He’s got a hide on him. You could shoot him in the arse and he wouldn’t know.
—JEFF BRAYSICH, Forrest’s former stockbroking colleague
John Poynton looked across his desk at the stammering country bumpkin sitting opposite him and tried to suppress a chuckle. Poynton was a star stockbroker and partner at Hartley Poynton, the blue-blooded firm his father had established in Perth during the 1950s. The unemployed Andrew Forrest, who was “dressed like a stockman” and armed with only an economics degree and a healthy dose of chutzpah, had managed to sweet-talk his way into Poynton’s office.
But when it came to speaking face-to-face, Forrest’s chronic stutter meant he could barely get his words out. “It was hard to be serious because I didn’t know how he would ever be able to sell anything to anybody – clients were going to hang up before he’d got the pitch out,” Poynton recalls of the 1983 job interview. “I’m assuming that, like a lot of stutterers, the more nervous he was the worse it became. But this was so bad it was almost like a caricature of a stutterer.” Poynton sent Forrest on his way. Thirty years after that meeting, he sees irony in the fact that Forrest – who is now a friend – would ultimately make billions of dollars through his gift of the gab. “I’m the idiot for not employing him,” he laughs.
Dressed in RM Williams boots, moleskin chinos and a blue chambray shirt, the tousle-haired Forrest did not exactly fit the image of the employee favoured by Perth’s clutch of establishment broking firms. They preferred to hire young men in dark suits raised in the city’s genteel western suburbs. Day after day, Forrest trudged along St Georges Terrace looking for a break. He cold-called and sent letters to most of Perth’s broking firms and banks, but he continued to be rejected.
Eventually, he promised Bruce Benney, the head of broking house Benney Partners, that he’d work for no pay for if he was just allowed in the door. The offer was too good to refuse for Benney, who took on Forrest as a research analyst. “He was a terribly, terribly enthusiastic young man,” Benney recalled. “It was through sheer persistence that he got his foot in the door. And once he did, we couldn’t close it.” After three months, Forrest was put on the books as an employee and back-paid. The real adventure had begun.
Forrest’s arrival in the stockbroking industry in 1983 proved to be fortuitous. It was the beginning of a gilded four years of wealth accumulation and corporate deal-making in Australia that would end abruptly with the October 1987 stockmarket crash. By then, plenty of fortunes and reputations would have been made and lost. And Perth would produce more than its fair share of high flyers, several of whom would end up in jail.
The global economy in 1983 was just recovering from the effects of a sharp recession in the United States, while in Australia the newly elected Hawke government was preparing to launch a string of business-friendly reforms that would open up the economy to the rest of the world. These included floating the dollar, deregulating the financial system and slashing tariffs. In Perth, with its history of money fever dating from the nineteenth-century gold rush, the boom of the 1980s would be bigger than anywhere else in the country. So much bigger, in fact, that Western Australia would officially declare itself the “State of Excitement”; the slogan was stamped on every new vehicle’s licence plate.
Yet it was a yachting race off the coast of Rhode Island in 1983 that had an even bigger impact on the Western Australian psyche. In September of that year, just as Forrest was settling into his new job at Benneys, a highly exuberant Perth entrepreneur called Alan Bond spearheaded Australia’s bid to wrest the America’s Cup from the venerable New York Yacht Club. Bond was already a major figure in Australian business but his bankrolling of this national sporting conquest transformed him into a popular hero and propelled him towards bigger and riskier deals that would lead him into bankruptcy, and ultimately prison for committing Australia’s biggest corporate fraud. Bob Hawke, the former Perth beer-drinking champion turned prime minister and a big fan of Bond, summed up the ebullience of the America’s Cup triumph with the immortal words: “Any boss who sacks anyone for not turning up today is a bum!”
When the Auld Mug arrived in Perth after 126 years at the New York Yacht Club, an estimated 200,000 people – one-fifth of the city’s population at the time – turned out to catch a glimpse of a beaming Alan Bond in an open-top Rolls-Royce leading the ticker-tape parade. Spurred by his victory, “Bondy” went on to acquire all the trappings of wealth – a private jet, fast boats, grand properties, prized artworks and blonde mistresses – while doing multibillion-dollar business deals at a dizzying pace, all funded entirely with other people’s money. At the peak of his hubris, he even starred in a popular television advertisement for his own Swan Brewery featuring a catchy jingle with the chorus, “They said you’d never make it, but you finally came through.” Bond had started to believe his own legend.
