The competition czar losing a majority of his family fortune, two rich listers going down, a bunch of political heavies in the mix — welcome to the troubles of DFO, one of the biggest Australian private ventures to fall over since the GFC hit.
The story was broken in The Sunday Age by Michael Bachelard but it wasn’t until ACCC chairman Graeme Samuel spoke candidly to Richard Gluyas in The Australian today that the full implications sunk in.
No Australian regulator, let alone a powerful and successful business figure such as Graeme Samuel, has ever gone public with quotes likes these before:
“This is most distressing indeed because it affects the interests of my children and grandchildren as beneficiaries of my estate,” Mr Samuel told The Australian yesterday.
Asked if the Austexx (parent of DFO) shareholding was his family’s most valuable asset, he said: “There’s no question about that.”
It was Crikey that first revealed the size of Samuel’s DFO investments, the proposed ring-fencing of certain DFO projects and the blind trust arrangements in this story in February 2006.
We followed up in August 2008 with some criticisms of potential conflicts of interest for Samuel as he held court over retail competition policy. In hindsight, it obviously would have been better to sell up and walk away.
Clearly, the public statements made by Samuel to Crikey in 2006 were wrong because his investments in the Moorabbin, Brisbane, Essendon Airport and Spencer Street DFO stores were not ring-fenced from the disastrous South Wharf project in Melbourne’s Docklands precinct.
This is called cross-collatoralisation where assets from one venture are pledged to support the financing of another. The sprawling Babcock, Allco and MFS empires partly collapsed because supposedly separate arms were indeed financially inter-dependent and the same group disease has seemingly brought DFO to the brink of insolvency.
Graeme Samuel is clearly reeling from the collapse, which tests a string of close relationships in Melbourne’s business and Jewish communities. Toorak neighbours and rich listers David Wieland and David Goldberger used to be Samuel’s best friends in life. If they really are worth more than $600 million, courtesy of their Liberty Oil fortune, will they bail out the Samuel family?
And would the ACCC let the Davids sell Liberty to one of the oil majors to finance a rescue of Austexx?
Then you have the role of gun lawyer Leon Zwier, from Arnold Bloch Leibler, who is representing the Davids at Austexx but was also the person who went to war with Samuel on behalf of the late Dick Pratt.
When Pratt died, fellow billionaire Frank Lowy put out a statement suggesting Samuel went in far too hard on the criminal perjury charges. Now we have a situation where Westfield, competition laws permitting, is an obvious buyer of the DFO chain, despite having spent many millions on legal challenges to its strategy of building stores on airports, which are not subjected to state or council planning laws.
Then you have the CEO of DFO parent Austexx, Geoff Portz, who was once hired by Samuel to work with him in the financial world.
Samuel has now given Portz the boot as one of the three independent trustees of his blind trust and replaced him with Guy Jalland, a Packer family employee who is also close to Andrew Kroger, brother of Liberal Party power broker Michael Kroger and another of Samuel’s blind trust guardians.
The presence of former ACTU secretary Bill Kelty as the third Samuel trustee probably reflects a relationship built up over the years through their time together on the AFL commission and a mutual connection with Lindsay Fox.
Kelty is also perceived as someone who can deliver industrial peace with those left-wing militants at the CFMEU, who arguably represented the biggest risk on the $1 billion South Wharf development.
Graeme Samuel will be 65 when his eight-year stint as ACCC chairman ends in July next year, but it remains to be seen if he’ll need to go back into business to rebuild the family fortune.
* Stephen Mayne is standing as an independent for the Senate in Victoria on this no pokies platform.
This sounds like the synopsis for a fascinating TV mini-series.
DFO going under? The bunch who abused airport privatisation to make a killing out of building huge retail outlets outside planning guidelines? Good riddance…