Twiggy

  Published by Black Inc.,

  an imprint of Schwartz Media Pty Ltd

  37–39 Langridge Street

  Collingwood Vic 3066 Australia

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  Copyright © Andrew Burrell 2013

  Andrew Burrell asserts his right to be known as the author of this work.

  ALL RIGHTS RESERVED.

  No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form by any means electronic, mechanical, photocopying, recording or otherwise without the prior consent of the publishers.

  National Library of Australia Cataloguing-in-Publication entry

  Burrell, Andrew John.

  Twiggy : the high-stakes life of Andrew Forrest / Andrew Burrell.

  ISBN for eBook edition: 9781922231246

  ISBN for print edition: 9781863956208 (pbk)

  Forrest, Andrew. Businessmen – Western Australia. Executives – Western Australia. Mineral industries – Western Australia. Mines and mineral resources – Western Australia.

  338.209941

  Cover design: Peter Long

  Contents

  Author’s note

  Prologue

  1. The Forrest Legacy

  2. Minderoo

  3. Fisticuffs and Failures

  4. The Wild West

  5. Sin City

  6. Dreams in the Desert

  7. The Comeback Kid

  8. Burke’s Backyard

  9. To Get Rich Is Glorious

  10. The Great Escape

  11. China Crisis

  12. Taxing Times

  13. The Intervention

  14. Doing God’s Work

  15. Wealth and Power

  Picture section

  Acknowledgments

  Notes

  AUTHOR’S NOTE

  This is an unauthorised biography. I asked Andrew Forrest to co-operate with my research, but he declined. He also instructed his family members and some of his close friends not to talk to me. Forrest’s opposition to this book greatly surprised many of those who know him well. It also surprised me. Since 2006, I have covered the resources industry and the rise of Fortescue Metals Group as a journalist in Perth for both the Australian and the Australian Financial Review. Senior executives at Fortescue have told me they believe my reporting has been fair and accurate.

  Forrest’s cooperation would have led to a different book, but not necessarily a better or more reliable one. His decision not to talk forced me to interview dozens of people whom otherwise I might never have called. Many of them provided sharper insights into his past than Forrest might have been prepared to do himself. And, luckily, some of his close friends and associates ended up defying his wishes and speaking to me at length.

  Despite Forrest’s non-cooperation with this book, I felt a heavy responsibility to be fair; wherever possible, I have sought to present his side of the story.

  PROLOGUE

  September 11, 2001: hotel room, Manila. Andrew Forrest sits alongside a convicted drug dealer, glued to the television as the World Trade Center crashes to the ground in Manhattan. His own world is collapsing back in Australia and he has flown to Manila because he needs cash. Forrest has been booted out of the mining company he launched, his investors are baying for blood and he needs millions just to hold onto the family home. Within months, he will have left Australia to live in self-imposed exile, his ego bruised and his dreams cruelled. Most in the establishment see him as a cowboy and hope they have seen the back of him.

  March 12, 2012: Westminster Abbey, London. Andrew Forrest stands before Queen Elizabeth II, Prince Charles, heads of government and hundreds of other VIPs to explain his quest to end indigenous disadvantage in Australia and rid the world of slavery. He is the only Australian invited to speak at the Commonwealth Day ceremony held in the imposing Gothic church. By now, he is respected as a generous philanthropist and backed by a multibillion-dollar fortune, thanks to the spectacular success of his Fortescue Metals Group.

  How did he do it? How did Andrew “Twiggy” Forrest transform himself from a corporate pariah into a humanitarian courted by the global elite? How did the desperate debtor of 2001 become Australia’s richest man by 2008? How could a country boy with an embarrassing stutter become the slickest salesman in Australian business? And how did a church-going Christian become a swashbuckling tycoon who frequently pushes against the barriers of acceptable behaviour?

  The great Australian mining boom of the early twenty-first century is replete with tales of towering ambition and colossal wealth, but the story of Andrew Forrest’s unlikely journey is perhaps its most enthralling. It is a study of bravado, guile, folly, adversity, triumph and vindication.

