By Karen Fredericks
On September 8 Robin Greenburg, former head of the Western Women investment group, was sentenced to 17 years' imprisonment by the Perth District Court following her pleas of guilty to 55 offences relating to the collapse of her corporate empire. Greenburg's unusually harsh penalty comes at a time when the "gentlemen regulators" of the Australian Securities Commission (ASC) are under fire for failing to bring the '80s "corporate cowboys" to justice, despite their big words and big budgets.
Christopher Skase continues to nurse his emphysema and bad back in a Spanish farmhouse on the Mediterranean island of Majorca. Alan Bond gives thanks to his lawyers, and the ASC, for allowing him a second go at proving his innocence. Tricontinental's Ian Johns breathes a deep sigh of relief at the decision of the royal commission into the collapse of Tricon, of which he was managing director, not to recommend his criminal prosecution.
But Robin Greenburg faces at least nine years behind bars, before she can even be considered for parole.
Greenburg's Western Women group of companies operated financial services in Western Australia from 1985 to 1991. The group found a profitable niche in financial advisory and investment services by pitching "financial empowerment for women".
The WA government's Women's Information and Referral Exchange accommodated a WW agency within its Perth office and referred women seeking financial advice to WW on a regular basis. In 1987, despite the stock market crash, WW remained apparently successful — thanks, according to Greenburg, to the previously untapped potential of the market for financial services for women distrustful of "men in suits".
It has now been proven that Greenburg misappropriated $2.9 million of WW money for her own personal use. Two thousand depositors, the vast majority of them women, lost about $6 million in the collapse of WW. They will be lucky to get back any more than five cents in the dollar.
When handing down the 17-year jail term, the judge explained his hard line on sentencing to Greenburg: "The ultimate hypocrisy of your actions is that you did to those people [investors] exactly what you stated you were seeking to avoid being done to
them — that is, being taken advantage of by greedy businessmen".
It is way past time that Australian law enforcement agencies and the courts took a hard line on corporate crime. Study after study by criminologists and sociologists, most notably by the Australian Institute of Criminology, have shown that there is one law for the poor and another for the rich.
Common burglary regularly brings sentences of five years and more, while toxic polluters, company directors with their hands in the till and property developers who calculate that it's more cost-effective to compensate a widow than to install proper safety equipment, get laughable fines or are let off completely.
Greenburg's sentence has been recognised by legal academics, such as George Zdenkowski of the University of New South Wales, as highly unusual considering the track record of the Australian legal system when it comes to crime by the rich.
"I think that, compared with other sentences, it is quite clear that this is a harsh sentence", he says. "She is a scapegoat who is being held out as an example, to show that the courts are taking seriously white collar offenders ... A message is being communicated to white collar offenders, but it is disproportionate having regard to the pattern of sentencing in the past ... I think she has been treated more harshly because she is a woman and because she has failed to meet the ethical principles to which she subscribed."
Late last year, before her prosecution for deception, fraud and theft, Greenburg attributed the collapse of WW to an unusually high level of interest by the Perth media in her past, her personal life and her gender. Bad publicity became particularly fierce around the time of WW's attempted purchase of the $2.4 million share capital of the Victorian First Mortgage Permanent Society (which she intended to rename First Women's, to fulfil her dream of a women's bank). The company formed to raise the money for the purchase, W and W Investments, managed to raise only $150,000, mainly because of the enormous and unprecedented publicity surrounding Greenburg and her previous failed business ventures.
Journalists displayed a level of investigative determination in Greenburg's case that was, and is, absent in mainstream reportage of the doings of Bond, Skase et al.
Greenburg maintains that she intended to pay back the money she had "borrowed" from WW when her business became the enormous success she believed it would be. She says the failure of her empire was caused by her special treatment, because she
was a woman.
She should receive no sympathy for expecting that she, like the cowboys, should be immune from the law and from fair reportage in the media — women's liberation isn't about equal rights for women to exploit and deceive. But the Greenburg case raises important questions about the failure of the law, the media and corporate Australia to get to the heart of corporate crime: the big boys. Why do they seem so immune?
Corporate regulators routinely claim that it's "too complicated" to prosecute corporate crime (the exact excuse recently given in the Tricontinental/Ian Johns case). Followers of the hunts for Alan Bond and Christopher Skase will sympathise: understanding the intricate details of the ASC's inability to get these two behind bars is next to impossible.
