I’ve met a lot of entrepreneurs, but Forrest was the best I ever saw.
By 2004, Brian Burke had done his time in prison and was frantically reinventing himself as the most brutally effective lobbyist Perth had ever seen. The charismatic former Labor premier could open doors to ministerial offices and government departments at the drop of a hat – usually the well-worn Panama that would become famous a few years later when Burke was forced to explain his actions to a corruption inquiry.
Burke served two stints in jail during the 1990s – once for rorting his travel expenses while premier and again for stealing $122,585 in campaign donations (a conviction that was quashed on appeal). By the end of that decade he was desperate to make a quid. He went into business with his old Labor ministerial colleague Julian Grill, and the pair marketed themselves as Perth’s lobbyists of last resort.
Some in Perth were convinced Burke had been unfairly treated in the wash-up of the 1980s WA Inc. scandals and that the charges brought against him had been petty. Everyone knew he was highly intelligent. As former prime minister Paul Keating said, Burke was “smarter than two-thirds of the WA Labor Party rolled together – that’s why he keeps bobbing up”. But plenty of others had never forgiven Burke for behaviour found by the WA Inc. royal commission to have been “improper” and “reprehensible”.
The Labor Party’s surprise victory at the 2001 state election was a godsend for Burke and Grill. Dozens of companies that needed help with government approvals were magnetically drawn to the pair. They boasted an enviable list of old mates and contacts extending from the outer reaches of the bureaucracy right up to ministers sitting around the cabinet table. Burke’s influence within the Labor Party’s factional system also meant he held sway over those members of parliament and ambitious staffers who needed help with fundraising or preselection. These networks of patronage meant he could easily call on favours as a lobbyist. It was a back-scratching exercise that took the art of political lobbying to new extremes. The memories of WA Inc. had been erased.
Grill, a Kalgoorlie boy, had excellent contacts in the mining industry, while Burke was a compulsive networker who was glued to his phone, cajoling ministers and public servants to get things done for his expanding client list. In 2006, his best year in business, “Burkie” racked up a staggering 25,389 telephone calls, faxes and text messages, according to the state’s Corruption and Crime Commission (CCC), which was secretly bugging his phone lines for the entire time.
After being warned that Burke and Grill had begun to infiltrate his government, premier Geoff Gallop banned his ministers from contact with the duo in 2004. That simply forced them to adopt more subterranean methods of approaching decision-makers, although several Labor ministers did flout the ban. “Whatever the intention, we would relish another ban,” Grill said in 2004. “The effect has been quite the reverse, as we have engaged a lot more clients since. Brian, in particular, saw it as a personal challenge to circumvent.”
One of those clients was Andrew Forrest, whom Burke’s magic would help to become a billionaire many times over. But when Burke first met Forrest, on 5 July 2004, the former premier was far from convinced about the young wheeler-dealer’s chances of success with Fortescue. He knew the iron ore tenements the company had inherited from Allied Mining and Processing were far from impressive and he’d heard whispers in financial circles that Forrest was trying to make a quick buck rather than build a real company. But Grill, who had known Forrest from his time at Anaconda Nickel, had more faith in the mining promoter’s abilities and convinced his business partner to meet Fortescue’s executives to see if they could help.
Burke recalls that Forrest, at that initial meeting, was obsessed with gaining access to BHP Billiton’s railways through the application he had recently made to the National Competition Council. But Burke says he told Forrest and his team that previous state governments, including his, had failed to force BHP and Rio Tinto to open up their infrastructure because it was too legally difficult. “I told him it’s extremely complex. Sir Charles Court tried to do it and I tried to do it, but we both failed. It was clear to me that BHP was never going to let anyone on their railway line. I told him it was absurd to embark on a strategy of putting all your eggs in one basket, that he would be tied up in the courts for fifteen to twenty years. I said, ‘You may win some rounds but BHP and Rio will not permit third-party access to their rail lines until every single legal challenge has been exhausted.’ Well, you could have heard a penny drop. They all said to us: “‘What should we do?’”
