Twiggy (6 page)

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.

Any normal, sane person wouldn’t have done it. But with Andrew, it’s no risk, no reward.

—ALBERT WONG, Forrest’s former business partner

Within minutes of first meeting his Jacksons colleagues in Sydney, Forrest had left a lasting impression. It was 1986 and the big-talking hotshot from Perth was in Sydney to work from the firm’s head office
for a few days. The seventy brokers had just finished their daily meeting at 8.30am when a typically effusive Forrest picked up the phone and began speaking loudly in a bid to impress his new workmates. Calling himself “Kookaburra”, Forrest had phoned Laurie “Last Resort” Connell in the hope of drumming up some business. But the call lasted only ten seconds. The broker sitting next to him at
the time, Peter “Cabbie” Richard, turned to Forrest to ask whom he had just been speaking to.

“It was Laurie Connell,” Twiggy said. “What did he say?” asked the gregarious Richard. A somewhat sheepish Forrest replied: “He said, ‘It might be 8.30 in Sydney but it’s bloody 5.30 in the morning in Perth, don’t ever bloody ring me at 5.30 in the morning again or I’ll come over there and cut your
balls off!’” Nevertheless, Connell called back a few hours later and placed a trade with Forrest.

When Forrest moved to Sydney permanently in early 1988, Richard was tasked with ensuring the young gun’s energy was being channelled effectively. Forrest’s style, as usual, was crash through or crash. If a group of brokers in the office happened to be talking about BHP, Forrest would get on the
phone straight away and demand to speak to BHP’s chief executive. Most of the time he was unsuccessful but nobody could doubt his verve. “The normal procedures you’d follow to do things, Forrest never did,” Richard says. “He’s the sort of bloke who wanted to pick up whatever he had in his hand at the time and run with it at 100 miles an hour in whatever direction he could. He wasn’t the best broker
I’d ever seen but he was out there, he was in your face. He was a better entrepreneur than he was a broker, ultimately.”

Another colleague, Ross Dobinson, remembers Forrest as a skilled raconteur whose workmates were enthralled by his relentless enthusiasm for stockbroking. Forrest would regularly hold court over long lunches at the Imperial Peking Harbourside restaurant, a short stroll
from Jacksons’ Spring Street offices in the heart of the Sydney CBD. “A lot of people criticise him for his enthusiasm,” Dobinson says. “But we were all growing up back then and he was just more successful at being enthusiastic than anyone else.”

Forrest had been buying up shares in Jacksons since the firm listed on the stock exchange in early 1987, and by the end of that year he owned 10
per cent of the company. That made him the biggest shareholder of a firm in which he was still a relatively junior employee – an extraordinary situation by any measure. But in May 1988, with the market still in the doldrums and Jacksons losing money hand over fist, Forrest quit the firm and sold all his stock. He even managed to turn a tidy profit on the investment, selling shares he picked up for
75 cents at $1 each. It was exceptional timing: Jacksons collapsed a year later, owing the National Australia Bank $3 million and carrying bad debts of $11 million.

The thrillseeking broker craved a fresh adventure. And what better way to satisfy the urge than by going into business with Alan Bond? The tycoon was one of the few still standing in the wake of the stockmarket meltdown, although
in reality his empire was stretched to breaking point and would begin to fall apart within two years. Forrest formed a broking and merchant banking venture, Intersuisse, in a 50–50 partnership with an investment company, Markland House, which was owned by Alan Bond, Perth businessman Brian Coppin and Sydney banker Julian Hill. But as would become apparent to investigators only when they were able
to comb through Bond’s financial dealings, the entrepreneur was using Markland House as a conduit to strip another company he controlled, Bell Resources, of more than $1 billion to prop up his struggling Bond Corporation. Bond would go to jail in 1997 for the enormous fraud.

An association with “Bondy” in 1988 still carried kudos for someone like Forrest, however. Ever the optimist, he outlined
plans for Intersuisse to poach key managers from rival broking houses and to appoint institutional and corporate dealing teams in Perth, Melbourne and Sydney. They were bold words at the time because the market was dead in the water and most other broking firms and banks were laying off staff.

Despite the huge paper losses Forrest had suffered in the stockmarket crash, life in Australia’s
biggest city was sweet for the knockabout kid from Minderoo. Forrest had branched out on his own at Intersuisse, he owned a bachelor pad in the harbourside suburb of Darling Point and he had enough spare cash to reward himself with a Harley Davidson to navigate the city streets. Twiggy attracted women easily and was rarely without a girlfriend. His sister, Janie, had also moved to Sydney and was
running a Kings Cross hotel that became his regular haunt for endless rounds of cocktails.

