Ben Hills explains

Moored at Sandringham Yacht Club, bobbing gently on the choppy grey waves of Melbourne’s Port Phillip Bay, is one of the fanciest pleasure boats in Australia – the sleek navy blue hull and twin masts of the 62-foot schooner Anitra May.

Worth a cool $600,000 and luxuriously appointed – the state-room even has a king-sized bed – the boat is a symbol of the lavish lifestyles of the rich and famous, and a reminder of the part its three owners played in some of the most notorious corporate scandals of the past decade.

Ken Jarrett, the first to buy into the Anitra May back in 1986, is the best-known of the three pals. He is the former head of Elders Finance, jailed for six months in 1994 after pleading guilty to his part in a bogus $66 million foreign exchange transaction.

The second co-owner is Michael Sissian*, a Sydney lawyer-turned-financier, best known to the racing community as the chairman of Segenhoe stud near Scone, Australia’s oldest. Although the business is now doing well, two years ago, after the shareholders’ funds collapsed from a surplus of $7 million to a deficit of $18 million, a Federal Court judge ruled there was cause to wind the company up, and the Australian Securities’ Commission announced an investigation.

But it is the third and most recent part-owner who has been in trouble recently. John Thomas Harvey, former turkey-farmer, dentist, and guest-house proprietor, confidant of premiers, consultant to some of the country’s biggest businesses and sports promoter extraordinaire must be wondering whether there is a curse attached to the Anitra May after two of the companies of which he was a director went into liquidation, and a third became embroiled in an ugly legal dispute.

As he sat in the witness box of the Supreme Court in Sydney the other day when?, while a barrister grilled him about his business affairs, Mr Harvey looked a mere shadow of the swashbuckling entrepreneur his former friends remember – the man who just a year ago was hobnobbing with supermodel Elle McPherson as he announced plans to raise $12 million for an all-woman crew to carry the West Australian government banner in the Whitbread round-the-world yachting marathon which starts tomorrow.

Nor was there any vestige of the political wheeler-dealer who, for more than a decade, had the ear of some of the most powerful conservative politicians in the country – former federal Liberal leader Andrew Peacock and NSW Premier Nick Greiner, for whom he worked ; Victorian Premier Jeff Kennett and WA Premier Charles Court from whom he wheedled more than $2 million of tax-payers’ money for sports promotions which ultimately flopped.

No, this John Harvey answered questions in a low voice, preceding his answers with the word “priviledged” to protect him from self-incrimination ; his lips moved and he frowned in puzzlement as he read documents handed to him ; he closed his eyes as he struggled to control his exasperation at suggestions that he had lied or acted dishonestly. How had it all come to this? he must have been wondering.

JOHN Harvey first registered as a blip on the political screen in 1981 when, at the age of 30, he ran as a National Country Party candidate for the State seat of Burrinjuck. Schooled in Canberra and a graduate in dentistry from a Sydney university, he had moved in 1977 to the tiny historic village of Binalong, 80 kilometres north of the national capital and within the rural electorate.

With his wife and business partner (now his ex on both counts) Susan and three children, he bought an old hotel where he practised dentistry, attempted to run a guest-house – the first of many unsucessful business ventures – and raised turkeys, which resulted in the first of his many involvements with the courts.

Ian Lumsden, general manager of local Yass Shire Council, says that Harvey was running about 1000 turkeys in a paddock adjacent to the hotel and “it became a health issue because the residents got upset about the feathers blowing everywhere and turkey shit getting into the creek.” The council took him to court and “we must have won because the turkeys disappeared.”

Harvey was also a loser in his election campaign, but impressed the party nabobs sufficiently to appoint him federal director of the NCP, the youngest in the party’s history. Unfortunately for Harvey, he lasted only about 18 months in the job – another harbinger of what would become a pattern in his life.

“He was very impetuous and very autocratic,” says Bryce Osmond, who got to know Harvey when Osmond was press secretary to the-then State NCP Leader Leon Punch “He used to make decisions without consulting the central committee, and they turned out to be decisions we would not have made. Membership started to slide and he had to go.”

However, by now Harvey – whose greatest asset, friends and enemies alike agree, is his charm and persuasiveness – had begun to impress other important people on the conservative side of politics. He was recruited as private secretary by Andrew Peacock, then federal Liberal Leader, and in 1987 was seconded to the staff of NSW leader Nick Greiner to work on “Statex,” a full dress rehearsal for the following year’s State election.

