Read The CEO Page 16


  “But you expect to exceed consensus forecast in the following year?” Milgate followed up.

  “We haven’t released any projections,” Aspine smiled, “but I’m not losing any sleep over broker forecasts.”

  “Look, Douglas, we’re not trying to get information that’s not available to the public,” Milgate lied. “We’re just trying to get a better understanding of the business.”

  “That’s right,” Lappin agreed. “We’re going to initiate coverage on Mercury with a buy recommendation, and we just want to make sure our clients are fully informed.”

  “We also think we might be able to help you manage the company’s cash, pending you finding a use for it,” Muir said. “You must have close to four hundred million?”

  “Have you thought about making a takeover?” Milgate asked. “We could help you with the advisory work, assist you to raise a little more capital, and you could take a competitor out of the market-place. You utilize your cash, get cost saving synergies, and remove a competitor. Makes sense doesn’t it?”

  Aspine pondered his answer carefully. They had done a lot of work, and most of what they’d said had been carefully planned and was just a little too pat, but he was pleased and didn’t want them to lose interest. “Yes it does, and it’s something I’ve been considering for a bit further down the track. Right now I’ve got enough on my plate, and takeovers are always disruptive.”

  “Who did you have in mind?” Milgate asked.

  “Apartco.”

  “So did we,” Milgate said, smiling at Lappin and Muir. “So did we.”

  Duncan Milgate put his arm around Aspine’s shoulders as he showed him to the elevators. “We’ve done a little work on Apartco, and it’s a perfect fit for Mercury. Would you like us to continue on a more formal basis?”

  “What’s it going to cost?”

  “Not much. No more than four hundred thousand.”

  “What do I get for that?”

  “A proposal that you can take to your board, knowing it’s almost certain to be adopted. You’re going to struggle to grow Mercury in the longer-term, and this could be the answer to your problem.”

  “And what do you get, if it’s adopted?”

  “We’ll raise some capital for you, do a little consulting work, and we’ll talk to the institutions and convince them to accept your offer for their shares in Apartco. Our fees and commission won’t exceed fifteen mil.”

  “Christ, you know how to charge.”

  Milgate didn’t blink. “Douglas, we’d also be pleased to handle your personal account on a minimal brokerage basis. As you know, we handle a lot of public company issues and, if you join us, we can get you into the good ones on the ground floor.”

  Aspine held his hand out and smiled. “It’s been a pleasure meeting you, Duncan. Go ahead with your research on Apartco, but bear in mind I won’t be ready to move for at least nine months. I’ll ask my ‘now former stockbroker’ to forward details of my personal holdings to you. I hope this is the start of a mutually beneficial relationship.”

  Six months earlier, Blayloch & Fitch couldn’t have cared less about him. Now he was being courted, being offered special deals reserved for those in the club, at token rates of brokerage. No wonder the rich got richer, he thought. Blayloch’s had been supportive but expressed concern about growth and profit increases − if they’d been totally satisfied they would have placed a ‘strong buy’ on the company’s shares rather than a ‘buy’. He knew the easiest way to increase profits was by price increases, but this strategy was only possible if the company’s competitors also increased their prices. He’d toyed with the idea of contacting the other manufacturers of quarry products, cement and bricks, suggesting an across-the-board price increase of eight to ten per cent, but he knew they wouldn’t be receptive. Boral, Readymix and Pioneer had already been caught by the ACCC for fixing the price of cement, and been collectively fined twenty million dollars. Aspine thought that they’d been staggeringly stupid, because they’d taken minutes of their illegal meetings, before fixing identical prices. The answer was obvious and lay in increasing the prices of high-rise apartments, where Mercury had three competitors in most of the geographical areas it operated: Apartco, Vicland and Urban. The conversation about Apartco had refocused his thoughts on apartment pricing. He hit ‘one’ on his mobile, and told Kelly to make sure Brad was in his office in ten minutes.

