Andrew Rule

"Knox says the joke at Australian Capital Equity head office was that he became the ‘Minister for Crap Incorporated’. It was a backhanded compliment: he was called in to help patch up stray business ventures so they could be saved and sold or, if hopeless, quietly strangled. At Stokes’s behest, he and Parker would later also work behind the scenes to help Stokes’s oldest children, Raelene and Russell."

"poverty pinched harder in other ways, such as being short of cash to feed the coin-in-slot gas and electricity meters in the house. Coin-fed meters were probably a better system for the hand-to-mouth lives of the poor than today’s forms of credit that lead to mounting bills. ‘Gas was threepenny or sixpence,’ says Stokes, miming feeding the hungry meter. ‘Don’t worry about credit — it just stopped!’"

"Instead of driving to and from the office by the same route the way most people do, he took different ways every week so he could see fresh country and opportunity. One morning he detoured through Thornlie and saw ten acres for sale. There was water lying on the ground after heavy rain, which would explain why no one wanted to buy the land, even at £150. It looked swampy and the low price might make buyers even more wary. But Stokes saw something that the merely prudent didn’t. He realised the block was not particularly low-lying, and went to the Lands Department and asked to see hydrologic maps of the area. These showed that the water table was not high at that spot: the surface water covering the block was only run-off, and would soon dry out when drains were dug on other land being developed nearby. He bought the land for £100. Six months later, new drains had solved the problem and he sold the land for ‘a couple of thousand’. Multiplying his stake twenty-fold was good but the lesson learned was better. After that, he always had an eye open for waterlogged land that could be fixed — ‘meaning it was a drainage problem not a water table problem’. That knowledge would lead him three years later to a 50-acre paddock in the Kalamunda hills that was going cheap for the same reason. By the time he had it paid off he could afford the fix — huge trenches deeper than the clay subsoil."

"Beyond the timeless equation of supply and demand were the many but sometimes predictable variations in human nature. The man who splashes out on a crayfish is at heart much like the one buying a sports car, a penthouse or the biggest boat in the harbour. He’s a buyer with money burning a hole in his pocket — he has already displayed a tendency for impulse buying that can be tapped again."

"Adamson mentioned to Stokes that at the top of every profession were chief executives who spent most of their time ‘communicating ideas to someone else’. What mattered most was to communicate well; specialists had knowledge but the communicator was king."

"‘You never told anyone what you got or what you had, as there was always someone waiting to take it from you.’ This lesson would stay with him long after he left the streets behind."

"‘I didn’t have the affection and support of a big family, but that meant I was not distracted. I had focus. I rarely started anything I didn’t finish.’"

"‘When the market thinks your business is worth more than you do, go public. When it goes the other way, buy it back.’ It’s a variation on the real estate maxim of ‘buying right’ that he’d learned in his early days in Perth."

"But he also had something not all salesmen did: the gift of seeing things not just as they are but as they might become."

"‘Stop thinking about yourself and focus on helping solve someone else’s problem and you’ll make money.’"

"In 1962, it was known as ‘buying on the never never’. It didn’t worry him while he was earning enough to meet the repayments because he’d stuck to his rule of ‘buying right’. He reasoned that resale value looks after itself if you buy cheaply enough. It would become his signature: to see a bargain where others didn’t — and to sell out before the pack."

"Each experience reinforced the pattern. All his life, he would hunt bargains — and knowledge. He set out to learn how much he didn’t know, then to find someone who did."

"His greatest skill, perhaps, was in finding the right people. Or, as his old friend and long-time employee John Ashby puts it, ‘the right person finds him’."

"They renamed the company Consolidated Properties and Investments Ltd (CPI) and listed on the Perth Exchange in the new year of 1971. Stokes was managing director and Bendat the chairman. They announced the new company would move from hire purchase to shopping centres and other development. They increased its capital from $500,000 to $5 million, with Zimpel shareholders getting two 50-cent Consolidated Properties shares for every $1 Zimpel share."

"Stokes’s imagination bolted with him. For once, ‘sweaty palms’ were not his friend. He feared that if the old charge surfaced during the hearing, his new enemies could use it to destroy him."

"The idea of making money by ensuring other people lost theirs didn’t appeal to him; the whiff of organised crime behind the glitter and glamour of Las Vegas and some other gambling destinations spelled trouble he thought that he and Bendat could do without. They had agreed that as long as they were partners they would not do anything that both did not support. It would be after they split in the 1980s that Bendat got his wish to invest in gaming — eventually making a reported $24 million out of a timely stake in Perth’s Burswood casino."