Investigations into the affairs of Christopher Skase so far reveal, among other things, that he and Ian Johns were good mates. Tricon, the bank which plummeted into oblivion under Johns' stewardship, lent Skase's company, Kahmea Pty Ltd, $52 million. Kahmea also received at least $12 million in "service fees" from companies in Skase's Qintex group.
Kahmea operated virtually as Christopher and Pixie Skase's personal bank account. It paid an allowance to Skase's stepdaughter, Kate Argenti, pool maintenance and florists' bills, and even a hefty deposit on the Skase's London home, a house which was subsequently "gifted" to another stepdaughter, Alexandra Frew, just in time to avoid being its being distributed to creditors by the bankruptcy trustee!
These facts are just the tip of the iceberg, and do not even begin to address the losses sustained by shareholders and creditors in the Skase empire. The trustee of Skase's bankrupt estate, Max Donnelly, has realised only $5133 against $164 million of proven debt. In a report to the Federal Court, Donnelly said, "There is evidence that substantial quantities of furniture, jewellery, paintings and antiques may have been sent overseas by the bankrupt [Skase] during the course of 1990. It appears that the bankrupt owned or had an interest in these items or the sale proceeds thereof but has failed to disclose any details to me."
As long as Skase and his lawyers (paid by some mysterious source of funds, since Skase became bankrupt) keep him out of Australia it will become ever more "complicated" to mount a criminal prosecution. The trail grows colder by the day. Despite an extradition treaty with Spain (signed in 1987) and a bundle of writs and summonses with his name on them, Skase stays put and threatens to sue anyone who questions the seriousness or
existence of his various medical conditions.
Earlier this year Alan Bond served 90 days of a 2
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55D> year sentence, for dishonestly concealing millions of dollars his company, Bond Corporation, received for its role in the rescue of Laurie Connell's Rothwells merchant bank. His lawyers have now succeeded in having his conviction overturned and a new trial ordered. Assorted law enforcement agencies are still considering the worth of proceeding with such a "complex" and expensive new trial.
An ASC report into Bond's group of companies, released in interim form in February, concluded that "the Bond group has a history of misleading and deceptive responses to auditors, creditors, the Australian stock exchange and the regulatory authorities". According to the report, Bond and his executives "upstreamed", into Bond Corp, cash and assets from many previously viable companies in which they acquired controlling shares, depriving shareholders in those companies of the value of their shares.
Bond may now be bankrupt, but his family company, Armoy (run by his son John) holds, through a complex trust structure, more than $30 million in assets, including the family home and other properties and investments. Armoy is believed to be paying Bond's enormous legal bills.
A liquidator, who preferred not to be identified, told BRW in March that he finds it difficult to believe that Bond's "friends" are paying his bills. "He jets around the world, employs all these legal people at horrendous cost. How does he pay for it?", he asked. About the time that Bond's bankruptcy challenge was being heard in Australian courts early this year, Bond himself was in San Diego, watching the America's Cup yachting.
Like the Skase chase, the hunt for Bond has ground to a near standstill before a barrage of paperwork and a complex series of transactions which lead Victorian Supreme Court Judge Barry Beach to describe dealing with Bond as "like dealing simultaneously with a very slippery eel and a large and very active octopus".
Australia's legal, bureaucratic and corporate system apparently has so many grey areas a thief in a suit can't be recognised, caught, prosecuted or punished.
Not that Robin Greenburg can have been short of suits (she was reportedly one of Myer's biggest customers in Perth). But they must not have been the right cut. Like a rabbit caught in the
headlights of an oncoming semi-trailer, she froze completely and pleaded guilty to all 55 charges against her. Presumably she hadn't taken the necessary precautions, gathered sufficient lawyers or accountants, "gifted" her assets to family and friends or set up house on a conveniently remote island getaway.
Luckily for the ASC, the Greenburg case was finalised on the very day the slanging match between federal director of public prosecutions Michael Rozenes and the ASC head, Tony Hartnell, reached its climax.
Following the ASC's decision, at the end of August, to withdraw all resources from the investigation of the 1989 public float and subsequent collapse of Budget Corporation (formerly headed by Bob Ansett), Rozenes publicly roasted Hartnell for the ASC's dismal failure to net any of the corporate cowboys of the 1980's, referring to him, caustically, as a "gentleman regulator".