One of Bond’s closest mates was Laurie Connell, a pugnacious Perth business identity whose twin passions in life were doing deals and betting colossal amounts on horseracing. Known along St Georges Terrace as “Last Resort Laurie”, Connell could always be relied upon for a loan. As one Perth businessman said later: “People liked going to Laurie for money. They could go in at 9am and have their money by 9.15 with very little paperwork. The interest charges didn’t matter in a bull market because they were making so much on the stockmarket with the money they got.”
What nobody knew, however, was that between 1983 and 1987 Connell was siphoning off more than $130 million of depositors’ funds from his firm, Rothwells, into his private interests. This had been hidden in Rothwells’ glossy annual reports through a massive fabrication of the accounts. In the official report into the inevitable collapse of Rothwells, Malcolm McCusker QC, who is now the governor of Western Australia, found that the bank was effectively broke from 1985. “Depositors [of Rothwells] would surely have been alarmed had they known that they were, in reality, lending largely to Connell, on an unsecured basis, to finance personal acquisitions such as racehorse stables and art; and even more alarmed had they been informed that Rothwells, the company to which they believed they were lending, was effectively insolvent.”
The freewheeling business culture of Perth in the 1980s was influential in shaping the young Andrew Forrest. By the middle of the decade, Bond and Connell were in full flight, the sharemarket was booming and Forrest was beginning to thrive. He left Benneys in 1985, aged twenty-three, for a job as a dealer with a new stockbroking house called Kirke Securities, which had a strong focus on the resources sector and boasted some big institutional clients on the east coast.
By this time, with his confidence soaring, Forrest was also able to bring his stammer under greater control as he worked the phones in search of new business. Just two years after being unable to speak in the presence of John Poynton, Forrest had earned the nickname “Silver Tongue” in Perth stockbroking circles for his powers of persuasion. “He was phenomenal at making phone calls,” recalls Graeme Kirke, the principal of the firm. “He was always on two phones on the desk at a time – I’d never seen that before.”
Forrest’s time at Kirke Securities was brief but formative. Above all else, he learned the importance of establishing contacts with the biggest names in business. And the biggest name at the time in Australia was Alan Bond, who had become a client of Kirke Securities through a connectionestablished by Forrest’s colleague Brett Fogarty. (Fogarty himself would go on to make hundreds of millions of dollars in the mining boom of the 2000s through his engineering company GRD.) Forrest also wrote plenty of business for some of his wealthy connections in the pastoral industry. But the boy from the bush did take a while to adjust to life in the corporate world. Recalls Graeme Kirke: “We had to buy him a suit; we said to him, ‘You can’t keep wearing the chinos and the RM Williams.’ He would come into work and there would be red dust stained from the seatbelt across his white shirt. Those sorts of things weren’t an issue for him.”
Although Forrest was unconventional, his peculiar brand of naïve enthusiasm won him admirers. One day the staff at Kirke Securities were working away in their first-floor office in central Perth when they were startled by a horrifying screech of brakes on the street below as a car slammed into a motorbike. Graeme Kirke remembers Forrest as the only employee who immediately ran downstairs to help. It was an impulsive act that, Kirke believes, underscores Forrest’s strong sense of morality. “We all went to the window to have a look, but Andrew was the person who went straight down and got the guy off the bike. It was quite ugly and Andrew looked after him until the ambulance arrived. He does those things not because he wants anything from it; he does it because it’s what you should do.”
Fifteen years later, when he had become one of Australia’s richest men, Forrest would perform a similarly impulsive act when he witnessed a vicious brawl between two men in the Perth CBD. According to media reports, the “incredibly brave” Forrest jumped in between the two men – both of whom were much bigger than him – and managed to break up the fight, but not before being walloped in the chest for his troubles. A television station showed mobile-phone footage of Forrest, dressed in a suit and tie, leading one of the men away from the brawl and calming him down, with the report labelling him a “good Samaritan” and a “humble billionaire”.
In 1983, another significant event took place in Perth that would shake up the old regime: a youthful former television reporter called Brian Burke came to power as premier of Western Australia. Burke promised a fresh, entrepreneurial style of Labor government and immediately set aboutforming close alliances with the local businessmen who had long supported – and donated to – the Liberal Party.
Burke’s intentions, at least initially, were pure: he wanted to boost the economy while rewarding Perth’s business community – all for the greater good of the state’s taxpayers. But his execution was deeply flawed. In what would become known as “WA Inc.” Burke handed out contracts to his chosen tycoons in a series of dodgy deals that cost the state hundreds of millions of dollars. He would end up going to prison before re-emerging in the 2000s as a brilliant lobbyist for Perth’s new breed of business leaders, including Andrew Forrest.
