An Australian Mirage

An Australian Mirage Author Hoyte, Catherine Published 2004 Thesis Type Thesis (PhD Doctorate) School School of Arts, Media and Culture DOI <a href="/goto?url=https://doi.org/10.25904/1912/1870" target="_blank">https://doi.org/10.25904/1912/1870 </a>Copyright Statement The author owns the copyright in this thesis, unless stated otherwise. Downloaded from <a href="/goto?url=http://hdl.handle.net/10072/367545" target="_blank">http://hdl.handle.net/10072/367545 </a>Griffith Research Online <a href="/goto?url=https://research-repository.griffith.edu.au" target="_blank">https://research-repository.griffith.edu.au </a>AN AUSTRALIAN MIRAGE by Catherine Ann Hoyte BA(Hons.) This thesis is submitted in fulfilment of the requirements of the degree of Doctor of Philosophy. Griffith University Faculty of Arts School of Arts, Media and Culture August 2003 Statement of Authorship This work has never been previously submitted for a degree or diploma in any university. To the best of my knowledge and belief, this dissertation contains no material previously published or written by another person except where due reference is made in the dissertation itself. Abstract This thesis contains a detailed academic analysis of the complete rise and fall of Christopher Skase and his Qintex group mirage. It uses David Harvey’s ‘Condition of Postmodernity’ to locate the collapse within the Australian political economic context of the period (1974-1989). It does so in order to answer questions about why and how the mirage developed, why and how it failed, and why Skase became the scapegoat for the Australian corporate excesses of the 1980s. I take a multi-disciplinary approach and consider corporate collapse, corporate regulation and the role of accounting, and corporate deviance. Acknowledgments I am very grateful to my principal supervisor, Dr Anthony B. van Fossen, for his inspiration, advice, direction, guidance, and unfailing encouragement throughout the course of this study; and for suggesting Qintex as a case study. I thank my second supervisors, Dr George Lafferty, and Dr Jacques Bierling, for their guidance and support during Dr van Fossen’s temporary absences. I thank Mr. Jack Gleeson, former chairman of Television North Queensland. I thank especially my friend Dr Sarah T. Rickson for her helpful advice and support. I thank my friend Carole Carr for her assistance, and calming influence in the final collation of this thesis. I thank my children, Geoffrey, Margot, Stephen, and Pamela for their support and forbearance. I thank my late husband Duncan for his unstinting tolerance, support, and understanding in the early part of this work, despite a debilitating illness. Table of contents Glossary i<ul style="display: flex;"><li style="flex:1">1</li><li style="flex:1">Introduction </li></ul><ul style="display: flex;"><li style="flex:1">1. Context </li><li style="flex:1">8</li></ul>2. Corporate Collapse and Regulation Corporate collapse 33 33 <ul style="display: flex;"><li style="flex:1">Corporate regulation </li><li style="flex:1">50 </li></ul><ul style="display: flex;"><li style="flex:1">The role of accounting </li><li style="flex:1">65 </li></ul><ul style="display: flex;"><li style="flex:1">3. Deviance </li><li style="flex:1">89 </li></ul>Dimensions of corporate deviance The role of the state 89 97 <ul style="display: flex;"><li style="flex:1">4. The First Ten Years </li><li style="flex:1">109 </li></ul>152 185 223 284 351 354 373 384 393 400 403 404 5. Resorts and Tourism 6 Media 7. The Mirage’s Last Year 8. The Twelve Year Finale Conclusion Appendix 1 Brief History Appendix 2 Capital Growth and Expansion Appendix 3 Reported Qintex Debt Facilities Appendix 4 Powditch Report Appendix 5 Supplementary Powditch Report Appendix 6 QGMS items sold at auction Bibliography Figures and Tables Figure 1.1 All ordinaries index 1970-1990 26 46 95 Figure 2.1 Qintex Group structure