Burke told Forrest he needed what’s known in Western Australia as a State Agreement Act – a special long-term contract between the government and a company that allows mines and infrastructure to be built with government support. State agreements are usually difficult and time-consuming to negotiate because they send a strong signal to investors that a project has the government’s imprimatur. The major iron ore mines established by BHP and Rio in the Pilbara all operate under such agreements.
Burke and Grill say they promised Forrest they could get Fortescue a state agreement to allow it to build its own railway, while providing the tiny company with a certain prestige that would boost its efforts to raise money and sign sales contracts. The pair signed on as Fortescue’s lobbyists on a retainer of $10,000 a month – plus a success fee for negotiating the state agreement. They say they told Forrest they’d prefer to take the success fee in Fortescue shares, which were then trading at just 40 cents each. Forrest refused, offering $150,000 in cash instead. An angry Burke would never forget the millions of dollars he forewent as a result of Forrest’s staunch refusal to hand over any shares.
Within a fortnight, Burke and Grill had made startling progress. On 22 July, the state development minister, Clive Brown, sent a letter to Forrest saying he would ask cabinet for approval to start negotiating a state agreement with Fortescue. When cabinet approval was gained, Burke and Grill went to work on the bureaucrats in various departments to sort out the details. But even the master lobbyists had trouble convincing some public servants that Fortescue had a genuine project that deserved the standing of a state agreement. “BHP had contacts in the department,” recallsBurke. “They were saying, ‘This company is never going to get up.’ We kept running into obstacles that were BHP-inspired.”
The Gallop government’s decision to back Fortescue’s bid to enter the iron ore industry had incensed BHP and Rio, who pointed out that they had invested billions of dollars in Western Australia over decades, employed tens of thousands of people and paid $550 million to the state in mining royalties that year alone. Rio believed that the approvals it needed to expand its Pilbara operations had been unfairly delayed because Department of Industry and Resources staff had been redirected to work on Fortescue’s state agreement. “Appropriate support should be given to companies that have invested billions of dollars in the state and have real projects and real plans, rather than promises,” a senior industry source told the West Australian at the time.
Encountering resistance, Burke and Grill say they worked during 2004 to coax the bureaucrats into quickly drafting Fortescue’s state agreement. “We got them to meet deadlines – we got a bit obsessive,” Burke admits. By 28 October a draft agreement was in place and by 10 November the deal had been signed by premier Geoff Gallop. What normally took eighteen months had been done in less than four. The announcement of the deal helped to boost Fortescue’s market value by a stunning $90 million in a single day.
But Burke and Grill – who worked closely with Fortescue’s head of government affairs, Julian Tapp – still needed to get the agreement through parliament for it to have any legal effect. To achieve this, they faced a potentially major hurdle: parliament was due to sit for only a few more weeks before retiring for the summer break. Worse, a state election was to be held in late February, meaning it would be longer than usual before parliament would return, with no guarantee that Labor would retain power against Colin Barnett’s Liberals.
Burke came up with a novel way of rapidly moving the Bill rapidly through parliament. He asked one of his old mates, Labor MP Norm Marlborough, to petition his colleagues for the Bill to be introduced in the upper house rather than the lower house, an unusual manoeuvre that enabled it to be passed in a single day. (Marlborough would later become a minister and kept a secret mobile phone purely for the purpose of communicating with Burke.)
When the Fortescue State Agreement Bill came before the lower house on the final day of the final week of parliament of 2004, Colin Barnett was outraged. The Opposition leader, who had served as resources minister in the government of Richard Court and prided himself on his knowledge of the industry, told parliament that such agreements were usually entered into only when the government was “absolutely confident” a project would proceed.
Fortescue, by contrast, had not even completed a feasibility study for its Pilbara iron ore project. An angry Barnett also complained that the Bill had been pushed through the upper house “a couple of hours ago” and he was now expected to vote on it without even a briefing from the government. The future premier was mystified as to why it was even being considered: “A state government agreement Act is a right to bank money, a right to raise money and a right to see a company’s share market price rise. It is a signal to customers, investors, equipment suppliers and contractors that a project is about to happen. That is the history of agreement Acts. However, the history is that when an agreement Act passes this Parliament, it is a judgment by the government and the parliament that the project is at a sufficient state of development that it is about to proceed … It is not something thrown around as a political document in the run-up to an election. It is not something given to a proponent to wave at the sharemarket. The company can use its prospectus and media consultants to do that.”
