14/12/2004 - 21:00

Protagonist in an eventful year

14/12/2004 - 21:00

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Neil Hamilton unexpectedly found himself at the centre of two of the biggest business crises of 2004. He spoke to Mark Beyer about the year that was and his plans for the future.

Protagonist in an eventful year

TWELVE months ago professional director Neil Hamilton had a game plan for 2004. But now, as the year draws to a close, the outcome could not have been more different from those expectations.

He aimed to be out of Western Power by June, following the planned break-up of the State-owned utility.

Instead he found himself promoted to chairman of a business in crisis.

And he aimed to be leading the revival of gold and tantalum miner Sons of Gwalia, which had well-known problems but nothing considered fatal.

But he instead became chairman just in time to preside over the biggest corporate collapse in Western Australia’s recent history.

It was an extraordinary year by any standards.

What makes it all the more remarkable is that Mr Hamilton has a history of finding himself at the centre of corporate dramas.

In 1987 he led the financial rescue of Indian Pacific, parent company of the West Coast Eagles football club, which came precariously close to collapse in its very first year.

In the 1990s he was chairman of Challenge Bank when it was involved in takeover deals with BankWest, St George Bank and its eventual buyer Westpac.

And in the early part of this decade he was a director of Insurance Australia Group, formerly NRMA Insurance, when it was wracked by long-running boardroom feuds.

With this sort of track record you might expect Mr Hamilton to be an intense, highly driven, even hyperactive person.

He can certainly be ruthless, such as in 1987 when he forced his then friend and business partner Richard Colless off the board of Indian Pacific.

But what is most striking about Mr Hamilton is his easygoing, pragmatic manner.

“He is a really down-to-earth, good fellow,” long-time friend and former Challenge Bank colleague Tony Howarth said.

Mr Hamilton’s business career isn’t always characterised by drama; far from it.

In November, with little fanfare, he completed the planned winding down of his listed investment company Chieftain Securities.

And this month he retired from the board of private smallgoods company D’Orsogna after a successful 10-year term as chairman.

In addition, Mr Hamilton has quietly continued as chairman or director of five other businesses in Perth, Sydney and Melbourne (see table), all of which achieved improved profits this year.

So, in the space of one year, Mr Hamilton has packed in more activity, change and drama than many people see in their entire career.

Another long-time friend, publican Murray McHenry, believes he has the temperament to handle the dramas.

“He doesn’t get fazed by anybody or anything,” Mr McHenry told WA Business News.

Mr Hamilton admits he became overloaded this year and is looking forward to easing off.

“I’d like to keep on doing more of the same, but less of it, and have more fun,” he said.

The 52-year old has no plans of starting a new business but enjoys taking on challenging projects as chairman of the board.

“That’s what’s so good about it, you can really make a difference,” he said.

Mr Hamilton shot to public prominence this year when he succeeded Malcolm Macpherson as chairman of Western Power, imme-diately after the February power crisis.

This followed his 2002 appointment as chairman of the State Government’s land development arm, LandCorp, soon after the Gallop Government came to power.

The two government appoint-ments have led many people to presume that Mr Hamilton has added political influence to his corporate influence, a suggestion he dismisses with a laugh.

“People ring me up and say: you’d know what’s going on. When is the election going to be?”

Mr Hamilton said he was able to take the government positions because the winding down of Chieftain Securities – a listed investment company that struggled to capture market excitement – was well under way by 2002.

“I’ve been lucky enough to make some money from business over the years, so it’s certainly not for the money,” he said. “I take the view that guys have an obligation to do something, to give something back.”

When Mr Hamilton first joined the Western Power board as a director in 2002 he thought it would be a straightforward task.

“It seemed fairly simple, it was like a project role for a limited period,” he said.

The game plan was that Western Power would be split into four separate businesses on June 30 2004 and he would depart at that time.

He is now chairman and the split still hasn’t happened (see article below).

Mr Hamilton effectively ran Western Power for several months, working alongside stand-in chief executive Harvey Collins, and not surprisingly he describes that period as far more difficult than he ever expected.

“Not only have you got a shareholder and a minister vitally interested but the premier was vitally interested and around all that you had the media scrutiny,”  he said.

