Alan Bond was born in 1938 in London, and spent his early childhood in Wales before moving to Western Australia with his family at the age of 12. He left school two years later and served part of an apprenticeship as a sign-writer before founding Progress Development Organisation (later Bond Corporation) in 1959, originally to pursue real-estate development. During the 1960s, 1970s and 1980s, his empire grew to encompass brewing, mining, television and even a private university. In 1983 his sponsorship of the winning Australian team in the America’s Cup later earned him the Order of Australia.
What was the scam?
From the start of his career, Bond based his entire empire on large amounts of debt, frequently buying properties before going to the bank for the money for a deposit. Initially this worked well, but in the 1980s his empire began to experience financial problems. Undeterred, Bond used a variety of accounting tricks to give the impression that his empire was more profitable than it actually was, such as understating the true amount of debt it had. As Bond Corporation’s situation grew more desperate, Bond transferred A$1.2bn from Bell Resources (a listed company that Bond Corporation had a 52% stake in).
What happened next?
In 1988 Bond Corporation attempted a hostile takeover of the resources conglomerate Lonrho, which released a 100-page financial analysis of the Bond group as part of its defence, pointing out the shaky foundations of its finances. The unwelcome publicity, along with pressure from banks worried about the company’s mounting debts, led to him being ousted as chairman in 1990, though this didn’t prevent Bond Corporation going under in 1991. Bond himself was declared bankrupt, owing A$1.8bn, a year later. In 1997 Bond was sentenced to up to four years in jail for the Bell Resources fraud.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Lessons for investors
Shareholders in both the Bond Corporation and Bell Resources were wiped out, although those investing in the latter company received some compensation after a legal battle lasting over two decades. Bond’s creditors fared little better. Generally, it’s a good idea to avoid companies with high levels of debt – it is not only a sign of weakness and poor management, but raises the temptation for managers to fudge the books.
-
Newspaper baron David Montgomery to bid for The TelegraphVeteran media mogul David Montgomery has seen off a bid for his media group National World. But he now has his eye on The Telegraph
-
Live: Did UK inflation rise in December? What to expect from tomorrow’s reportDecember’s inflation report will be published at 7.00am tomorrow. The team at MoneyWeek is reporting live.
-
Why Wise could be worth a lot more than its share price impliesForeign-exchange transfer service Wise has the potential to become the Amazon of its sector – here's why you should consider buying this stock now
-
How to find the best investment ideas that others will missFind the best investment ideas by observing trends and listening to anecdotes, says Max King
-
Can The Gym Group pump up your portfolio?Gym Group was one of the best UK small-cap stocks in 2024 and will beef up your profits this New Year
-
MoneyWeek's five predictions for investors in 2025MoneyWeek's City columnist gazes into his crystal ball and sees five unexpected events in store for investors in 2025
-
How buy-and-build stocks deliver strong returnsBunzl, DCC and Diploma became successful through buy-and-build – rolling up dozens of unglamorous businesses. How does it work and what makes it successful?
-
Singapore Technologies Engineering shows strong growthSingapore Technologies Engineering offers diversification, improving profitability and income
-
Has RIT Capital fallen out of favour?RIT Capital saw its discount soar amid weak returns, and investors remain sceptical of a turnaround
-
Why emerging markets are waiting for a weak dollarEmerging markets have had a better year but, like everything else, are still lagging far behind the US
