It’s the best Sydney story in living memory – even better than Underbelly – but no scriptwriter would ever let it end like this. After nearly two decades trying to crack the secret of who made millions of dollars from the famous fire at Offset Alpine, Australia’s corporate cops have finally given up the chase, with the mystery unsolved and the crooks – if there were any – still on the loose.
The fictional version would have been far more fun: a factory burnt down to claim the insurance, politicians and businessmen cashing in on the scam, a suicidal stockbroker spilling Swiss bank secrets, and a beautiful girl thrown to her death to prevent her from talking. The final act would have seen the villains arrested as a top investigative reporter, played by Russell Crowe, stepped up to collect his Pulitzer Prize.
The real life drama – which is almost as compelling – comes with its own stellar cast, featuring Rene Rivkin, Graham Richardson and Trevor Kennedy in leading roles, and with a cameo performance by Kerry Packer, then Australia’s richest man.
The opening scene – be it fact or fiction – is Christmas Eve 1993; an old printing plant in Silverwater goes up in smoke. It’s one of those rare nights in the year the presses aren’t running, so there’s no one at work to put out the fire. The thermal alarm is triggered at 11.04 pm, and five minutes later, by the time the first engine arrives, the blaze is so fierce it’s too late to stop it. With wooden pallets, rolls of paper and gallons of flammable solvents to fuel the conflagration, orange flames light up the sky for miles around. By daybreak, the roof has collapsed and $3 million worthf of printing plant has been destroyed.
In the aftermath, anyone who is lucky enough to hold Offset Alpine shares gets a lovely Christmas present, because the antiquated presses are insured for more than ten times their actual value. Two months before the fire, the company has upgraded its insurance policy and taken out new-for-old cover that indemnifies it for loss of profits. The eventual payout from the disaster will come to $53 million, or more than three times what a small company controlled by Rene Rivkin has just paid Kerry Packer for the whole shebang.
Thus the scene is set for 16 years of action in which police and journalists in Sydney try to solve two big mysteries. The first: Was the fire deliberately lit and if so who was responsible? And the second: Who has made money out of the rocketing share price and, in particular, who owns a secret parcel of stock worth $26 million that is held by a couple of Swiss banks.
In the first few days after the fire it became clear that arson would be impossible to prove, because the damage was so great that any potential evidence had been destroyed. The police informed the NSW State Coroner that the factory’s intruder alarm had not been working, but also reported no sign of forced entry and no trace of accelerants. As far as could be divined, the fire had started in a metal bin containing chicken bones and solvent-soaked rags. In the afternoon before the fire, there had been a barbecue on the factory floor; it was possible that smouldering ashes had been tipped into the bin and that these had started the blaze.
Intriguingly, the official police report revealed that an anonymous note had been sent to the insurance company’s fire investigator. Typewritten on one sheet of paper, it pointed a finger at “the owner’s father” at Offset Alpine and claimed a similar blaze had destroyed his El Telegraph Lebanese newspaper in Marrickville a decade earlier. This person was identified as the ALP powerbroker Eddie Obeid, who had been offered the company by Packer before the sale to Rivkin and whose son Paul was a director, but who did not in fact own any shares.
Detectives were unable to unearth any records of the El Telegraph fire (even though it had all but destroyed the newspaper building in 1983). However, even if they had been able to do so, it would hardly have mattered, since there was no evidence to suggest it was anything more than coincidence.
Consequently, the investigation was abandoned, the case was closed and Offset Alpine’s insurers paid up, thereby delivering a handsome payout to the company’s shareholders. Australia’s then governor-general, Bill Hayden, was among those lucky enough to benefit, as was Channel Nine star Ray Martin and the wife of ex-network boss Sam Chisholm, all of whom were friendly with Rivkin. Another who got in on the act was Rivkin’s driver, Gordon Wood, who told his prospective father-in-law, Tony Byrne, to buy the shares in March 1994, because “the fire was a set up” and the price was going to soar.
