The other day I was handed an advance copy of a book to go on sale today. In it was one of those wonderful little Kevin-Baconesque degrees of rugby separation that make reading worthwhile.
On July 25, 1981, a group of anti-apartheid protestors were baton charged and mercilessly beaten in Wellington’s Molesworth St as they protested the Springbok tour of New Zealand. Several suffered serious head injuries as they were bashed by the NZ police “Red Squad”.
Few would have realised then that the man in charge of the Red Squad, was linked in a small way to the evolution of one of Australia’s greatest corporate scams, a scam which would almost cripple Australia’s newest rugby franchise as well as several other sporting organisations.
The story is that the Red Squad was a specially convened anti-riot unit headed up by Ross Meurant (who wrote a book about the experience) and later stood as the National Party candidate for Hobson (NZ) in the 1987 elections where he was successful. Later still upon leaving the Nationals, Meurant established a new party known as Right of Centre, based around his deeply conservative views.
After leaving Parliament, Meurant stood several times for various local political offices, including the Rodney seat on the Auckland Regional Council.
His bid at the Rodney seat was successful but his time with the Rodney District Council was short lived, when the entire council was effectively dissolved by the NZ Government on 10 April 2000 due to “relationship problems” between elected members. Many former members of the council attributed these issues to Mr Meurant’s attitude.
After the embarrassing District Council fiasco that made national headlines in New Zealand, his bid at the Rodney mayoralty failed amid huge local disapproval. He has since moved to Eastern Europe and now allegedly feels he was manipulated by the “police subculture”.
Along the way to this unusual Iron-Curtain-shaded retirement, Meurant also found time to fill a directors seat at Prok Bank, a shady “bank” which was investigated three times by the New Zealand government around banking rules and money laundering allegations. Among other things, Meurant helped Prok broker a commercial fishing deal, despite his parliamentary position as undersecretary of agriculture and forestry. When asked to relinquish the directorship, he refused and was summarily sacked from parliament.
Around this time, Prok also had links with the company that would eventually become Firepower, the failed fuel additive giant which collapsed in 2008. Prok funded a series of dubious trials in Russia, the Ukraine and Vietnam aimed at proving the viability of Firepower fuel pills and products.
Although the tests didn’t prove anything, they provided an opportunity for Tim Johnston, the Firepower supremo, to pay for positive endorsements which he later used to market his products and thus engineer the greatest corporate scam Australia had ever seen.
Meurant is just one of the hundreds of dodgy, weird, wired and wonderful characters who makes an appearance in the epic fiasco that is the Tim Johnston/Firepower story. Others to make an appearance include former Australian Prime Minister John Howard, Pakistani president
General Pervez Musharraf, Australian Governor General Michael Jeffrey and British PM Tony Blair. That’s not to say, of course, that any of the above people were involved in the Firepower scam as active participants. It is simply an illustration of the level at which the Tim Johnston’s deceit was operating.
Not only was it happening at an altitude beyond imagination, the sheer scope of the Firepower scandal was breathtaking. To give you an idea, the episodes involving Meurant above cover barely 2 pages of my advance tome of Gerard Ryle’s new book “Firepower – The Most Spectacular Fraud In Australian History”, so you can imagine just how much scandal, intrigue and skulduggery is contained in the whole 250-odd pages.
In any case, by mid-2005, Firepower had hit the stratosphere – at least in terms of hype and income, if not actual worth, and it was amid this mad scramble for wealth in the boom towns of WA, that Tim Johnston reconnected with his old school and rugby mate from Queensland, Peter O’Meara.
To quote author Gerard Ryle, “O’Meara had recently arrived in Perth as chief executive of the new Super 14 rugby franchise called the Western Force. Only months earlier, Perth had surprised many people by beating Melbourne for the right to host a team in the world’s best rugby competition.”
“Heading up the new western Force Super 14 franchise was O’Meara’s first job as a full-time sports administrator, but he saw the job as a stepping stone towards his real target. He wanted to be chief executive of the game’s elite administrative body, the Australian Rugby Union (ARU) a coveted position he had applied for and failed to secure two years earlier.”
