Russell Goward loved to conduct visitors around his enormous mansion, set on almost a hectare of land at Wahroonga on Sydney’s leafy upper North Shore. He would show them the sauna, the spa, the six bedrooms with their en suites, the billiard room and the banquet room with its 12-piece antique dining suite.
And then they would tour the grounds to inspect the pool, the tennis court, the three-storey summer house, the manicured lawns and flower beds and the miniature rainforest which he stocked, for authenticity, with 200,000 specially bred worms.
For two years, Goward would tell people, he slummed it in the summer house with his wife, Catherine, the two girls and the baby while an army of 60 tradespeople (including a “doctor” to look after the 83 trees) worked on the project. The cost? $5 million … $6 million … $7 million … who could guess at the height of the crazy property bubble?
Then, sitting in his study with the light streaming in through a window with the word Sherwood picked out in stained glass (Goward wanted his investors to see him as Robin Hood, stealing from rich and lazy corporations and giving to the poor shareholders), he would say something like: “Of course, all this is not just for me. It’s an investment for Catherine and the children.”
Sometimes his visitors were reporters, and they would write this down and put it in their papers and magazines under adulatory headlines like “Corporate Lion Relaxes In Den” and they would predict that this tousle-haired paragon of propriety would one day rival Alan Bond and Robert Holmes a Court. This was in the days when those names meant seriously rich rather than broke or dead.
They were not to know that – like so much of the Russell Goward’s public life – this image of the devoted family man was a lie.
Just a few hundred metres down the road, in another million-dollar mansion owned by one of Goward’s companies, the Federal Court was told recently, he had installed his mistress, Caroline Radburn – his wife’s younger sister, and the estranged wife of John Radburn who was doing the renovations on the Goward mansion in Lucinda Avenue. Goward would jog down to Walpole Place telling Catherine he needed somewhere quiet away from the kids to work … and for a while she believed it.
“The truth about Russell is that he was an incorrigible pants man … still is, by the look of things,” says a former friend, studying a newspaper picture of an ebullient Goward striding into the Federal Court for a bankruptcy examination the other day, hand in hand with the latest love in his life – a mysterious blonde teenager young enough to be his daughter about whom little is publicly known apart from the fact that Goward first met her when she was at school, and that her parents are most distressed at the publicity.
Goward himself hinted at his weakness for women in an interview with The Sun-Herald a few years earlier. “I never went out with the boys playing snooker, billiards, whatever boys do. At parties I gravitate towards women. I find them more interesting.” To a journalist putting on some weight, he was a tad more direct. “You should do more screwing,” he said, patting the journalist’s paunch.
Says a former secretary from Goward’s days as chief executive of Industrial Equity Ltd: “It really pisses me off – I think I must have been the only one in the office he didn’t try to waylay. He was always finding excuses to have the girls work back and drive them home or wherever. You couldn’t help liking the little scoundrel, but where women were concerned he just couldn’t help himself.”
Another former colleague says that Goward would try to pick up young women wherever he met them – in shops, at the bank, at restaurants, at the hairdressers when he was getting his famous hair curled (another Goward illusion – school photos show him with straight, brown hair, a style to which he has recently reverted). On one occasion he hired a private detective to investigate a girl he took a fancy to in a shop – to find out her name, where she lived, and her date of birth.
Of course, none of this would matter – except to Catherine and the kids, now formally separated and living with a policeman in Mittagong – if it wasn’t an indication of the kind of deception that became a hallmark of Goward’s life… and eventually contributed to his downfall.
One should treat with caution the log-cabin-to-White-House legend that Goward liked to spin about his early life. He says he lived in a fibro house near a swamp in the backblocks of Brisbane, wore surgical boots for fallen arches, and had to write on a slate, not receiving his first pen until he was around nine.
Even allowing for media inaccuracies, it’s unlikely that growing up in the 1950s and ’60s young Russell meant it literally when he said: “I’ve seen what it’s like not to have the money to buy tomorrow’s meal. I’ve been there, done that, and it’s not very pleasant.” Unfortunately his father, Allan John Goward, who retired in 1988 as first assistant secretary of the Department of Immigration could not be contacted to confirm or deny these tales of deprivation.
His part-time economics degree from the Australian National University in Canberra is documented, as are his early years working for the Commonwealth Statistics Department, and then for the merchant banker Hill Samuel. His sporting prowess, too, is a matter of record: 10th in the City-to-Surf marathon the year Robert de Castella won, although we have only Goward’s word that he then turned round and jogged back to the Town Hall to pick up his car.
But one should not take too seriously any claim to fame on the cricket field. Goward used to be well down the batting order for the Hill Samuel social team, and no-one can recall having seen him bowl. “He used to be put out to field on the fence to cut off Bill Loewenthal’s fours and sixes. He couldn’t bat much, but he could run like a jack rabbit,” recalls a fellow analyst at the bank, Kevin Mooney.
