You wouldn’t read about it. Well, actually you would have, if you had opened the business press to see former Elders boss John Elliott bemoaning that Foster’s has been “badly run [with a] bad board [and] bad management”. Elliott’s comments came after the Fosters’ board agreed to recommend an offer from SABMiller, which valued the brewer at more than $10.5 billion.
According to Elliott, Fosters’ problems stem from its management’s decision to reduce the alcohol content of its flagship Carlton Draught product, and “lose their way” in marketing.
The irony of Elliott’s comments shouldn’t be lost.
It was John Elliott who led Elders IXL from being Australia’s second largest company (by revenue) to the brink of insolvency. In 1990, under Elliott’s control, Elders lost more than $1.5 billion, much of it on loans made to high-flying entrepreneurs. Elliott would finally depart Foster’s in 1992, after his buy-out vehicle, Harlin Holdings, collapsed, and the company announced its third successive loss (of $951 million). Elliott and his co-executive had attempted a leveraged buy-out of Foster’s, but had only succeeded in acquiring 56% of the company after an adverse court ruling.
Elliott would later lose millions on failed enterprises including a Russian pie enterprise and witness any last shards of credibility vanish after his disastrous chairmanship of rice company Water Wheel, which culminated in the bankruptcy of the 127-year-old firm. (Elliott and fellow directors were banned after a court found they had allowed Water Wheel to trade while insolvent). Elliott himself would soon after declare personal bankruptcy, owing creditors more than $9 million. The one-time multimillionaire, who owned a $12 million Toorak mansion, would eventually pay only $200,000 to creditors.
Not content with presiding over corporate bankruptcy, under Elliott’s two-decade presidency, the Carlton Football Club slid from the league’s most successful, to nearly bankrupt, and finishing last for the first time in its fine history.
While the near collapse of Elliott’s Elders represented one of Australia’s greatest corporate downfalls, Elliott’s problems didn’t lay merely in his ability to destroy billions of dollars in wealth. For Jack Elliott, and co-Elders directors were also implicated in one of the country’s most controversial transactions.
The alleged fraud involved a now infamous cross-shareholding agreement between Elders and BHP, back in 1985. The Melbourne coterie of Elliott and BHP combined to stave off attempts by Western-Australia based Robert Holmes a Court to take over BHP. Allan Hawkins’ Equiticorp and Richard Pratt provided funding to Elders for the purchase of BHP shares. Later, Elders would “repay” Hawkins through a fictitious foreign exchange transaction (which led to Hawkins’ jailing). Pratt would be repaid through Elders making a $50 million investment in a Bahamas-based company called Vic Invest. Mysteriously, Vic Invest would soon vanish, along with Elders’ “investment”. (Another dubious element of the cross-shareholding involved a parcel of Elders shares worth $US105 million, which were sold to BHP. Those shares were claimed to have been secretly owned by Elders executives in Swiss bank accounts, including Elliott, according to former Elders finance chief Ken Jarrett).
The National Crime Authority, which had a brief to investigate corporate crime investigated the matters and the DPP would charge Elliott, along with other Elders executives (including BRW Rich List member Peter Scanlon) with fraud. Jarrett would plead guilty and spend six months in jail for his role in the incident agreed to testify against Elliott and the other Elders executives. However, before a court was able to determine the matter, a single Victorian judge committed a grave error and wrongly allowed Elliott to be exonerated on a legal technicality. While the Judge, Frank Vincent, was criticised and overruled by the Court of Appeal, the proceeding was unable to be re-opened due to legal technicalities.
So when it comes to bad management, perhaps former bankrupt and alleged corporate criminal, John Elliott, isn’t the person to be casting stones.
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