could not cope with seeing her heroic father in such decline. She failed to return from a three week holiday to the US. ‘We didn’t know where she was, what she was doing,’ says Kate Ayrton. It would be almost a year before she was heard of again. Kate had always had an antagonistic relationship with Gordon and Cindie, but even she could understand Cindie’s pain. ‘I don’t think he did it intentionally, but he became lost to all of us and it was very, very hard to watch.’

While Mary Ellen would try taking Barton to a health professional to treat his depression, Kate confesses, ‘He didn’t really believe in therapists . . . Gordon’s a very . . . complex, difficult man and I don’t think anyone could have really coped with understanding his problems.’

Given that all other solutions to retrieve his fortune had failed, repayment of the Sanwa debt would now require selling his last major asset—the Loch Maree mansion. Unfortunately in 1990 the Sydney property market commenced a downward spiral, with prices dropping by up to 40 per cent. High levels of borrowing during the 1980s boom years made it difficult for vendors to accept this reality. Barton was no exception. Many properties were taking months to sell—passed in at auction, with bids coming nowhere near the reserves. Banks were losing patience and mortgagee sales were increasing.

Throughout October 1990, Loch Maree was discreetly marketed by Richardson & Wrench Double Bay. Advertised as a secluded medieval monastery, its sales brochure promised ‘treasured inspirations to pleasure the senses . . . Iron forged by hand into webs of fantasy’. Tenders were called. Barton and Mary Ellen had recently had it valued at $15 million. A nearby harbourfront home had sold for over $11 million not long before.

When no tenders came close to the mark, Sanwa became frustrated. As a director of Oamington, Bob Miller recalls having a number of summons served on him by the lender. Close friend Marion Manton and her partner were house-minding Loch Maree at around this time. She was alone in the house when Sanwa dispatched a sheriff in an attempt to seize assets. Under siege, Marion was terrified. Not knowing where to turn, she rang Graham Cooke and he came down immediately. As the night lengthened, the pair drank a bottle of whiskey together. Marion recalls Graham getting teary and crying. ‘It was a whole night of him feeling despair about the fact that Gordon had not . . . looked after himself. He was doing dreadful things . . . Of course Gordon was taking huge amounts of cocaine at that time.’

When it came to the Loch Maree furniture, Barton and Mary Ellen suggested Aleco Vrisakis might accept a few valuable pieces in lieu of fees. A magnificent eighteenth-century English elm dining table from Loch Maree still graces Vrisakis’ home today. Mary Ellen flew alone to Sydney to claim the remaining furniture and contents, locking most of it into storage. Ultimately Sanwa made off with the only asset of substantial value it had rights to—a luxury car. Sending it to auction, it hoped for $30,000. It fetched just half that.

In November 1990 Freddie Gardiner was invited by Barton to a barbecue lunch at Loch Maree. He and his wife had arrived to find Gough and Margaret Whitlam, Geoffrey Robertson and his new wife Kathy Lette, and Paddy McGuinness and his wife. Sir Laurence Street had even called in briefly. There was not much to eat, as if Barton had added extra guests at the last minute (he probably had) and had run short on food.

Some of the old colleagues Barton met during this visit recall his words vividly: ‘I’ve come to see if I can re-establish the fortune I had back in Australia’. Australia Party stalwart and one-time Tjuringa manager Harry Wallace remembers Barton ringing him out of the blue. ‘Things are tough. I’m looking for work.’ He was after something around $100,000 a year. Realising Barton was asking him for a job, Wallace felt very sad and disturbed. This was a man for whom he had the highest admiration, someone with whom he had once shared such great affinity.

In March 1991, Loch Maree was put up for auction and passed in at a paltry $5.9 million. Ex-Sanwa operations manager Steve Scott recalls a buyer subsequently put down a deposit of one or two hundred thousand but kept requesting an extension of terms before finally defaulting on the purchase.

Now in liquidation, Barton’s estate came under the control of receiver Gary Urwin. Unable to sell at a sufficient price, Sanwa instead insisted that Barton rent out the property.