February 1989 Figure 3.1 Apparent ownership of QMH November 1989 <ul style="display: flex;"><li style="flex:1">Figure 8.1 Qintex television ownership late 1989 </li><li style="flex:1">290 </li></ul>Table 1.1 Comparing Australian GDP and added value 1960-1989 Table 1.2 Major bank exposure to Qintex Australia Table 4.1 Qintex Ltd Accounts 1983 Table 4.2 Shareholdings in Hardy Brothers (Group) Ltd at 31 July 1983 Table 4.3 Preference shareholders in IPH Investments Pty Ltd 1983 Table 6.1 The Fairfax equation 11 20 123 124 131 202 202 226 266 289 292 304 305 Table 6.2 Group debt Table 7.1 Qintex Australia financial position Table 7.2 Distribution of fees paid to QGMS Table 8.1 Book value of television stations at the time of the collapse Table 8.2 Intra-company debt Table 8.3 Skase’s debts Table 8.4 Skase’s acknowledged assets Glossary ASIC AARF Australian Securities and investment Commission. Australian Accounting Research Foundation. The rule drafting body for the ICAA and the ASA. <ul style="display: flex;"><li style="flex:1">ABT </li><li style="flex:1">Australian Broadcasting Tribunal. </li></ul><ul style="display: flex;"><li style="flex:1">Adorno* </li><li style="flex:1">Paul Adorno. Pixie Skase's Melbourne hairdresser who </li></ul>established a Gold Coast branch at Marina Mirage. Australian European Finance Corporation. The Australian Financial Review AEFC AFR ANZ Trustees Arbreau ASA ANZ Executors and Trustee Company Ltd. Formerly Queensland Merchant Holdings. Australian Society of Accountants. <ul style="display: flex;"><li style="flex:1">ASC </li><li style="flex:1">Australian Securities Commission. </li></ul><ul style="display: flex;"><li style="flex:1">ASRB </li><li style="flex:1">Accounting Standards Review Board. </li></ul><ul style="display: flex;"><li style="flex:1">ASX </li><li style="flex:1">Australian Stock Exchange. </li></ul><ul style="display: flex;"><li style="flex:1">ATC </li><li style="flex:1">Australian Tourism Commission. </li></ul>ATN Bosch, Henry Braham† Australian Television Network (formerly the 7 Network). Second and last chairman of the NCSC (1985-1990). Dudley Braham, former deputy chairman Hardy Brothers. He remained on the Qintex board until 1989. In 1982 he resigned from the board and publicly attacked Skase over the attempted takeover of Nettlefolds, he rejoined the board a few months later, when Qintex dropped the attempted takeover.<a href="#8_0">1 </a>Architect, who designed the two Mirage resorts. Joined Hawaiian-based Media Five Ltd as a director and partner. He was later part of a joint Australia venture Media Five, which terminated in 1985, with Brooks keeping the name until 1988. In January 1990 a Hawaiian court issued a judgement against Brooks continued use of the name.<a href="#8_1">2 </a> Brooks, Desmond BRW Business Review Weekly <ul style="display: flex;"><li style="flex:1">Burden </li><li style="flex:1">Peter Burden, Melbourne Lawyer, The group's deputy </li></ul>chiarman. Shareholder/Director of QGMS. Companies Auditors and Liquidators Disciplinary Board. Chief executive of QAL's media and entertainment arm. Shareholder in QGMS. CALDB Campbell, Bob Capps CEO Richard Capps group treasurer.<a href="#8_2">3 </a>Chief Executive Officer. <ul style="display: flex;"><li style="flex:1">CM </li><li style="flex:1">Courier Mail </li></ul>CRUST CSLRC Curtis* Contingent Residuall Undated Sobordinated Tranches. Companies and Securities law Review Committee. Ian Curtis, married to Pixie's Skase's sister, Di. Followed the Skases to Brisbane. General Manager Qintex 1981-1988. <ul style="display: flex;"><li style="flex:1">Discretionary Accounting Policy changes. </li><li style="flex:1">DACP </li></ul>1Sydney Morning Herald 14 November 1987:81. Coourier Mail 3 September 1991:24. Australian Fiuancial Review 2 February 1993:7. Courier Mail 2 February 1993:10 23i<ul style="display: flex;"><li style="flex:1">Davey </li><li style="flex:1">Fred Davey QC, Melbourne commercial barrister. Joined </li></ul>Qintex board at Skase's request, and at the recommendation of a mutual friend in Stockbroking about 1977.