Ben Hills
With additional reporting by Craig Nelson in Moscow. Whatever happened to Synroc, the Australian invention that was to solve the problem of storing nuclear waste? Ben Hills investigates how a colourful Perth promoter cost investors millions and Australia the chance to earn billions from the revolutionary technology.
Doug Treharne is better known to the residents of Adelaide’s pleasant seaside suburb of Christie’s Beach as their friendly local vet, rather than as an international financier of cutting-edge nuclear technology.
Treharne runs the Beach Road Veterinary Hospital, and on a typical day he can be found with his sleeves rolled up doing his best for Felix or Fido.
All that changed four years ago when he was introduced to a man named Brian William Ivey, a polo-playing entrepreneur from Perth with a taste for flash cars and international travel, a claimed acquaintanceship with the United States Federal Reserve chairman, Alan Greenspan and a “no risk” scheme for making millions.
Today, Treharne is more likely to be found buried in the contents of a bulging filing cabinet, puzzling over certificates for dodgy gold-backed bonds, the testimony of a British earl, the progress of a pilot nuclear-processing plant somewhere on the Russian steppes and, most of all, the whereabouts of nearly $130,000 he gave Ivey.
“We went into it starry-eyed, thinking we were financing a real Australian scientific breakthrough ,” said an angry-sounding Treharne. “Instead it looks like we have all lost our money.”
He is one of 60 or 80 people around Australia who were persuaded to invest in a convoluted scheme devised by Ivey, supposedly to finance the development of the Australian-invented Synroc method of storing radioactive waste. Ivey, who is living in London, says he has raised $9 million altogether.
However, none of the investors has received a cent of the fabulous returns Ivey promised them and, in spite of all its early promise, 22 years after it was invented the Synroc technology has still never been used anywhere in the world.
This is a sorry story that reflects little credit on Australia’s corporate regulators and even less on the Australian National University that, through its failure to tie up the rights to the Synroc name, allowed the technology to be hijacked. Most of all, it is another chapter in the never-ending saga of world-beating Australian inventions that never made it.
Synroc was hailed initially as the answer to the world’s most intractable garbage problem how to safely store more than 100,000 tonnes of deadly waste from nuclear power plants and scrapped weapons systems that litter the planet. The most dangerous elements will remain radioactive for a million years and must be prevented from polluting the biosphere.
In the 1970s, a scientist at the Australian National University, the late Professor Ted Ringwood, had become intrigued by a type of rock found in the remote Kimberley region of north-western Australia which appeared to have the ability to permanently lock radioactive elements into its crystalline structure. By 1978 he had succeeded in synthesising the rock (hence Syn-roc) by subjecting a mixture of metallic oxides to extreme heat and pressure.
The idea was to bond nuclear waste into blocks of this material, then drop them down drillholes bored 2 1/2 kilometres into the Earth, where (in theory) they could stay safe and stable for a thousand millennia. This was claimed to be a better solution than the current standard storage technology, a French-developed method of vitrification fusing the waste in glass which its critics claim has a safe life of only 50 years.
As recently as 1998, after Ivey sang the praises of Synroc to a House of Lords committee, London’s The Sunday Times reported: “Unwanted nuclear material … could soon be safely entombed in stone by a new technology that has been licensed to a British company.”
The story was wrong, as we will see, but it conveys a flavour of the excitement Synroc still inspires. The ANU did register patents over the technology, in Australia, the US, Canada, Japan and several European countries. But, crucially, the university failed to register the name Ringwood thought up, Synroc, as a trademark, leaving it open for anyone to “claim jump” it.
Politicians and businessmen were quick to realise the commercial potential of the invention it was claimed at one stage that Australia could tap into a global market for nuclear waste disposal worth $4 billion to $6 billion. However, the wheels of academia ground slowly and it was not until 1985 that the ANU granted two “non-exclusive” licences for the commercialisation of Ringwood’s invention.
One went to the Australian Nuclear and Scientific Organisation (ANSTO), which runs Australia’s only nuclear reactor, at Lucas Heights in Sydney. The other was granted, for a fee of $10,000 a year, to a newly formed South Australian-based company called Nuclear Waste Management Pty Ltd and it was here that the trouble began.
While ANSTO plodded along, building a pilot plant and spending, to date, about $40 million of taxpayers’ money for no return, NWM a reputable company, but one with limited commercial experience registered Synroc as a trademark and began a worldwide hunt for a market for the technology and for venture capital to get the project off the ground.
