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Authors: Andrew Burrell

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Forrest’s dislike of media scrutiny did not surprise many of the journalists who
had come to know him. One of them, Paul Armstrong, then a young business reporter for the
West Australian
in Perth, recalls how Forrest would regularly hurl abuse at him over stories published about Anaconda. “With Twiggy, you’re either totally for him or you’re the ultimate enemy – there’s nothing in the middle,” says Armstrong, who would go on to become editor of the newspaper and says he greatly
admires what Forrest has achieved as an entrepreneur. “I dared to question whether the processing technology they had would work. He would call and say, ‘Digger, what’s your problem? Why can’t you see there is no issue here?’ It always started off with a charming introduction, and if he didn’t get what he wanted, it ended with an abusive conclusion.”

By the time the Sydney Olympics came around
in September 2000, Forrest was slowly losing control of Anaconda. As the chairman of Athletics Australia at the time, he was among the first on the track to congratulate Cathy Freeman on winning her gold medal in the 400-metres women’s final. But back in Perth, the situation was becoming dire. The Anaconda share price slumped from $4 to $1 between September 2000 and March 2001 as investors saw
that the company could not deliver on the forecasts made by Forrest.

Another sin, in the eyes of some investors, was Forrest’s penchant for rewarding himself handsomely even while Anaconda was losing money. His total remuneration in 2000 was $1.8 million, and by 2001 it had jumped to more than $2 million. This put him in the same league as the heads of some of Australia’s biggest companies
– but they were generating strong returns for shareholders. Forrest was also able to win generous performance bonuses even while Anaconda was posting heavy losses.

The company’s remuneration committee was chaired by Rodney Adler, who at the same time was busy committing serious crimes in his role on the board of another troubled company, HIH Insurance. Adler would be jailed for four and
a half years for a series of offences at HIH, and described by the sentencing judge as having displayed “an appalling lack of commercial morality”. He quietly stepped down from the Anaconda board, but remained close to Forrest, who even visited him in prison in rural New South Wales several times.

The Olympics were a frantic period for Twiggy. As he cheered wildly for Australia’s athletes
on the track, he was also involved in negotiations with Melbourne mining entrepreneur Joseph Gutnick over a deal to buy his company, Centaur Mining. Forrest knew Gutnick from his stockbroking days and the two men had generally been friendly, even if some of their deals hadn’t worked out. Gutnick, an ultra-Orthodox Jew, had been prominent in Australian business for years and was widely known as the
president of the Melbourne Football Club in the AFL. But Gutnick’s empire was laden with debt and he was desperate to offload Centaur to Anaconda. Centaur owned the Cawse nickel laterite mine, not far from Murrin Murrin, so the idea of seizing control of Centaur’s assets appealed to Forrest’s vision of building his “three nickel province” in the Goldfields. The Anaconda–Centaur deal was meant
to have been settled in September 2000, but Forrest told Gutnick that month he needed more time to conduct due diligence on the company.

While Gutnick waited for the deal to be finalised, Centaur’s share price plummeted and the once-warm relationship between the two men turned icy. “I’m not interested in games,” an angry Gutnick wrote to Forrest in November. “Centaur’s future is at stake
and I must act to resolve the uncertainty. You have not acted honourably, and that is very disturbing to me.” A day later, Anaconda told the market it was backing out of the deal. Gutnick responded with legal action in the Victorian Supreme Court, claiming Anaconda had breached the agreement by failing to complete the transaction. Forrest appeared to be affronted by the litigation. “There has
not been an obligation that Anaconda hasn’t honoured and we’re not about to break that record with Joe Gutnick,” he said.

Justice Marilyn Warren’s findings against Forrest in 2001 were damning. She ruled that he had pursued a “deliberate plan” of maintaining the pretence of a share deal with Gutnick so he could prevent a rival to Anaconda from gaining a foothold in the “three nickel province”.
The delay, she found, was also aimed at allowing Anaconda to gain control of Centaur’s nickel assets on the cheap. She said Gutnick was probably foolish to have trusted Forrest in the first place. The “smoking gun” in the case was an email written by Forrest’s right-hand man at Anaconda, Stephen Dennis. In the email, Dennis told Forrest he should falsely explain to Gutnick that Anaconda was
backing out of the deal “because of due diligence reasons”. It was advice Forrest took on board. Justice Warren took a dim view of the email. “The Dennis memorandum set out a strategy to make Gutnick dependent upon and vulnerable towards Anaconda, gain control of Centaur and quarantine Gutnick from Anaconda’s rivals,” she found.