With new managing director Tony Iannello now running Western Power, Mr Hamilton can look back with some satisfaction that he helped guide the business through its darkest period.

The same can’t be said for Sons of Gwalia.

Mr Hamilton agreed in January to succeed Sons of Gwalia founder Peter Lalor as chairman, and he formally took up the position in April.

His expectation was that the Western Power job would be near to completion by April, allowing him to focus on his new role.

Mr Hamilton’s appointment was part of a generational change at Sons of Gwalia. Chief executive John Leevers started in January, chief financial officer Ian McCubbing started in May and directors Mark Barnaba and Peter Knowles were appointed in May.

So the company, which had incurred a succession of operational and financial setbacks over the past three years, appeared to be in good hands.

The market believed there was plenty of value in the company, which was valued at $220 million on Friday 27 August.

The following Monday its shares became worthless when the company was placed into voluntary administration.

Mr Hamilton said he has gone over the details of the company’s demise and believed there was nothing he could have done differently.

The collapse was preceded by deterioration in the company’s gold reserves, which raised concerns about its ability to meet its hedge book commitments.

Sons of Gwalia proposed a standstill agreement to allow a reorganisation of its affairs but one member of its 12-bank syndicate, understood to be Citigroup, refused to accept the proposal.

As soon as the company stopped trading it was forced to crystallise the losses on its hedge book, which had a marked-to-market value at June 30 of negative $348 million.

This instantly wiped out the value in the company and has since attracted the attention of Hugh McLernon’s litigation funder, IMF (Australia).

IMF is planning to provide funds for shareholders claiming Sons of Gwalia failed to keep the market properly informed of its gold reserves and forward commitments.

If the litigation proceeds, it means that lawyers will join insolvency managers as the main winners from the collapse of the 21-year old company.

TWELVE months ago professional director Neil Hamilton had a game plan for 2004. But now, as the year draws to a close, the outcome could not have been more different from those expectations.

He aimed to be out of Western Power by June, following the planned break-up of the State-owned utility.

Instead he found himself promoted to chairman of a business in crisis.

And he aimed to be leading the revival of gold and tantalum miner Sons of Gwalia, which had well-known problems but nothing considered fatal.

But he instead became chairman just in time to preside over the biggest corporate collapse in Western Australia’s recent history.

It was an extraordinary year by any standards.

What makes it all the more remarkable is that Mr Hamilton has a history of finding himself at the centre of corporate dramas.

In 1987 he led the financial rescue of Indian Pacific, parent company of the West Coast Eagles football club, which came precariously close to collapse in its very first year.

In the 1990s he was chairman of Challenge Bank when it was involved in takeover deals with BankWest, St George Bank and its eventual buyer Westpac.

And in the early part of this decade he was a director of Insurance Australia Group, formerly NRMA Insurance, when it was wracked by long-running boardroom feuds.

With this sort of track record you might expect Mr Hamilton to be an intense, highly driven, even hyperactive person.

He can certainly be ruthless, such as in 1987 when he forced his then friend and business partner Richard Colless off the board of Indian Pacific.

But what is most striking about Mr Hamilton is his easygoing, pragmatic manner.

“He is a really down-to-earth, good fellow,” long-time friend and former Challenge Bank colleague Tony Howarth said.

Mr Hamilton’s business career isn’t always characterised by drama; far from it.

In November, with little fanfare, he completed the planned winding down of his listed investment company Chieftain Securities.

And this month he retired from the board of private smallgoods company D’Orsogna after a successful 10-year term as chairman.

In addition, Mr Hamilton has quietly continued as chairman or director of five other businesses in Perth, Sydney and Melbourne (see table), all of which achieved improved profits this year.

So, in the space of one year, Mr Hamilton has packed in more activity, change and drama than many people see in their entire career.

Another long-time friend, publican Murray McHenry, believes he has the temperament to handle the dramas.

“He doesn’t get fazed by anybody or anything,” Mr McHenry told WA Business News.

Mr Hamilton admits he became overloaded this year and is looking forward to easing off.

“I’d like to keep on doing more of the same, but less of it, and have more fun,” he said.