Enter Ivey.
“He was one of a number of people who looked at this and got all excited and said he would put some money up,” says Ronald Wilmshurst, the lone surviving foundation director of the company. “But he never has,” he adds wistfully. In its 15 years of existence, NWM has not even managed to raise enough money for a “bankable feasibility study”.
Ivey is today, aged 56, a man of apparently limited education his letters and reports are full of schoolboy howlers such as confusing “there” and “their” who has told friends he worked on a farm before moving to Perth where he ran a real estate agency and business brokerage. He is listed as a current director of 13 companies and former director of another 20 or so, many of which have been deregistered.
Most who have met him describe him as charming and persuasive, an entertaining raconteur and well-connected though they are now wondering whether he could really “get Alan Greenspan” on his mobile phone, as Treharne asserts (and Ivey denies) he once said he could. His wife lives in the suburbs of Perth, while Ivey himself decamped to London in May and he has been staying at the Langham Hilton Hotel.
Ivey’s initial attempts to raise money to develop Synroc were unsuccessful he had no collateral to offer by way of security and Australians are notoriously shy about putting up seed money for such blue sky projects. However, some time around 1995 he struck it lucky when he discovered the Marietta and North Georgia Railway Company.
In the great rail-building decades of the 19th century, thousands of private companies were raising capital by issuing bonds to lay tracks across the vast North American continent. A few flourished, but many more were driven into bankruptcy by the depression of the 1890s.
The Marietta company was one such company it issued hundreds of $US1,000 bonds in 1887, but four years later the company collapsed and the bond-holders lost their money. Today the scrip is worthless, apart from the memorabilia value of the handsome paper certificates Web sites such as that of the Western Mountain Stamp and Coin Shop offer dozens of such bonds for sale, at prices ranging from $US8 ($A15.30) to $US30.
In recent years, the US corporate regulator, the Securities and Exchange Commission, has become concerned that these “fantasy securities” have been used to bilk investors of large amounts of money. In a warning posted on its Web site, the SEC says:
“Scam artists are selling historical bonds to unsophisticated investors at inflated prices far exceeding their fair value as collectables. They often use third party valuations which state that the bonds are worth millions, or billions, of dollars to do so. These valuations, or authentications … are completely bogus.”
In one such scam alone, in 1998, a company called The Infinity Group Company, took $US26.6 million from more than 10,000 investors across the US. Convicting the principals of fraud, a Federal District Court judge said the company’s promotional materials “depict a mysterious cabal into which only the initiated could enter … [they] weave visions of risk-free, high-return investing in a clever tapestry of anti-government individualistic fervour.”
In an interview from London last week, Ivey maintained that he bought the 167 Marietta bonds that were to be the basis for his fundraising scheme in good faith. He relied on a valuation by a man called Gerald A. Dobbins, who described himself as the “master curator” of a little business grandly titled the Fidelity Secured Deposit Corporation.
Dobbins ignored the fact that the company had gone bankrupt a century earlier, multiplied the interest due on each bond for the past 109 years, and gave Ivey a fancy certificate that said the “hypothecated value of each bond” was $US12,501,875.
In 1996 and 1997 Ivey put together his scheme. He would sell the Marietta bonds for $US50,000 each to Australian investors, backed by the Dobbins valuation. Then the bonds would be used as security to raise enormous amounts of money, to be split 50/50 between the investor and Ivey’s companies, which in turn would use their share to commercialise Synroc.
Investors like Treharne were promised astonishing returns on their money $US8.5 million on an investment of $US50,000, a return of 17,000 per cent per annum, or 2 per cent per hour. “Looking back on it now, it sounds a bit ridiculous,” he says now. “But there was the valuation on the bonds, and it all looked pretty convincing at the time. And we thought we were helping develop Synroc.”
Various claims were made in the marketing material that would survive little scrutiny: that the bonds were “guaranteed by the US Government”; that they were backed by debentures issued by a “prime bank”; that the scheme was “carefully shielded to prevent the attainment of personal wealth”; that the ex-president George Bush’s older brother Prescott was involved. As a final clincher, wrote Ivey’s Sydney manager, a commodities broker named Kevin Brash, “I can assure you there is no risk.”
Ivey was also a good salesman, who chose classy hotels and restaurants for meetings with potential investors. In July 1997, for instance, when Treharne is being wooed to buy a second bond, he reports to a friend, “We had oysters, steak and kidney pie, and 20-year-old reds a great lunch!!”