Ken Hooper, Greiner’s long-standing press secretary, says Harvey performed well as an “advance man” and was a “technological whiz,” bringing the campaign into the electronic age by introducing mobile phones and faxes and other gadgetry. When Greiner won the election, his gadget-man was appointed principal private secretary, according to Hooper and others on his staff “the worst decision we ever made.”

The most expensive memorial to the Harvey’s two years as the premier’s right-hand man is the Eastern Creek raceway for which Harvey justifiably claims credit. What began as a prestige project to capture a Grand Prix event for NSW without costing the tax-payer a cent, ended up a fiasco devouring $90 million of public money and badly damaging Greiner’s reputation for good management.

Harvey became increasingly overbearing as the controversy dominated the headlines. “He and I clashed so many times it was like open warfare,” says Hooper ,”He’s 6ft 3in and I’m only 5 ft 8 in but I remember once when he had been dynamiting me in the media I threatened to stand on a chair and knock his block off.”

The turkeys, too, returned to rear their ugly heads. Hooper says that Harvey was in continual dispute with local tradespeople in the Yass area, and on one occasion a supplier obtained a garnishee on his wages over some unpaid-for turkey feed.”He had all sorts of excuses – the feed was not delivered, it was wet, it was full of weevils, he wasn’t going to pay – but at the end of the day we convinced him it wouldn’t look too good if it got into the media, and it was quietly settled.”

Eventually, things came to a climax. Hooper was sitting in Greiner’s office one day when Harvey burst in and told his boss “He’s got to go, Nick. Either he (pointing at Hooper) goes or I do.” Greiner, who had been writing at his desk, looked up and said :”John, would you collect your things on the way out and leave the car-keys on the desk.” Harvey turned white, spun on his heel, and walked out.

NO-ONE is quite sure where Harvey’s passion for yachts – big, expensive yachts, of course – came from. People who have been boating with him describe him as a social sailor at best, and a former girlfriend, Marie Faull, says he once boasted that he would become “the first non-yachtsman to win the America’s Cup.”

Walking out of Greiner’s office may have finished his mainstream career in politics – though the contacts he made would last him in good stead for many years – but Harvey was about to embark on a new career as a sports entrepreneur, combining business with pleasure in a series of adventures that would consume large amounts of other people’s money, and leave a trail of angry creditors across the continent.

After an involvement in Syd Fischer’s unsucessful 1992 bid for the America’s Cup, Harvey claims credit for instigating the 1995 bid by the One Australia syndicate headed by the cup-winning Melbourne skipper John Bertrand. The idea was born over dinner with a friend, the yachtsman Andrew Buckland, at Sydney’s Harbourside restaurant one night – Harvey would raise the $35 million required and Buckland would recruit the talent, including Bertrand. Just like that.

The money did pour in, thanks at least partly to Harvey’s connections. Kennett ( whose 1992 election campaign Harvey worked on, telling friends his principal role as minder was to make sure the future premier did not put his foot in his mouth) contributed $1.5 million from Victoria’s “Community Support Fund,” which is funded by poker machine taxes and referred to by the Opposition as “Kennett’s personal piggy bank.”

The Federal Government was even more generous – the challenge qualified for a 150 per cent tax deduction for “research and development,” which resulted in a controversial multi-million dollar tax break for investors. However, Harvey once again had a falling-out with his co-workers – a spectacular one, which led to his resignation as a director of the two companies formed to manage the bid, and his filing three writs claiming damages.

In one, he said Bertrand had assaulted him ; in the second he claimed he had been unfairly dismissed ; and in the third, he said he was the victim of “defamation by omission,” by not having his role properly acknowledged in a book about the challenge by Bertrand’s wife Rasa.

The first two actions have been settled out of court, with Harvey telling former friends that he was paid about $250,000. This appears to have given him an appetite for litigation – he once told Lindsay Marwood, the onshore manager of the failed Elle racing syndicate “Whenever I run out of money I sue.”

The venture that landed him in the witness-box of the Supreme Court last month (memo : August) was Harvey’s next unsuccessful attempt to break into big-time sports promotion – a series of races between small Suzuki racing cars, staged in conjunction with nine major race-meets around Australia during 1995.

The idea, actually, came from Neville Crichton, the governing director of Ateco Suzuki, the NSW distributor of the Japanese cars, and it was intended to give young budding drivers a chance to break into racing. The drivers themselves would finance the event – 31 of them were recruited, each paying $30,000 in entry fees which entitled them to keep the cars at the end of the series.