  Brad was sprawled in a visitor’s chair, reading the form guide. “No wonder you’ve never got any money, Brad. There’s never been a punter who’s kept a dollar but there are plenty of bookies living in luxury. Doesn’t that tell you something?”

  “I’m not a big gambler. It’s the women and cars that keep me broke, but they’re two habits I’m not giving up. What is it that you want to see me about?”

  “I want you to write a nice letter to Cynthia Cartwright, offering to cancel the contract for the purchase of the Docklands apartment. Don’t forget to refund the deposit.”

  “Why? We’ve got a watertight contract that we can enforce.”

  “If the old fella dies and the wife goes crying to the media, they’ll crucify us.”

  “You’re worried about that Jeczik woman.”

  “I’m not worried about that bitch or anyone else for that matter. It just makes good business sense not to run the risk of bad publicity. Brad, it’s not up for debate. Draft the letter and make sure it goes out today!” Aspine growled, angry at the mere mention of Fiona Jeczik’s name.

  Brad was surprised but unfazed by the ferociousness of the response, and started to get up from his chair.

  “Don’t go! I’m not finished. I want to talk to you about the selling prices of our apartments.”

  “We’re about the same as Apartco and Vicland, and slightly less than Urban.”

  “I want you to increase prices by seven-and-a-half per cent across the board, effective from the end of October.”

  “Fuck! The sales guys are going to go ape shit. We’ve just had a price increase. This is going to make it really tough to make sales. Besides, what are we meant to do with outstanding quotes and apartments we’re negotiating on?”

  “It’s simple; you’ve got six weeks to close them at existing prices. I don’t want you or your reps backdating quotes after the end of October. Do you understand me?”

  “Yeah, I told you at the interview that management always made it harder to make sales when the sales guys start making too much money.”

  “You’re management now and I want you to support the price increase. I’m going to make Mercury the market leader and price setter. It has nothing to do with saving commission and, if you shut up and listen, you’ll understand why.”

  “I’ll toe the company line, but sales are going to fall. Our average price is going to be forty thousand dollars more than our competitors for basically the same apartment.”

  Aspine exhaled, not trying to hide his contempt. “Maybe I’m about to find out if you really can sell. What’s the after-market like for our Docklands apartments?”

  “Falling. Punters who paid $600,000 last year are trying to sell for $550,000.”

  “What about our competitors’ apartments?”

  “The same. Docklands is ratshit.”

  “We’ve got three more blocks of land at Docklands, and I want to start building.”

  “Shit! Why don’t you sell the land?”

  “Who’ll buy? The scavengers, the bottom pickers, the opportunists, and we’ll take a huge loss. That’s not an option. How many pre-owned apartments of ours are for sale?”

  “About ten.”

  “Listen to me carefully. I want you to create twenty companies, all at different lawyers and accountants’ offices, with them and their nominee companies as directors and shareholders. Make sure your name doesn’t appear on any record. Then I want you to instruct them to buy the pre-owned apartments in the after-market, making sure that at least some of the sellers make profits.”

  “Have
you gone totally mad? Why would I want to do that? Where am I going to get the money? What are you on?”

  “You’ll have no difficulty. I’ll provide you with the name and details of a finance company that’ll lend the new companies the funds to buy the apartments on a non- recourse basis. You’ll organize to rent them out, and defray the costs of the loans.”

  “Non-recourse?”

  “Yeah, in the event of default on the payment of interest or principle on the loans, the finance company’s recourse will be solely against the apartments and, if there’s a shortfall it’ll wear it.”

  “What finance company does business like that?”

  “I’ll let you know in due course.”

  “The rental income won’t even come close to covering costs and interest.”

  “I know.”

  “I don’t understand. Why are you doing this?”