Just how many people sank money into Ivey’s scheme he won’t reveal. He guarded the list of 60 or 80 names closely and made everyone sign draconian confidentiality agreements. However, individual investors contacted by the Herald parted with amounts ranging from $US50,000 to $US200,000, and Ivey himself claims that he has raised $9 million that he says he invested in Synroc.
It became obvious to some investors by 1998 that the promises of returns in the millions were not going to eventuate. No-one has yet seen as much as one cent. Treharne began making inquiries overseas and soon realised that his investment was far from the “no risk” guarantee he had been led to expect.
For a start there was that valuation. Dobbins, it turned out, had been busted by the SEC, which filed a complaint in March 1998 claiming that he had “knowingly made false representations” valuing bonds in long-bankrupt railways at up to $US400 million each. In spite of the fact that the SEC failed to come up with a single victim, the District Court froze all Dobbins’s assets and banned him from any involvement in securities.
Convinced by now that he had lost his money, Treharne went to the Adelaide police, but they declined to investigate and told him to complain to the corporate watchdog, the Australian Securities and Investments Commission (ASIC). Which he did but there was another strange twist to the story.
In April last year, restless West Australian investors gathered at Perth’s luxurious Luxton Hotel on St George’s Terrace, the city’s main thoroughfare and not far from the offices of Ivey’s companies, Synroc Australia Pty Ltd, and Chase (later National) Pacific Corporation Pty Ltd. About 40 investors turned up, either in person or by proxy, but astonishingly they accepted yet another assurance from Ivey that their money was about to arrive.
A measure of Ivey’s perennial optimism can be gleaned from a letter he wrote almost three years earlier to three colleagues. “I hope the wording was OK and the deal has been signed if so, there could be a couple of million Australian in it for each of us, so keep your fingers crossed,” he wrote. “I know it’s not what we had hoped for, but I would like to think it’s better than a poke in the eye with a sharp stick, as my old dad use (sic) to say.”
Those investors voted to send a deputation to “request ASIC to cease any investigation into or action against” Ivey and extraordinarily ASIC agreed, telling a furious Treharne that it “intends to take no further action in respect of this matter.” He has now sued Ivey’s companies for $US485,294 that he says he is owed.
However, in a letter dated June 1 last year, ASIC’s WA regional commissioner, Jamie Ogilvie, did warn investors that ANSTO and the ANU disputed Ivey’s rights to the Synroc technology, and that as the bonds were worthless, “Any representation you make to a potential purchaser as to Marietta bonds having value (other than as memorabilia) may expose you to civil and/or criminal liability.”
Ivey told the Herald that he had ceased attempting to sell the bonds after he received this letter, though correspondence from him dated in April this year indicates he is still attempting to raise money: “We wish to advise that our financiers in London have informed us that the project funding has commenced … we would expect to be in a position to pay the initial payment by mid-May 2000,” he wrote.
He maintains he has been “cleared” by the ASIC investigation and still insists that all the investors, except Treharne, will be paid. Asked when, and how much, he turns coy: “That’s none of your business … that’s between me and them.”
As for Synroc, that is an equally tortured tale that is still not over. Ivey maintains that he is continuing to promote the technology, admitting that none of his companies has any rights to it (other than that Australian trademark), but claiming, “There is no licence needed today. The patent has run out. Anyone can make Synroc.”
If ever there was a place on the surface of the planet that needed Synroc or some similar solution to its nuclear waste problem it is Chelyabinsk, in the Ural Mountains 1,500 kilometres east of Moscow. Only since it ceased to be a “closed city” with the collapse of the Soviet empire a decade ago, has the extent of its environmental calamity become known to the world.
In 1957, waste from its Mayak plutonium plant exploded, polluting thousands of square kilometres with radioactive waste and causing hundreds of cases of leukaemia and other cancers. One Russian scientist has described it as “20 Chernobyls”.
In 1990, a delegation from Nuclear Waste Management (the South Australian company that was given a licence to commercialise Synroc) visited Moscow, and signed an agreement for a feasibility study for the world’s first Synroc plant, to be built at Chelyabinsk. There was only one catch: neither NWM nor the Russian Atomic Energy Ministry, Minatom, had the $US300-$US500 million it was estimated the plant would cost.