Barnett also raised questions about Forrest’s troubled past at Anaconda. “I know that the proponent has an ability to raise funds,” he said. “He did so on the Murrin Murrin project. I know that American bondholders lost $1 billion. I also know that the project got into serious difficulty. I know that a lot of people lost a lot of money on the sharemarket.”
Norm Marlborough then leaped to his feet in defence of Fortescue’s bid to take on BHP and Rio. “The leader of the Opposition needs to stop supporting all those foreign-owned companies in the Pilbara today that are running the iron ore industry,’ Marlborough told parliament. “He ought to stop making excuses for the decisions that they make in their boardrooms in New York, London or wherever. Because the truth of the matter is that this [Fortescue] is a dinky-di Aussie company.”
After some debate, Barnett said he would not oppose the Bill because he didn’t want to jeopardise Fortescue’s chances of developing the project. The legislation passed the upper house that evening – the fastest turnaround of a state agreement anyone had seen. It only emerged later that the government had negotiated the agreement purely on the strength of Fortescue’s bullish media releases and the “binding contract” it had signed in August with China Railway Engineering Corporation to finance and build the Pilbara railway – a deal that was later revealed as merely a framework agreement without any details of price or schedules. The government had done virtually no due diligence of its own.
Burke cites the fast-tracking of Fortescue’s state agreements – including a second one for the mine in 2005 – as a critical development in Fortescue’s history. “All of a sudden it gave them huge credibility in China and in the US market,” says Burke. Forrest became a big admirer of Burke’s seemingly magical powers, referring to him in one meeting as a “national treasure”. Burke remembers being surprised when Forrest took him aside one day to raise concerns about the lobbyist’s weight, even offering him to make an appointment with his own doctor to help him drop a few kilograms. Says Grill: “Andrew got really close to us, and he particularly liked Brian.”
Julian Tapp accepts that Burke and Grill did plenty of important work behind the scenes in negotiating the state agreement with public servants and that they had originally convinced Forrest to pursue the deal. But he says the lobbyists had less influence in the government than they claimed because many were still suspicious of them. “They had their own people they knew inside the government who they would deal with, but to be seen to be involved with them was actually likely to be slowing you down, not speeding you up,” Tapp says. “I once made the mistake of taking Julian Grill with me to a meeting and I never did it again … because they engendered such hostility in some people.”
Luckily for Burke and Grill, the state agreements were the first of many negotiations with the government that Fortescue would need to complete before it could start construction. Building an iron ore mine in the Pilbara in the mid 2000s was a vastly different proposition to the 1960s, when BHP and Rio had first charged into the region. Back then, there was no Environmental Protection Authority or green groups to challenge projects, no native title laws to worry about and no need to pay consultants to carry out Aboriginal heritage approvals or liaise with local communities about a project’s “social impact”.
In early 2006, former ABC journalist Alan Carpenter became premier, replacing Gallop, who was suffering depression. Carpenter immediately dropped the ban on ministerial contact with Burke and Grill, but it was a decision he would come to regret deeply. In a further stroke of luck for the lobbyists, Carpenter appointed another former ABC reporter, John Bowler, to the influential role of resources minister. Bowler was close to Grill, who had preceded him as the MP for the seat of Eyre in the Goldfields. He also got on well with Burke, who had donated $2500 to Bowler’s re-election campaign in 2005. Bowler’s workload in 2006 was heavy; the great mining boom was in full flight and every company with the sniff of a viable project was spruiking its plans and trying to win government approval.