The 52-year old has no plans of starting a new business but enjoys taking on challenging projects as chairman of the board.

“That’s what’s so good about it, you can really make a difference,” he said.

Mr Hamilton shot to public prominence this year when he succeeded Malcolm Macpherson as chairman of Western Power, imme-diately after the February power crisis.

This followed his 2002 appointment as chairman of the State Government’s land development arm, LandCorp, soon after the Gallop Government came to power.

The two government appoint-ments have led many people to presume that Mr Hamilton has added political influence to his corporate influence, a suggestion he dismisses with a laugh.

“People ring me up and say: you’d know what’s going on. When is the election going to be?”

Mr Hamilton said he was able to take the government positions because the winding down of Chieftain Securities – a listed investment company that struggled to capture market excitement – was well under way by 2002.

“I’ve been lucky enough to make some money from business over the years, so it’s certainly not for the money,” he said. “I take the view that guys have an obligation to do something, to give something back.”

When Mr Hamilton first joined the Western Power board as a director in 2002 he thought it would be a straightforward task.

“It seemed fairly simple, it was like a project role for a limited period,” he said.

The game plan was that Western Power would be split into four separate businesses on June 30 2004 and he would depart at that time.

He is now chairman and the split still hasn’t happened (see article below).

Mr Hamilton effectively ran Western Power for several months, working alongside stand-in chief executive Harvey Collins, and not surprisingly he describes that period as far more difficult than he ever expected.

“Not only have you got a shareholder and a minister vitally interested but the premier was vitally interested and around all that you had the media scrutiny,”  he said.

With new managing director Tony Iannello now running Western Power, Mr Hamilton can look back with some satisfaction that he helped guide the business through its darkest period.

The same can’t be said for Sons of Gwalia.

Mr Hamilton agreed in January to succeed Sons of Gwalia founder Peter Lalor as chairman, and he formally took up the position in April.

His expectation was that the Western Power job would be near to completion by April, allowing him to focus on his new role.

Mr Hamilton’s appointment was part of a generational change at Sons of Gwalia. Chief executive John Leevers started in January, chief financial officer Ian McCubbing started in May and directors Mark Barnaba and Peter Knowles were appointed in May.

So the company, which had incurred a succession of operational and financial setbacks over the past three years, appeared to be in good hands.

The market believed there was plenty of value in the company, which was valued at $220 million on Friday 27 August.

The following Monday its shares became worthless when the company was placed into voluntary administration.

Mr Hamilton said he has gone over the details of the company’s demise and believed there was nothing he could have done differently.

The collapse was preceded by deterioration in the company’s gold reserves, which raised concerns about its ability to meet its hedge book commitments.

Sons of Gwalia proposed a standstill agreement to allow a reorganisation of its affairs but one member of its 12-bank syndicate, understood to be Citigroup, refused to accept the proposal.

As soon as the company stopped trading it was forced to crystallise the losses on its hedge book, which had a marked-to-market value at June 30 of negative $348 million.

This instantly wiped out the value in the company and has since attracted the attention of Hugh McLernon’s litigation funder, IMF (Australia).

IMF is planning to provide funds for shareholders claiming Sons of Gwalia failed to keep the market properly informed of its gold reserves and forward commitments.

If the litigation proceeds, it means that lawyers will join insolvency managers as the main winners from the collapse of the 21-year old company.

 

HAMILTON’S HISTORY

Current positions

  • Chairman: Western Power
  • Chairman: LandCorp*
  • Chairman: Sons of Gwalia **
  • Chairman: Integrated
  • Chairman: IRESS Market Technology
  • Chairman: AFL Players Association Advisory Board
  • Chairman: STW Sport & Events (WA)
  • Director: Insurance Australia Group

Former positions

  • Managing director: Chieftain Securities
  • Chairman: D’Orsogna
  • Chairman: Cockburn Corp
  • Chairman: Challenge Bank
  • Chairman: Indian Pacific/West Coast Eagles
  • Chairman & CEO: Pacific Mutual
  • Partner: Robinson Cox (Clayton Utz)

* Intends to retire in 2005  ** In administration

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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