A close friend from that period, David Hannon, estimates Forrest made at least forty good friends in his first year in Sydney, most of whom were not stockbrokers. One of these mates was “Rocket” Rodney Adler, the brash businessman for whom Forrest had traded stocks while at Jacksons. Adler recalls
that he enjoyed going out on the town with Forrest, but he could never match the Western Australian’s drinking prowess. “I did not want to, nor could I, drink that volume,” he says.

In 1988, Forrest met Albert Wong, who was working for another firm in the same Bligh Street building as Intersuisse. Wong is an affable investment banker with slicked-back hair and thirty years’ experience in
wheeling and dealing in Sydney, often in partnership with former NSW premier Neville Wran. Soon after the pair met, Forrest was lobbying Wong, then in his mid twenties, to join him at Intersuisse. Wong could see some potential in working with Forrest, but he declined. As many others have learned, however, Forrest doesn’t take no for an answer. “Andrew with his silver tongue just continued to persevere,
so I joined,” Wong says. Wong later took a 20 per cent stake in Intersuisse, leaving Forrest and the Alan Bond-backed Markland House with 40 per cent each.

As a banker, Wong had hitched his fortunes to one big client, Japanese hotel group EIE International, which was emerging in the late 1980s as one of the largest foreign investors in Australia. Forrest was keen for exposure to what he believed
to be a looming flood of Asian investment into the country. With Wong on board, one of Intersuisse’s first major deals involved EIE buying Macquarie Bank’s stake in a floating luxury hotel that was perched off the Great Barrier Reef. Forrest and Wong had to negotiate with government agencies and shipping companies to tow the huge structure to Vietnam on behalf of EIE. Their relationship with
EIE was lucrative, but by the early 1990s the Japanese company had collapsed with $11 billion in debts, and its boss was prosecuted for fraud in Tokyo. EIE wasn’t to be their only client that ultimately went broke or ran into legal troubles. Others included corporate raider Bruce Judge and dodgy property developers Mike Gore and Malcolm Edwards.

Forrest and Wong did deals around the clock
and kept fit by jogging around Sydney’s Nielsen Park after work before heading out for drinks. In defiance of the general economic malaise, Intersuisse grew rapidly to have more than fifty staff in six offices, including in London, Auckland and Taiwan, where Forrest first caught a glimpse of the Chinese entrepreneurial spirit. And when the young deal-makers travelled overseas, they always flew in
style. “Andrew taught me how to fly first-class,” Wong recalls. “I remember the cheapest first-class ticket to London was on Air India, which nobody used to fly. Andrew and I got into the first-class cabin and there was only one other person. They minded their own business and we got plastered all the way to London.”

One day Forrest and Wong “borrowed” EIE’s Boeing 727 corporate jet and
took it across the country to Minderoo for the weekend, flying low for a few loops around Uluru on the way to the Pilbara. At the Forrest family station, Wong witnessed his mate’s constant pursuit of the quick thrill when he jumped into the muddy Ashburton River from the wobbly branch of a tree that was at least ten metres off the ground. “Any normal, sane person wouldn’t have done it,” he says. “But
with Andrew, it’s no risk, no reward.”

One of the personal assistants employed at Intersuisse’s office was a quiet, refined woman by the name of Nicola Maurice, who hailed from a Brethren farming family in rural New South Wales and had studied economics at university in Canberra before moving to Sydney. To observers, she was the antithesis of Andrew Forrest, the party-boy stockbroker who
gave the impression of worshipping Mammon more than Jesus. Albert Wong admits he was surprised when Forrest declared to him in 1989 that he had fallen for the blonde girl he had nicknamed “Sweet Pea”. Wong recalls: “One night he just said to me, ‘I’m going to take Nicola out,’ and I said, ‘You’re kidding!’ Romance just blossomed from there.”