In the 1980s, Brian Burke saw something he especially liked in Alan Bond, a former sign-writer, and Laurie Connell, the son of a bus driver. Bond and Connell were certainly not the typical old-school-tie Perth businessmen who’d run the city for decades and they quickly sided with Burke. But the premier soon came to realise that Connell, who had been involved in a string of horseracing scandals and would end up going to prison, was hardly squeaky-clean. “I’d hate to stand between Laurie and a bag of money,” he said.
Connell dazzled Perth with his conspicuous consumption. He owned 400 horses in Australia and England, hosted a grand reception for Princess Anne at his country estate and bulldozed six waterfront houses in Dalkeith, an exclusive riverfront suburb, to make way for a multimillion-dollar mansion on a new 10,000-square-metre “superblock” – a scheme that had to be abandoned when the good times ended in October 1987. It would be another two decades before Perth would again revel in the euphoria of a boom of such magnitude – and by that time Andrew Forrest would be richer than anyone who came before him. But in champagne-soaked Perth in the mid 1980s, few dared to ask whether Alan Bond and Laurie Connell might be crooks.
Forrest certainly wasn’t about to question the business ethics of Bond or Connell. The tycoons would become two of his own treasured clients after he left Kirke Securities in 1986 to launch the Perth office of Sydney broking house Jacksons. Forrest was hired by Jacksons’ managing director, Bob Pfafflin, who was hellbent on expanding the firm’s operations in Australia and overseas at what was the peak of the 1980s stockmarket boom. Jacksons would become the first Australian stockbroking firm to be publicly listed, and it boasted branch offices in Melbourne, London, Paris, Munich and Hong Kong. Graeme Kirke says he wasn’t surprised the precocious Forrest left his firm to accept Pfafflin’s offer to run his own operation, even at the age of twenty-four. “I don’t think Andrew could ever work without being the intellectual driving force,” he says. Another of Forrest’s colleagues from that era marvels at his audacity in taking on the establishment after he’d been in the industry for only three years. “That was something adults did – not 24-year-old blokes,” he says.
The fit between Jacksons and Forrest was perfect. Jacksons had grown in the 1980s by backing many of the companies the establishment frowned upon, including Alan Bond’s Bond Corporation. “Jacksons were go-getting blokes who wanted to take broking away from the old-school-tie environment,” says former employee Peter “Cabbie” Richard. “They were never going to get business out of the conservative Collins Street in Melbourne, but as resources developed in WA, that created a whole new breed of people and they’re the people that Forrest represented. Forrest was the start of the era where you had to be innovative, the resources industry was going up and you had to be in the middle of it.”
At Jacksons, Forrest assembled a team of Perth whiz-kids who were fast-talking, hard-living and hungry for the next deal. The most colourful of the pack – which came to be known around town as the “Jacksons Five” – was the Ferrari-driving Dave Rigoll, who started out working as a plumber but got his break in the early 1980s when he was hired by Laurie Connell as a merchant banking junior at the ill-fated Rothwells.
Rigoll was often the last man standing, accompanied by a bevy of beautiful women, at the trendy Club Bay View in Claremont, where the cashed-up Jacksons boys would order “squadrons” of twenty-four drinks at a time. “Andrew idolised Dave,” says a friend from that era. The super-slick salesman went on to make hundreds of millions of dollars through a Kazakhstani oil venture and at one point boasted houses in London, Dubai and the Swiss tax haven of Zug. And he never quite stayed out of trouble, attracting headlines in 2007 when he was implicated in a major share scandal at one of his London-based oil companies.
Forrest’s next hiring at Jacksons would be Simon Lill, his old schoolmate and fellow prefect from Hale School. Lill, a talented athlete with a smart business brain, would become a key ingredient of Jacksons’ success. Like many, he got carried away with the deal-making excitement of the era. After leaving Jacksons, Lill was investigated by the Australian Securities and Investments Commission and ultimately sent to prison for eighteen months on two counts of improperly using his position as a director. When he emerged from jail in 1997, Forrest gave him a plum job at his new venture, Anaconda Nickel.