Each week, Bowler experienced what he referred to as the inevitable “FMG Friday crisis”, involving a problem that Forrest needed addressed by Monday. If it wasn’t fixed, Bowler conceded, there would be “hell to pay”. When he appeared before the CCC to answer questions about his close links to Burke and Grill, Bowler made no apologies for cutting a few corners in pushing through Fortescue’s approvals. “This was a multibillion-dollar project that has – under my guidance and help, along with other ministers – been driven quicker than anyone could imagine,” he said. “Andrew Forrest drove it, pushed everyone, pushed his staff, and sometimes we helped him along as quick as we could. I don’t see anything wrong with that. That is my job as minister, to help people, and if I can cut a corner – maybe it’s my attitude to do so, that’s my natural instinct, and it might get me into trouble sometimes.”
Bowler cut as many corners as he could for Forrest, but by the middle of 2006 there was still one crucial approval that Fortescue needed to get its project started. The company wanted to build its railway line to Port Hedland through a 2500-square-kilometre patch of land that was shielded from development under the Aboriginal Heritage Act. This was a potentially major obstacle for Fortescue because the region, known as Woodstock Abydos, had been given the highest level of protection available under state law. It contained some of the oldest and richest indigenous rock engravings in the world, as well as many Aboriginal ceremonial sites, artefacts, stone arrangements and rock shelters.
Western Australia has a woeful record in protecting the internationally renowned Aboriginal rock engravings of the Pilbara. In the 1980s, Woodside Petroleum was allowed to destroy or relocate thousands of rocks on the Burrup Peninsula to make way for its huge North West Shelf gas project. To this day, many of the 30,000-year-old pieces of rock art that were cleared remain stacked behind a cyclone fence. The artefacts dumped there are thought to be twice as old as the Pyramids or Stonehenge. The rocks that were not removed are subject to deterioration, theft and vandalism, leading the New York-based World Monuments Fund to declare the Burrup rock art one of the 100 most endangered heritage sites in the world.
At Woodstock Abydos, which lies about 200 kilometres inland from the Burrup Peninsula, BHP had already been granted special approval to build its railway to Port Hedland. This and other approvals prompted the federal environment department to sound the alarm in 2011 over the intrusion of industry into the area. “The Woodstock Abydos experience is perhaps one of the most striking examples of development incrementally disturbing an area of recognised outstanding heritage significance,” the department found.
There are many sites very close to rail tracks and maintenance roads, so dust accumulation on rock art poses an ongoing, serious threat. Sites suffer from neglect, poor fencing and lack of protective measures. There is no program of monitoring of the sites or individual images, and there have been reports that additional rail corridors are planned in the years ahead. Woodstock Abydos shows that even the highest form of protection available for Aboriginal heritage sites under Western Australian law may not be a guarantee of protection, and that individual approvals can have a serious cumulative adverse effect.
In early 2006, Fortescue asked the indigenous affairs minister, Sheila McHale, to excise a corridor of land from the Woodstock Abydos protected area measuring about 200 metres wide and fifty-six kilometres long. But McHale – who was not as helpful as her cabinet colleague John Bowler – sat on the application for months without making a decision.
Brian Burke phoned Bowler, the resources minister, and asked him to tell McHale that her indecision was holding up Fortescue’s entire project. But McHale said she was planning to reject the application because, as Bowler reported back to Grill, she believed allowing the railway would set an “unhealthy precedent”. As McHale later told the CCC, she also felt uncomfortable that Bowler was pushing her to make a decision at the behest of Burke and Grill. She’d probably have felt even more uneasy if she’d known Bowler was relaying most of their confidential discussions straight back to the lobbyists.
McHale referred Fortescue’s application to the state’s Aboriginal Cultural Material Committee, an advisory body that evaluates the importance of indigenous sites and makes recommendations to the government. On 7 June, the committee recommended to McHale that she should reject Fortescue’s application. This was a huge blow for Forrest. Making matters worse, a group of Aboriginal custodians, led by renowned author Sally Morgan, had been made aware of Fortescue’s plan to build through Woodstock Abydos and had been campaigning against it.
Fortescue decided to crank up the pressure on the government to ignore the ACMC’s recommendation. Julian Tapp, as head of government affairs, sent Bowler an email on 16 June saying the company needed a decision urgently because it was running the risk of being unable to obtain financing for the project. “The project will be killed by indecision – we need a decision now,” Tapp wrote.
