Dirty Rotten Scoundrels

by Matthew Benns

  Big names, especially from the world of sport, coughed up their cash to Johnston and Firepower. Former All-Australian AFL captain Wayne Carey handed over $100,000; his father, Kevin Carey, invested $60,000. Adelaide Crows former captain Mark Ricciuto put in $175,000, and Crows coach Neil Craig and his wife invested $30,000. Crows players Brett Burton, Simon Goodwin and Rhett Biglands; former Crows forward Scott Welsh; radio broadcaster Anthony ‘Lehmo’ Lehmann; and AFL, television and radio star Ryan ‘Fitzy’ Fitzgerald collectively handed over hundreds of thousands of dollars. In return, they received a worthless paper share certificate that appeared to have been run up on Johnston’s printer at home. In total, he is believed to have issued more than 550 million shares, worth more than $3.5 billion, on the basis of a promise that the company would be listed on the London Stock Exchange.

  Those with any doubts were answered by the staggering success of the company, which was suddenly one of the biggest sporting sponsors in Australia. Firepower’s name appeared on racing cars, motorbikes, racecourses, surfboards and boxing rings. Johnston lavished money on Australia’s number-one basketball team, the Sydney Kings, taking on a high-profile sponsorship that extended to buying the entire franchise. He also threw cash at Perthbased Super 14 team Western Force, and came up with amazing sponsorship deals for Wallabies Drew Mitchell and Matt Giteau. Of course, it was the investors’ money that he was handing over, rather than any earned from the sale of the magic blue pills.

  Johnston, meanwhile, was living the high life. He regularly hung out with Oscar winner Russell Crowe after sponsoring the Gladiator star’s beloved rugby league team the South Sydney Rabbitohs. His business partners included property developer Warren Anderson, former Western Australian police minister Gordon Hill and Russian oligarch Grigory Luchansky. Australian cricket captain Steve Waugh and Queensland premier Peter Beattie would appear at Firepower events, one of the biggest of which was held after the announcement of Firepower’s sponsorship of the Sydney Kings. A swanky soiree was held on the deck of the naval ship the HMAS Sydney, with uniformed sailors handing out food and drinks to socialites, journalists and basketball players as they posed for photographs beside the warship’s own impressive firepower. It was a marketing dream. The navy later said the taxpayers had not funded the event, and then changed its mind, saying the wages and food had been paid for out of a community-engagement budget. No sooner was the party over than several key military figures were suckered into the Firepower trap. Head of the Defence Force, Air Chief Marshal Angus Houston and his wife, Liz; the Deputy Chief of Navy, Rear Admiral Davyd Thomas; a former senior naval officer, Commodore Kevin Taylor; and the former air force chief, Air Marshal Errol McCormack all became investors. There was nothing to suggest any wrongdoing on their part. Air Chief Marshal Houston said he bought less than $50,000 worth of shares. ‘Like many other Australians I have lost money on this investment,’ he said.

  The navy was not the only government organisation to unwittingly give Firepower a veneer of official respectability. In 2003, Austrade, the Australian government’s trade promoter overseas, had teamed up with Firepower and allowed Johnston to use its embassies and ambassadors’ official residences around the world to spruik its product. There was even a special spot for it on the Austrade website. Austrade handed over almost $400,000 in export grants to Firepower, and sent Johnston on a speaking tour of Russia with its chief economist Tim Harcourt, to lecture others on the secrets of Firepower’s success. It was on this tour that Johnston met president of the Russian Olympic Committee and Russian prime minister Vladimir Putin’s close friend, Leonid Tyagachev, from whom he managed to score US$1 million after promising to sponsor the Russian Olympic team. The people he met were impressed when he told them that he had dined with then prime minister John Howard at the Lodge in Canberra. This was true — the meetings had been set up by Julie Bishop, then deputy leader of the Liberal Party, who was a close friend of Johnston’s corporate lawyer Les Stein. She maintained the dinners had been arranged because Johnston was a constituent. Johnston, however, was quick to gild the lily, telling anyone who would listen that he was there to advise the government on climate change. All of this for a company that had a couple of empty offices, no trucks, hardly any staff and just $40 worth of product in a cupboard.