“But first, O’Meara needed to build a successful team. And that wasn’t easy. The rules of the competition capped the wages of the players he wanted to hire. Without being able to offer extra payments, he had little to persuade a good player to relocate to the other side of the continent, to a city that many felt didn’t appreciate the finer points of the game. So O’Meara decided to break the rules. Together with the chairman of the new club Geoff Stooke, and with the passive endorsement of the rugby WA board, the Western Force made secret arrangements with the commercial representatives of six Wallaby players: Brendan Cannon, Matt Henjak, Scott Fava, Cameron Shepherd, Lachlan Mackay and Nathan Sharpe who would be the new club’s captain.”
“Western Force promised to secure the players paid employment with one of the clubs sponsors in addition to their regular income. The club then went further and guaranteed to pay the players the agreed amounts if the employment fell through, which was what occurred in each case except that of Cannon. Some of these payments were worth up to $400,000 a year to the players, although there is no suggestion that the players themselves knew the protocols were being broken”
“The transactions would later create headaches for the new club, including the need to hide payments from the ARU or risk sanctions. But the immediate benefit was that six top line players had been hired. More significantly, the club had shown that it was willing to splash around money, a fact appreciated by the powerful player agents that lurk behind the professional game.”
“Johnston walked into this world in May 2005 when O’Meara introduced him to club officials around Perth’s business community as a self made millionaire. He was, it was said, a man with money to burn”.
“Firepower was signed up as inaugural sponsor of the new club, with Johnston promising at least $300,000 a year for three years to have his company’s dragon logo stitched onto the sleeve of the Western Force shirt. Though no formal contract was ever signed – Johnston complained he was too busy – he left nobody in doubt about his ability to pay. In early July, he stunned an audience at a gala function held in honour of the team’s new sponsors by paying $30,000 for one of the clubs new shirts”.
“In this way, Johnston took his first tentative steps into the world of Australian sport”.
Even in this short extract, the potential catastrophes for Australian rugby were rife. What if O’Meara had become head of the ARU? What if the Wallabies had become the Firepower Wallabies? Why didn’t anyone in a professional sporting organisation insist that a major sponsor sign a contract? Why didn’t anyone ask around about Johnston’s background? Why was there no due diligence on a company which was effectively about to become a Force debtor to the tune of $300,000 annually?
Gerard Ryle’s “Firepower – The Most Spectacular Fraud In Australian History” gives several telling reasons for rugby fans in Australia to be concerned about the magnitude of the bullet that rugby has dodged, and to breathe a sigh of relief that the damage was not greater, although the parlous financial state of the Western Force may yet prove to be too much for it to endure.
Incidentally, there is an argument here for the ARU to have a fairly significant say in the financial affairs of the provinces, given that they will almost certainly become the lender of last resort should the Force need financial support to survive. If this was to happen, it would further erode the slim reserves from the 2003 World Cup – funds which the ARU can ill afford to squander, and which in any case, belong in spirit to the rugby public. They should not become a bail-out fund for provinces engaged in prohibited activities.
The Firepower story is a stunning tale of matter-of-course lies, casual deception and astonishing bravado, mixed with continual examples of massive acquisitive greed and slapdash investigation. I read the whole thing with my mouth slightly open – truly gobsmacked that one man could accomplish such an utter rout of all that was honest and decent.
If you follow rugby and you’re engaged in any sort of business, you need to read this book.
“Firepower – The Most Spectacular Fraud In Australian History” by Gerard Ryle, goes on sale today at all good bookstores.
Gerry
Guest
Wheres Mudskipper when you need him?
AndyS
Guest
Lyon, My point with Wynns is obviously being made poorly. What I am referring to is statements about poor duped idiots/greedy buggers etc ignoring scientific impossibilities, when they could walk into any garage and see seemingly similar scientific impossibilities being sold openly. There have been no journalistic or regulatory issues raised about that practice, so why would anyone necessarily question the feasibility of what was being offered? Surely someone would be protecting the public if there was a continuing and ongoing scam involving products that cannot do what they claim? But to be honest, I have always been a little surprised that everyone focuses on the science, or the idea that a sponsored club/players could have demanded an audit of the sponsoring company's books, or that they should have done a personal background check on Johnston himself. Surely the biggest caution light and alarm bells should have gone off when everything was based on future events and potential. Common sense says that all of Johnston's time, money and effort should have been focused on getting his product to market, if he actually had a product to sell. How on earth could so many people place so much trust in an individual that was instead freely splashing around money that was raised for other purposes and was yet to be earned??!! Still, as an aside, I would encourage you to make public anything you have to back up the assertion that any of the sporting teams were actually aware that Firepower was a fraud. I am sure there would be plenty of people interested, as it would probably be actionable.