Crichton contracted a company called International Sports Services Pty Ltd (ISS) to promote and run the races. ISS was owned by Harvey and two friends, Bill O’Gorman (an entrepreneur who first brought Grand Prix racing to Australia) and Tim Michael, a former journalist and ministerial advisor whom Harvey had met while he was working for Greiner.

The three had planned to make “a modest profit” out of the exercise – and, indeed, at one stage the company had close to $1 million in the bank. Extraordinarily, just a few months later, ISS hit a cash crisis, bills mounted up, the Confederation of Australian Motor Sports cancelled the licence to run the event the following year, and O’Gorman and Michael had an administrator appointed. The company is now in liquidation with debts of over $250,000, and no realisable assets that the liquidator has yet been able to find.

Crichton says that Ateco Suzuki had to bail the event out by anteing up tens of thousands of dollars in unpaid prize-money.”The bills were not paid, the rules were changed, it was an absolute disaster,” he fumes “We went into it for the good of the sport, and finished up with egg all over our face and involved in a massive legal battle we did not need.”

Harvey’s examination, instigated by the liquidator, attempted to get to the bottom of one key transaction in the fall of ISS – Harvey’s withdrawal from the company, in June 1995, of two cheques totalling $170,000. Those cheques were paid to Ken Jarrett and a company controlled by Michael Sissian, and was the price Harvey paid for his one third share in the Anitra May.

Harvey told the court this was either money the company owed him, or an advance – and that his two co-directors were well aware of what he intended to do with it. This, Michael at least denies – he says he foolishly signed a blank cheque (ISS cheques required two directors’ signatures) and had no idea the money was to be spent on a yacht. The liquidator is still trying to decide what, if anything, can be done.

“SOMEONE rings me up and asks me the name of my daughter’s manager – what am I supposed to do?” Peter Gow, property developer, Cronulla Sharks president, and father of Elle McPherson, bristles at the suggestion that he played any part in arguably the most embarrassing episode of her brilliant career.

Gow has used John Harvey as a consultant on “a number of projects” and is one of the few people who still sticks by him – but he denies he used his influence to bring him and Elle together.”He’s a very entrepreneurial person,” he says “I feel he has been very malaligned (sic) over the whole thing.”

It was just last November, with an election campaign about to get into full swing, that a beaming W.A. premier Charles Court announced that Elle had agreed to lend her name to a WA entry in the Whitbread yacht race – and the rest of her to an $8 million international advertising campaign for the WA Tourist Commission.”Elle perfectly complements the new Brand WA – fresh , natural and free-spirited,” he gushed.

In fact the ink was barely dry on the contract between the WATC and a company called Elle Racing Pty Ltd – the first two cheques, totalling $300,000, were given to the company on November 14, the day the election was called. But who exactly was behind Elle Racing Pty Ltd?

Company records show that it had a paid-up capital of just $11, and on that date there were three directors – John Harvey, his daughter Jayn¤, and his friend Andrew Buckland. There is no mention of Elle herself, though she was referred to as “company president”.

And there is also no corporate record of the “R.Dixon” who counter-signed the contract on the company’s behalf. This turns out to be Roslyn Dixon, an accountant who was lodging at Harvey’s house in Stanmore, and who claims she was a director of the company at the time – her appointment was not registered with the Australian Securities’ Commission, as required by law, “because I was in and out so quickly – I resigned about a week later.”

A spokesman for the WATC (Mr Court has now put a glacial distance between himself and the project) conceded that “with hindsight we should have made more checks”- on Harvey’s commercial track record, and on the substance of the company. Because, like so many ventures with which Harvey has been associated, the project has now fallen in a heap.

The WA Government agreed to pay $1 million – $600,000 was to go to Elle to star in the tourism commercials, and $400,000 to a syndicate which Harvey said would raise the $12 million needed to enter an all-woman crew in the Whitbread marathon. However, only $540,000 had been handed over before the WATC tore up the contract on the grounds of non-performance, and all that money went to Elle Racing.

“Elle herself never received a cent, as far as I know,” said Patti Mostyn, her Australian agent ,”She did everything she was contracted to do, and all we got was a lot of grief.”