  Sydney Morning Herald journalist Gerard Ryle led the investigations into Firepower and its charismatic head, who by now was living in a $16-million mansion in Perth. ‘I had my suspicions about the company, but never had an idea it was a fraud of this magnitude,’ said Ryle, who went on to write a book about the giant con. ‘What really started us off was that you couldn’t actually buy the product. The more I checked Johnston’s claims and ticked them off, the more it began to look that things weren’t right … Nothing was real about Firepower. It was all smoke and mirrors … His modus operandi was to tell a big lie and surround himself with credibility, but the lies were so far-fetched they had a ring of truth about them and I often asked myself “Why would he make them up?”’

  As Ryle’s stories were printed and the cracks began to appear in the Firepower facade, Johnston decamped to London. He maintained his lavish lifestyle, staying in the Marriott in a $442-a-night room before setting himself up in a swank converted warehouse apartment with Hollywood legend Dustin Hoffman as his downstairs neighbour. He took his enormous entourage on first-class jaunts to places like Germany and Dubai — on one trip, one dinner alone cost $1356. His international flight bill jumped from $157,062 in 2004–05 to a staggering $1.1 million a year later. Hotel bills for the same year clocked in at $332,962.55. His daughters, Emily and Madeleine, ran up mobile phone bills of $13,377.57. All of it paid for by the hapless investors in Firepower who believed his lies. Eventually Firepower was put into liquidation in Australia in July 2008, sparking $40 million of private lawsuits against lawyers, accountants, financial advisors and banks that had been involved in the company.

  Among the many left high and dry were the athletes Firepower had sponsored, including Wallabies Matt Giteau and Drew Mitchell. Mitchell later said, ‘I was there for three years wondering where 40 per cent of my wage was. By no means am I playing the “poor me” card, I know families lost their life savings, far more than what I did … Myself, Gits, every day we would spend chasing Firepower, Tim Johnston, just to know when we were getting paid, if we were getting paid … It wasn’t a welcome distraction by any means, it consumed your thoughts outside of footy.’

  The Western Force managed to survive the Firepower sponsorship crisis. The Sydney Kings were not so lucky — the franchise collapsed in a heap when the Firepower rip-off was finally exposed. It took them two years to get back on track and relaunch in 2010.

  Johnston, however, happily went on his way, starting a new company called Green Power Corporation, which had exactly the same logos and spiel as Firepower. His business partner was a Romanian–Australian called Frank Timis, who had two convictions in Western Australia for heroin possession, and whose previous business partners included a Dutch secret agent arrested for laundering US$250 million for a Colombian drug cartel. Nice people.

  In 2008, Johnston, who was now working out of a stylish Covent Garden office, finally broke his silence. ‘You will see, we will eventually be vindicated and our investors will be well rewarded,’ he told The Australian.

  He also rebuffed accusations that he had ‘fled’ the country and insisted he had not been in hiding overseas, to which liquidator Bryan Hughes scoffed, ‘If that is true, then why has Johnston disappeared for two years and refused to even answer phone calls, let alone tell us where all the money has gone?’ Hughes himself would end up $100,000 out of pocket from his dealings with Firepower.

  Johnston still insisted the blue pills were the cure to the world’s energy ills. ‘We have plenty of tests to prove they work, but we have copped these vicious attacks saying the products can’t possibly work, so anyone in the business must be a con man. It has had a terrible effect on my name and my family and hurt a lot
of good people who have worked hard for the company,’ he said. Staggering, right? With more front than Harrods, he continued: ‘Eventually the truth will come out.’

  Australia’s regulator, the Australian Securities and Investments Commission (ASIC), had been incredibly slow to react, and inept in its response to the Firepower debacle, earning it several nicknames, including the Australian Supremely Indolent Commission. Due to the lack of evidence necessary to secure a conviction, no charge of fraud had ever been levelled against Johnston, and there was no way ASIC could seek his extradition.