Gerry
Guest
And if you want more spectacular frauds? Try Bell Corp or maybe Visy.
Gerry
Guest
Lets look at the basic premise of the Firepower fraud. Johnson offered people shares in Firepower on the vision that Firepower would be listed on the the London Stock Exchange. His promise was that the 50c/$1/$2 , whatever they paid for the shares or were given, were going to be worth $8/$10/$20 when they listed on the London Stock Exchange. Giteau et al decided to take shares and not CASH. The people who lost were not innocent, they were GREEDY. So how does this collate to the loss of the latest CEO. Completly different story.
Lyon
Guest
AndyS Think you're a little way off the mark in comparing wynns and others to Firepower. Directors of Firepower raised almost $100,000,000 for themselves, not the company, and have left shareholders and creditors dry. Did wynns and others do this? Firepower peddled a pile of fraud to perpetuate a fraud and had help from those that have now gone to ground. Did wynns and other reputable businesses do this? Perhaps ask them. I'd sugges there are a number of very major differences between Firepower and existing businesses. If you dont agree, why dont you write to Wynns and others and suggest otherwise. Further, Firepower directors raised money and splashed this on sporting teams, some of whom knew that Firepower was a fraud. Some of these sporting teams were even promised shares and bonuses to sell firepower products....greed overtook common sense and thats a sad indictment on the administrators of certain sporting groups. I admire the coach and team of the Sydney Kings. They had the guts to stand up to johnston and expose him for the fraud he is. Its a shame the Western Force CEo and his friends didnt do this earlier. A lot less innocent people could have lost money and the Force may not have lost so many players... Giteau, Mitchell, Valentine, their latest CEo.... and I imagine more to come.... But of course, AndyS. This has nothing to do with Firepower...
AndyS
Guest
Hmmm, that was longer than I realised. Maybe should have settled for just suggesting the faintest whiffs of "Bonfire of the Vanities"...
AndyS
Guest
Matta, Ah, fair enough, "players" was probably a bit misleading although I'd suggest reading posts in context with what is written above them. I meant players in a dramatic sense, referring to were comments like "Johnston honed his skills out West. The smell of dodgy deals still permeates sections of the business community out that way. I believe they’re breeding a whole new generation out West too". I was merely observing that, in fact, Johnston and the other people involved were from the East and Johnston actually honed his scheme in New Zealand. Although given that you mention the players, I find it similarly curious that the Force can be regularly castigated for comprising of nothing but imports, but then any misdemeanour or misbehaviour must be a WA thing and not something that they may have brought with them. And yes, Firepower may have been a Ponzi scheme but comments like Andy's suggest that it should have been obvious to everyone that the whole thing was a scientific impossibility. That implies that everyone must have been either morons, blinded by greed or somehow culpable. If wrong, it is just more than a little smug. If true however, it would surely have to be a much, much bigger scandal that there are actually products on the shelves that are equally impossible. Maybe our journalistic bretheren could help by confirming a sighting of the documented performance results for those products, otherwise there must be a much juicier story and significant company that they would surely be itching to take on... and Lyon, "...the best players the Force recruited, with some help from firepower, would still have played for their former franchises....The Force..bought talent that would have blossomed in the states they were pinged from anyway" The best players - yes, but not the players that were developed in replacing them at their former franchises...the Poloto Naus, Lealifanos, Toomuas, Hynes' etc. And the talented ones certainly would have made their way through...eventually. But then this might well have been Pocock's debut year instead of Braid, and who knows where Brown might be. The Wallabies have suddenly identified a flush of depth and youth and, like it or not, that is because of the additional playing opportunities provided by four teams rather than three. ------------------------- More than anything though, I am always amused by journalistic re-writing of history. Stuff like "The club then went further and guaranteed to pay the players the agreed amounts if the employment fell through....The transactions would later create headaches for the new club, including the need to hide payments from the ARU or risk sanctions". Yeah, right, well done, that'll be this: http://www.rugbyheaven.com.au/news/super14/force-to-front-aru-over-payments/2007/08/17/1187462139125.html on the 17/8 and this: http://www.theaustralian.news.com.au/story/0,25197,22263751-2722,00.html the next day where Peter O'Meara cunningly conceals those payments by basically saying "Yeah, so what, it was pre-protocols" and (direct quote) "Before any protocols were actually documented in 2006, there were players in Australia receiving commercial payments benefits that were underwritten by clubs and some clubs, in the case of Queensland, were paying players directly out of the operating costs of their business". Remember, this was someone who was on that board speaking...didn't hear much more about that though, did we? Overall though, I just get the feeling that the undoubted debacle that was Firepower has more generally proven a boon to anyone unhappy about the existence of the Force. It is routinely referenced in comments and articles, sometimes with the flimsiest of links to the actual topic at hand, and it is often hard to miss the little undertone of smug satisfaction and even glee in much of it. Let's at least hope some lessons have been learnt, at all levels.