"THE BARE BONES of the coup were later exposed in the takeover documents required to be lodged with the Perth Stock Exchange. The two family companies that Stokes and Bendat controlled, Retford and Villaro, had borrowed $2.8 million from Hill Samuel and lent it to North West Mining. In return, North West Mining agreed to transfer 1,430,309 CPI shares each to Retford and Villaro. According to the lodged documents, the market value of properties owned by CPI on 28 February 1977 was about $21.5 million. The statement said this was more than $4.5 million above the value recorded on the company’s books. The new valuation boosted CPI’s net assets from $1.49 per share the previous 30 June, eight months earlier, to about $3 per share. At a glance, the North West Mining offer of $1 a share had seemed generous because it was more than the most recent market price of 70 cents. But it was well below the asset backing of $3 a share — which was why the Hong Kong bankers had resisted selling their holding at $1. But for unsophisticated shareholders, rattled by three years of bad news, it was a chance to get out at what seemed like a profit. After all, the company’s recent track record had been patchy: with sales from as low as 20 cents and up to 63 cents on the eve of the offer. For reasons carefully explained at annual general meetings, it had not paid a dividend for three years. Failed and struggling shopping centre developments in the middle of a recession had shaken shareholders’ confidence and here was a way out."

"DOING BUSINESS IN Kalgoorlie raised other possibilities. To Bendat, a mining town bursting with single men and where brothels and two-up were legal seemed the ideal site for a casino. In May 1972 Stokes went to an international shopping centre convention in Florida. On the same trip he toured other parts of the United States and Europe to look at gaming but returned unpersuaded. He was no Puritan and liked to gamble at games of skill himself, but it seemed to him casinos lured gullible people who lost money and hard people who preyed on them."

"‘If you use the media to grow it will eventually destroy you. If you don’t use it, you don’t lose it. Banks and the people I deal with don’t want publicity.’"

"‘Out of problems come opportunities.’"

"IN THE NEW year of 1978, Stokes and Bendat decided to sell the Bunbury Shopping Centre, by then owned by a subsidiary of CPI. It had been Bendat’s first building venture in his adopted country but he wasn’t sentimental. The centre faced increased competition. It was nothing the pair couldn’t handle but they had other plans. They wanted $1.5 million to sink into ‘new ventures’, a local newspaper reported that summer. In fact, what they wanted was in plain sight of the shopping centre."

"Stokes agreed. Next morning, 10 April, Stokes went to the bank’s main Sydney branch in Martin Place and picked up the cheque made out to Fairfax. He signed a receipt for it, slipped it into his coat pocket and went off to meet the waiting delegation. He had long since learned the value of silence, a tactic that originated when he was surrounded by educated and articulate people fond of giving orders and being listened to by underlings. Falkingham didn’t disappoint in this respect. Stokes’s memory of events goes as follows. As soon as they met that morning, Falkingham said something like: ‘You are going to tell me you need more time to pay.’ Stokes shrugged and made a noncommittal comment. He was happy to wait till right on the deadline. When the clock hit 10 a.m., Falkingham said words to the effect of: ‘Your time is up. I told you to have a cheque ready.’ Stokes, deadpan: ‘Is a bank cheque all right?’ He fished the cheque from his jacket and handed it over. He recalls Falkingham saying: ‘You are full of surprises. You will have a deal by lunchtime.’ The deal was closed, but they kept sparring almost to the end. ‘We had this interesting conversation, with Falkingham saying that [price] won’t get the deal done . . . and I stood there and said you have two choices: you can deal with Rupert Murdoch’s friend [Bruce Gordon] or you can do what you said you would do and sell to me at a higher price. I have not come here to be chiselled and I’ve put $1 million in good faith on the table without a contract. ‘They finally agreed they would accept my offer. And Mr Falkingham said: “Well, Mr Stokes, that gives you 30 per cent but I fear Mr Gordon’s head start [a 14 per cent holding in Fairfax] may be too much for you.”’ Stokes played the Edmund Rouse card — the option to buy the Tasmanian’s 12 per cent stake. ‘I responded: “I wouldn’t worry too much, Mr Falkingham. I already own Launceston TV shares in Canberra and that gives me 42 per cent and I’m pretty confident before this day is over I will have what I need to take it to 50 per cent.”’ And apart from a little argy-bargy with Bruce Gordon, that is the way it evolved.’"

"Pulling off the intricate share play had him thinking he could do it again. As he says, looking back on the deal, ‘There’s a pattern emerging here.’"

"He’d come from the east at nineteen with £150 in his pocket. Twenty years on, he was going back with a war chest of more than $10 million; he owned assets worth millions, was owed many millions more, and co-owned businesses with enormous cash flows. It was the beginning of what he calls ‘one of my defining moments’."

