Winners and losers

Published 15 December 2011 05:00, Updated 22 December 2011 05:16

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WINNERS

AUSTRALIA

At a time when most of the developed world is either mired in recession or sluggish at best, Australia continues to record strong growth. The economy grew by 1 per cent in the September quarter to record annualised growth of 2.5 per cent, mainly because of massive mining investment. America’s GDP growth is running at 1.5 per cent, Britain is growing at 0.5 per cent and much of Europe is on the brink of recession due in large part to the euro crisis.

BILL EVANS

Veteran Westpac chief economist Bill Evans went out on a limb in July predicting a fall in interest rates. At the time he said: “Interest rates are too high in Australia given the state of the non-mining sectors of the domestic economy.” A lone voice at the time, he was vindicated on Melbourne Cup day when the Reserve Bank of Australia shaved 0.25 per cent off official interest rates and did the same in December.

CADEL EVANS

By winning the prestigious Tour de France cycling race – the first Australian to do so – Cadel Evans has not just etched a place in sporting history. He is now hot property for marketers. Evans has a close relationship with accounting firm Ernst & Young, appearing in cycle days in Melbourne, Sydney and Brisbane. He has lucrative deals with Paradice Investment Management and vitamins company Swisse.

GINA RINEHART

It is something of a vindication of Rinehart’s fierce protection of the House of Hancock that she is now Australia’s richest person. She is valued at $10.3 billion, making her one of the 20 richest women in the world. Her challenges continue, however. Next year she is likely to face a fight with her children over some of the ownership of the Hancock fortune. In September, when her youngest daughter, Ginia, turned 25, Ginia’s three siblings filed a suit in the NSW Supreme Court to remove Gina as trustee of the Hope Margaret Hancock Trust, which controls 25 per cent of Hancock Prospecting.

FOSTER’S INVESTORS

After years of mismanagement and failed attempts to develop a global beer and wine business, Foster’s Group shareholders got some rewards when the wine and beer businesses were demerged and global brewer SABMiller paid $10.5 billion for the beer business. The wine business is still trading. Described by The Australian Financial Review as “among the worst-run companies in Australia over the past 15 years”, Foster’s finally gave long-suffering shareholders some relief.

LANCE HOCKRIDGE

Despite missing its 2011 financial targets, the chief executive of Queensland Rail, Lance Hockridge, who started with the rail operator in 2007, earned $4 million in 2011, up from $1 million the year before. The rise included a $1.6 million cash bonus. Hockridge’s incentive plans are being “revised” following the Queensland floods and Cyclone Yasi, which forced QR National to reduce its forecast coal volumes. The company argued the floods were outside his control, so he should not be penalised.

ALAN JOYCE

The chief executive of Qantas has played a high-stakes game against the unions, becoming a pin-up for corporate Australia. By shutting down the airline, he forced the issue to arbitration at Fair Work Australia. Joyce is well rewarded for his efforts, although just how much is a point of contention. Qantas unions claim Joyce’s salary swelled 71 per cent to $5 million last year; the airline argues it fell 9 per cent to $3 million. Either way, the rewards for his aggressive management style have been generous.

SHORT SELLERS

It has been a dire year for the world’s stockmarkets. The benchmark All Ordinaries index is down 9.45 per cent for the year, giving short sellers rich pickings. There were also plenty of overseas opportunities. The Indian market was down 15 per cent, the German DAX down more than 15 per cent, the Japanese Nikkei down 15 per cent and the British FTSE 100 down more than 5 per cent. The crisis in Europe suggests next year is also likely to be a good year for short sellers.

NATHAN TINKLER

Worth $1.13 billion, Nathan Tinkler topped this year’s BRW Young Rich list in what was a vindication of his risk-taking approach to business. Most of Tinkler’s wealth comes from his holding in Aston Resources, which is yet to produce any coal. Tinkler continues to take risks, mortgaging his shares to build even bigger wealth. He also spends big, sinking $300 million into horses and the Hunter region as well as soccer and rugby teams in the Newcastle region.