But then came the killer blow. In assessing the details of
an important phone call between Forrest and Gutnick, the judge decided that she believed the latter’s version of events. “Gutnick was a truthful witness in all respects of his evidence,” she said. “Having observed Forrest, including his physical demeanour, especially in the course of giving evidence-in-chief, I am unable to accept his version of the conversation of 4 September 2000. Forrest was an
untruthful witness.”

As he had done previously, Forrest went on the warpath over the 110-page judgment. “It’s a strange judgment … it’s most extraordinary and logically unbelievable,” he said. “It’s just a really dumb outcome.” Forrest said the judge had been persuaded by a “very clever Queen’s counsel” acting for Gutnick. And on Justice Warren’s key finding that he had not told the truth
in court, he said: “Anyone who knows me knows my great character.” Ever the optimist, Twiggy expressed his absolute confidence that an appeal court would overturn Justice Warren’s verdict. But neither the Victorian Court of Appeal nor, ultimately, the High Court could see his side of the story and the decision stood.

Two others who had long felt let down by Andrew Forrest were Canadian investment
bankers Stephen van der Sluys and Richard Maish, who had helped Anaconda negotiate the $US420 million in junk bonds from US capital markets in 1997. Van der Sluys and Maish, who were employed by the Canadian bank CIBC, sued Anaconda in the NSW Supreme Court, claiming they had not been paid a success fee to which they were entitled. A critical part of the case revolved around the details of
a phone conversation between Forrest and a senior executive at CIBC, Bruce Spohler.

When Justice John Brownie came to rule on the issue in 2002, he was in no doubt as to whose evidence he preferred about the details of the phone call. “I prefer the evidence of Mr Spohler who I regard as a truthful and reliable witness, to that of Mr Forrest, who I regard as quite untruthful,” he said. “Indeed,
I think it would be unsafe to rely on any account he has given, in or out of court, except to the extent that it is demonstrated by other evidence to be correct. His evidence was generally quite unimpressive, and his evidence about the telephone conversation of 7 August 1997 particularly so.”

For the fourth time in his career, in four unrelated legal cases, Forrest had been found to be a
less-than-honest person. In all four cases, his ethics and truthfulness had been impugned. It is an extraordinary record that is unusual for someone who has run a large listed company in Australia.

Forrest has complained that other courts have found him to be an honest witness, but that this has never been reported. The sole reference to his honesty, however, was a 1999 case in the WA Supreme
Court in which Justice Eric Heenan found that Forrest’s version of two phone conversations with a fellow mining company executive, Steven Dean, was “both truthful and substantially accurate”. The judge also noted that Dean did not give evidence in court over the dispute with Forrest, and he ended up ruling against Anaconda in the case.

Many of Twiggy’s other business disputes were settled
before a judge could rule on them. One involved a falling out between Forrest and two of the central figures at Anaconda, Peter Matheson and Geoff Motteram. In the early days of the project, the pair formed a company, Matheson Motteram Projects, to advise Anaconda on how to build the nickel processing plant. They had also negotiated with Forrest to be paid 0.5 per cent of the capital cost of Murrin
Murrin, assuming it was ever built. But years later they alleged Forrest had no intention of paying up and sued Anaconda in the Supreme Court of Western Australia. The case was eventually settled, with Matheson and Motteram receiving about one-third of what they claimed to be owed.

Geoff Motteram had originally made his feelings known about Forrest at Anaconda’s fancy-dress Christmas party
in 1997. As scores of the people present at the bash at Perth’s Burswood Casino can attest, the metallurgist had downed a few too many beers during the evening and began loudly criticising Forrest to then Anaconda chairman Allan Coogan. Forrest, who was dressed as Elvis Presley in flares and sideburns, was not within earshot at the time. But the chief executive soon heard about Motteram’s rant.
Two days after the party, Forrest turned up at Motteram’s house in Dalkeith with a cardboard box filled with the contents of his office. He told him he was no longer a director of Anaconda.