  Then, in an extraordinary move, Johnston turned up in Australia of his own volition and moved into his wife Sandra’s $3-million Gold Coast mansion. He claimed he was too sick to attend court, but, eventually, on receipt of a summons, in 2009 he fronted the Federal Court in Perth. Naturally it came with a new drama: this time it was claims of threats to his personal safety and bikies kidnapping an accountant who refused to give up the secret of the Firepower pill. All nonsense designed to distract from the matter in hand.

  It did not matter; Johnston declared himself bankrupt and in 2011 was banned from managing a company in Australia for twenty years. In other words, he essentially got off scot-free for one of the most controversial corporate collapses in Australian history. It was estimated that Firepower raised $100 million from 1400 retail investors, many of them small-time investors who hocked their homes and went into debt to raise the cash, and then sent the money into offshore tax havens. In September 2014, ASIC announced that its seven-year investigation, in which it collected more than 10,000 documents, served over 300 compulsory notices and examined eighteen people, had come to naught. It had provided the Commonwealth Director of Public Prosecutions with a full brief, but the CDPP had said it would not take action because there was ‘insufficient evidence’. Firepower con man Tim Johnston could put his feet up and live happily ever after with his family in Sydney.

  And as a little con lovers’ footnote, Firepower’s former chief executive John Finnin approached investors in 2008 saying he could locate a secret $38-million stash Johnston had hidden in offshore accounts. All the investors needed to do was pay him $300,000 … Well, once a crook, always a crook, and I suppose he believed it was worth a shot. Thankfully, the investors had learnt their lesson.

  Despite the salutary lesson of Firepower, the belief people have in these amazing fuel-saving devices carries on to this day. Motor racing legend Peter Brock, one of Australia’s most successful racing drivers, himself had a passion for an energy-saving device. Brock, who was nicknamed ‘Peter Perfect’ after the Wacky Races cartoon driver and ‘King of the Mountain’ because of his Bathurst wins, had made a name for himself driving successfully primarily for Holden. Before his untimely death, hitting a tree in his Daytona sports car during the Targa West rally near Perth in 2006, his spiritual teacher, Eric Dowker, convinced him of the energy-saving properties of a device called the Energy Polariser. It was essentially a bunch of everyday magnets and crystals wrapped in tinfoil and placed in a black box. But Brocky believed they aligned the molecules of the car for greater energy performance. Such was his standing with Holden that when the special-edition VL Brock Commodores were released in 1987, he requested that the cars come with an Energy Polariser. In the end, only 173 of the 500 limited-edition Commodores were fitted with the device after Holden engineers in Australia and Detroit failed to find any evidence that they worked.

  Nevertheless, in 2011, the heritage-edition Commodore released to celebrate the 25th anniversary of the car included Energy Polarisers once again. ‘It’s on the car to stay true to the VL’s heritage,’ said Holden Dealer Team general manager Darren Gillis at the time. But he was making no big claims for the device: ‘Whether they work or not, it’s completely up to the customer to decide. It’s on the car for historical purposes.’ Proving nothing other than sometimes people will believe any old nonsense about energy-saving magic just because they want to.

  The Silver Fox: Christopher Skase

  PERHAPS it’s the convict heritage etched into our national psyche that makes Aussies love a con man. We adore a larrikin, a rogue, a scoundrel. Anyone who takes on the toffs, the authorities who make up the big end of town, and knocks them on their arse gets a big thumbs up from your typical Aussie.

  Look at Alan Bond. Sure, he was a crook, but he won the America’s Cup, so we will forgive him just about anything. He was a product of the 1980s, when greed was good and excess was everything and everywhere. More about him later.

  In those tacky, glory days, another con artist stood shoulder to shoulder with Bondy in terms of excess and national profile, but is remembered today with none of the affection. Christopher Skase, a white-shoed faker, broke the unwritten rule: when it’s time to face the music, you stand and face it like a man.

  As broadcaster Derryn Hinch explained to the ABC: ‘He chased big, but he chased too hard. I don’t believe he was a crook until he went bad and his biggest crime in Australia was he ran … Max Donnelly [Skase’s trustee in bankruptcy] told me maybe [Skase] wouldn’t even have gone down on those charges, those corporate charges, even if the case had gone ahead.’ But that was not a chance Skase was ever going to take.

