John Elliott (Image: AAP/Julian Smith)

The inevitable eulogies are flowing thick and fast for former corporate titan John Elliott, with Treasurer Josh Frydenberg and newly returned Victorian Liberal leader Matthew Guy taking pole position.

But most testimonials have conveniently ignored Elliott’s criminal past, instead focusing on his “larger than life” personality, leadership of the Carlton Football Club and brief time as a potential prime minister. But while the eulogies ignore or gloss over Elliott’s many misdeeds, Crikey certainly won’t.

After receiving a private school education at elite Carey Grammar, Elliott won a scholarship to study commerce at Melbourne University before landing a job at BHP soon after joining leading consultancy firm McKinsey in 1966, where he was mentored by Roderick Carnegie.

The rise of the Elders empire

Elliott would soon turn his attention to business, and just six years later become one of Australia’s first corporate raiders. Elliott led a team of young tigers based out of Melbourne, most of whom would have very lucrative corporate careers — names include Peter Scanlon, Geoff Lord, Bob Cowper, Ken Jarrett and Richard Wiesener.

Elliott was backed by $30 million from some of Melbourne’s establishment families, including the Darlings, Myers, Kimptons and Carnegies. His first move, “Operation Tiger”, was acquiring sleepy Tasmanian jam-maker Henry Jones IXL.

Elliott rationalised Henry Jones’ assets before acquiring fruit-canning business Tom Piper and a series of smaller food businesses. In the late 1970s, Elders would expand into a range of unrelated sectors, including engineering and media. But Elliott’s big move came in 1981, when Robert Holmes à Court attempted a hostile takeover of livestock, real estate and trading giant Elder Smith Goldsbrough Mort (which was a shareholder in Elliott’s IXL).

In a move that would portend Elliott’s legal problems many years later, Henry Jones entered into a complex cross-shareholding transaction with beer giant Carlton & United Breweries. Under the reverse merger, Carlton & United emerged with a 49% stake in the new Elders IXL but was effectively managed and controlled by Elliott’s Elders. (In 1983 Elliott’s Elders undertook its own debt-fuelled takeover of CUB.)

From there, Elliott and his band of merry raiders went on a decade-long acquisition spree, purchasing the UK’s Courage Brewery in 1986 and Canadian giant Carling O’Keefe in 1987, as well as a Melbourne stockbroker and even a goldmine (which would lead to the disastrous Elders Resources).

In 1986, Elliott became a key player in the takeover defence of BHP by the Melbourne establishment against Holmes à Court (more on that later).

By the mid-1980s Elliott and Elders were a big deal. The business, Australia’s second-largest by revenue, was turning over $7 billion and had more than 20,000 employees. Elliott, meanwhile, rubbed shoulders with Australia’s corporate elite, sitting on the boards of BHP, National Mutual, Goodman Fielder and Bridge Oil. He was also the federal Liberal Party president.

Elliott’s debt-laden business empire collapses

But while Elders survived the market crash of 1987, Elliott had the long-running dilemma that he actually owned very little of the business (his wealth was estimated by BRW in 1989 at $78 million, far less than many assumed).

It was said he was owned by the Melbourne establishment, working for wages rather than profits. To overcome this, Elliott and fellow Elders executives attempted a management buyout of Elders through their vehicle Harlin Holdings. This would prove the catalyst for Elliott’s later downfall.

After Harlin acquired a suitable 17% stake in Elders directly from BHP, the National Companies and Securities Commission forced Harlin to extend its offer to all Elders shareholders, meaning Harlin would be forced to purchase 56% of Elders, ending up with a crippling $2.8 billion debt load. That debt, coupled with mismanagement (Elders lost more than $1.5 billion, much of it on loans made to high-flying entrepreneurs) meant that Harlin and Elders would teeter on the brink of insolvency.

In May 1990, Peter Bartels replaced Elliott as CEO of Elders, shortly before Elders announced its then Australian record loss. Elliott would remain chairman until 1991, while Harlin would finally collapse under the weight of its massive debt in 1992, effectively ending Elliott’s public corporate career. Foster’s would survive — barely — and still lives on in a small way as ASX-listed Treasury Wine Estates (Foster’s beer assets were sold to SAB Miller in 2011 and then to Japanese brewer Asahi in 2019).

Things go from bad to worse

While his corporate career effectively ended in 1992, Elliott remained a public figure as high-profile president of the Carlton Football Club and through a series of disastrous personal business ventures. He lost millions on a Russian pie investment before his calamitous chairmanship of rice company Water Wheel, which culminated in the bankruptcy of the 127-year-old firm. (Elliott and fellow directors were banned after the Victorian Supreme Court found they had allowed Water Wheel to trade while insolvent.)

Elliott soon declared bankruptcy, owing more than $9 million. The one-time multimillionaire, who owned a $12 million Toorak mansion, would eventually pay only $200,000 to creditors.

Elliott’s two-decade presidency of Carlton would also end in disaster as the club slid from the league’s most successful to nearly bankrupt, before two decades of nearly constant failure.

Getting away with it

While the near collapse of Elliott’s Elders represented one of Australia’s greatest corporate downfalls, his problems didn’t lie merely in his ability to destroy billions in wealth. Elliott and several Elders executives were implicated in one of the country’s highest-profile corporate fraud cases.

The fraud involved the now infamous cross-shareholding agreement between Elders and BHP in 1985. Back then, Elliott’s Elders stepped in to protect Melbourne establishment icon BHP stave off a takeover attempt by Holmes à Court. The complicated machinations involved New Zealander Allan Hawkins’ Equiticorp and Richard Pratt provided funding to Elders to buy BHP shares.

Later Elders would “repay” Hawkins through a fictitious foreign exchange transaction (which would lead to Hawkins being jailed in New Zealand). Pratt would be repaid through Elders making a $50 million investment in a Bahamas-based company called Vic Invest. Mysteriously, Vic Invest would soon vanish — along with Elders’ “investment”.

Another legally dubious element of the cross-shareholding involved a parcel of Elders shares worth US$105 million, which were sold to BHP. Those shares were claimed to have been secretly owned by Elders executives in Swiss bank accounts, comically claiming they were owned by Belgium dentists friendly to management.

Elders finance chief Ken Jarrett, who later gave evidence for the Crown, testified that Elders executives reaped $78 million from the sale ($33 million of which went to Elliott), which was later used to fund the ill-fated Harlin vehicle.

The National Crimes Authority and the Victorian DPP would eventually charge Elliott, along with other Elders executives, with fraud. Jarrett, who would plead guilty and spend six months in jail for his role in the incident, agreed to testify against Elliott and the other Elders executives.

Controversially, a single Victorian judge committed a grave legal error, wrongly allowing Elliott to be exonerated. While the judge, Frank Vincent, was strongly criticised and the judgment later overruled by the Court of Appeal, the proceeding was unable to be reopened due to Vincent’s legal error and a subsequent technicality. The only person who was imprisoned for the massive alleged fraud was Jarrett, who made the strategic error of being far too honest.