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Cover of book: Rogue Corporations

Quentin Beresford
Rogue Corporations

In 1984, Geoffrey Edelsten opened his first “super clinic” in Western Sydney. The facility replaced the subdued atmosphere of the traditional doctor’s consulting room with unabashed tack: pink faux-mink couches, luridly dressed hostesses and a musician tinkling away on a grand piano.

Soon Edelsten ran 32 facilities, treating a staggering 1.5 million patients a year. One clinic reportedly processed a thousand people a day. The model relied on overservicing: in essence, gouging taxpayer dollars from Medicare via both high turnover and pathology services that were either unnecessary or undelivered. Edelsten built through debt, taking out fresh loans to service previous obligations, while acquiring the Sydney Swans AFL team, living in a 15-room Sydney mansion and driving around a succession of much-younger wives in sports cars with numberplates reading “SEXY”, “GROOVY” and “FAMOUS”.

Pursued by the tax office, the Medical Tribunal and the National Crime Authority – the “good doctor” had responded to an aggrieved patient by calling on the hitman Christopher “Mr Rent-a-kill” Flannery – Edelsten was bankrupt in 1987, deregistered in 1988 and in jail by 1990.

The Edelsten narrative opens Quentin Beresford’s new book on corporate malfeasance, Rogue Corporations: Inside Australia’s biggest business scandals. Its themes reappear throughout the 11 other case studies he documents, involving other well-known figures of ’80s excess such as Alan Bond and Christopher Skase, and less famous figures such as Emmanuel and Julie Cassimatis, the husband-and-wife duo behind the Townsville-based company Storm Financial.

In the early 2000s, Storm developed a business strategy in which fast-talking sales teams persuaded suburban investors to gamble on high-risk margin loans. By 2008, the Cassimatises had accrued a personal worth of $450 million. “We’re people who have an excess of everything,” boasted Julie Cassimatis to a fawning Brisbane Sunday Mail, just before the global financial crisis bankrupted the mums and dads who’d put their trust in the couple and their advice.

In these vignettes, sycophantic journalists play an important role in legitimising out-and-out shonks – as do politicians. Bob Hawke famously teared up at an event at Sydney’s Regent Hotel, discussing his friendship with the con man Alan Bond. He lavished equal praise on the one-time chairman of the Rothwells merchant bank, Laurie Connell, a man described by Beresford as “little more than a con artist running a Ponzi scheme masquerading as a bank”.

In Tasmania, the Federal Group developed a chummy relationship with the state’s entire political class that enabled its gambling business to expand irrespective of the party in office. Such cosy relationships between parliaments and boardrooms help explain the remarkable immunity enjoyed by Australia’s shadiest executives.

In 2009, the Supreme Court of New South Wales found the directors of James Hardie Industries guilty of failing to fulfil their responsibilities as they sought to minimise payments to workers affected by the company’s asbestos. The court fined former chief executive Peter Macdonald $350,000 and disqualified him from senior management for 15 years; ex-company lawyer Peter Shafron received a $75,000 penalty; former chief financial officer Phillip Morley was fined $35,000. A subsequent appeal reduced fines, even as Hardie executives departed with payouts in the millions. By then, asbestosis had killed 9000 people.

Again and again, a vast gulf yawns between the damage done by corporations and the penalties – if any – imposed upon them. Billionaire Russell Withers and his sister Beverley Barlow made their fortunes through the 7-Eleven franchise system, while underpaying a mostly migrant workforce. When the scale of abuse came to light, 7-Eleven repaid some of the stolen wages – but otherwise faced no penalty at all.

In 1997, the Howard government’s Aged Care Act came into effect, creating a financial bonanza for private nursing home operators such as Bupa. The elderly did not fare so well. In 2018, a dietician found more than half the residents in one South Hobart home were malnourished or at risk of malnutrition. “Our overarching view,” said a doctor asked to assess Bupa’s facilities, “is that we would prefer euthanasia than to go and live in one of those places.” Yet Bupa – a substantial donor to both the federal Liberal and Labor parties – never lost its licence.

“Australia incorporated,” writes Beresford, “the so-called ‘Friedman doctrine’, the view associated with Nobel Prize-winning economist Milton Friedman, who, in the 1960s, argued that the only purpose of a corporation was to maximise shareholder wealth. This is the root cause of the scandals examined in the book.”

In 2003’s The Corporation, Joel Bakan writes on how the pursuit of profit mandated behaviour that is best described as sociopathic – and how 19th-century law turned businesses committed to that behaviour into legally designated “persons”.

“As a psychopathic creature, the corporation can neither recognize nor act upon moral reasons to refrain from harming others,” says Bakan. “Nothing in its legal makeup limits what it can do to others in pursuit of its selfish ends, and it is compelled to cause harm when the benefits of doing so outweigh the costs. Only pragmatic concern for its own interests and the laws of the land constrain the corporation’s predatory instincts, and often that is not enough to stop it from destroying lives, damaging communities, and endangering the planet as a whole.”

Rogue Corporations provides a glimpse of that creature in action. 

NewSouth, 432pp, $34.99

This article was first published in the print edition of The Saturday Paper on December 2, 2023 as "Rogue Corporations".

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