"‘No one thought they’d need me but when the music stops I’ve got my chair — and my lunch.’"

"There’s a moral to the tale, he says three decades later. When it mattered, the bank had trusted him with a $1 million advance without formal documentation because he ‘always religiously paid’ whatever he owed. ‘You only have to make the payment once so you might as well pay on thirty days. I did, and that’s why I didn’t have any trouble with banks.’ Nor with creditors, he says, who also knew they could count on swift payment."

"The station was pitched at 18- to 39-year-olds, baby boomers and their children who’d mostly grown up listening to rock music and, since 1959, watching television. Stokes, who turned forty a month after the launch, had just drifted out of the demographic. Bendat was old enough for his children Paul and Laura both to be in the target market. This wasn’t a shopping centre; they had to trust the experts they’d hired to make it work."

"‘Cash in before a crash, ready to buy later’."

"FOR SOMEONE WHO has done a lot of deals, Stokes doesn’t see himself as a deal-maker. His deals have mostly been towards an end: to acquire and build businesses."

"Like playing Russian roulette or defusing bombs, it looks easy when you get it right, and most of his life Stokes got it right — picking his moment to sell then waiting to swoop on another opportunity, often involving a completely different business. He recalls the date and duration of every recession and credit squeeze in half a century, and sensed most of them coming. Turning himself from battler to billionaire was like tossing seven heads in a row, betting all up."

"‘People can get lucky but you have to work,’ he repeats. ‘You have to work hard when it’s hard to work.’"

"‘He told me to make sure you can get away from any situation because you never know who you’re going to be fighting.’"

"‘I’m a chameleon,’ he says in a revealing moment. Just to prove it, another time he describes himself as a ‘technocrat’."

"Stokes is tactful about most of his contemporaries in business but his real opinions are crisp. Most of them, he says, were specialists: people who struck a formula and perfected it. He avoids saying ‘one-trick ponies’."

"He still loves a bargain, from jeans to jets. Price doesn’t matter but value does."

"to survive you have to ‘buy right’ so that when you sell you still have your stake."

"Thomas De Quincey’s judgment: ‘No man will ever unfold the capacities of his own intellect who does not at least checker his life with solitude.’"

"Stokes is unpretentious about food and clothes. He arranges sausage rolls with tomato sauce instead of hors d’oeuvres at board meetings and corporate functions: he likes them and he knows most other people secretly do too."

"When Stokes was making his way in real estate in the 1960s a young doctor told him he was thinking of quitting his practice to buy and sell land because there was obviously more money in it. The implication was he could do anything Stokes could if he merely turned his brightest-boy-in-class mind to it. Stokes remembers looking at him and saying, ‘No, you won’t.’ ‘Why not?’ asked the affronted doctor. ‘Because I had nothing to lose — and you have,’ Stokes answered. ‘I went hungry. You won’t do that now.’ The comfortable wouldn’t risk what they already had for the chance of future reward. They wouldn’t match the fierce way Stokes backed himself. All champion fighters come from ghettos and barrios and slums."

"Aristotle says the only true measure of a man is his actions."

"Property is the safest long-term investment when the market crashes, he says, which is why he has quietly kept gathering it."

"‘If things get tough, it’s a survival skill to address it quickly — to sell things at a loss, even. You have to think clearly.’"

"‘the coldly economic mind’ that it operates efficiently under life-or-death pressure."

"Waiting below are people to meet, deals to stitch together, plans to make. He’s never wasted time in his life; now that time’s wasting him, it is more important than ever to fit in all he can. He was born restless, knowing instinctively what most learn too late: that life is short. Maybe that insight marks Golden Dragons, the rare ones destined for success and condemned to chase it to the"

"he draws a lesson about business and about life from the story of the Antipodean: people who lose money usually go into denial and won’t act quickly enough to cut their losses. ‘Waiting doesn’t help,’ he says. ‘If you don’t get ahead of the curve you get wiped out by the wave.’"

"‘I’m no saint,’ he says. ‘But I’ve done a few interesting things.’"

"‘If I didn’t have this [the jet] I wouldn’t be able to do business the way I do at my age,’ he says. It’s not a glib statement. He doesn’t complain but he’s obviously in pain. He’s been sitting uncomfortably for days, trying to ease the aches in his back and neck: the effects of wear and tear inflicted by a careless young owner in the foreign country he’s left behind."

"Business comes first and if there’s any spare time, he’d just as soon spend it quietly with his sons, his wife and a handful of others, skiing, diving or boating. And thinking."