Strangely, it seems there was never a fifth member of the Jacksons Five. For some time, Forrest even struggled to hire a fourth broker for his new enterprise. Jeff Braysich had been working at Patersons, one of Perth’s most conservative and successful firms, having started in the industry in 1983, and was regarded as one of its best talents. When Forrest called him, Braysich rejected the job offer out of hand. But Braysich remembers Forrest repeatedly phoning him until he finally relented: “I wasn’t sure whether to go, but he does wear you down. By the ninth phone call, I was saying, ‘Okay, for fuck’s sake, I’ll come!’ When I told Patersons I was joining Jacksons with Andrew Forrest, they were horrified.” Braysich would later have his own brush with the law: he was sentenced to a twelve-month suspended jail term after being convicted of twenty-five counts of market rigging, involving shares in a Perth mining company in the 1990s, but after a long legal battle the conviction was eventually quashed by the High Court.
The Perth stockbroking establishment had never seen anything quite like Andrew Forrest and his crew at Jacksons. Forrest and Braysich were both just twenty-four; Rigoll and Lill were a year younger. But pretty soon, Perth’s entrepreneurs were lining up to do business with these young turks, who traded feverishly in mining and energy stocks and would underwrite new floats worth millions of dollars. Every new resources explorer with dreams of making it big would come in to see Forrest. On several occasions, Jacksons hit the jackpot when a mining stock priced at 20 cents opened at $2 immediately upon listing. It was champagne all round on those days.
On the rowdy trading floor of the old Perth stock exchange on St Georges Terrace, the Jacksons boys were known as aggressive and cavalier. Regulation of stockbroking in the 1980s was weak; this was an era of few checks and balances. Insider trading was rife and, unlike today, there were no “Chinese walls” – the barriers within a firm that separate the research analysts, who provide advice to clients, from the traders, who do the buying and selling. John Poynton recalls many of the older brokers along St Georges Terrace frowning upon Jacksons. Jeff Braysich agrees: “We weren’t exactly loved around Perth. If we were invited to functions, they weren’t clamouring to associate themselves with us. It was because of the nature of the deals we were doing and the publicity we were generating.”
Besides Bond and Connell, Jacksons’ key clients in Perth included Robert Holmes à Court (the legendary corporate raider who tried to take over BHP), Yosse Goldberg (a key player in the WA Inc. scandal whose company, Western Continental, sank in 1987 before he fled to Spain) and Mark Povey (the youthful Rolls-Royce-driving tycoon who was bankrupted when his petrol empire fell over). Forrest also established strong links with colourful Melbourne mining tycoon Joseph Gutnick and Sydney insurance king Larry Adler and his son Rodney (another of his good friends who would later be sent to jail). It was the most spectacular bull market anyone in the industry had seen, and the biggest names in Australian business lined up to trade the mining stocks being pushed by Jacksons. “They did their big deals through the big brokers and they’d give the smaller stuff to the small brokers like us who were hungry,” Braysich recalls. “We were used by all these entrepreneurs – they inflated our egos to get us to do what they wanted to.”
Even at a young age, Forrest was keen to show his colleagues who was boss. But he must have been taken aback when the Perth stock exchange – for reasons that remain unclear – signalled it would not accept the young firebrand as a member. Forrest reluctantly agreed that Braysich, who had an MBA and was more acceptable to stockbroking traditionalists, could be the firm’s representative so it could open its doors. Forrest’s version of the story, as told to friends, is that he was never rejected and Braysich was chosen to be the firm’s representative simply because he was already a member of the exchange.
Braysich says this created friction between the pair over seniority. The issue came to a head one day when a journalist from the West Australian arrived to interview Braysich about the new firm. “Andrew comes straight in and says, ‘Hello, I’m Andrew Forrest’ – he was wearing moleskins, the navy jacket with the gold buttons and the blue chammy shirt,” Braysich recalls. “He got really upset because I was stealing the limelight.”
Reflecting on the 1980s, Braysich says he and his colleagues at Jacksons were flamboyant because they were so young and had only ever known an industry in boom times. “We didn’t know any better – we thought this was what it was like; we didn’t have ten years of tough times. The older guys in the industry were more cautious and sober,” he says. Braysich says he admires some of Forrest’s achievements since Jacksons but acknowledges he was difficult to work with. “You were either his best mate or worst enemy, and at various times I was both,” he says. “He’s got a hide on him. You could shoot him in the arse and he wouldn’t know. He is as brash and as cocky as anyone you’ll ever meet.”