<a href="#9_0">4 </a>Nick Dawe finance and acquisitions specialist. Keith Dixon, Pixie Skase's father. He and his wife Nan moved to Queenland when the Skases did. He secretly transferred funds for Skase after the group collapsed. Dawe Dixon* <ul style="display: flex;"><li style="flex:1">Ferrell† </li><li style="flex:1">Sir Ray Ferrell formerly chairman of Ludbrooks. He remained </li></ul>on the Qintex board until his retirement in 1987. <ul style="display: flex;"><li style="flex:1">Foreign Investment Review Board. </li><li style="flex:1">FIRB </li></ul>GC Bulletin Harris, Pamela Hartnell, Tony The Gold Coast Bulletin Skase's private secretary. A senior partner of the law firm Allen Allen Hemsley. First chairman of the ASC. <ul style="display: flex;"><li style="flex:1">Hielscher </li><li style="flex:1">Sir Leo Hielscher, Under-Treasurer, Queensland Treasury </li></ul>from 1974 to April 1988. Appointed to Qintex Australia Board Novmeber 1988, resigned for family reasons in October 1989. Hili, Albert John Hutchins Accountant, financial controller at Lloyds Ships from November 1988.<a href="#9_1">5 </a>Peter Hutchins, Melbourne accountant and tax avoidance expert, the brother of Wilson Bishop partner Barry Hutchins. Institute of Chartered Accountants in Australia. Industrial and Pastoral Holdings. ICAA IPH <ul style="display: flex;"><li style="flex:1">Klinger </li><li style="flex:1">Mr Tom Klinger Stockbroker, first with the firm Eric J. </li></ul>Morgan, later he moved to Mcintosh Hamson Hoare Govett. Andrew Kroger, McIntosh director. Brother of Michael Kroger (Vic Liberal party). Kroger Lloyd's Ships Masel, Leigh McIntosh Lloyd's Ships Holdings Pty Ltd, a Brisbans boat-building company, controlled by Qintex and its directors. First chairman of the National Companies and Securities Commission (1981-1985). Qintex’s Stockbrokers McIntosh Griffin Hamson and Co in 1981. Later Mcintosh Hamson Hoare Govett.<a href="#9_2">6 </a>Japanese trading house, bought into Mirage resorts Mirage ResortsTrust. Mitsui MRT <ul style="display: flex;"><li style="flex:1">NBC </li><li style="flex:1">National Broadcasting Company, a subsidiary of General </li></ul>Electric Company. <ul style="display: flex;"><li style="flex:1">NCA </li><li style="flex:1">National Crimes Authority. </li></ul>NCSC Newport, Adrian National Ccompanies and Securities Commission. Mr Adrian Lee Newport, a qualified accountant, General manager Lloyd's Ships Holdings Pty Ltd from sometime in 1988 until late 1989. He attempted a management 'buy-out' of Lloyd's, which collapsed in June 1989. 4Sydney Morning Herald 14 November 1987:81. Newport in evidence Lloyd's Ships public examination.P4. 56 Australian 1 January 1982:11; 5 January 1982:16; 16 January 1982:27. Australian 1 January 1982:9. Sydney Morning Herald Australian 1 January 1982:11; 16 January 1982:32. Australian Financial Review 4 January 1982: 22, 23; 13 January 1982:30; 27 January 1982:40 ii <ul style="display: flex;"><li style="flex:1">NYSE </li><li style="flex:1">New York Stock Exchange. </li></ul><ul style="display: flex;"><li style="flex:1">O'Neill* </li><li style="flex:1">Kevin O'Neill Pixie's florist. He and his partner John Graham </li></ul>of Toorak Rd South Yarra, opened a florist shop at Marina Mirage. They provided flowers for every Skase function. The Skases sent a large bouquet of red roses to his funeral after his death from cancer at the beginning of 1997. Barry Peters. Interior designer worked for the Skases from the 1970s. His designs were an integral feature of their houses, boats and resorts. He followed the Skases to Brisbane and was reported to have been resident in Mallorca in June 1991. The press mentioned an 'abusive' minder called Barry. Employed in the Qintex