Early in 1991, in the midst of a worldwide recession, TNT was struggling. The situation had not been helped by Abeles embarking on a shopping spree for aircraft for TNT Air Express. With its financial woes, TNT was suffering bad press. Its share price dropped quite dramatically. Ian Sayer approached Barton with the suggestion of putting together a syndicate to try to acquire TNT, then selling off everything except its express freight at significant profit. The break-up value the pair calculated was much higher than its current share price. A number of possible part or full control takeover strategies were tossed around. Barton must have felt he was back doing Tjuringa deals.

To attract the money required, credibility would be crucial. Unaware of Barton’s financial woes, Sayer had a sense that his old colleague was frightened. However, Barton wrote to Sayer: ‘I think I can satisfy the management credibility as well as provide koala skin if syndicate mainly foreign.’ He had calculated syndicate members could each scoop off hundreds of millions in profit. The trouble was, at least $800 million would be required. Hugh O’Neill and US lawyer Jim Campbell also became involved, leaning on their own contacts to seek potential partners.

In April, TNT announced that a consortium of five major postal services had agreed to take up 50 per cent of its ailing European Air and Road Express business. Despite this, Sayer and Barton were not discouraged. A syndicate takeover still appealed to Barton and he approached Peter Abeles to sound him out.

On 14 June 1991, Abeles’ replied indicating he was resolving his current difficulties and was not receptive to Barton’s plan. ‘However,’ he continued, ‘if there should be a takeover—I would rather it came from a friend like you’.

A month later, Barton believed the timing was right, ‘the conditions are optimal & the sums’. He had ascertained that TNT’s directors held no more than 20 per cent of shares, that TNT’s lenders were nervous and that Peter Abeles was not popular. Further, Australian interest rates had fallen significantly in the previous year.

By early September, Barton had corralled Australia’s Chris Corrigan into investing up to $300 million. Through the Monaco-based Richard Wiesener, another group was also prepared to put in $200 million. Still, the syndicate remained $300 million short. Additionally, TNT owned a millstone—an aircraft leasing business it shared with News International— which would need to be offloaded for the deal to be viable. Sayer and Barton could find no-one prepared to buy it. Their dream died.

In August 1991 Barton returned to Sydney, to Loch Maree. Tenants had not yet been found. Rosemary O’Grady stayed a few days with him. With much of the furniture stripped out, it had become an empty tomb.

By now Barton’s hearing was worse than ever. Communicating with him face-to-face was heavy going. As long as Rosemary enunciated clearly, Barton could lip-read to some extent. Often she would write her thoughts on paper, in the form of condensed notes. Her diary records Barton’s chief concerns being his growing estrangement from Mary Ellen, whether they would separate and where a penniless Barton might now live. Would he stay in London, live in continental Europe or return to Australia?

In the days he and Rosemary were together, Barton would occasionally refer to the need to sell Hurlingham (he hoped for over £2 million and owed nearly this much to UK creditors); the failure of his latest business and its ultimate liquidation; the problematic Berkeley Vale land development; and the forced sale of his share of Skypak to TNT, leaving him without an income. Their exchanges were forever being interrupted by visitors and a stream of urgent faxes from Mary Ellen fighting creditors in London.

In September, Barton suffered a final ignominy. The bank had found a tenant—ironically, a property investor—for Loch Maree, who was prepared to pay $3000 a week giving it at least some return on its debt. Forced out of his home, Barton decamped temporarily to stay with his old friend Francis James on Sydney’s upper North Shore before returning to join Mary Ellen in London. The rental contract, however, proved to be another disaster. The tenant not only trashed the remaining furniture but was evicted having defaulted on the rent.

Late in 1991 Sanwa, desperate for a sale and with no interest locally, advertised Loch Maree in the international press. There were few bites. Frustrated, Sanwa eventually decided it would sell for whatever it could get. It would be February 1993 before another London expat—a South African businessman—bought the house for A$4.75 million. The entire amount went to Sanwa. Still out of pocket by $1.25 million, the lender wrote off the remaining debt.

September 1991 was a shocking month for Barton. It also marked the collapse of the newest of his business investments. During his frequent road trips across the English Channel from Holland to London in the 1980s, he had been in the habit of calling Mary Ellen on a payphone at Dover to let her know how far away he was. British Telecom had a monopoly on public telephones, but poorly maintained, they were often out of order. Payphone servicemen would let coins bank up—they could then pilfer those that had not clicked through.