He may have been a dud at cricket, but it was the social contact with Loewenthal (then number two to Sir Ron Brierley at Industrial Equity) that led in 1980 to Goward being hired by IEL. It was his industry and intelligence -which no-one doubts – that led three years later to Brierley nominating him, at the age of 29, heir apparent at the company, then one of the fastest-growing and most aggressive corporate raiders on either side of the Tasman.
The next three years were a honeymoon for Goward and the media. The Golden Boy of the Bourse could do no wrong. Company after company fell to IEL … all told, he claimed credit for around 50 takeovers. But, once again, the reality was somewhat different, and may help throw some light on Goward’s abrupt and hitherto unsatisfactorily explained departure from the company.
The name of the development is North Arm Cove, a 1,000-hectare swathe of wooded hills and grassland overlooking the Pacific across the Karuah River north of Newcastle. In the mid-’80s, with Goward at the helm, IEL plunged into a scheme to purchase, redevelop and sell the land as residential blocks (the title had originally been carved up back in 1916 as a Walter Burley Griffin”model town”).
IEL and the Lyons group of companies, headed by the controversial Double Bay developer John Lyons, took over the land expecting to persuade the Government – or the council – to approve roads, water, sewerage and electricity to the area, at a cost estimated at $30 million. But both refused and the land remains zoned rural.
The upshot of this fiasco was that several hundred people bought blocks, only to find that they were not able to build on them – the only use the local council will approve is camping for a maximum of six weeks a year. And IEL(according to Lyons) was left holding the balance of several hundred virtually worthless blocks of land. Although Lyons insists nothing improper occurred, Sir Ron Brierley can hardly have been impressed.
“The banks are happy to lend to me. They have done their due diligence. Why shouldn’t I borrow the money?” This was Goward around the middle of 1989, just when things were beginning to fall apart, when his fellow directors were urging him to go to the market with some new shares, rather than just borrow, borrow, borrow.
Three years earlier, when he had left IEL declaring, “I am 32 and I will never again work for a salary”, Goward bought control of a sleepy listed oil exploration company called Westmex, and began turning it into a poor man’s version of IEL, aiming at snapping up small fish in the $5 million to $20 million range, turning them around, and selling at a profit. He was, says a former colleague, “Ron Brierley writ small”.
Indeed, although the business press kept comparing him with Bond and Holmes a Court, he was never in that league. His wealth was largely locked up in Westmex shares, and probably never exceeded $55 million, which made him(according to the BRW rich list) the 105th richest man in Australia.
He boasted ad nauseam that he would never draw a salary from the company, that he used his own car (in fact, it was a BMW that Brierley had given him)and that he paid for his own phone bills and international travel. But, again, this should not be taken entirely at face value. In the first year Westmex was under his control, Goward managed to earn something like $5 million in dividends from the company … with a return like that, the shareholders might be entitled to ask, who needs a salary?
AND there was also the little matter of exactly how that dramatic profit turnaround occurred. Although Goward was keen to claim credit for turning this moribund little company into an exciting little earner (he declared a $6 million profit for the first six months of his stewardship) others, as far back as 1988 were raising disquieting objections.
The company’s auditors, Mann Judd, said the Westmex accounts were”bordering on the fictional” and resigned. The chairman of the corporate watchdog, the National Companies and Securities Commission, Henry Bosch, said the report was “more akin to a public relations exercise than to the presentation of a true and fair view of the company’s financial affairs”. Goward said he was merely applying IEL accounting practices to Westmex, a statement which should have raised a lot more questions than it answered.
By now a $400,000 turbo-charged Bentley was added to the family fleet. He bought a farm north of Sydney, and began to commute every month to London where he kept a company flat.
On the business front, Goward for a while maintained the illusion that all was well with Westmex. Having survived the crash of ’87, he set off on an aggressive international expansion. He had already bought up Charterhall PLC, another sleepy listed company in the UK, and set about using that as a stock exchange raider on the other side of the world … again, looking for cheap, undervalued assets.
“The trouble with Russell was he had no management philosophy,” says a businessman who worked with him at one stage. “He just assembled a grab-bag of shares which he hoped would increase in value. He had no idea of how to run the things, and he had no fear of debt … he was really just a desk jockey who thought number crunching was the answer to everything.”
The portfolio he assembled appears to bear this out. He became Australia’s biggest stationery producer, he bought a bankrupt vintage car reproductioncompany, he bought a magazine, he bought a security systems company, a chain of cheap shoe shops, a rope factory, a Glasgow store, a clothing manufacturer. Right to the end, whenhis “empire” was said to be worth nearly $600 million, Goward was still buying things with other people’s money- principally his shareholders’ (who obligingly forked out another $20 million for options just a few months before Westmex went down in flames) and the ever-helpful State Bank of NSW, which at last count was $155million down the drain and the proud possessor of a chain of cheap shoe shops etc.