It was around 1986 that Forrest struck up an important friendship with Woody Pearce, an old Kimberley pastoralist who had struck it rich by investing in gold stocks. Pearce had three daughters, one of whom worked at Jacksons as a personal assistant. Forrest had become romantically involved with one of Pearce’s other daughters, Merrilee. It was a tangled web at the time, because his mother, Judy, by then divorced from Don, later started a relationship with Woody Pearce. Woody became Andrew’s stepfather when he married Judy.
When Woody died in the 1990s, Forrest fell out badly with the Pearce daughters over the will. The daughters believed their mother, Georgina, had not been looked after, and they blamed Forrest, who emerged with Woody’s Mercedes and other items (Forrest has told friends he bought the car from the estate). To Andrew, Woody was an inspiration. Those who knew Forrest in the late 1980s say Pearce taught him how to read exploration reports and had a strong influence on the way he viewed the mining industry. Others say Pearce shaped Forrest’s whole approach to life, infusing him with the belief he could achieve anything if he dreamed of what most people considered impossible. Forrest also traded stocks for Pearce. “He was a mentor and he perhaps helped open Andrew’s eyes to the possibilities in the sharemarket,” says one old friend. “Woody was a thinker.”
If there was one thing at which Jacksons really excelled, it was partying. Forrest was renowned for his ability to work at least twelve hours a day, drink late into the night and still be back at his desk the next morning. “He was happy to go out until four in the morning and get to work at seven and still function; his mind is always active,” says an old colleague.
Jacksons’ trips to the WA Goldfields, often with fund managers and journalists in tow, became legendary among the stockbroking crowd. The firm’s Melbourne-based head of corporate, Ross Dobinson, once arm-wrestled a huge red-bearded local miner in the front bar of the Leonora Hotel; somehow, he won. Another time, the well-lubricated Jacksons boys drove a fire engine down the main street of Mount Magnet (a donation to the local brigade the following year was intended as an apology for that indiscretion). And on the bus trips between Kalgoorlie and Perth, the brokers would challenge themselves to drink more litres of Emu Export beer than the vehicle used in fuel. The most sober one on the bus would be responsible for keeping a tally.
The money really started pouring in at Jacksons in 1987, allowing Forrest to buy a gleaming new Jaguar. Perhaps he was simply trying to keep up with his colleagues, who also enjoyed spending their newfound wealth on fast cars. One day in the Jacksons office, Dave Rigoll asked Simon Lill to drive him to a car yard so he could pick up the new Ferrari he had ordered. But by the time the pair arrived, Rigoll had managed to convince Lill to buy one for himself as well. Lill immediately wrote out a cheque and the two brokers headed back to the CBD to parade their new toys.
This sort of madness could not last, of course. The bull market that had been fuelled by cheap cash and greed ended abruptly in Australia on 20 October 1987, when the sharemarket lost one-quarter of its value in a single day of panicked selling. Most of the stocks Forrest had been spruiking to clients were now pretty much worthless. He has since told colleagues that he personally lost $3.5 million in the crash. It wasn’t money he had in the bank, but the paper profits he’d built up as the market surged.
Forrest had to endure plenty of angry clients calling to ask what had happened to their money. But one of his more highly valued clients, Rodney Adler, was particularly unhappy to discover that he had lost several hundred thousand dollars on a stock he had never wanted in the first place. Adler was then the investment manager for his family insurance company, FAI, and he had been impressed with Forrest’s zeal for stockbroking. But the value of Adler’s investments had plummeted in the crash.
Despite Forrest’s financial worries at the time, he was never downbeat. A day after the crash, the Australian Financial Review asked several Perth stockbrokers whether they thought the market could recover anytime soon from the biggest collapse in its history. All of them – apart from one – were bearish about the outlook. The sole optimist was Forrest, who blamed the fall on the herd mentality of Australian investors and predicted the punters would come rushing back into the market to buy undervalued stocks. “There are some excellent situations offering value now and we are recommending buys,” said Forrest. Unfortunately for Forrest and the cheap stocks he was flogging, the Australian stockmarket continued to fall for several months and would not return to its pre-crash peak for another six and a half years.
With the Perth market virtually blown away overnight, there wasn’t much more Forrest could achieve in the wild west. It was time to move to Sydney. If truth be told, Bob Pfafflin and his fellow directors at Jacksons had already grown slightly uncomfortable with the “cowboy” reputation of the Perth office, so transferring Forrest to Sydney was a way of keeping a closer eye on him. But the directors had another motive: Forrest had made plenty of money for Jacksons in the boom and they hoped his talents might help lift the firm out of its post-crash despair.