"‘Kerry’s a bit of an iceberg,’ he offers, then explains: ‘not frigid — more under the water than on the surface’. ‘If he asked me to do something for him I would say yes even before I knew what it was. He gets ten out of ten as a businessman and ten-plus as a bloke. His track record speaks for itself.’"

"Gower lists the catch-all qualities Stokes possesses — ‘enthusiasm, application, drive, intellect’ — then stresses a specific talent: ‘He selects subordinates well so he can look ahead while they do the day-to-day.’ He observes the instinct for planning that another engineer,"

"Stokes flew to Borneo to inspect the rich man’s toy, fading in the tropical sun. He knew that Mercedes Benz had ‘a note’ on it — a mortgage for money the owner owed. ‘I go to see him [the owner],’ Stokes says. ‘The boat’s looking a bit shabby because he’s not maintaining it. I told him, “I love your boat but there’s a recession on — it’s too dear.” He says he doesn’t want to sell it any cheaper.’ Stokes dived under the boat to make sure the hull was sound. He chatted to the skeleton crew, who let slip that they were moored at Kota Kinabalu because it was a jurisdiction where the mortgage holder could not seize the boat. The two crewmen hadn’t been paid for months. As Stokes left, he gave them a contact number ‘for the people who really own the boat’ and suggested they use it. He suspected Mercedes would pay the crew their back wages if the boat was in a jurisdiction where it could be seized. Soon afterwards, Mercedes called him to check if he’d be interested in buying the boat. He told them if it appeared in a legal jurisdiction he would ‘pay out the mortgage plus costs plus the crew’s wages’. A month later the boat arrived in Bali; the crew had fled Borneo on the promise of getting their wages. When Stokes got the news, he said: ‘Fill it full of fuel and send it to Fremantle and I’ll buy it.’ He says it cost less than $5 million, plus what he’s spent since to bring it to mint condition. He estimates it had cost more than $10 million to build — and building a replacement would be more than $20 million."

"The family has grown up with wealth and quality but without lavish spending on ostentatious things. The brothers have been raised often using hand-me-downs, from ski gear to cameras to cars."

"If Seven and WesTrac was an arranged marriage, Stokes’s next proposal — that West Australian Newspapers should swallow the entire Seven Media Group — seemed more like a contortionist’s act. West Australian Newspapers was valued at $1.4 billion and Seven Media Group at $4.1 billion. Shareholders were nervous and some downright hostile to a related party transaction, but Stokes managed to persuade enough of them that Jonah could swallow the whale and would benefit hugely from the experience. Apart from a little indigestion, what could possibly go wrong? When Stokes had done the original deal with KKR in 2006 he had been able to take out $3.2 billion in cash, keep half the business and leave the joint venture holding all the debt. Now he was able to merge it back into the rest of his media interests and raise $1 billion in new equity to pay down the debt — and still maintain control. Seven West Media was born. It was one of the great coups of Australian business history."

"The scale was industrial, but the effect was as close to beautiful as a factory gets. The architects and the builders had delivered on a brief to create something that would improve the landscape, not be a blot on it."

"Stokes’s sardonic summary is: ‘The judge found he was telling the truth when he wasn’t lying. But that was all right, apparently.’"

"‘This is a showpiece for WesTrac,’ David Aspinall said a few weeks before the formal opening in late winter of 2012. ‘We wanted somebody who could build a building that wasn’t just a shed with finish.’"

"In one of Stokes’s long-range chess moves, he put former Woodside Petroleum chief Don Voelte in the media-group chair — where he took a chainsaw to costs — ready for Worner to take over the big job in 2013. Although Stokes sees Voelte as a tough all-round manager, his ultimate value lies in his knowledge of the energy business, which explains why the American became head of Stokes’s Seven Group Holdings with a brief to examine gas extraction."

"So why bother with China as well? ‘I still like to feel sweaty palms,’ he admits."

"Stokes quickly worked out a couple of things many Western businesspeople didn’t. One was not to look at his interpreter but at the person whose words she was translating. ‘And I never said I’d “teach” anything to people with a culture that was thousands of years older than mine.’ Instead, he told the Chinese he wanted to share his experiences with them, the way friends and equals do."

"It was time for Stokes to apply his philosophy that problems throw up opportunities. Seven had started as a 6 per cent shareholder in the stadium and was the only foundation investor to have made money out of it. Under the new structure, it would take over operating the stadium but keep Ian Collins on to run it. It was like coaching a bottom side — the only way was up."

"On one hand, new technology promised a higher standard of living and broader knowledge. On the other, the ‘globalisation of the information industry’ threatened to turn Australia into a cultural colony. He was already on the record with a prediction that by 2010 everyone would have laptop computers, which in 1994 were an expensive novelty for a tiny elite."