By May 1995, Offset Alpine’s share price had duly gone through the roof and the Australian Securities Exchange (ASX) was desperate to discover who owned a big parcel of shares – amounting to 38% of the company – held by Bank Leumi le-Israel and EBC in Zurich. Convinced that these secret shareholders had breached the law relating to disclosure and takeovers, the ASX asked the then Australian Securities Commission (ASC) to investigate. Within a couple of weeks, Rene Rivkin and his good friend Trevor Kennedy were called in for questioning.
Presumably the authorities had good intelligence suggesting these two men were the bashful owners, which was somewhat strange given that Rivkin and Kennedy both had blocks of shares they had declared. Kennedy immediately denied on oath that he had any interest in the offending parcel. Rivkin, meanwhile, was flying to Zurich with Wood to talk to the banks. On return, he also assured the ASC on oath that he had nothing to do with the secret Swiss shares.
The day following this assurance, 7 June 1995, Gordon Wood’s girlfriend, Caroline Byrne, was thrown to her death from the cliffs at Sydney’s famous suicide spot, the Gap. Wood’s alibi to police, which later proved to be false, claimed he had picked up Graham Richardson from lunch in the city. Years later, when he was finally convicted of Caroline Byrne’s murder, the prosecution alleged that a possible motive for her killing was that she knew too much about Offset Alpine.
But back to 1995, when the ASC was taking action in the Federal Court to unmask the mystery shareholders and was suffering its first defeat at the hands of Switzerland’s notorious banking secrecy laws. In those days, Swiss law made it an offence punishable by imprisonment for bankers – and anyone else looking after other people’s money – to identify their clients, even if a foreign court ordered them to do so. Consequently, the Federal Court baulked at directing that the true owners be revealed. Instead, Justice Sackville accepted the Swiss banks’ suggestion that the shares be sold, and $26 million (minus withholding tax) was soon being despatched to the gnomes of Zurich for distribution to the various straw companies whose accounts they managed.
After that, the corporate cops gave up trying to find out who owned the shares, and all went quiet for seven years. Then in 2003 the Australian Financial Review cracked the case with a superb piece of sleuthing that won them a Gold Walkley Award. The AFR discovered that in 2002 Rivkin and Kennedy had been forced to come clean to Zurich’s district attorney, Nathan Landshut, about bank accounts they owned or controlled at Bank Leumi le-Israel that had been milked of funds by the manager Ernst Imfeld.
In the transcript of interview, which the AFR obtained, Rivkin admitted that the by-then-famous secret share parcel belonged to him, Kennedy and Richardson: “These Offset Alpine shares, which this [account] was originally all about, were held, for the most part – let’s say 81% – by me, and about 7% by Richardson and 12% by Kennedy.”
Rivkin further admitted that $1.44 million from the sale of these shares had been paid into a Swiss account in the name of Cheshire, held for Graham Richardson. According to the AFR, Rivkin made these admissions in the presence of his Swiss lawyer, Benno Hafner, who also acted for Kennedy and Richardson, after being cautioned that his answers might be used in legal proceedings.
The obvious conclusion to be drawn from these revelations was that Rivkin and Kennedy had both lied to the ASC back in 1995. And, if this could be proved, both men had a lot to lose, because the crime could potentially put them behind bars for up to five years. More immediately, it was bound to set the Australian Taxation Office onto our three amigos.
Unsurprisingly, Kennedy was horrified when he opened his newspaper at breakfast on 30 October 2003. As he admitted to the Australian Securities and Investments Commission (ASIC) a few weeks later: “This was probably the worst day of my life … my world was crashing down around me … the next two or three days are just a blur in my mind. There are recollections of weeping wives, of dozens of people ringing up, of all of that sort of stuff.”