treasury division, a contact with Lloyd's Ships Holdings Peters* Pratt, Craig <ul style="display: flex;"><li style="flex:1">Putland </li><li style="flex:1">Geoffrey William Putland, Chartered accountant. Qintex </li></ul>company secretary and group accounting manager, QGMS director and Kodogo company secretary. <ul style="display: flex;"><li style="flex:1">QAL </li><li style="flex:1">Qintex Australia Limited. </li></ul>QCAC QEI Queensland Corporate Affairs Ccommission. Qintex Entertainment Inc. <ul style="display: flex;"><li style="flex:1">Qintex America Inc </li><li style="flex:1">Projected US listed company to be formed by joining Qintex </li></ul>Entertainmnet Inc with MGM/UA after the ill-fated projected MGM/UA purchase. Not to be confused with Qintex America Ltd. <ul style="display: flex;"><li style="flex:1">Qintex America Ltd </li><li style="flex:1">Australian listed company, formerly Hardy Brother (Group) </li></ul>Ltd. QMH QTTC Rags Henderson† RPT Queensland Merchant Holdings, later Arbreau Ltd. Queensland Tourist and Travel Corporation. Of Channel 7 Related Party Transactions <ul style="display: flex;"><li style="flex:1">Sawyer* </li><li style="flex:1">Peter Sawyer corporate communications and advertising. His </li></ul>wife, Gail, was rep[orted to be Pixie's bst friendHe established an advertising firm in Brisbane when Skase moved to Queensland <ul style="display: flex;"><li style="flex:1">SFIT </li><li style="flex:1">Suparannuation Fund Investment Trust </li></ul><ul style="display: flex;"><li style="flex:1">Shears </li><li style="flex:1">Donald S. Shears, Melbourne cereals magnate, founding </li></ul>member of Team Securities provided entrepreneurial flair. John P. Shergold, a Melbourne accountant and company director, former partner of accountants Wilson Bishop Bowes, founding member of Team Securities, provided listed company backing and connections. Shergold Skase SMH Tabart Christopher S. Skase The Sydney Morning Herald John Tabart, Civil engineer. Mirage Resorts Trust. Shareholder/director of QGMS. <ul style="display: flex;"><li style="flex:1">THL </li><li style="flex:1">Television Holdings Limited. </li></ul>Tribunal Trueblood† Australian Broadcasting Tribunal. Harry Trueblood, who sold his Princeville resort holding to Qintex, but he remained on the board. <ul style="display: flex;"><li style="flex:1">UTQ </li><li style="flex:1">Universal Telecasters Queensland Ltd. </li></ul>iii <ul style="display: flex;"><li style="flex:1">VBN </li><li style="flex:1">Victorian Broascasting Network, later Southern Cross </li></ul>Television <ul style="display: flex;"><li style="flex:1">VCAC </li><li style="flex:1">Victorian Corporate Affairs Ccommission </li></ul>White, Christopher D. Chartered accountant , a member of the firm Pannell Kerr Forster. Auditor for Lloyd’s Ships Holdings Pty Ltd from 1986 to 1989. * Incdicates people who definitely followed the Skases to Queensland. † People whose businesses Skase took over iv Introduction Skase’s dream began 20 years ago when struck by the beauty of the tiny far north Queensland beach town of Port Douglas he sketched a plan of the resort he wanted to build there in the sand.1 Christopher Skase's dream was a like a castle on the sand. The tide came in and washed his sketch away, and the ripples were felt across the nation. This thesis is the first detailed academic analysis of the complete rise and fall of Skase and his Qintex group mirage,<a href="#12_1">2 </a>which it places within the Australian political economic context of the period. It illustrates how a micro-level case study can be analysed within the context of a macro-level theory. It does so in order to answer questions about why and how the mirage developed, why and how it failed, and why Skase, as is argued in this thesis, became the scapegoat for the Australian corporate excesses of the 1980s. At the same time it demonstrates that it is possible to link