The bad blood between Motteram and Forrest didn’t end there. In 1999, Motteram was among the hundreds of people invited to the formal opening of Murrin Murrin. But in the weeks leading up to the event
he had sold a large number of Anaconda shares. Forrest sent Motteram a fax uninviting him from the opening, saying only people committed to supporting the company were welcome to attend. The fax bemused Motteram, given that he still held plenty of shares. But Forrest could see nothing odd about it. In his eyes, anyone who sold shares was not a true believer and therefore did not deserve to be
at the event. “The numbers were tight,” Forrest told the
West Australian
. “Those who sold shares have had their invitations withdrawn and replaced by those who bought shares.”

Forrest’s fate at the helm of Anaconda was effectively sealed just a few weeks after Murrin Murrin’s formal opening when he persuaded South African mining giant Anglo American to invest $US243 million for a 23 per
cent stake in the company, putting it above Glencore at the top of the share register. At first blush, Anglo appeared to be Forrest’s saviour. The company had agreed to buy shares in Anaconda for $3.15 each – a premium of more than 35 per cent on the market price. In one fell swoop, the world’s second-largest mining company had solved Anaconda’s financial troubles and given it a huge credibility
boost in the eyes of the market. Within months, Glencore’s sole director, Michael O’Keeffe, had been voted off the board with the backing of Forrest, Marc Rich and Sherritt International, which owned 9 per cent of the stock. Twiggy’s old business partner, Albert Wong, looked on in admiration at Forrest’s “divide and conquer” tactics, saying the idea had probably germinated when the pair first read
Chinese military strategist Sun Tzu’s
The Art of War
a decade earlier.

Forrest, with his back against the wall, had employed his trademark salesmanship to convince Anglo’s hard-headed minerals boss, James Campbell, that Anaconda Nickel, despite all its woes, still had the potential to dominate the global nickel industry. Eventually, however, Campbell came to believe that Forrest would have
to be removed if Anaconda were to realise that potential. In 2001, with Murrin Murrin still in deep financial and operational trouble, Anglo declared it had lost all confidence in Forrest’s management. It told investors that the company’s “missed targets, lost production, lax corporate governance, capital cost overruns and high-risk capital structure” had cost Anaconda shareholders up to $431 million
in lost profits. Anglo called a special shareholders’ meeting in an attempt to sack Forrest as chief executive
,
along with most of the board, promising to recapitalise Anaconda with a $100-million rights issue. Forrest denied the allegations about mismanagement and claimed Anglo was simply engaged in a ruse to try to seize control of Anaconda on the cheap.

Drawing on all his street-fighting
instincts, Forrest refused to bow to the might of Anglo American. He boarded a plane and went to Europe in search of another potential white knight who might save him. But Twiggy’s message by now was wearing thin. More than two years after John Howard had “opened” Murrin Murrin, the plant was still not producing the nickel Forrest had so confidently predicted, at the low costs he’d always promised.
Anaconda was saddled with debts of more than $800 million and wasn’t even close to turning a profit. In what amounted to a high-stakes game of corporate chess, a stand-off ensued for several months. Nobody appeared to know whether the enigmatic Glencore, which held the balance of power, would back Forrest or Anglo American.

At an eight-hour meeting in Perth in May 2001, the warring parties
– Forrest, Glencore and Anglo – thrashed out a compromise under which Twiggy would stand down as chief executive in November but remain on the board as deputy chairman. Forrest’s dream was now over. He was deeply wounded at being ousted as chief executive of the company he’d built from nothing, but as always, he attempted to put a positive spin on the move and laced it with some overblown rhetoric.
“The winner is an independent Anaconda Nickel,” he declared after the meeting. “I think what has been achieved is an independent Australian company now fully supported by major shareholders, as opposed to dominated by them, and I think that is an excellent outcome for corporate governance and democracy in this country.”

Forrest left Anaconda having achieved one of the most extraordinary
fundraising operations even seen in corporate Australia. In total, he had convinced investors to part with almost $US1 billion – or about $1.4 billion in Australian currency terms – purely on the strength of his fanatical conviction that Anaconda was the next big thing.

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