However, in May 1988, British Telecom lost its monopoly over payphone services, opening up the market to a range of suppliers. Barton now saw this an opportunity. His one-time hero Gary Richardson of Victa lawnmowers had launched Red Phones in Australia twenty years earlier. Rented by shop-owners for the convenience of customers, Red Phones had established a firm foothold throughout Australia. Barton had admired the success of its business model.

Aleco Vrisakis remembers a lunch with Barton and David Hoare— then chairman of Overseas Telecommunications—and Barton telling Hoare about his latest idea. He was convinced the success of Red Phones in Australia proved they would work in England.

‘What about these portable phones?’ Hoare had asked. Mobile phones, then in development, were large and expensive (Aleco had him self just paid about $1000 for an early model). Barton was convinced their take-up would be slow. ‘I can’t ever see those phones being the means of telephone communication for people in the street,’ he forecast. Despite the fact that both his son and his business partner Nick Street had installed mobile carphones to assist them to run their fledgling business, Barton failed to recognise the threat.

Barton had approached Fergus McPherson, a long-serving senior public servant under New South Wales Labor, with his concept late in 1987. For Fergus the timing was fortuitous. With a Liberal government about to gain power, he was ready for a change. Clarke, a past managing director of Australia’s Red Phone Company became involved. As always, Barton’s enthusiasm was infectious.

In April 1988, McPherson, his wife Janelle and their young son packed up and shifted to London. Sid Clarke would also be brought over for a short period. With the measured manner of an accountant, McPherson was totally unflappable under duress. He was to take on the role of managing director of Barton’s Red Telephone Company.

Barton also gave Dick Henderson, his old IPEC Europe marketing director, a call out of the blue. Henderson recalls Barton’s words, ‘I’ve made many people millionaires, and now it’s your turn’.

In late 1988, the new company was launched and there were soon six staff based in Hurlingham Lodge’s spacious back studio. The two floors were shared with Geoffrey’s remailing business. Numerous commission-based sales staff were also employed. Capitalising on her energy and good looks, even Barton’s daughter Cindie was put on the sales team.

The premise was straightforward—Red Telephone Company would charge customers a fixed monthly rent which covered installation and servicing. Its phones would automatically signal a central receiving station if they were out of order, prompting a quick response service call. This was to be a point of differentiation, and having a payphone in your corner store would supposedly increase customer flow.

Given the need to employ sales teams, invest in a marketing program as well as purchase the hardware and outsource maintenance, significant up-front capital investment was going to be needed before rental returns started flowing in. McPherson estimates Barton injected some £500,000, but venture capital would also be required. A financier in New York raised another £2 million.

British Telecom’s payphones delivered a profit of under 5 pence per call to most business proprietors. Barton reasoned that if end-users could be convinced to pay 20 pence instead of 10 pence minimum for a call, proprietors could rake off an extra 10 pence profit per call.

Market research was commissioned. Three in five end-users were prepared to pay a 10 pence premium for the convenience of a working payphone. On this basis, Barton set Red Telephone’s minimum call charge at double that of British Telecom.

Sales staff were paid based on the number of new contracts signed. While new business kept coming in, the contracts were not being maintained, thus usage and revenue to renters, was below that forecast. Dick Henderson admits Barton underestimated the British capacity to ‘walk over hot coals to save 10p’. He suspects sales staff were abusing the commission system by simply telling store owners to try the service. While contracts specified a twelve-month minimum, in reality customers were not penalised for an early exit. As he had always done, Barton believed most people would act honourably. In the case of small business owners this was apparently not so. Some cancelled contracts as young men started using a phone call as an excuse to loiter and shoplift. All this meant the business had massive outgoings, having to purchase and install phones as well as maintain service agreements, while little income flowed in from rental agreements.

A competitor launched a similar service, making Red Telephone’s sales efforts even harder. In response, British Telecom began pumping money into maintaining its payphones, reversing its historical weakness.

