How Debt Is Sinking A Property Tycoon's Empire
Sydney Morning Herald
28 December 1991
By BEN HILLS
Warren Anderson, once one of Australia's richest and most influential men, is virtually broke and his property empire is submerged in more than $500 million debts, according to documents seen by the Herald.
The man who recently described himself to the WA Inc Royal Commission as "a simple property developer" was estimated by BRW magazine just last year to be worth $190 million - the result of two decades of reshaping the skylines of Sydney, Melbourne, Perth and Darwin.
In fact, as the magazine rolled off the presses, the flagship of Mr Anderson's network of 53 companies, Tipperary Developments Pty Ltd, had assets of $59,158,500 and liabilities of $59,158,498 - a net worth of just $2.
And the family trust which controls most of the Andersons' personal wealth, Tipperary Developments Discretionary Trust, was in even deeper trouble. At June 30 last year, according to unaudited accounts, the trust's liabilities exceeded its assets by $19 million.
As for Mr Anderson himself, in spite of the 560 SEC Mercedes parked in his driveway as recently as last week, the chartered private jets, the ski lodges, the mansions, and the other trappings of his millionaire lifestyle, his 1990 group certificate shows that his income was just $30,394.96.
In a letter last February to one of Mr Anderson's major creditors, his accountant, Mr Peter Stubbs, said: "Mr Anderson has no assets in his own name, apart from shares in various trustee companies. These shares only have a nominal value ..."
Warren Perry Anderson, who turned 50 in October, began life as a bulldozer driver clearing scrub in Western Australia, married the manager of a local roadhouse (they now have four children) and kicked off a career as a property developer in 1970 by building a Coles supermarket in the goldfields town of Kalgoorlie.
Over the subsequent 20 years he put together the deals for some of Australia's largest developments - the $1 billion-plus Westralia Square skyscraper in Perth, 50 Coles and K mart supermarkets around Australia, the new Parliament House complex in Darwin, and at least six major office blocks in the Melbourne CBD, including the proposed redevelopment of the Windsor Hotel site opposite Parliament House.
Along the way he became partners with the rich - including the billionaire businessman Mr Kerry Packer, Mr John Roberts of the construction giant Multiplex which built most of his developments, and the collapsed tycoon Mr Alan Bond.
And he became friends with the powerful - the new Prime Minister, Mr Keating, his new Transport and Communications Minister and party powerbroker, Senator Richardson, the former WA Premier Mr Brian Burke and a swag of other State premiers and lord mayors.
Mr Keating has holidayed with Mr Anderson and was once filmed by Channel 10 washing his Mercedes in the driveway of Mr Anderson's Vaucluse mansion.
Mr Anderson also made some less salubrious associations. He once hired Tim(The Enforcer) Bristow, who has a criminal record and has testified to the building industry royal commission that he stood over troublesome unionists on building sites. And he employed for a while the notorious Tom Domican, who is at present appealing against an attempted murder conviction.
Mr Anderson was also in the news after he featured in two Royal Commissions, was subject to a special audit by the Australian Tax Office after two companies he once owned were stripped in a bottom-of-the-harbour tax rort, and as recently as last month was named in the Victorian Parliament in connection with a bribe allegedly offered to a city councillor to drop his opposition to Mr Anderson's Melbourne CBD property consolidations. All parties denied this happened.
It has been suspected for some months that Mr Anderson is in financial trouble. Among the signs:
* Boomerang, his $10 million pink stucco art deco mansion with its own private cinema on the waterfront in classy Elizabeth Bay is up for sale.
* Fernhill, an 1824 National Trust-classified mansion near Penrith(complete with stables, race track, pool, tennis court and zoological gardens)is also on the market.
* A half interest in Tipperary, his 50,000-hectare property in the Northern Territory, complete with 200 imported palm trees, a white rhinoceros, an airstrip that can take a Boeing 707, and Australia's biggest private zoo, has been sold to an Indonesian trading company.
These properties were once said to be worth $250 million.
Adding insult to injury, he has been forced to put up for auction his extraordinary collection of weapons, said to be one of the best in the world, which once included the gun which assassinated President Lincoln, a pair of pistols which Napoleon gave to Josephine, and the sword wielded by General Custer at his Last Stand.
It is not known what will happen to his extensive collection of paintings or his antique clocks - an interest he shares with Mr Keating, an occasional house-guest at Fernhill, Tipperary and the ski lodges.