  “You’ll buy all of our pre-owned apartments that are for sale. Then you’ll make sure that we get newspaper editorials, saying that there are sellers of pre-owned apartments constructed by Apartco, Vicland and Urban, but that none of our apartments are available, and those that have recently been sold resulted in profits for the sellers. I also want you to foreshadow the seven-and-a-half per cent price increase and our next Docklands high-rise developments, as a strong sign of confidence. And don’t forget to mention we’ll be selling off the plan.”

  “You’re going to try and prop the market up, and create the illusion, that the prices of our apartments have held up against the overall market decline,” Brad gasped.

  “Yes, and I want you to follow up with a major advertising campaign emphasizing that our apartments increase in value, whereas our competitors apartments decline.” Aspine grinned.

  “Fuck, is it legal?”

  “Why wouldn’t it be?

  Apartco Limited was a medium sized public company capitalized at seven hundred and fifty million dollars. Its shares were trading at 90 cents, with fifteen per cent controlled by its founders, the Romano family. Aspine knew that Mercury would have to bid at least a $1.20 to mount a successful takeover. He also knew that Mercury would be making a bid within eighteen months. It was against this background that he pondered the regulatory risk of personally buying shares in Apartco, knowing that he’d make a guaranteed thirty-three per cent profit. Gene Alder had gone to jail for insider training, and Stuart Vizrad had been disgraced, fined three hundred and ninety thousand dollars, and been barred from being a company director for ten years. Aspine considered setting up a blind trust that he would fund and that would buy the Apartco shares, but this was what Vizrad had done and he’d still been caught. He toyed with the idea of buying in Barbara’s name or perhaps Trevor’s, but the trail would inevitably lead back to him, and the risk of jail and disgrace was just too high. Because of this he decided not to buy shares in Apartco − it had nothing to do with honesty, ethics or morals, and everything to do with the fear of being caught. However, he resolved to form a company that could not be traced back to him so that, if other opportunities to use insider information arose in future, he would be ready.

  - 18 -

  THERE WERE EIGHT purchasing officers and nine support staff who reported to Anthony Keen.

  Aspine painstakingly perused their personnel records, until he reached the recently appointed Steve Brogden’s file. He was only twenty-eight, married with two children and, more importantly, had previously been employed by Westfield and Lend Lease, which gave him better credentials than any of Mercury’s long-term employees. Aspine’s only doubt about Steve was his motivation for joining a laggard like Mercury.

  “Kelly,” he shouted, “tell Kurt to come up and see me, with Anthony Keen and Steve Brogden, right now.”

  He mused about Keen’s reaction to the changes he was about to make, and the corners of his mouth turned up in a cruel smile.

  Ten minutes later, Kurt knocked nervously at his door with Keen and Brogden close behind him.

  Aspine glanced up, directing them with his hands to sit down. “Gentlemen, I’ve called this meeting to discuss Anthony’s future with the company.”

  As Aspine had anticipated, Anthony flushed with anger. “What are Kurt and Steve doing here then?”

  “I’m not with you, Anthony,” Aspine responded, feigning aggrieved innocence. “Kurt is human resources manager and your future falls within his area of responsibility.”

  “I’m a senior executive, and this type of conversation was always held in private with Harry. Besides, what’s he doing here?” Keen glared at Steve Brogden.

  “I don’t give a fuck what you did with Harry, and Steve’s here because I’ve appointed him to take your place as supply manager.”

  Kurt’s mouth was agape and Keen looked like he would explode. Steve Brogden remained calm and apparently unaffected.

  “I told you, that if you sacked me I’d sue Mercury to the hilt. I’m going to enjoy watching you grovel in court.”

  “Anthony, Anthony, you’ve totally misunderstood me. I haven’t sacked you, and nor do I intend to. You’ll remain on the same salary and benefits. You just won’t be supply manager. I’m sure Steve will be able to use you as an expeditor or clerk. You will have to vacate your office though, and work from the general supply office.”

  “Bastard! You’re not going to get away with this.”

  “I’m sorry, Anthony, I don’t understand why you’re upset,” Aspine said, expressing mock concern. “If you’re not happy, you can always tender your resignation.”