  * * *

  Christopher Skase’s life began with enormous promise. The son of wealthy Melbourne radio personality Charles Skase, Christopher was educated at Malvern and Caulfield grammar schools and started out as a stockbroker before becoming a finance journalist with the Sun News-Pictorial and the Australian Financial Review. Even as an impoverished C-grade journalist, he had impeccable style, buying his clothes from high-end men’s fashion retailer Henry Bucks. In 1975, at the age of 27, he spent $15,000 and took a controlling interest in a snoozy Tasmanian tin mining company called Qintex, which was a minnow listed on the Australian Stock Exchange with assets of just $400,000. Shortly after, with $170 in his pocket, an open-topped MG sports car, and a failed marriage behind him, he met the woman who would become his partner, supporter and, eventually, equally reviled exile.

  Joanne Nanette ‘Pixie’ Dixon was seven years Skase’s senior. She had been educated at Methodist Ladies’ College in Kew and had already been married twice when they met. The first time was to Albert Argentini, the singing head waiter of the ritzy Savoy Plaza Hotel. He surprised many by showing unexpected ambition and opening a reception house after they were married. Many credited Pixie with his newfound success. They were married for long enough to have three daughters, but the marriage broke down when Pixie began having an affair with a man named George Frew, who would become her second husband. After quickly leaving their spouses, Frew and Pixie moved in together with Pixie’s three daughters and then had another daughter of their own.

  Frew’s experiences would be mirrored on a much larger scale by Skase in later years. He wrote an autobiography in 2003 called Some Day I’ll Have Money. In the chapter titled ‘Away with the Pixies’, he wrote: ‘I wanted nothing in the world other than to have this woman; a feeling so strong it transcended all other considerations.’ He concluded: ‘Lust is a terrible thing’. When they met in 1967, Frew was the successful owner of the Commodore motel chain in Melbourne. He credits her with lifting his sights and encouraging him to expand into Asia. It was great … for a while. Then Pixie grew bored.

  ‘She had fallen in with a bunch of socialites from the Portsea set, led by a yuppie playboy with whom — it seemed to me — she was clearly “misbehaving” in a big way. It was degrading and demoralising, awaiting her return — just sitting there in the darkened room, staring out the window, until 3 am or 4 am, and then seeing her come home drunk, in other men’s cars …’ he told Sydney Morning Herald journalist Jane Cadzow.. After they split, he went bankrupt.

  In her exhaustive feature on Pixie, Cadzow tracked down several other lovers whom Pixie had had before Skase, including entertainer Don Lane, who felt ‘she was looking for someone or something’, and was a bit stuck-up. Pixie told Lane how embarrassed she was to have celebrity agent H
arry M Miller over for dinner, only for him to hold his knife like a pencil. But that did not stop her from boasting to friends that she had gone horse-riding with Miller in Sydney, or from taking him as her lover. For his part, Miller confirmed the affair to Cadzow, denied they had gone riding and concluded: ‘I’m from New Zealand. I thought you were supposed to hold your knife like a pencil!’ And besides, Pixie’s claim that ‘our people’ did not do that kind of thing was a bit rich coming from the daughter of a newspaper linotype mechanic and strong trade unionist.

  In Skase, Pixie finally had the man who could match her tastes and ambitions. In Pixie, Skase finally had the support of someone who believed in him as much as he believed in himself and, with her four daughters, the family he had always wanted. Although it was long rumoured, lust was not something that motivated Skase, unlike Frew. Skase’s interests allegedly lying in the same direction as Pixie’s.

  For a long while, it went very well. It was the 1980s, and Skase was the epitome of the Australian success story. Meeting Skase for the first time when he took over Channel Seven in 1988 for $130 million, The Australian’s Errol Simper found himself in the Fairfax building in Ultimo, questioning ‘an elegant, impeccably dressed man, brimming with business optimism … [who] was also polite and articulate’. However, Simper ‘also felt him to be a bit glib, a bit sharp, maybe even a tiny bit shifty’. He was right, but any unease people felt upon meeting Skase was smoothed over by the visible success of the $2.3 billion empire into which he had carefully and skilfully built Qintex.