When the initial funding ran out, Dick Henderson recalls Barton did not reassess Red Telephone’s viability but instead looked for more capital. A colleague to whom Barton showed the prospectus was pessimistic, suggesting he had perhaps a 2 per cent chance of getting the half-million he sought. Rather than being discouraged, in typical fashion Barton simply decided he might have to approach up to 50 venture capitalists before achieving his aim. Sure enough, he succeeded in raising the additional £500,000.

Nick Street now reflects: ‘He could have switched the direction of Red Telephones into mobiles instead of payphone rental. But he didn’t . . . Perhaps the fact that he wasn’t interfacing with people in the sector every day gave him a disadvantage. Decisions become tragic because: you don’t correct them; you ignore your instincts; or you don’t have the personnel or the capability to change.’

‘I saw it as fatally flawed,’ admits Dick Henderson, though neither he nor Fergus McPherson was prepared to admit defeat at the time.

Nick Street suspects Barton was so depressed and distracted by his futures trading losses, that he failed to pay sufficient attention to the signals in the Red Telephone business. ‘He had so many balls in the air,’ Street recalls. It really required his senior executives to ‘bring Gordon in and sit him down and tell him what was happening’.

Mary Ellen had observed not longer after meeting Barton that ‘he walked a fine line between genius and madness . . . that made him very attractive to people’. Combined with his charisma and his intellect, it was a dangerous cocktail.

In September 1991, as Barton was being evicted from Loch Maree, the Hurlingham Lodge mortgage payments remained many months behind. With interest bills escalating another £60,000 per quarter, Coutts was demanding Hurlingham be sold. Huge council rates notices built up. The Red Telephone Company financiers also pulled the plug. Very depressed, Barton remained largely in bed. As creditors staked out the house, it was left to Mary Ellen to deal with them. Barton had no choice but to put the business into receivership.

In November 1991, Barton still owed over a million pounds to TNT to cover the second mortgage over Hurlingham Lodge. Barton’s accountant Bob Miller saw many of Barton’s credit card bills. He recalls ‘they used to call Mary Ellen the golden sieve . . . Back when they were flying high, she could spend a million pounds a year and it didn’t matter.’

As one of Barton’s closest friends, Marion Manton had come to know Mary Ellen well over the decades. ‘Mary Ellen . . . just always spent infinite money. She did it whether she was spending her own money, his money, everybody’s money. She can’t help herself. She’s very generous. Every time she comes to see me she’s bought me some ridiculous gift . . . She’d give you millions of things—at Gordon’s expense of course—potions and lotions, she was a make-up fiend, had gorgeous clothes and the best of everything.’

When Janelle McPherson’s husband Fergus was running Barton’s Red Telephone Company, she recalls Mary Ellen forever telling her, ‘Why do you ever bother going to the hairdresser to have your hair done, darling?’ Mary Ellen was generous enough to offer Janelle her own hairdresser. For just £200, he would come to her home for the appointment. The tension at Hurlingham between Barton and Mary Ellen was becoming unbearable. Communication between the pair broke down. Worse, Barton’s hearing was now so poor it was impossible for him to use the telephone.

Hurlingham Lodge mortgage repayments remained many months behind. Coutts’ interest bills escalated another £60,000 each quarter. The bank threatened to foreclose. As huge council rates notices built up and debt collectors knocked at the front door, staking out the house, Gordon remained in bed. Mary Ellen was left to fight them off.

By early February 1992, Coutts had Hurlingham Lodge slated for a mortgagee sale. With no businesses to minister to, Barton was frustrated and unhappy. Crying out for stimulation, he began sending faxes to his friends worldwide. He even bought some of them fax machines complete with a service contract so they had no excuse not to contact him.

It was suggested Barton use the time to write his memoirs, but with the emotional upheaval involved in the impending eviction from his last asset, Hurlingham Lodge, he was finding it impossible to concentrate. ‘Also,’ he confessed to Francis James, ‘the interesting bits contain much incendiary material . . . The stuff is safer in my head . . . It would be too startling. I feel the need for confession but I fear the damage.’

To occupy himself, Barton and his son, who had taken six years of Russian at school, began planning a way-out project to set up a transport system in the Soviet Union in partnership with the Red Army and the KGB. Russia was a land with ample resources but a crippled infrastructure. However, with Perestroika, business activity was growing and there were potentially plenty of goods to move. The rouble remained fairly worthless, so a transport business would only be viable if it could be paid in hard currency.