  At school, Forrest was a rebellious, stick-thin kid who was quick with his fists. Later, his business ethos was shaped in the get-rich-quick culture of Perth’s stockbroking scene of the 1980s, when crooks like Alan Bond and Laurie Connell were on the make. By 2001, his company, Anaconda Nickel, was in dire straits and his reputation was shot to pieces. Seven years later, he had mined the fastest sharemarket fortune in Australian history and was worth $10 billion. Now he is remaking his image yet again, befriending world leaders as he promises to give away most of his money to charity.

  Among the tribe of Australian miners who have become billionaires in the resources boom, Forrest is the most substantial business figure. Nathan Tinkler rose and fell in the blink of an eye. Clive Palmer claims to be worth billions but has never actually mined a deposit and seems more dedicated to self-promotion. Gina Rinehart may be worth more on paper than Forrest, but in twenty years of running her own company she has yet to build a mine on her own and may struggle to do so, given her aversion to risk and her well-documented idiosyncrasies.

  Forrest is a deeply polarising figure. At one end of the spectrum, people worship him for the brilliant and unconventional way he built one of the biggest private projects ever undertaken in Australia. They point to his mission to improve the lives of indigenous people and fight modern slavery as evidence of his underlying decency.

  At the other extreme, people view him as a hyperbolic fool who can’t be trusted to deliver on his promises and is motivated by greed. Four judges in four separate court cases have questioned his truthfulness. “An idiot who got lucky,” is how one prominent Perth business leader describes him.

  The story of the mining boom is writ large in the rise of Andrew Forrest. And nowhere is the impact of the China-fuelled economic miracle more palpable than in his home town of Perth. When Forrest sketched out his plan to launch Fortescue Metals Group while sitting at his kitchen table in 2003, the median house price in Perth was $200,000 and iron ore was selling for just $US30 a tonne. Five years later, the median house price had more than doubled to $450,000 and iron ore was worth $US200 a tonne as the urbanisation and industrialisation of China became a seismic economic event.

  Back in 2003, resource companies were shipping commodities worth $26 billion out of Western Australia – a healthy industry by any measure. But ten years later, the sector’s value had reached $106 billion. The glamour commodity is now iron ore, the steel-making ingredient that lies beneath the rust-red hills of the Pilbara. It is worth $60 billion annually to Australia – that’s a staggering $165 million worth of dirt that is being dug up each day in the Pilbara. Iron ore now plays a big part in determining whether the federal and state budgets are in surplus or deficit.

  Forrest is at the forefront of this economic revolution because Fortescue was the first company to challenge the supremacy of iron ore miners Rio Tinto and BHP Billiton in the Pilbara. In 2003, Fortescue was little more than a thought bubble in Forrest’s hyperactive brain. Within five years, it was the
world’s fourth-biggest iron ore exporter.

  Forrest has succeeded because he is an entrepreneur in the classic sense. “To understand the entrepreneur,” renowned psychoanalyst Abraham Zaleznik told the New York Times in 1986, “you first have to understand the psychology of the juvenile delinquent.” Zaleznik meant that the hallmark of a great entrepreneur is the drive for autonomy that bespeaks rebelliousness and fearlessness in the face of risk.

  As this book will explain, Forrest has always had a rebellious streak and doesn’t believe that conventions apply to him. The rules are there to be pushed and prodded until he gets his way. He is afraid of nothing and somehow wills himself to believe that he will never fail. But he is also highly charismatic and socially charming, inspiring a cult-like loyalty and optimism in his followers.

  The great Austrian-American economist Joseph Schumpeter could as easily have been describing Forrest’s character when he wrote, more than a century ago, that the best entrepreneurs are propelled by “the will to conquer, the impulse to fight, to prove oneself superior to others”. The ruthless manner in which Forrest fought his way to the top is a modern Australian case study in entrepreneurial success.

  1.