Lyon
Guest
Greg Agree with your comments here on the regulation of sport in relation to salary caps etc. If an organisation is going to establish a form of regulations, then they do need to police this. Like corporate regulators police companies. I have mixed feelings on salary caps, but I think their disadvantages are outweighed by the disadvantages of a free market system. A free market system will see many teams, in any competition, wilt and die and we'll end up with a group of powerful teams and those that continually struggling. A free market in sports is potentially open to abuse by overzealous and uncommercial administrators. We've all seem this before. I believe the ARU have the right mix. They have a cap ( to some degree I believe) on player payments but allow the players to foster third party deals - without assistance from the provinces of course.... The problem I see with the ARU, is that they may not have policed the very systems they created. Perhaps they need to do this now? Or are they awaiting another Firepower to arrive on the scene?
Working Class Rugger
Guest
In another unrelated topic. The Gold Coast have evidently formed a consortium to bid for the fifth Super team. Do they really stand a chance against the obvious clout of the VRU's bid.
Greg Russell
Roar Guru
I think the only real lesson in all this is that clubs/franchises in professional sporting competitions must be very heavily regulated, monitored and audited, otherwise self-destructive greed runs riot. But who did not already know this? One sees it all the time, including in Australia (think quite a few NRL, AFL, ANBL, etc. clubs). Even with David Gallup's extreme vigilance, the NRL always seems close to Firepower episodes (e.g. Manly's recent off-field politics). The flipside of such heavy regulation is sameness. Yes, the NRL is a terrifically even competition, but there is a sameness to all the sides, because the rigidly applied salary cap is a straightjacket that leaves little room for variety. So what do people want, the sameness of the NRL, or the potentially disastrous variety of a truly free market? This is not an easy question to answer. One might make a comparison here with English football (and other leagues of Europe), where Firepower-style collapses are known to occur (who's a Leeds United supporter?). The multi-layered structure of such competitions is what enables such catastrophes to be absorbed, i.e., it doesn't matter too much if a Leeds United goes belly up, because there are plenty of other clubs ready and waiting for the chance to step up. But if the Western Force collapse, then Australian rugby has a huge problem, because there is no multi-layered professionalism. To change the topic, it is relevant to mention that Ross Meurant's brother Brad is a senior NZ rugby coach and expert, having been at the helm of the Chiefs in their early years, and also having been in charge at North Harbour during their best days. As far as I am aware Brad is still an expert commentator on radio broadcasts of Auckland matches. So Ross may be a villain in the above story, but there is genuine rugby blood in the family.
Lyon
Guest
Ren and WCR, agree with your comments but it concerns me how much the Force can spend on local development when they're clearly losing money and may no thave the resources to develop local kids. Time will tell I guess, but to be honest I dont think they've started that well. And that a reflective view. A slower, more measured climb in to Super 14 comp may have been better. Searching for instant success is going to hurt them in the short term. The Firepower influence on sport is devastating and cant be overlooked. Though many seem to be taking a head in the sand approach to this. Firepower brought down the Sydney Kings and left a stain on basketball. They caused grief to South Sydney and they've left the Force in a mess. Taking Giteau and Mitchell out of any team is going to hurt and will badly stretch the depth of the Force. Depth that needs to be developed locally.