So what happened to the money? Some went to pay the crew Harvey hired for the challenge, though (they claim) not enough – the trial yacht was “arrested” in Sydney when they claimed more than $100,000 in back pay and expenses. Some went to McConaghy’s famous boat-yard in Mona Vale, where the half-built Elle boat which should have been launched last March is now begging for a buyer to complete it, at a cost of a cool $1 million.

But some of the money from Elle Racing Pty Ltd, we know, went to settle private debts owed by John Harvey which had nothing to do with the challenge. Tim Michael has one company cheque, signed by Harvey, for $1000 – part payment of an unfair dismissal settlement. A solicitor representing Marie Faull, his ex-lover, received another Elle Racing cheque, for $2124.21, to settle a court judgement against Harvey involving some of Ms Faull’s property he failed to return after they separated.

When the Herald approached Harvey for his explanation of these payments – and other matters, including the $170,000 paid for his share of the Anitra May – he was less than forthcoming. “Sleeze,” he said “You are absolute sleeze.” And then hung up the phone.

Clarification

* Michael Sissian contacted me in July 2014, some 17 years after this article was written, and asked me to post the following clarification:

1. This section is headed ‘Scams and Scoundrels.” I am neither. My business career spans over 40 years, during which I have held many positions of trust, including several years as Honorary Treasurer of Aushorse (which is the peak marketing body of the Australian thoroughbred industry). More recently, I represented the thoroughbred industry’s breeders, owners, trainers and workers before the Productivity Commission, in relation to product fees payable by corporate bookmakers to the race clubs.

2. The second paragraph describes the part I played in “some of the most notorious corporate scandals of the past decade”. In relation to those “scandals”:

3. The ‘collapse in shareholders funds” in Segenhoe Ltd was occasioned by write downs in the carrying value of thoroughbred stallions and mares, following the collapse of Australian bloodstock prices in the recession of the early 1990s and the failure of those stallions and mares to produce enough high class progeny to maintain their commercial appeal. These horses were acquired by Segenhoe before I became chairman in 1989. As you fairly note, we were able to turn the business around when the market started to recover in the mid-1990s and Segenhoe continues to be an iconic commercial stud to this day, with a world wide customer base. Every creditor of Segenhoe has always been paid; the recession of the early 1990s was a very tough period in which many studs went out of business and I remain proud of what my team  achieved.

4. To the best of my knowledge, no company in which I have been involved has ever been the subject of a formal ASC or ASIC investigation. If any was announced, it most certainly never proceeded.

5. The Federal Court case referred to arose in relation to a convertible note issued to Equiticorp by Segenhoe’s prior management in the late 80s. The note had a face value of $2M and the proceedings were settled for $200K on the ‘steps of the court”, which is indicative of the strength of Equiticorp’s claim as perceived by the lawyers for both parties. When the settlement terms were handed up, the judge said that he wanted to hear the case in any event, as it involved an important technical point of law. To the surprise of those involved, he found that there was cause to wind up the company – but the debt had already been settled.

6. The third paragraph refers to “the three pals” (i.e. The 3 partners in crime). Please note that I initially owned the boat with 3 executive directors of Elders and then solely with Ken Jarrett, with whom my friendship has now spanned 30 years. I regard him as a thoroughly decent man  who made one error and paid a terrible price. My support for Ken is a matter of public record, as I gave character evidence at his committal. John Harvey, on the other hand, is a person I have met and spoken to only once in my life, after Ken sold him a share in  the boat. I had no knowledge of his business dealings, but he is a person to whom I took an immediate dislike and did not wish to be associated. To break this association, Mr Harvey forced me to obtain a court order for sale of the boat. It was sold at public auction for about $270,000, pursuant to that court order.

7. In summary, I am not the man who sunk Elle, I have no relationship with the man in question and there is nothing in my business career that founds description as a ‘notorious corporate scandal’. Now that we are looking to raise capital for Procon, this article is apparently causing disquiet among potential institutional investors and I appreciate your offer of assistance.

— Michael Sissian

Publishing Info

Pub: Sydney Morning Herald
Pub date: Saturday 20 September 1997
Edition: Late
Section: Spectrum
Sub section:
Page: 4
Word count: 3022
Classification: Transport/Water/Sailing Ships & Yachts
Caption:
1. All at sea … John Harvey at the helm, and Elle Macpherson
2. Media crush … Elle Macpherson at the launch of the campaign in WA.
3. Happier times … John Harvey with his former girlfriend Marie Faull.
4. Making waves … the 62ft. $600,000 schooner in which John Harvey was a partner.