Nobody seems to have queried why Fortescue could not have simply spent a few extra million dollars to divert its railway line around the protected area. Forrest would later claim this to have been virtually impossible. “We’d have had to go around [Woodstock Abydos], which would have been another set of applications, put the project back two years and we’d have gone broke,” he said.
Faced with this apparent crisis, Forrest decided to take matters into his own hands. In a meeting with McHale on 7 July, he used all his persuasive powers to try to convince her to allow the railway. Forrest promised McHale that Fortescue would use non-explosive blasting techniques in its excavation work that would not damage the ancient engravings nearby. “I said, ‘Minister, each time they go to blast, I will personally stand in front of the carvings so if I happen to be wrong, I will get hit and not the carving. Do we have a deal?’ And she said, ‘If you can commit to that, we have a deal.’”
Significantly, McHale appears to have agreed to meet Forrest only after the intervention of the premier, Alan Carpenter. Evidence to the CCC showed Bowler had personally raised the issue of Fortescue’s delay with Carpenter. Later, in a secretly recorded phone conversation, Grill said Bowler had been responsible “for getting Alan to put a bit of pressure on Sheila to come up with the right sort of answer”.
It’s not known whether Forrest ever fulfilled his promise to act as a human shield for the rock art during the railway construction. But the pledge must surely have helped his argument. Three days later, McHale approved Fortescue’s application. The government’s respected planning minister, Alannah MacTiernan, then signed off on the final route for the railway. When Fortescue’s first train eventually ran down the track in 2008, it was called the “Alannah MacTiernan Express” and Forrest stood on the cowcatcher waving the Australian flag.
On 10 July, the same day as McHale’s critical decision, Grill rang Forrest to discuss their successful lobbying efforts. The conversation was being covertly recorded by CCC investigators. The recording shows Forrest was concerned Grill should not “leak” McHale’s yet-to-be-announced decision and that he viewed himself as a person who “loves” Aboriginal rock art.
Grill: Oh, Andrew, Julian Grill. How are you?
Forrest: G’day, mate, how are you?
Grill: Yeah, good, I heard from inside the Department of Indigenous Affairs that Sheila’s virtually reached agreement with you in respect to the basic elements of the rail route on Friday. I just wanted to find out whether that was correct, as to whether we needed to take any further action, just what the score was.
Forrest: No, look I hope not, Julian, hope that we can just go very quietly now, let the government announce it when they’re ready. We really got to make sure, Julian, it does not leak, ’cause Sheila’s petrified about that. What she did is put us through a very, very fine-mesh sieve, which … suits me fine as a West Australian who loves rock art, we’ve been able to guarantee and enshrine the safety and protection of every single carving … and still not hassle the railway line particularly.
Grill: Oh, that’s good. It’s just that it seemed to me from the description I was getting that you might have to deviate it somewhat but …
Forrest: No. What was given away was large chunks of the 200-metre corridor. And I’m comfortable with that.
Grill: Alright, then, so we’ll leave it on that basis, then?
Forrest: Yeah, I think so. Just make sure, mate, no one leaks the fucking thing, please.
Grill: Yeah, sure. And you know, as far as I’m aware, the only person that’s been informed is myself. I am not aware of anybody else. Of course there’ll be other people within government, you know that, don’t you?
Forrest: Other people within government but Sheila is … I think it is a very brave decision by her. She’s taken a very long time to reach it and strung this out to a point where, you know, I had decided the project will break. It can’t stretch … you know projects, they usually just stretch and stretch. We will actually go under … and she considered it all.
Grill: Oh, you’re very persuasive too.
Forrest: Well, the facts really helped.
As a result of its investigation, the CCC found Bowler had taken advantage of his public office by passing on confidential information to Burke and Grill that he gained from his discussions with McHale and Carpenter. But it also found there was no evidence that Bowler’s actions constituted misconduct. By the time of the CCC’s finding on this issue in 2009, however, Bowler had long resigned as a minister over his close links to the lobbyists and Forrest had greatly benefited from the Burke–Grill connection by winning all his approvals and building the whole project.