Working Class Rugger
Guest
Ren I was looking at the competition structures for juniors in WA. They have had to split many of the comp into two pools due to the swell in the ranks. The numbers of clubs aren't as numerous as in Sydney but when junior teams are fielding three teams from the U 6 up thats pretty impressive. The Force is a building process as will be the Victorians. Look at the AFL and their expansion nationally from the VFL to illustrate a great example.
ren
Guest
Lyon ==how is the presence of the force in WA for a short period going to increase the number of home grown westralian players of super rugby quality or even wallabies quality. It will be another 10 years before this sort of benefit will be seen. jnr participation is way up, you actually see 7-12 year olds playing rugby now, something that was not seen just five years a go. so like LAS long term this will be good for australian rugby, for those in the east who want a return to the 'good old days' of qld and nsw get used to it, we're here now and we're here to stay.
Working Class Rugger
Guest
They will lose money if they stay at Subiaco. Hence the move to Member Equity. At the moment the only loss that hasn't got a suitable replacemnt is Giteau. I say all this and I'm a dyed in wool Waratahs man.
Working Class Rugger
Guest
Matta Those two locally developed players are Kieran Longbottom and Dane Haylett-Petty. Incidently James Stannard was also plucked from their local ranks. But he was formally of Queensland.
matta
Guest
Lyon - agree with you but to be fair they have had two locals play... I cant remember their names but one prop and one scrum half have Super 14 caps from the local WA system.....and come on, you cant expected them to produce a home grown Wallabie in that time.
Midfielder
Guest
Andrew Great read ... I very much enjoyed it and I congratulate you in that we all know you to be rusted on hard core rugby person but you spared no one and that is how the right decisions get made.. Again well done
Lyon
Guest
All this firepower stuff is amusing, but it paints a poor picture of Australian Rugby and its administrators. The Force should be ashamed of perpetuating a cover up of Firepower. And more so, the players that took money from Tim Johnstone have taken the hard earned money of mums and dads around Australia. Should they repay it? I think so. The Force ride is similar to that of other sporting teams that have tried to buy success and use whatever means they can to win. Amibtious and self serving Administrators doing their best not for the team, nor the state or competion, but purely serving their own ambitions and egos. We've seen these administrators before. They love the publicity when things go well, but quickly go to ground when found out. But what were the Force adminstrators buying and who benefits? In relation to the Force, it appears that the CEO and Coach were the only two that stood to gain the most from any 'instant' success the Force could muster. And interestingly, both have indicated a desire to coach and manage the Wallabies /ARU. Think about it, the best players the Force recruited, with some help from firepower, would still have played for their former franchises. They werent, nor are they still, destined for greater honours by playing with the Force. How did they benefit then?? Money! And only money. The real parties that stood to benefit from any short term success the the Force could was O'meara and Mitchell. But will they now benefit? Appears that O'Meara wont and it looks like Mitchell has some fences to mend. I believe kiwis can be good at mending fences. So, what have the Force achieved as they enter their 5th season next year - 1. They've just announced their profits are plunging and they stand to lose millions this year and more next year. 2. Their membership has plummeted. And its not ALL because of a stadium 3. They have lost 2 talented players and so far 3 very experienced players. They're likely to lose more before the season is out too. 4. The Force have produced very little talent locally. In fact I dont think one local has played s14 rugby. And for all those bluffing about how good rugby is in WA, how many Wallabies have they produced? One. One who happened to jag a few games 10 years ago due to injury. 5. The Force havent developed any talent. They've bought talent that would have blossomed in the states they were pinged from anyway. Just like a car bursting with firepower, these guys had power and talent to burn anyway. 6. The Force are likely to have a much weaker side next year and there is no denying this. The loss of 6-7 first team players is going to devastate the team and results. But of course dont tell the locals. They've done everything right and its not their fault................. Change is needed and badly. But I think people have been saying that about Zimbabwe for a while too. Andrew, I loved the book. I'm sure it will make a leading case study some day on how NOT to develop a business - and how to stuff the development of sport in a state in the short term.
matta
Guest
what does the players coming from QLD or NZ have anything to with the issue? Also the comparison between Wynns and Firepower is silly....Firepower was a Ponzi scheme where the CEO was using old VC to court new investment to pay off said original VC. There were links to the Russian mob and the scam touched every level of Australian society and the fact that the product didnt work is only a fraction of the tale.
AndyS
Guest
In what respect?