  THE FORREST LEGACY

  He’s seriously got whatever it was that drove Alexander and John Forrest and David Forrest to go into the deserts of the middle of the country. It’s in the history, it’s in the blood.

  —JANIE HICKS, Andrew Forrest’s sister

  When Judy Forrest discovered she was pregnant in 1961, her first reaction was to plan for a miscarriage. Life on a remote sheep station in the Western Australian outback was demanding enough with two small kids and a husband gone from dawn to dusk. For Judy, the thought of having a third child was horrifying. So she decided to ride her horse bareback across the rugged Pilbara terrain every day for a week, with the aim of aborting the pregnancy. When that didn’t work, she jumped off the roof overlooking the homestead’s tennis court three times a day for seven days, but without success. Friends advised her to hit the gin bottle as well, but she drew the line at that.

  Several months later, on 18 November, Judy gave birth to a healthy baby boy, John Andrew Henry Forrest. She confided in her youngest son from an early age that she had wanted to end the pregnancy and told him he must be a tenacious type to have survived in the womb. It may have been a calculated ploy by the tough-as-nails Judy to instil in her youngest son a sense of self-belief and drive that she believed would take him far in life. According to the small group of friends who have heard this story from Forrest over the years, it also implanted in the boy’s brain the overwhelming need to impress his mother. “So much of what he does is proving to his mother that he’s worth it,” says Warwick Grigor, Forrest’s former business partner. “It really is a big motivating factor.”

  Young John carried another weighty burden from birth: his name. Being named after Sir John Forrest, his great-great-uncle and Western Australia’s most famous historical figure, was simply too much to bear for the boy, and so he decided he’d be known by his second name, Andrew. Despite this, many now believe that Andrew Forrest, the entrepreneur, has been inspired to take extraordinary risks and pursue grand dreams by seeking to follow in the footsteps of Sir John, who was the state’s first premier and most celebrated pioneer. Warwick Grigor, who knows Forrest better than most, suggests the businessman’s success is driven by a combination of living up to the Forrest family legacy while subconsciously trying to prove to his mother that he deserved to be born in the first place.

  Over the years, Forrest has rarely missed a chance to cite the deeds of Sir John in the self-promotional spiels he delivers when wooing a financier, pitching his vision to a politician or signing up a customer. Often he has worked at a desk underneath a framed portrait of the burly, bearded image of “Uncle John”. Even his home address contains potential clues to his family inspiration. For the past thirteen years, Forrest has lived in Perth’s salubrious beachside suburb of Cottesloe at the pinnacle of John Street, which runs parallel to Forrest Street – both leafy thoroughfares were named after Sir John Forrest. Perhaps Forrest’s decision to buy a house in this location was a coincidence. If so, it’s an extraordinary one. For his part, Forrest has mostly rejected the notion of himself as a latter-day incarnation of Sir John. Yet the words of his family members and others who’ve observed him up close have tended to blunt his denials.

  “I think, unconsciously perhaps, Andrew would like to emulate his great-great-uncle,” said Forrest’s father, Don, when asked whether his son was motivated by the deeds of Sir John. Forrest dismissed such talk in a rare interview on the topic with Perth journalist Mark Drummond in 2007. “We can never escape who we are,” he said. “We are the opportunities, the education and the genetics we were given. But as far as it [the Forrest name] being a motivator to me, that’s entirely misguided.”

  By 2011, however, after his goal of building an iron ore mine in the vast red dirt of his Pilbara homeland had been realised, Forrest seemed more willing to accept that he had been inspired by Sir John and his sidekick CY O’Connor, the brilliant engineer who designed a revolutionary water pipeline to the Goldfields but committed suicide after being accused of corruption. “I think those two guys probably did have an impact,” Forrest said. “To think, okay, if you really believe in something yet you’re heavily ridiculed for it, well, just cop it. Don’t make the mistake which CY did, which is to let it all get to you … I was fascinated by [O’Connor], fascinated by the fact he was told it’s absolutely impossible to create a dam at what is now the most beautiful Mundaring Weir [outside Perth]. He was told it was completely impossible to pump water up a hill for 600 miles, and I love the fact that John Forrest believed so much in him and backed him completely.”

