A bitter pill for investors

IT is one of the great ironies of crime reporting that tell-all tales often lead to copycatting as the information provides both inspiration and instruction to other would-be criminals.

Let's hope the same problem doesn't arise from a comprehensive book about the giant confidence trick perpetrated under the guise of fuel technology group, Firepower.

In his detailed and very readable book on the subject, Sydney journalist Gerard Ryle almost writes a manual on how to sting investors, outlining the step-by-step approach to building an edifice that no-one seemed to want to tear down.

Firepower is estimated to have burned around $100 million of investors' funds in a short corporate life that led it to become one of Australia's most prolific sports sponsorship brands and darling of the federal government's export marketing service Austrade.

Much of what is in the book has been previously published, mainly by Mr Ryle, who led the expose of Firepower via articles in the Sydney Morning Herald.

That is another of the many quirks in this story, that a Sydney newspaper led the investigation into what was predominantly a Western Australian company.

Virtually alone in this state, WA Business News carried some news about Firepower's mysterious ownership and subsequent court cases in 2006 and 2007, which revealed much about the group's buccaneering approach to corporate governance.

In the past year, the mainstream local press became a lot more interested in Firepower's rapid descent into corporate oblivion and published many articles on its demise.

What Mr Ryle does best in this book, however, is look back to founder Tim Johnston's background and early business life.

It is in that process that we see a man who appears to have learnt his art through experience, enabling him to plan what happened in the Firepower case.

Mr Ryle's reference to a Pandora's box of reference material is the clearest evidence that Firepower was pre-meditated.

Mr Johnston, it is claimed in the book, kept copies of nonsense test results from his own and other products to be embellished when so-called proof of Firepower's intellectual property was needed.

There are various instances mentioned in the book of test results being fraudulently obtained in third world countries and being added to the box of goodies.

Others were just made up, often using the names of fictional or defunct organisations.

The book is yet another to reveal the blinkered approach people take when faced with the prospect of a big idea or big money, or both.

High-ranking Macquarie Bank executive Bill Moss and local mining services entrepreneur Ross Graham are just two of the many successful business people who were taken in by Mr Johnston's patter.

While Mr Moss long toyed with the idea of getting involved as a director, he travelled about and was seen regularly with Mr Johnston, unwittingly becoming an important name leveraged by Firepower in offshore markets.

Mr Graham ended up committing around $25 million to the failed business empire.

Con men the world over will also be relieved to read how little due diligence people actually do.

How many investors, employees or suppliers checked the validity of this group's claims?

Very few it would seem did even the obvious.

Some even signed deals with companies that did not exist.

Even those who had post-commitment doubts seemed to cling too long to the hope that the idea was good enough to outweigh the bad management, lack of transparency and outright lies they discovered.

Politicians, too, ought to recognise how easily photo opportunities can be used by others to create an air of credibility.

Mr Ryle's book outlines numerous such occasions, such as a time when former WA police minister and Firepower company director Gordon Hill was asked to make an appearance at a meeting with then British Prime Minister Tony Blair in London.

Far from what Mr Hill expected, the meeting turned out to be a fundraising event attended by thousands.

Nevertheless, a chance photo of Mr Hill and Mr Blair ended up in Mr Johnston's Firepower newsletter with the caption "At dinner with the British Cabinet".

Similarly, Prime Minister John Howard unwittingly became part of the same propaganda machine when he witnessed the signing in Pakistan of a memorandum of understanding about a proposed agency arrangement, not contracts that Mr Johnston allegedly spruiked in his communications to investors.


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