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entreVersity | Design Entrepreneurship – Lean Start-Up | Howard Frederick

Dedicated to re-imagining education for entrepreneurs through design-based enterprising mind-sets

Thursday, Aug 22, 2019
Image Brando Godfather

Just as social and business entrepreneurs share many personality traits there are many of those traits that they share with criminal entrepreneurs. These people have to be excellent risk managers and information managers. They are future-oriented organisation builders. Like business entrepreneurs, they are continually working the edge or the margin.

In Australia, the word entrepreneur once had a very bad connotation.  Back in the 1980s, it all looked so easy, the way the Aussie business magazines told it. The answer was simple. Australia’s ideal was the high-flying entrepreneur – not in the sense of a risk taker developing a new enterprise, but more as a corporate predator making money from shuffling paper assets.[i] Such were the excesses that it cost Australia’s commercial standing and the reputation of its entrepreneurs dearly and that damage continued well into the 2000’s.

In 1992, the Australia Institute of Criminology described entrepreneurial crime this way:

Entrepreneurial crime as a concept refers to punishable acts which are committed by individuals in controlling positions within corporations, using the resources and power deriving from the corporate form as a vehicle to achieve ends which benefit the entrepreneur personally … Factors contributing to the commission of entrepreneurial crime range from the psychological characteristics of individuals operating in a corporate culture which values risk taking, to factors at the macro-economic level which may provide opportunities for such individuals.[ii]

Rogue’s gallery of Australian criminal entrepreneurs

Here’s a rogue’s gallery of Australia’s criminal entrepreneurial past whose legacy present-day entrepreneurs must confront.

Christopher Skase’s activities are now the stuff of legend. Born in Melbourne in 1948, Skase became Australia’s most wanted white collar criminal when he lost $1.5 billion of other people’s money and then skipped the country. He exploited the adventurous spirit of Australian investors and then, when it all unravelled, began a perverse appeal to the Australian sense of a fair go. Skase fled to Majorca, lived in material comfort, complained at every attempt to bring him back and died thumbing his nose at the prosecutors. The Brisbane Courier Mail editorialised philosophically after Skase’s death in 2001: ‘If Skase represented most of the failings of corporate behaviour in the 1980s, the failure to bring him to justice spoke of the inability of successive governments to protect ordinary investors’.[iii]

House of Boond
Bond’s ego, greed and ambition saw him overreach beyond all measure until his empire collapsed, leaving him as the country’s greatest villain with the biggest ever bankruptcy.

Alan Bond came to Perth from England as a boy. He put together a land speculation company with just $1000 and interests eventually included Swan brewery, Channel 9, radio, property development and oil exploration. By the mid-1980s his personal wealth was put at some $400 million and he splashed it around with abandon. The stock market crash of 1987 gave him a $980 million loss. In 1997 Bond went to jail for criminal dishonesty in his business dealings. He was released from prison in 2000 but he still owes thousands of investors.

Goldberg was known as the “square dancer” for his habit of rapidly changing business partners.

Abe Goldberg, Australia’s biggest bankrupt, was one 1980s entrepreneur who found a refuge in Poland. His Lintner textiles group, which produced garments under the Speedo, King Gee, Stubbies and Bradmill labels, collapsed owing $1.5 billion. Goldberg himself had personal debts of more than $790 million when he left the country in 1990, just days before his bankruptcy action began. However, in 1995 his creditors accepted $5.1 million and Abe Goldberg was discharged from his bankruptcy.

George Hescu
George Herscu is driven away in the back of a paddy van after being sentenced to prison on bribery charges in 1990

George Herscu lived in exile after his property and retail business Hooker Corporation went into liquidation in 1989 with debts of nearly $1.7 billion. Herscu mortgaged Hooker to the hilt and then expanded into the US with a series of disastrous shopping malls that increased debts by $1 billion in three years. He completed a five-year jail term for paying $100,000 in bribes to a Queensland State government minister.

John Spalvins resided on Hamilton Island following the mid-1990s disintegration of his $2 billion Adelaide Steamship group, one of the country’s largest industrial and retail combines, with debts of $470 million. In the 1980s Adelaide Steamship was one of Australia’s largest industrial groups with a market capital of $2 billion and ownership of Woolworths, Penfolds Wines, Petersville and David Jones. By the mid-1990s it was worth a mere $10 million with debts of $470 million.

New Zealander Bruce Judge built up a small Brisbane quarry operation called South Pine Quarries in Ariadne, a $1.8 billion conglomerate before the global share market crash of October 1987 sent the company down. He was behind a myriad of acquisitions and projects that were often done on the telephone or over lunch and often on a handshake with the paperwork done later. Judge’s voracious expansion appetite led to Ariadne acquiring companies in a dozen countries with assets ranging from frozen bean curd to Alaskan oil, American building societies to the Wet ‘n Wild theme park on the Gold Coast, swimming pools in Cincinnati, a finance company in England and property developments in Hong Kong. Judge has retired to the south of France and obscurity.

‘Entrepreneur’ no longer a bad name

Fortunately there has been a significant shift in Australians’ attitudes. Once a negative term – thanks to corporate cavaliers – an entrepreneur is now someone to be admired. Entrepreneurs and the brands they stand behind are being embraced by consumers who now see big companies as the bad guys, not entrepreneurs. Today’s Australian entrepreneurs are regarded as people prepared to have a go and take some risks.[iv] ‘People have stopped associating the word entrepreneur with the likes of the Bonds and Skases and now see them as battlers prepared to take on the big corporations’, BRW said. Some 97 per cent of people who responded to a BRW survey said they admired anyone who went out and started their own company, whereas 64 per cent said they did not trust big companies.

[i] Brian Toohey, ‘Reporting on Business: A Case of Market Failure’ in Tumbling Dice: the Story of Modern Economic Policy, Heinemann, 1994.

[ii] Boroni A. Halstead, Entrepreneurial Crime: Impact, Detection and Regulation, Canberra: Australian Institute of Criminology, 1992: 1–2, www.aic.govt.au.

[iii] ‘Death of an Unloved Rogue’, Courier Mail, Brisbane, 7 August 2001.

[iv] ‘Entrepreneurs Now Back in Vogue: Australian Survey’, Asia Pulse, 5 May 2005.

(https://www.imdb.com/title/tt0264792/)

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