LOSERS

AUSTRALIAN FARMERS

The big drought may have ended – although in many places it ended with damaging floods – but the high dollar has kept things hard for farmers by reducing their competitiveness and profitability in the local currency. Worse, wheat and dairy farmers had to contend with heavy discounting by the supermarket duopoly in bread and milk, which hurt their margins. Farmers in the Murray-Darling basin also may have their water entitlements substantially reduced over the next decade.

ANDREW FORREST

“Twiggy” Forrest’s company, Fortescue Metals Group, has shed more than one-fifth of its value since mid-year. His personal holdings have been reduced by more than $1 billion. Fortescue will be one of the biggest losers from the proposed minerals resource rent tax, which applies to iron ore and coal companies only. Forrest is considering a High Court challenge.

BIG BUSINESS

Changes to the tax system will make life much more difficult for big companies and wealthy individuals. The reportable tax position that is being piloted requires companies to alert the Australian Taxation Office to any tax decisions that involved debate, or risk jail time. Companies will be required to reveal any tax decisions that are not clear cut, forcing them to expose their most sensitive tax strategies. The government has also introduced three retrospective tax changes in relation to the petroleum rent resource tax, transfer pricing and tax consolidation laws.

GRAEME HOY

In March, Geelong businessman Graeme Hoy, who founded the disastrous $80 million Ponzi scheme Chartwell Enterprises, was given a 14-year jail sentence in the Supreme Court of Victoria by judge Terry Forrest. It is believed to be the longest jail sentence against a director. “Those contemplating fraud on this scale must understand that long terms of imprisonment await them,” the judge warned.

WAL KING

After 23 years in the job, Wal King resigned as chief executive of Leighton Holdings. King claimed he left of his own volition but there were suspicions that it was partly because he was on poor terms with the parent company Hochtief, which owns 54 per cent of Leighton’s stock. Leighton has had a poor financial year and in November Leighton chairman Stephen Johns told the company’s annual meeting King would not be paid the $4.9 million transition payment to which he was entitled under his contract. Nor would King be paid any consultancy payments, Johns said.

AUSTRALIAN MANUFACTURING

The high currency has hammered manufacturers, with many finding their competitiveness impossible to sustain. This is especially so with interest rates in other developed countries at unusually low levels, affording international competitors with comparatively cheap funding. It is a long-term decline. Manufacturing’s share of national gross domestic product has shrunk from 16 per cent to 9 per cent since 1970.

RUPERT MURDOCH

News Corp suffered a massive loss of credibility with the infamous phone hacking scandal at the company’s News of the World scandal sheet in the United Kingdom. Rupert Murdoch was hauled before a parliamentary inquiry for questioning, something he described as contributing to the most “humble day” of his life but the greater impact probably will be felt by his son James. Murdoch’s preferred successor, James has made two appearances before parliamentary inquiries and is likely to be centre stage in the upcoming judicial inquiry. The increased scrutiny is likely to harm his reputation and adversely affect his chances of taking the reins of the company. News’s failed MySpace investment also did not help.

SCOTT MURRAY

The former chief executive of collapsed shadow broker Sonray Capital Markets, Scott Murray, was sentenced to five years in prison and must serve at least 2½ years before his release. He traded on risky contracts for difference (CFDs). Murray and his business partner and brother-in-law, Russell Johnson, transferred millions from “friendly” clients’ accounts without authority, used client funds to plug holes in Sonray’s books and made personal use of other funds. The company collapsed last year owing more than $76 million to 3500 people.

PANKAJ OSWAL

Indian businessman Pankaj Oswal raised $US1 billion to support his dream of building an ammonia plant in the north- west of Western Australia. But he now stands accused of one of Australia’s biggest corporate frauds after receivers for his company, Burrup Fertilisers, which operates one of the world’s biggest ammonia producers in the Pilbara, allegedly uncovered evidence that he had siphoned $113 million from the company. The total claim against Oswal stands at $210 million. The Australian Securities and Investments Commission is reported to be reluctant to mount an investigation because of perceived difficulties in bringing Oswal back to Australia from Dubai.

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