Barton, of course, had a contact—a female general in the Russian army. The idea was to utilise Geoffrey’s Russian language skills, base themselves there and harness the resources of the Russian army, in particular its trucks. Their main concern was the number of under-the-table payments that might be needed to get the business up and running.

On her return from a WorldPaper meeting in New York, Mary Ellen exploded when she discovered the mad scheme. She could bear her partner no more. On 25 February, Barton wrote to his old friend Francis James: ‘She’s had enough (understandably) of my madness—which is difficult to cure—and wants a quieter life. I wish I had a solution.’

Kate Ayrton reflects now: ‘I can’t believe she stayed with him as long as she did . . . She loved him, she was trying to save him. But Gordon was very self-destructive . . . Gordon indulged in some very dysfunctional and self-destructive behaviour.’

By now Kate had won a scholarship to allow her to return to New York. Cindie was in Los Angeles, and Geoffrey could look after himself. A week later, Barton wrote to Francis James again, admitting only that Mary Ellen ‘needs a holiday away from me’. He hinted that he might come to Sydney again and stay: ‘I am, if put to it, reasonably able to do things like housekeeping, shopping, cooking etc—even gardening. I have friends in Sydney and things to do, usefully and frivolously, but could write my memories or dip into your library . . .’

James did not see his friend’s intended escape as such a good idea. He pointed out that Barton was no good at housekeeping, nor did he enjoy it. Barton had to admit he was right.

By late in 1991, the ongoing battle between Europe’s postal services and the private courier industry was thrown into disarray when TNT announced a shock marriage. Five postal services—those of Germany, France, Sweden, Netherlands, and Canada—were to jointly purchase one-half of TNT’s courier business. Together they made up half of the European postal traffic. It was a clever move by TNT.

As a result, Barton was moved off the TNT European board and his contract terminated. TNT was keen to wrap up its financial arrangements with him. With his income at an abrupt halt, Barton raised the issue of severance compensation. He also engaged a Sydney-based commercial advisory firm—Garfield, Robinson Wareing—to forecast the future value of his Henry Morgan Agreement. Given factors such as discounted cash flows needed to be incorporated, it was a complicated set of calculations. Ultimately, Barton was prepared to sell out for $3 to $4 million.

With a world recession and poor recent performance, TNT had a serious cash-flow problem itself. It would offer no more than $1 million. Negotiations fell apart when the board dramatically ousted founder Sir Peter Abeles from the managing director’s role. Abeles’ increasingly pig-headed strategy had driven TNT further and further into the red until its bankers ultimately refused to maintain TNT’s overdraft.

TNT’s chief executive officer Colin Green admits Abeles ‘had lost the plot well and truly . . . It all became larger than life—dining with Bob Hawke, Keating, John Elliott, Malcolm Fraser or Peacock—[he] started believing that he was infallible.’ His oldest friends, Ross Cribb and Fred Millar, agreed. TNT’s founder had failed to acknowledge some serious strategic mistakes. At a dramatic September 1992 board meeting, a resolution to remove Abeles was passed.

TNT was forced to embark on debt recovery, refinancing, capital raising and an asset fire sale to ensure survival. ‘Paying Gordon one or two million to fix his problems wasn’t very high on our list,’ admits Colin Green.

By early March 1992, Hurlingham was finally sold to Prince Ernst-August of Hannover and his wife—an heiress to a Swiss pharmaceutical company (their marriage would also unravel at Hurlingham)—for £2.9 million. Even so, it was nowhere near enough to discharge the two mortgages and their huge interest component. Barton took over the balance of the TNT mortgage.

With six weeks to vacate, as she had done at Vaucluse Mary Ellen packed up the house, alone, quarantining the Hurlingham furniture, eventually selling some to raise money to live on. On 1 May, she received Prince Ernst’s lawyer alone in the empty mansion. Having by now acquired a lover in New York, she made it clear Barton was no longer welcome in her life.

Heartbroken, Barton and his son shifted into a flat lent by a friend. With his relationship in tatters and his fortune lost, it was time to cut loose and strike out afresh.