Alan Bond: the sign-writer who lost everything

There is a photograph taken in Newport, Rhode Island, on 26 September 1983, that pretty much every Australian of a certain age can conjure without prompting. A group of men in red-and-white jackets, soaked and screaming. Alan Bond, barrel-chested and grinning fit to split his face, at the centre of it. Australia II had just become the first yacht in 132 years to wrest the America's Cup from the New York Yacht Club, and the man who had funded four challenges to do it looked, in that moment, entirely invincible.

He was not, of course. But it took another decade for the full extent of the damage to become clear, and the story between that photograph and the eventual reckoning is one of the most instructive in Australian corporate history. It is instructive not because Bond was uniquely villainous, but because the machinery that built him and then destroyed him was so thoroughly of its era.

A sign-writer from the western suburbs

Alan Bond was born in Hammersmith, London, in 1938 and arrived in Fremantle with his family as an assisted migrant in 1950. He left school at fifteen. His first trade was sign-writing, and by his late teens he was running his own small lettering business in the western suburbs of Perth. It was not the kind of origin story that the merchant banks of Collins Street were accustomed to financing.

What he had instead of credentials was an almost physical inability to accept the scale he was currently operating at. By the mid-1960s he had pivoted from signs to land, buying outer-suburban Perth blocks at the fringes of the city's then-modest sprawl and selling them at a margin that kept surprising people who thought they understood the local market. The deeds office on Barrack Street would have seen his name regularly enough in those years to know something was building.

Bond Corporation was incorporated in 1969, and from that base the acquisitions accelerated: mining leases, brewing (he eventually acquired the Swan Brewery in 1983, a piece of Western Australian patrimony that meant something beyond the balance sheet), media and eventually international assets spanning oil fields, resorts and a South American telephone company. By the mid-1980s, Bond Corporation had become a genuine conglomerate, the kind of sprawling, debt-financed structure that the decade seemed purpose-built to reward.

The Cup and what it bought him

Bond had made three unsuccessful America's Cup challenges before 1983. Most syndicates would have stopped at two. His persistence was, depending on your interpretation, visionary or simply an inability to hear the word no, and those two things are not always easy to tell apart in a founder at full tilt.

The 1983 win, achieved with designer Ben Lexcen's famously winged keel on Australia II, did something that money alone rarely does: it conferred legitimacy of a different kind. Bond became, briefly, a figure of genuine national pride rather than merely a rich man from Perth. Prime Minister Bob Hawke declared it a public holiday. The photograph went on walls.

What the Cup actually bought Bond was access, to capital markets, to boardrooms, to the kind of people who had previously kept him at a certain distance. He used it quickly. In 1987 he purchased the Nine Network from Kerry Packer for around $1 billion, a price Packer himself considered extraordinary and which he is widely reported to have described with characteristic economy. Packer bought it back a few years later for a fraction of that sum, which tells you a fair amount about what happened in between. The wider saga of the Packer family's power and gambles shows how differently the two men played the same game.

Also in 1987, Bond purchased Vincent van Gogh's Irises at Sotheby's New York for what was then a world-record price for a painting at auction, widely reported at the time to be around US$53.9 million. The detail that later emerged, that the purchase had been partly financed by Sotheby's itself, contributed to subsequent scrutiny of how the record had been set. The painting was eventually sold to the Getty Museum in Los Angeles.

The architecture of the collapse

The 1987 stock market crash did not cause Bond Corporation's failure, but it compressed the timeline considerably. The structure Bond had built depended on asset values rising, on debt being refinanced, on the next deal covering the cost of the last one. When asset prices fell and credit tightened simultaneously, the internal logic of the whole thing started to dissolve.

The group's debts were staggering. By the time administrators were appointed to Bond Corporation in 1992, the total liabilities were reported in contemporaneous coverage to be in the vicinity of $10 billion, an almost abstract figure for the period. It ranked among the largest corporate collapses in Australian history to that point and drew regulatory attention at the national level.

The Australian Securities Commission, as it then was, began investigating. Corporate regulators of this kind can examine company records, question directors and refer matters for prosecution, which is why their findings tend to shape what ends up before the courts. What investigators found, and what the courts subsequently addressed, was not simply a business that had borrowed too much and lost. There were questions about specific transactions: how assets had moved between related entities, how losses had been recorded, and whether the accounts presented to creditors and shareholders had accurately reflected the company's position.

The trials and what the courts found

This is the part of the Bond story that requires precision, because it is easy to smear the specific into the general.

Bond faced multiple sets of criminal proceedings over the course of the 1990s. In 1992 he was found guilty of a charge related to the Bell Resources matter, the extraction of funds from Bell Resources, a company Bond Corporation controlled, in circumstances that the prosecution characterised as fraudulent. The litigation that grew out of the Bell collapse ran for years. He was sentenced to two and a half years in prison. That conviction was subsequently overturned on appeal.

A second, and ultimately definitive, set of proceedings followed. In 1997 the Western Australian Supreme Court found Bond guilty on a charge of dishonestly using his position as a director in connection with a transaction relating to the La Promenade painting deal, a transaction in which Bond Corporation had paid well above market value for a painting in circumstances that benefited Bond personally. He was sentenced to four years imprisonment. He served a portion of that sentence before being released on parole in 2000, at which point he resumed business activities with what his critics found a fairly breathtaking pace.

Honesty requires noting that Bond always maintained he had acted properly, and that he attracted genuine sympathy from some quarters, partly because the regulatory environment of the 1980s was, by subsequent standards, quite lax, and partly because several of his peers in the decade's acquisition boom faced far less scrutiny. Whether that constitutes mitigation is a question the courts did not need to address; they addressed what was in front of them.

The comeback, and the persistence of the persona

Bond died in Perth in June 2015. In the years after his release from prison he had rebuilt some personal wealth through a series of mining and resources ventures in Africa, which is either evidence of remarkable resilience or of the degree to which the Australian financial system had moved on from wanting to revisit the 1990s. Probably both.

What strikes me about this story is how much Bond's reputation tracked the national mood rather than any fixed assessment of his conduct. In 1983 he was a hero. By 1992 he was a villain. By his death, the coverage had softened again into something more elegiac: the immigrant kid who made it to the top of the world, who held the Cup. Australians are rarely comfortable holding two contradictory things about the same person, and so the narrative simplified in each direction as circumstances required.

The businesses he built are largely gone or unrecognisable. Swan Brewery is now owned by a Japanese multinational. The Nine Network survived its Bond interlude and passed through several more hands since. Irises hangs in Malibu.

What the Alan Bond story actually tells us

There is a temptation, especially in retrospective coverage of the 1980s, to treat the figures of that era as sui generis, as characters so peculiar to their moment that their stories offer no forward-looking lesson. I think that is wrong, and the Bond story is one reason why.

The specific mechanisms were of their time: the deregulated banking sector, the thin disclosure requirements, the credit that flowed to anyone who could tell a convincing enough story about assets and growth. But the underlying dynamic, a founder whose personal mythology outpaced his company's actual position, whose access to capital was in part a function of the image he had cultivated, and whose board and bankers preferred the narrative to the numbers, has not gone away. It appears in different clothes in every decade.

Bond Corporation did not collapse because Alan Bond was uniquely reckless. It collapsed because an entire system decided, for a while, to believe the story he was telling. When the belief stopped, there was not much underneath it. That is a lesson that travels.

The Tycoons & Dynasties archive at Defamer covers the full spectrum of Australian business empire-building, the ones that endured as well as the ones that didn't. Bond sits near one end of that spectrum, but he is not alone there, and the company he keeps is instructive.

— Margaret Fenwick, Tycoons & Dynasties