Early this month, at the hearings of the Joint Parliamentary Committee on Corporations and Securities, Rozenes said of the ASC: "They see themselves as protecting the interests of the injured corporation or disadvantaged creditors or shareholders, and they honestly believe that if they impose a commercial penalty then that by itself will act as a major deterrent to corporate crime. It won't. What a corporate criminal is really afraid of is going to jail."
ASC officials and conservative financial journalists have been quick to point to Robin Greenburg as proof that the ASC is as keen as anybody else on bringing corporate criminals to justice. But what does Greenburg's capture really prove?
The ASC was set up in July of 1990 in response to concerns that the existing National Companies and Securities Commission (NCSC) was soft on white collar crime because of insufficient resources, inefficient structures and inadequate powers.
In September 1990 Tony Hartnell announced the new commission would focus on 16 "national priority" cases. The hit list included the empires of Alan Bond, Christopher Skase and Bob Ansett. After nearly two years of operation, Robin Greenburg is the biggest fish the ASC has netted, and the ones that got away (or are in the process of getting away) were definitely bigger.
The ASC's budget for the 1990-91 financial year was $112 million. Less than $20 million was spent on the investigation of corporate crime and associated litigation (one-third of these
resources have been dedicated to the 16 "national priority" investigations); $43.2 million went on information services, $32 million on civil law matters and deterrence through routine surveillance and $18.5 million on policy development and liaison with other agencies.
The commission employs a total of 1600 staff in 23 offices around the country. One-fifth of these staff service the private sector by providing information from the ASC data system. This system cost $22 million to develop, and a further $48 million is being spent on a new information-processing centre at Traralgon in Victoria. The ASC has announced, proudly, that its system, one of the most comprehensive and sophisticated in the world, saved the corporate sector some $174 million in the first 15 months of ASC operations.
Millions of dollars have also been spent establishing and fitting out ASC offices in desirable corporate locations. Bill Robinson, ASC statutory member responsible for accounting matters, told BRW in May that the new corporate fit-out means the ASC can look corporate Australia in the eye and say, "We mean business". Presumably this is also the reason that ASC chairperson Tony Hartnell received a remuneration package in excess of $210,000 in the 1990-91 financial year.
The story of the 16 "national priority" cases is sad, complicated, tedious and expensive. It started with the announcement of the hit list, by Hartnell, in September 1990. By July 1991 there were 15 investigations and five criminal prosecutions in train, and by June of this year the number of prosecutions had grown to eight. These prosecutions involved corporations such as Estate Mortgage, Rothwells, Qintex, Interwest, Spedley and IRL. Only one investigation had been dropped.
The results of these impressive-sounding investigations have been less than impressive: At the end of June 1991 there had been not one conviction. By June this year, there had been only one major conviction: Alan Bond, a conviction which has now been overturned. The only other jail sentences have been for Richard Lew and Carl Davis, who each received eight months for their parts in the Estate Mortgage swindle. Dennis Jones, formerly of Rothwells, incurred a total of $20,000 in fines. These are the largest catches so far, bar Greenburg.
The untouchability of the "big 16" has made it imperative that someone get caught. Frustration and frayed tempers have been surfacing in the bureaucracy and in the pages of the financial press. Apart from Rozene's latest outburst there have been others expressing concern at the toothlessness of the
ASC, and of the legal system in general.
A state fraud squad investigator told a BRW
In the wake of the Rozenes-Hartnell brawl, the former chair of the NCSC, Henry Bosch, told the Australian that he could understand corporate regulators becoming frustrated. "Our system is slow, expensive and most people get off."
Justice Andrew Rogers of the NSW Supreme Court last July described bankruptcy proceedings against Bond as "a legal quagmire into which I am rapidly sinking".
Meanwhile the ASC's Hartnell takes comfort in his philosophy that "regulatory laws are not written primarily with a view to their being enforced; their prime objectives are as political statements."
Too bad for Robin Greenburg that she wasn't made aware of that before she pleaded guilty.
Greenburg's gender placed her outside the '80s network of "mates" which bound the likes of Bond, Skase, Johns, Connell and Ansett (and quite a few ALP politicians). She was an outsider. She is now, probably deservedly, an insider, but not in the way she would have wanted. The gentlemen regulators have lassoed the corporate cowgirl. They are not enough of a posse to worry the cowboys.