As soon as the CCC hearings into Burke and Grill began in late 2006, Forrest ran as fast as he could from the pair. He told journalists that Fortescue had engaged Burke and Grill only to train Julian Tapp, who was unfamiliar at the time with the state bureaucracy. “As far as any lobbying goes, they don’t do that for us,” Forrest said. “When we need to speak to a minister or a member of the bureaucracy, we do that.” He repeated this claim to the Australian Financial Review a few months later. “We did retain Burke and Grill to show our new government relations manager the ropes, and they did that effectively. But we did not ever use them in our approaches to government,” he said.
Forrest was either mistaken in making these statements, or else he was deliberately telling untruths. Perhaps his comments showed how desperate he was to distance himself from the stench of corruption that had suddenly enveloped Burke, Grill and their mates in the state government. As evidence given at the CCC would show, Burke and Grill did have extensive contact with John Bowler and senior public servants on behalf of Fortescue. Grill also now confirms he had direct contact with McHale in relation to the Fortescue rail application. Burke and Grill had also lobbied Labor MPs and senior bureaucrats to push Fortescue’s state agreements through parliament during 2004 and 2005 – a point Forrest must have temporarily forgotten when journalists quizzed him about how well he knew the pair.
As soon as the media storm erupted over Burke and Grill in 2007, Forrest ceased all contact with them. These days, the pair are still bitter at the way their contract was ripped up. “Most clients took the time to express gratitude for the work we’d done, and explained they could no longer use us, which was fair enough in the circumstances,” Grill says. “Forrest just cut us off.” Grill’s wife, Lesley, sent bills to Fortescue seeking payment for the $10,000 owing for the previous month’s work. She followed up with emails but never received a reply.
Within weeks, Brian Burke’s name had also infected federal politics as John Howard’s Liberal government attempted to drag the Opposition leader, Kevin Rudd, into the controversy. Rudd had been the VIP guest at a Perth dinner Burke had organised in 2005 to introduce him, as Labor’s foreign affairs spokesman, to Burke’s best clients. Forrest sat alongside Rudd at the dinner, which was held in the private dining room at Perugino restaurant in West Perth. At the height of the Burke paranoia, federal treasurer Peter Costello unwittingly insulted Forrest, and plenty of other Perth business leaders, by gleefully telling parliament: “Anyone who deals with Brian Burke is morally and politically compromised!” But Costello’s own party was soon dragged into the mess when WA Liberal senator Ian Campbell, the federal minister for human services, was forced to resign after admitting he once chatted to Burke for twenty minutes.
Fast-forward six years and Brian Burke is reclining in a chair in Julian Grill’s plush apartment, which overlooks the city they once dominated. The pair have agreed to discuss their work for Forrest – one of their best clients – but Burke seems especially keen to rehabilitate his name. He says his lobbying business has been dead ever since the CCC began examining his lobbying efforts for Fortescue and scores of other Perth companies. The investigation, he claims, was purely a witch-hunt that was designed to destroy him, but that only produced a string of failed prosecutions.
Like others, Burke believes BHP’s failed attempt to cut Forrest down became the catalyst for his success. “BHP made a fundamental mistake by wrongly assessing the character of Andrew Forrest,” he says. “BHP did everything they could to stop him; they brought every bit of their firepower to bear. They basically created him. If they had gone easy on him, he wouldn’t have fought back so hard.”
Reflecting on his work with Forrest, Burke says he soon overcame his initial scepticism and came to realise that Forrest was a freak – even better than the deal-makers he knew well in the 1980s, including Alan Bond and Robert Holmes à Court. “I don’t think anyone else but Twiggy Forrest could have gotten that company off the ground,” says Burke. “I’ve met a lot of entrepreneurs but Forrest was the best I ever saw. He was the best salesperson, the best driver, the best demander. He is the best at exuberance I’ve ever seen. He got people to do things they thought theycould never do. He would treat people in ways that were not the best, but maybe that’s an ingredient of his success. He’s unique – but that doesn’t make him likeable.”