On the afternoon the articles were published, Kennedy went to see Rivkin at his house and found Richardson already there. He then phoned Benno Hafner in Zurich to arrange a meeting for the following Monday morning, as soon as was practically possible. Kennedy’s purpose in this, as Justice Gyles later observed in the Federal Court, was “to take all available steps to preserve or enhance the secrecy from Australian authorities, including ASIC, of his dealings in or relating to Switzerland, including … any dealings with Rivkin generally and … the Offset Alpine shares in particular”. As the AFR had already reported, Kennedy took secrecy seriously. He had written to Benno Hafner in 2002 to say, “I deliberately keep no records of my affairs in Switzerland. I visit the country only on an annual basis … I am very circumspect about using the telephone between Switzerland and Australia.” He had gone on to say that examination of his Swiss dealings by the Australian authorities would be “catastrophic” for him and “totally unjust”.
Arriving in London on a Qantas plane on Saturday, 1 November 2003 (he was still a director of that company at the time), Kennedy stopped for the night at the Ritz, where he jotted down a few questions for his Swiss lawyer on the hotel’s notepaper. The next day he boarded a flight to Zurich, where he scribbled a few more points on a notepad at the Romantik Hotel Florhof. Eleven days later, back in Australia, both these sheets of paper were seized in a raid on his Kirribili home by officers from ASIC and the Australian Federal Police, who were disturbing another quiet Kennedy breakfast.
Three weeks after this, he was hauled in by ASIC and grilled for two days. Transcripts of the interview – revealed in a Federal Court judgement in 2004 – make fascinating reading. Kennedy was asked (again) if he had had “any interest at all” in the Offset Alpine share parcel. Prefacing many of his answers with the word “Privilege” so they could not be used in a subsequent prosecution, he answered:
KENNEDY: Privilege. I don’t believe so.
INTERVIEWER: Would the answer be any different if instead of referring to you personally, we referred to some family company or trust or other entity associated with you?
K: Privilege. Yes, it could well be.
I: Mmm-hmm. And are you able to explain that for us?
K: Privilege. Well, in the late ’80s, to the best of my recollection, I caused an entity to be established that was offshore.
I: What was the name of that entity?
K: It was, I believe, called Brampton.
Kennedy told ASIC that Brampton had been set up for him “by some supposedly smart accountants and lawyers in London on the basis that what I was doing was strictly legal and that I had no ownership or— or authority over it …” Asked why they had done this for him and whether he had given them instructions, Kennedy replied: “It was suggested to me that— that— that— that it might be useful to have something over there. I— the— to the extent which I gave instructions, I— I simply don’t recall.”
I: Who— who made the suggestion that it might be useful?
K: I don’t remember.
I: And when you used the expression “over there”, what did you mean by that expression?
K: … When it was originally suggested, I can’t recall whether the— the— the jurisdiction was going to be the Netherlands BV – when I worked at the Consolidated Press, there was a lot of companies that were established in the Turks and Caicos and Netherlands BVs, Liechtenstein, Switzerland, etc. What specifically, I don’t recall.
Over the years there had apparently been several different Bramptons – in Switzerland and the Bahamas – but their purpose was always the same. According to Justice Gyles, it was “obvious” they were set up “to take advantage of Swiss secrecy laws and thereby hide assets and transactions with which Kennedy had a connection from the Australian authorities including the Australian Taxation Office.”
Perhaps Kennedy’s ex-boss Kerry Packer had told him he would be a fool not to dodge tax in this way, or perhaps Rivkin had persuaded him to hide his money offshore. But even as Kennedy tried to deny legal ownership he clearly admitted the entities were his, in that he accepted they were, “a very private piece of my own affairs”.
For the next six-and-a-half years, the corporate police tried their damnedest to prove their case, while Rivkin, Kennedy and Richardson did their best to frustrate them. And so began a series of legal battles in Australia, Switzerland, London and the Bahamas, and possibly several other tax havens.