Looking back on it, it is hard to escape the conclusion that it was all done with smoke and mirrors. Russell Goward has told friends the media brought him down, and has hinted that some unnamed poor man’s Tiny Rowlands conspired against him – an apparent reference to the analysis of the Bond group’s accounts which helped send that company to the knackers.
But any fair analysis of the Westmex accounts shows that the whole thing was a castle of sand almost from the start, based on elaborate sale and lease-back arrangements, with vast sums set aside for the goodwill of the companies purchased, and with cash flow dependent on selling things off; $28 million of the company’s $38 million “profit” in its last year of operations was from the sale of assets, leaving $10 million to service $300 million worth of debt. “In the end he just ran out of things to sell,” says a UK analyst.
And, as in so many of the corporate collapses of the ’80s and ’90s, it was the 18,000 “widows and orphans” (as stockbrokers call them) who were left holding the bag. Sometime in late November or early December 1989 Goward’s last major institutional investor, the AMP insurance company, told its brokers to “sell at market” around 6 million Westmex shares – a highly unusual order which resulted in the virtual dumping of the shares. Within hours the rush was on and the share price collapsed from over $1 to 37 cents – at which stage the company’s shares were suspended. By February it was in receivership with debts of up to $200 million.
That first week in December, as his company crumbled and the media, for a change, began to ask some pointed questions, Russell Goward simply disappeared. He said later that he had been laid low by a bout of flu and had lost six kilos in weight, but his friends think there may have been more to it than that.
“I think he had a nervous breakdown. He rang a few of his friends saying, ‘It’s gone – do what you have to’ and then retired to his house in Wahroonga and told anyone who rang him up to get f—–d.” This is a former friend of Goward’s, one of the many former friends, who only three months earlier had been pumping thousands of dollars into Westmex, reassured by Goward’s public statements that “There’s no pressure on us. We don’t have banks sweating on us. We have good, profitable core businesses.”
Once again, Goward’s statements should not have been taken at face value. But it is what he was doing with the money during those last few perilous months when he should have known the company was going down, that has been intriguing the business community over the last few weeks. And particularly the involvement of the women in Russell Goward’s life.
When they broke up in 1989 – it was for the second time – wife Catherine got a $1.7 million house in Pymble and another $225,000 which Goward gave her to renovate in the style to which she had become accustomed – or so the Federal Court was told. Another $100,000 was made out to her (then) policeman boyfriend.
Caroline, the sister-in-law and mistress, was ensconced in the house down the road and received another $112,500 from Goward for renovations. “If you think that payment was for sex, you’re wrong,” Goward told the court. That house turned out to be owned by a Goward company and has now been sold -Caroline and Goward parted company (she is now remarried, according to her former husband).
Another $25,000 cheque was apparently applied to the Gowards’ deer farm. This splendid establishment, at Mangrove Mountain not far from the Hunter Valley, was bought by Goward in 1987 as a weekend retreat for the family. “But like everything else he did, it went over the top,” says a former associate. “It had to be Tara and the whole damned thing. He spent $1.25 million on a house, $100,000 each on a tennis court and a pool … God knows how much he sunk into it – my guess is at least $9 million. There were more than 1,000 deer there at one stage – it’s the largest in Australia.”
That property, Antler Farm, has been repossessed by the National Australia Bank, the largest of Goward’s $33 million worth of creditors at the time he was declared bankrupt. And there is little chance – at least in the short term- of the bank getting its $9 million back. It seems that, once again, Goward screwed up – the farm has what is called an agronomic problem. In laymen’s language, it is on sandy soil which means the grass is sparse, and when the deer eat it the sand grinds down their teeth.
Goward has told friends that he is considering suing over implications that all this money came from Westmex. It was, he told the court, money which he had placed on deposit with the company … and then withdrew.
But, once again, that merely deepened the mystery. Since he didn’t draw any salary, and his private companies were all going broke, where did these hundreds of thousands come from? “Overseas investors,” Goward cryptically told the court.
So at the end of the day, Goward remains as much of a contradiction as he did when he first burst onto the business pages. Teams of accountants from at least five of Sydney’s major firms are now delving into these transactions, and are planning trips to such exotic locations as Hong Kong, the US, England and the tax haven Channel Island of Jersey.
Meanwhile, the new straight-haired Goward and his teenage girlfriend reside in a comfortable brick bungalow on a hill at Mona Vale overlooking the ocean. In the garage is a Toyota Land Cruiser. All provided, one hastens to add, by some kind friends and relatives who have contributed around $65,000 to randy Russell’s living expenses over the past 18 months.
Or so he says.
Caption: Three Illus Family affairs …
1. Russell Goward in 1986 with wife Catherine
2. Son Richard and sister-in-law and mistress Caroline
3. Outside court two weeks ago with his teenage girlfriend