  Graeme Kirke, Forrest’s former colleague at Perth stockbroking firm Kirke Securities, believes Forrest’s raw determination, obsessiveness and zeal are actually embedded in his DNA. “Do I think it [the family legacy] is on his shoulder? No, I don’t – I think it’s innate,” he says. Forrest’s sister, Janie Hicks, is also a believer in the nature, rather than nurture, theory when analysing her famous brother’s personality. “He’s seriously got whatever it was that drove Alexander and John Forrest and David Forrest to go into the deserts of the middle of the country,” she said in 2005. “It’s in the history, it’s in the blood.” Forrest’s older brother, David, agreed: “Andrew will probably go down as a very significant part of the 21st-century version of John.”

  To fully understand Andrew Forrest, we need to delve into the history of Western Australia and examine the exploits of Sir John. There are, in fact, plenty of similarities between Andrew “Twiggy” Forrest, the entrepreneur of the late twentieth and early twenty-first centuries, and John Forrest, the explorer, politician and statesman of the late nineteenth and early twentieth centuries. Twiggy has said his business motto today – of taking bold but calculated risks – is essentially the same as the philosophy Sir John employed in the desert more than a century ago. John Forrest survived his three dangerous expeditions into the continent’s interior by never venturing so far from a waterhole that it would be impossible to return. It’s a fitting analogy because Andrew Forrest has strayed from the metaphorical waterhole a few times in his colourful career. And so far, like Sir John, he’s always made it back – sometimes bloodied yet still alive.

  Like John Forrest, Andrew has ventured into frontier territory and built some of the essential wealth-generating infrastructure of his era. Sir John borrowed six times the annual WA government budget – an extraordinarily risky amount, equal to a premier taking out loans of more than $100 billion today – to build the Goldfields water pipeline and other nation-building works at a time when the colony was beginning to grow rapidly, thanks to the discovery of gold at Kalgoorlie and Coolgardie. Andrew Forrest has shown a similar fondness for debt, raising billions of dollars to build the Murrin Murrin nickel project north of Kalgoorlie in the 1990s and, more recently, the F
ortescue iron ore mines of the Pilbara. John Forrest, a “bulldozer of a man” in the words of historian Geoffrey Bolton, was the pivotal figure of the state’s first mining boom in the 1890s. Andrew Forrest, by dint of his wealth and activism, is the poster boy of the latest one. Both rose to the top with boundless energy, habitual optimism, self-belief and an ability to inspire others. Both were gamblers. Luck also played a part, for both Forrest men were in the right place at the right time.

  Born in 1847 near the WA town of Bunbury, south of Perth, John Forrest was the son of indentured Scottish migrants who had arrived in the colony in 1842 with virtually nothing, spending their first night huddled in a tent. John was a tall, strong youth who sprung to fame at the age of twenty-one by leading a daring expedition into the heart of Australia in search of the missing explorer Ludwig Leichhardt. Leichhardt’s party had last been seen twenty years earlier, about 2400 kilometres east of the most easterly sheep station in Western Australia, while attempting to cross the continent from east to west through the interior.

  This was an era in which the colony of Western Australia, settled only in 1829, was still almost totally isolated from the rest of the continent and was economically backwards in most respects. Forrest, a surveyor by profession, left Perth in April 1869 with five other men, sixteen horses and several dogs. After traversing more than 3000 kilometres of desolate country in the most remote interior of Western Australia, he failed to find any trace of the Leichhardt party. Nor did he find, as he had hoped, an inland Garden of Eden, a river system or even any decent pastoral land. As John Forrest’s biographer Frank Crowley noted, the most significant outcome of the expedition into the “Great Lone Land” was the confidence Forrest developed in his own abilities and the respect he inspired in both his subordinates and superiors.