to levels of analysis so that a macro-analytical theory can be used to help to explain a micro-analytical case study. The major theoretical approach of this thesis is within the broad macrotheoretical concept of postmodern political economy and postmodern flexible accumulation outlined by David Harvey.3 I demonstrate that this theory provides the context of the rise and fall of a corporate conglomerate. This thesis oscillates between 1Euromoney January 1989 Supp Brisbane: 26-27. Appendix 1 contains a history of the group from its beginnings with Skase’s acquisition of the Tasmanian 2company Ludbrooks Ltd until its collapse in 1989. Appendix 2 lists the capital growth of each company in the group up to the last Annual Report issued by each company. 3Harvey, D. (1990) The Condition of Postmodernity Cambridge MA: Blackwell. 1facets of Harvey’s broad theory and the individual concerns of the case study, and argues that this ‘oscillation’ is the most appropriate and effective strategy to be used.4 I take this approach because the rise and fall of the Qintex group was not unique. It is representative of related corporate collapses and near collapses in the early post-modern period. But it is also situated within the wider parameters of the corporate sector, which is itself situated within the national political economy. This approach therefore contextualises and enriches our understanding of corporate collapse. The Qintex group is significant as a case study because it was one of several major Australian corporate groups, which rose to prominence in the 1980s and then collapsed. These collapses had enormous repercussions through the Australian financial sector. They damaged Australia’s international corporate and financial reputation. Although the Qintex collapse was not as extensive as other corporate collapses such as Bond Corporation or Adsteam, Skase was made ‘the personification of the evil 1980s entrepreneur … Even the bankruptcy laws (were) changed to quite specifically target him’; for many ‘he is remembered as a scoundrel, a thief, a liar and a coward’.<a href="#13_1">5 </a>This continues to divert attention from the structural failings of established socio-economic conditions, such as the continued lack of satisfactory corporate regulation and the state’s<a href="#13_2">6 </a>inability, or reluctance, to regulate the corporate sector comprehensively. The development of Qintex group began with Skase’s acquisition of Ludbrooks Ltd in 1975. This coincided with the end of the transition from the relatively stable Fordist modernist historical socioeconomic stage of capitalism to the 4 I do not compare models because this is beyond the scope of my thesis. A comparison of the type that would be necessary would in fact constitute the material for another thesis in its own right. 5CM 7/8/01: 5; 21/4/93:36. 6In this dissertation I make frequent use of the words State and state. In doing so I have adopted a spelling convention which uses an upper case ‘S’ when referring to individual Australian States, and a lower case ‘s’ in the broader general sense of the government or body politic. 2more flexible postmodern stage, which dates from the oil crisis in 1973.7 Postmodern flexibility, with its ‘economic restructuring and social and political readjustment’,8 encouraged Skase to create the postmodern mirage that was his empire. Particularly important were the changes in the finance industry within the continuing evolution of a system of global capitalism. Skase himself was ambitious for wealth and its trappings. He had a ‘grand vision of building’ an Australian-based international media and tourism empire. Qintex Australia receiver John Allpass said an overview of the group showed Skase's ‘singular motivation’ as he ‘he went from one deal to another’, always aiming towards his mirage of an empire.9

An Australian Mirage

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