Andrew and Nicola became engaged but Forrest soon
got cold feet and broke it off, mainly because he wanted to remain a bachelor for longer. “He had a real weakness for the ladies,” says an old friend. A heartbroken Nicola quit her job and fled to Europe, where she took a job as assistant to the finance director at the United Nations in Geneva. Andrew’s stepmother Marie, Don’s second wife, explained this episode to journalist Cameron Stewart in
2008: “He got a bit tired of talk of bridal dresses and babies and he said, ‘I don’t think I’m ready to be married, still a few more girls in the field.’ I said to Andrew at the time, ‘You have just got rid of the best part of yourself. She is such a lovely girl.’ About nine months later he said, ‘Well, I guess if I want to marry little Nic I’d better go and chase her.’ He did that, but from then
on it was on her terms.”

Forrest flew to Europe, ostensibly to do some work for an oil industry client, which paid his airfare. But his real mission was to find Nicola and ask her to take him back. She agreed; however, she was determined to instil more Christian principles in her wayward fiancé and demanded the couple do a counselling course before they walked down the aisle. Her deep faith
in God was a big influence on Forrest, and friends noticed he started to become more pious. Nicola began taming Andrew in a way no one else had been able to. As Don Forrest said in his matter-of-fact way: “Nic has been very good for him; she has taught him other values.”

As Forrest was sorting out his romantic life, his business relationship with Albert Wong began to unravel. In late 1989,
Forrest took a holiday to Africa that was originally meant to last for three months but was extended to allow him to be in South Africa for the release from prison of Nelson Mandela in February 1990. “When he was away all the skeletons started to come out of the closet,” Wong recalls. One of the firm’s backers, Julian Hill, ran into financial strife and Intersuisse found itself in breach of the
liquidity ratios it needed to remain a member of the stock exchange. Wong urgently borrowed money to buy out the stake in the firm owned by Hill, Coppin and Bond. That gave him 60 per cent of the company and therefore the upper hand over Forrest. Intersuisse, which had expanded too quickly in a weak economic climate, was teetering on the brink of failure. In the days before mobile phones and email,
Forrest was unaware of much of the drama that was unfolding back in Sydney.

When Forrest finally returned from Africa, Wong presented him with an ultimatum: either you buy me out of this mess or I will buy you out. According to Wong, Forrest didn’t want to be pushed out of Intersuisse because he had lent the company $300,000. Things turned nasty when Forrest took Wong to the NSW Supreme
Court. “Andrew’s natural instinct is always to fight,” says Wong. But the case never made it before a judge, as Forrest and Wong reconciled at the last minute, reaching a settlement on the steps of the courthouse. Forrest sold Wong his stake in 1990 for a much smaller sum than he had hoped for and went off in pursuit of his next wild plan: breeding alpacas.

Alpacas are lethargic beasts that
look like a cross between a llama and a small camel. Until the 1980s, they were bred for their silky-soft fibres only in their native South America. Forrest’s idea was to bring the alpacas from the highlands of Chile all the way to Australia – where they were worth $20,000 each – and to ultimately sell them to the North Americans and Europeans, who were prevented by strict quarantine laws from
importing the livestock. But first he needed to raise millions to buy hundreds of the animals. Forrest was quick to pounce on a recent change in the law in New South Wales that allowed for limited partnerships in agricultural schemes. This meant that investors – usually wealthy lawyers, doctors and other professionals – could put $10,000 each into the scheme but would only ever be liable for a fraction
of their original outlay. Their entire upfront investment could also be written off as a tax deduction.

Forrest formed a company called International Alpaca Management and sought to raise $5 million, promising investors that the alpacas would deliver a final payout of up to $49,000 each. While that sounded like an outstanding return, only about $3 million of the $5 million arrived. Rodney
Adler’s FAI ended up putting in money to help meet the shortfall and the scheme was off the ground. Forrest became obsessed with the scheme, which took him back to his agricultural roots in the Pilbara. With his mother, Judy, and sister, Janie, he established a breeding stud near Mittagong in the NSW southern highlands. Forrest might have been living in Sydney’s fast lane, but now he had the rural
retreat – and a Range Rover – to lend credence to the country gentleman persona he liked to cultivate.

The alpacas were shipped from Chile to the Cocos Islands, the remote Australian territory in the Indian Ocean where the government had a quarantine station. But that’s when Forrest’s new get-rich scheme ran into trouble. While about 100 of the animals were waiting to be cleared to enter
the Australian mainland in late 1992, a dispute over ownership erupted between Forrest and an intermediary in the deal, New Zealand businessman Ben Ensor. Forrest responded by suing Ensor, and what followed was a lawyer’s feast. A flock of highly paid QCs lined up for hearings in the Federal Court that stretched over several months in 1993 and 1994.