For the past 10 years there have been desultory discussions and delegations exchanged between Australia and Russia, but, says Nicolai Babayev, 69, one of Minatom’s top scientists who has been involved in the negotiations for a decade, no Synroc research has been done in Russia, nothing has been built at Chelyabinsk or anywhere else, and no decision has even been made on whether a feasibility study will go ahead.
Babayev says he first met Ivey, whom he described as “a big Australian entrepreneur” when a ministry delegation visited Perth and Adelaide in 1997 at the invitation of Synroc International, a new company Ivey had formed in London. Babayev and another senior Minatom official, Victor Akhounov, agreed to join the board of Synroc International, but both deny they have received any money from Ivey.
Said Babayev: “He [Ivey] was talking about a big credit line that could be opened for the project, and that we can all benefit from it. He was saying, `Please consider my proposal very attentively and you will soon become millionaires.’ But, personally, I was only interested in getting the money for our project.”
In spite of continued claims by Ivey that construction of a pilot plant is imminent he told the Herald that legislation was “going through the Duma [Russian parliament] now” Babayev said that he had had no contact with Synroc International for two years.
He learned only last August that Synroc, the company, had no rights to Synroc, the product other than having taken over the trademark from NWM and Minatom’s negotiations had since been with ANSTO. ANSTO confirms that it has now signed a “protocol of intent to co-operate” over Synroc with Minatom. ANSTO and the ANU confirmed that none of Ivey’s companies had ever held a patent or licence for Synroc, and that two years ago the non-exclusive licence granted back in 1985 to NWM (a company in which Ivey has no interest) had been cancelled because NWM had not paid its $10,000-a-year licence fee for a number of years.
s head, Helen Garnett, and David Green, director of the Research School of Earth Sciences at the ANU, said that although the earliest of a number of patents had expired, the most recent still had about 20 years to run.
Ivey saw no need to mention this in June 1998, his finest hour, when he was a member of a Synroc International delegation that gave evidence to an inquiry into the disposal of nuclear waste by the select committee on science and technology of Britain’s august House of Lords. He still boasts about it. The delegation was headed by no less a luminary than Richard Bentinck Boyle, the 76-year-old Ninth Earl of Shannon, who had been persuaded to become chairman of Synroc International, and who is still shown as owning 3 per cent of the company’s shares, although he resigned his directorship in April. The Earl of Shannon had earlier enthused to his fellow noble lords: “Your fairy godmother has arrived, and she is called titanate ceramic [Synroc].”
The committee, however, was less than impressed, particularly by evidence from Ivey of the “dedication Minatom has put into this Synroc technology”. Commented Lord Peter Gregson, a member of the committee: “I am sorry if I am a bit biased, but I did go on a party to look at the Chernobyl design some 15 years ago, and we were absolutely horrified by the standard of Russian engineering.”
When the committee published its final report in March last year, Synroc was dealt with in three paragraphs. “Immobilisation of wastes in Synroc has not yet been carried out on a commercial scale,” the report noted. “In the future, it could become an alternative to vitrification for reprocessing HLW (high level waste).”
Both ANSTO and the ANU are still hopeful that, after 22 years, someone will find a commercial use for Synroc, although Green at the ANU says that Ivey’s continuing involvement risks “bringing the technology into disrepute”. He said: “These are some of the hazards faced by universities and their commercial arms as we seek to profit from the intellectual property which we generate.”
Ivey’s supporters are still hoping against hope for a return on their bankrupt bonds, though even Brash, Synroc’s Sydney manager who once described it as a “no risk” investment, admits he has exchanged sharp words with Ivey. “I must have been cuckoo to believe something like that at the time,” he says. “I don’t know how much the bonds are worth it could be toilet paper, it could be something you’d hang on the wall for the rest of your life.”
As for Ivey, he says the $9 million he has raised has been well spent, although he could not be specific on what, and angrily denies any of the money has gone astray. “You have already made your mind up,” he said. “You have talked to some people down there you think I’m a crook or a con-man or something like that.
Q : Well, are you a crook or a con-man?
A : No, I’m not. I’m fighting for a project …
Publishing Info
Pub: Sydney Morning Herald
Pub date: Monday 30 October 2000
Edition: Late
Section: News And Features
Sub section: Insight
Page: 10
Word count: 2900
Classification: Nature/Environment/Pollution/Radioactive Waste Industry/Nuclear
Geographic area: Australia
Photo: Bryan Charlton
Caption: Digging deep … the late Professor Ted Ringwood in 1978 with equipment he used to develop Synroc.