"The nuts and bolts of broadcasting fascinated Stokes. He had trouble remembering dates and people’s names, even figures once he’d finished with them. Money bored him once it was made and reinvested. But technology had always intrigued him. Inside Australia’s new media mogul was the little boy squatting in the squalor with his Meccano set at Watsonia barracks, the bigger boy who built a crystal set, the teenager who grafted an electric fuel pump onto his first jalopy and the offbeat property developer who was among the first in Perth to have a home computer. Now he was gripped by the idea of creating the first digital broadcast centre in Australia. His eyes gleam and his voice is animated when he talks about how they did it."

"‘You seem to have a lot of money,’ she recalls saying. ‘What do you do?’ ‘I own things,’ he told her."

"Deveson was to chair a board meeting on 30 March in Perth. He decided not to call a crisis meeting before then and did not brief other directors in detail, which made some unhappy when the story broke. They started blaming Deveson as well as Campbell. Stokes can recall being in his office with Peter Gammell when the rate-card story broke in March 1995. He and Gammell looked at each other and Stokes said something like: ‘I think we just got the chance to take over Seven.’ Stokes tends to sum up complex matters with a pithy line. ‘When a company is at war with its two major shareholders there’s always an opportunity for a man of peace,’ he deadpans, then chuckles."

"the sharpest of all was in damage control: the necessity to cut losses hard and swiftly instead of what he calls ‘going into denial’. He explains drily, ‘When everyone says you’ve cut too much, you’ve got it about right.’"

"‘When a company is at war with its two major shareholders there’s always an opportunity for a man of peace.’"

"To reverse one of his favourite metaphors, he was weeding the garden rather than bulldozing it."

"Matt’s ambition was humble and his world was small, but in him were pride and perseverance and a bottomless capacity for work. It’s one definition of true grit and they shared it."

"WHAT MATT WOULD have called ‘horse sense’ applied in the stockmarket as much as in the stockyards: to avoid getting kicked, stick close to the horse so you can feel what it’s going to do. It’s a homespun version of the Mafia maxim that says to keep your friends close and your enemies closer, and Stokes’s experience in Dallas had underlined the truth of it."

"MAKING MONEY WAS one thing. Stokes had known he could do that since he trapped rabbits. Keeping it was harder because the position was reversed: the traps were set for him. As he would joke later, even ‘carnivores’ at the top of the food chain get hunted. ‘Everyone wants to help you invest the money.’"

"‘Kerry is very intelligent and can foresee the future,’ he says. ‘He’s a forward planner and very clever at picking good people’ but an ‘iron disciplinarian’."

"WHILE OTHERS RAPIDLY made and subsequently lost fortunes, Stokes mostly stuck to making plans and watching them unfold. And next on his list was an ambitious project that had been on the cards for quite some time."

"Valuations rocketed when Stokes and Bendat rolled all the holdings into a company called BDC Investments that year (1987) and floated it on the stock exchange. But a bigger reason was that the bull market had turned into a mindless stampede. Gammell marvelled at the hand Stokes held in the game but was taken aback by the high stakes: ‘I said I couldn’t believe the value of the businesses and asked what happens when the music stops.’ Stokes said he had little debt and was confident of riding out whatever trouble was ahead. In truth, he was a little uneasy. He wasn’t a herd animal and stampedes…"

"STOKES’S INSTINCT TO avoid the mob turned out to be strong. So did his misgivings about whether the boom would last. But the itch to join the big league of media players niggled at him. It was a make-or-break moment. If staying in the market was a test of nerve, as so many of the 1980s big shots implied, would selling out brand him as some sort of failure? Even (or especially) with hundreds of millions of dollars at stake, the politics of it was as primitive as playground push-and-shove. Nobody wanted to blink first. But Parker advised Stokes to follow his instinct and step off the train in case it crashed. Parker had got it wrong with PGF and Stokes had got it wrong with Pacific Film, waving aside Bill Rayner’s gentle protests that film processing was…"

"Stokes and Bendat thought they’d been patient long enough: it was time to throw the switch to profit. Stokes recalls: ‘It lost three times as much as we expected the first year and people said of course it would, because you are not selling ads! The second year it lost twice as much as the business plan said. The third year it was off to the races. We creamed it.’"

"His attitude could be summed up by the builder’s maxim ‘A clean site’s a happy site’."

"Stokes says he invested in the station but didn’t indulge it. In line with his instinct of always ‘buying right’, he knew that people equipped with the right gear do a better job and have no excuse for failure. ‘I didn’t get a reputation for extravagance but I liked to invest in people. It created a buzz, and that helped generate revenue.’"