To begin with, Kennedy asked the Australian Federal Court (in two separate actions) to prevent ASIC from using his handwritten notes and the personal computer files that had been seized from his house, on the basis that these were covered by legal professional privilege. He then launched another suit challenging ASIC’s constitutionality and its application for help from Switzerland. When all three were unsuccessful, Kennedy appealed, and lost again.
By this time, ASIC’s investigators had started collecting evidence from banks, lawyers and tax advisers in the UK and Switzerland, with the help of the relevant governments. This provoked three more legal actions from Kennedy and Richardson in the Swiss courts, seeking to stop ASIC getting hold of documents or – once 13 volumes had been delivered to Australia in 2006 – being allowed to read them. Once again, all these hugely expensive battles ended in victory for ASIC.
Meanwhile, Hafner was fighting a fourth foreign action on behalf of the three amigos in London’s High Court. This time he was attempting to prevent ASIC questioning two employees of MeesPierson Intertrust, the world’s biggest trust company, which appeared to be the brains behind the offshore structures disguising ownership of the Swiss bank accounts. Once again, ASIC emerged victorious in the battle and, as far as we know, the two men were duly examined under oath in London’s Bow Street Magistrates’ Court in 2006.
Yet somehow all these victories eventually counted for nothing, because in late May 2010 ASIC was forced to announce it was giving up the fight. And here’s why: as the AFR reported, “the bank accounts in Switzerland were held indirectly through a series of corporate trusts in Liechtenstein and Scottish partnerships based in London. These were in turn controlled by corporate entities in the Bahamas and trusts in the British Virgin Islands managed by nominee companies in the Channel Islands.”
In other words, Australian investigators were faced with a set of boxes within boxes, with the key to each one kept in a different tax haven. Legal action to unlock the first box was just the precursor to another legal battle to unlock the next, and so on. In the end it appears that ASIC became exhausted, just as the Australian Federal Police had done in the 1990s when they pursued Alan Bond’s offshore fortune. Bond fought 13 separate legal battles against the AFP or his bankruptcy trustee to prevent access to documents and witnesses, and lost all of them, yet he still won the war, despite it being blindingly obvious that he was hiding millions of dollars from his creditors. In the end, Bond won because his Swiss moneyman, Jurg Bollag – who was the only one who knew how the puzzle worked – could not be forced to tell police what he knew. Benno Hafner had a similar monopoly of knowledge on Kennedy’s offshore affairs, and he too could not be compelled to talk.
Nowadays, the Swiss trumpet their willingness to help foreign governments chase criminals and the proceeds of crime. But the Rivkin–Kennedy–Richardson saga shows that you can still rely on Swiss bankers to keep their mouths shut and that this usually suffices to keep pursuers at bay.
Avoiding prosecution (Richardson was accused of lying on oath to the ATO, according to London’s High Court) did not mean that the three amigos escaped scot-free. All were audited by the Australian Taxation Office and hit with big tax bills and penalties, and all coughed up millions of dollars in settlement. Rivkin, of course, committed suicide. And while Kennedy and Richardson fought long and expensive legal battles against the ATO, it was they who were event?ually forced to throw in the towel. The ATO does not have to bother with the difficulty of dispelling all reasonable doubt.
But the mystery remains: Exactly what were the three men so desperate to hide? Rivkin had seven Swiss banks accounts, Kennedy five and Richardson three (one of which only came to light this year) through which millions of dollars moved for years. Most likely it wasn’t merely their dealings in Offset Alpine that they wanted to keep secret. As the AFR reported in October 2003, Rivkin told the Zurich district attorney about “a network of secret bank accounts used by himself, Richardson, Kennedy and a string of other Australian business figures – whom he named – to move tens of millions of dollars anonymously in and out of the Australian stock market”.
Now there’s a story. I wonder who they might be. I have my little list, but I’ll need it confirmed before I publish. Oh, if only dead men could talk.
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