  “You’d like that, wouldn’t you? You can play your little games but I’m not resigning.”

  “I’m glad to hear it,” Aspine smirked. “You can leave us now and clear out your office for Steve. Can I assume you’ll be out in an hour?”

  Keen got to his feet, trembling with rage

  “Anthony, Kurt will be circulating a memo this afternoon, to the effect that any employee who leaks company information to the media will be summarily dismissed. Shut the door after you.”

  “You can’t do it,” Kurt said.

  “I just did,” Aspine grinned, looking at Steve. “So what do you think?”

  “I’m flattered, Doug, but you’ve never spoken to or interviewed me, so why did you choose me?”

  “You were too young to have grey hair and you’ve worked for some savvy companies. My only concern is why you left them to join Mercury?”

  “I want to raise my family in Australia. Promotion at Westfield was only on offer in the US, so I decided to find a company with its operations based in Australia, preferably in Victoria.”

  “Was that the only reason?”

  “No. Mercury had a lot of older employees, and I had a feeling that I might get to be on a very fast track.”

  “You thought you could shove the oldies out of the way?”

  “Yes.”

  “See Kurt, you should always back your hunches. I have very good feelings about this young man.”

  “That might be the case, but Steve’s going to find it difficult so long as Anthony remains with the company. And he’s not going to resign.”

  “Steve, I want you to start screwing prices down. Suppliers have been pulling Anthony’s pants down for years, and I want them crunched. I expect you to make a big contribution to our bottom line, and to also give me the grounds to sack him. If you can cut our costs by five to ten per cent in the next six months, I’ll sack Anthony and, if he’s stupid enough to go to court, I’ll bury him.”

  Kurt’s body was motionless as he slowly shook his head.

  “Is there anything wrong, Kurt?” Aspine chuckled.

  “No, Douglas.”

  Norman Pell was a highly successful but devious tax accountant, who’d acted for many notorious white collar criminals. Despised by tax office employees, he devoured tax law and case history in the same way that a prolific reader devours novels. He was also a petrol head with a love of fast European cars, and it was this interest that led to his close friendship with A
spine. The phone rang only once, “Pell & Pell, Jessica speaking.”

  “It’s Douglas Aspine. Is Norman in?”

  “Yes, Mr Aspine. I’m putting you through.”

  “Hello, Douglas. You’re not looking to sell the Ferrari are you?”

  Aspine ignored the question. “I need to see you. Do you have time for coffee this morning?”

  “Sure. Do you want to tell me why before we meet?”

  “No. I’ll head into the city now and meet you in the Hyatt just after eleven.”

  “Okay.”

  Norman was sitting at a table in the dining room when Aspine arrived. As he strode toward the table, the little man with the disproportionately large head, receding hair line and horn rimmed-glasses stood to greet him. Aspine extended his hand, wondering how many had under-estimated Norman because of his physical appearance, only to later regret it. “Hello, Douglas. Now what’s so urgent that you had to rush in here to see me?”

  Aspine glanced around until he caught the eye of a waitress and beckoned her over to take their orders. “I want you to create a company for me with a stooge director. Someone who’ll sign documents, applications for bank accounts, tax and corporate returns, but who won’t have a clue what the company’s really doing. Can you organize it?”

  “That’s easy, but what’s this company going to do?”

  “It’s going to provide finance to companies, who want to buy apartments from sellers of Mercury’s apartments.”

  “Where’s the money going to come from?”

  “Mercury will make loans to the new company.”

  “You’re going to try and prop up the prices of your apartments,” Norman said, his face lighting up in a huge grin. “It can’t be done; the market’s too big. Besides, how’s Mercury ever going to get its money back?”

  “When the market picks up the buying companies will sell the apartments and payoff their loans to the new company, which will then repay Mercury.”

  Norman looked bemused and slowly shook his head. “That’s so convoluted.”