Research the three cases of early corporate collapses in Australia mentioned in the textbook on page 11: Alan Bond, Laurie Connell of Rothwells and the Girvan Corporation. Prepare a brief report outlining the case(s). What was the underlying reason for the failure? Would today's corporate governance codes, rules and regulations have prevented these outcomes?

Another good example of conflict between goals is a lack of coincidence in interest between a firm and government. The most obvious case is taxation, where strategies of the parties are mutually exclusive. The company's benefit is retaining as much profits as possible, whereas the government is concerned with the increase of effectiveness of the tax collection.

In the case of Girvan Corp., there was a clear cut case of the clash between goals of the management and shareholders. The intentions of the company's managers pose questions from the very beginning, ie the formation of the Girvan machine. Girvan Corporation Ltd became listed when it was acquired by a small publicly listed firm, Sift Securities Ltd which then changed the name to Girvan Corporation Ltd. P.Petersen, executive chairman, has received 188.5 million shares. The Girvan group consisted of the holding company Girvan Corp. Ltd, Girvan Holdings Pty. Ltd and its subsidiary, the long-established construction firm Girvan NSW Pty Ltd. The complex corporate structure was a major factor in enabling managers to cover the company's poor performance over the time, which has lead to the imminent collapse. Executives were aware of the firm's severe cash flow problems, however, they continued to increase its indebtedness to unsustainable levels. The result was that liabilities by January 1990 mounted over assets at $650 million.

One of the worst of Bond’s acquisitions was the ailing American brewer G Heileman, for which he paid $1.26 billion in 1987, around three times what it was worth. Heileman, Bond figured, would be the perfect vehicle to launch his local brewing assets – Swan, Castlemaine and Tooheys – in the US market. It turned out to be merely another symptom of an incurable condition which caused Bond to do deals and then juggle his increasingly massive debt to pay for them.

In the same year he bought Heileman, Bond also made the most expensive art purchase the world had ever known. But the $US54 million he paid for Vincent van Gogh’s Irises was typical of his unusual deals, its purchase having been financed to the tune of around $US27 million by the auctioneer Sotheby’s. Bond never paid them back, and the painting never graced any of his homes. Bond meanwhile struck another deal during the same period that typified his doubtful business acumen and became part of Australian business folklore.

The purchase from Kerry Packer of the Nine Network for $1.05 billion, and its later sale back to Packer for $300 million was a dream transaction – but not for Bond. By 1989, the man who had marched boldly into boardrooms around the world found himself firmly on the back foot with Bond Corporation’s debt at astonishing levels and his once compliant bankers clamouring for repayment. More persistent than the bankers, however, was the English businessman Roland “Tiny” Rowland, in whose company Lonrho, Bond, using yet more borrowed money, had acquired a substantial holding. Rowland pulled Bond’s business empire apart in a 93-page document he published showing it to be insolvent and trading illegally. Rowland’s revelations made an already slippery slope ever more perilous. The first part of his father’s forecast came to pass in 1991 when Bond faced trial for theft over a deal to rescue the failed Rothwells merchant bank. It was a case that revealed much about how business was done Bond-style.

Bond allegedly talked a business colleague Brian Coppin into tipping a few million into a rescue of Rothwells while concealing that Bond Corp would receive a $16 million fee for organising the rescue. Bond served six months, only to be acquitted at a re-trial. That success proved fleeting as the world continued to crash down around the man who little more than a decade earlier had been named Australian of the Year. In 1996 Bond was committed to stand trial for defrauding the shareholders of Bell Resources, a company he had acquired from the late Robert Holmes a’Court, of more than $1 billion. He also stood trial and was jailed over a fraudulent art deal involving the Edouard Manet painting La Promenade which Bond’s public company, Bond Corp, sold to his private company Dallhold for $2.46 million. He got four years for stealing the money from Bell resources and three for the art deal. Together the guilty verdicts made him the biggest fraudster in Australian history.

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Answer In the opinion of Sykes 1996 Alan Bond was the individual who brought Australia to its lowest position after having previously brought it to its greatest position He was widely regarded as one ... View the full answer