Until now, details of Mr Anderson's parlous financial position have not been publicly known. They come as creditors, headed by Mr Packer, close in on the remaining assets of what was once a property empire spanning the continent and estimated to be worth more than $2 billion.
The documents seen by the Herald show that Mr Packer's Consolidated Press Holdings - which financed and co-ventured some of the more spectacular Anderson developments - has moved to secure its position by taking charges of around $200 million against land and buildings owned by the trusts and other Anderson companies.
It is not hard to understand why. The consolidated accounts of the Warren Anderson and related trusts (according to Mr Stubbs) show a bottom line of$168 million in assets, described as "various rural, commercial and residential properties and antiques".
Against this were listed liabilities of $228 million - Mr Packer's group was the biggest creditor, but the Bank of New York was also owed part of $54 million, and Trafalgar Properties Ltd was owed $8 million. The shortfall is$60 million.
The main cause of Mr Anderson's crash is his disastrous decision to buy into the biggest property development ever planned for West Australia - a complex of three tower blocks on the city's main boulevard, St George's Terrace, which was originally estimated to cost $1.2 billion, more than the new Parliament House in Canberra.
Mr Anderson and Mr Packer (through their companies, Tipperary and Consolidated Press Holdings) bought the site from the Western Australia State Government Insurance Office in 1988 for $270 million in circumstances which have been the subject of a WA Inc Royal Commission inquiry.
They paid (according to evidence) $90 million up front, with the balance to be paid several years from now.
Following the collapse of the Perth property market (28 per cent of CBD office space is empty) only one of the towers has been completed, and it is floundering with virtually no tenants.
Of Mr Packer's $200 million charge against the Anderson properties, Mr Stubbs says: "The net asset value of the Westralia site is unknown in the present market, and the liability is increasing due to the capitalisation of interest."
One estimate is that the eventual loss will blow out to $350 million.
On top of this, Mr Anderson (according to his evidence to the Royal Commission) borrowed the $50 million he put in as part of the WA Government's bail-out of the Rothwells Bank from Mr Packer.
In spite of threatening to "tear the heart out" of then WA Premier Mr Peter Dowding if he did not get his money back, Mr Anderson still owes Mr Packer about $40 million of this.
"He's a big fellow, too," he told the inquiry.
And Mr Packer is not the only one hunting Warren Anderson's scalp.
In 1988, while the property boom was at its frenzied peak, Mr Anderson linked up with two major Japanese companies - the trading conglomerate C. Itoh and Co. Ltd and its associate, the construction giant Shimizu Corp. Ltd - to develop a number of CBD sites in Melbourne. In particular, there were 20-storey buildings at 350 Queen Street and 320 Exhibition Street.
Last September, after a series of complex court battles, the NSW Supreme Court ruled that Mr Anderson had to comply with an agreement to buy out his Japanese partners, and awarded damages of $118 million against one of his companies. It was a highly unusual action - Japanese companies usually prefer to negotiate rather than litigate.
C. Itoh is apparently determined to recover the money, which has not been paid, even if this involves instituting bankruptcy proceedings over personal guarantees given by Mr Anderson. The Japanese claim these guarantees total$348 million.
The Bank of New York, financier for the Queen Street office block, has also had resort tothe courts to try to recover $32 million it paid out to guarantee Mr Anderson's obligations.
It has taken out charges over various Anderson properties, including the Elizabeth Bay mansion and the Tipperary station in the Northern Territory.
In a last-ditch bid to stave off his creditors - who are claiming they are owed at least $578 million - Mr Anderson has been sending out confidential letters claiming he is as good as broke.
His Sydney accountants, Peter Stubbs and Co Pty Ltd - which operate out of the same plush art deco building in Castlereagh Street, Culwalla Chambers, as Mr Anderson - have written that Mr Anderson himself has no assets, and his trusts and companies have everything in hock to the Westralia Square project.
The Tipperary Developments Discretionary Trust - the umbrella trust for the Anderson family - had a net loss of $19 million in 1989/1990 , after writing off $27 million worth of loans as an "extraordinary item".
The documents do not explain who these loans were to, nor why they were written off.
The telephones at Mr Anderson's Tipperary Developments offices were not being answered this week, and his private numbers are a state secret, so the comments of Australia's latest ex-millionaire on his plight could not be obtained.
Not that they would have been very enlightening - the media-shy Mr Anderson's last public comment, as he left the Royal Commission in Perth, was to tell a photographer, "Why don't you get a proper job."
Recommended Personal & Car Loans
