RICH PICKINGS: Hidden value

The collapse of Griffin Coal not only represents a bad start to 2010 for Australian entrepreneurs, it also shines a light on the plight of the 'reclusive billionaire'.

It has been a bad start to the year for Australia’s richest entrepreneurs.

While 2010 looks like being a big year for our wealthy business people, the $700 million collapse of Ric Stowe’s Griffin Coal mining business has started things off on a poor note.

The sheer size of the collapse and Griffin Coal’s importance to the West Australian economy have earned this story plenty of media attention. But there has been one thing common to every story – the description of Stowe as a "reclusive entrepreneur”.

It’s a fitting description. When I edited BRW’s Rich 200 lists a few years ago, determining Stowe’s wealth was a near impossible task, due the complex company structures he used, his ability to keep his companies out of the news and his steadfast refusal to talk to the media.

Of course, Stowe isn’t Australia’s only reclusive Richie – entrepreneurs including Greg Poche, Phil Matthews, Angus and Richard Grinham and Penelope Maclagan are fiercely protective of their privacy and do all they can to stay out of the public eye.

So what is the best way to hide your business empire from prying eyes? Here are eight key strategies.

1. Stay private

If you want to be a reclusive billionaire, running a public company is not a good idea. You’ll have to publish the size of your shareholding and salary every year, and worst of all you’ll have to turn up to annual general meetings to talk to shareholders. Much better to keep things private and avoid disclosure requirements. Please note, however, that reclusive billionaires can pull off the public company thing in some circumstances – the publicity shy Wilson family, major shareholder in plumbing business Reece, is notorious for giving previous little information away, and holding AGMs that last for less than 10 minutes.

2. Get the structure right

Your private empire will need to be structured properly to make it as difficult as possible for outsiders to get a sense of how your company is actually performing. Use lots of holdings companies and trusts and, where possible, use offshore companies in places like the Cayman Islands and Switzerland to really throw people of the scent. Stowe’s empire reportedly includes companies in Nauru, Cyprus, Jersey and Fiji.

3. Move overseas

Stowe, who spends a lot of his year in Monaco, is one of a growing number of expats on the Rich 200 and these people are typically the hardest to track just because of their offshore interests. Offshore Australians who keep a low profile include Michael Hintze (London), Greg Coffey (London) and John Kahlbetzer (Buenos Aires) and George Koukis (Geneva).

4. Don’t talk to the media

Avoiding the media can be tough for an entrepreneur with a big ego or a need for a bit of free publicity, but it’s crucial if you want to stay under the radar and particularly important if you are tying to avoid ending up on a rich list. Well-known media dodgers include the fund managers Angus and Richard Grinham, Gerry Harvey’s business partner Ian Norman and shopping centre magnate John Gandel. Cotton On founders Nigel and Tania Austin stand out as unusually media-shy in the ranks of younger wealthy entrepreneurs.

5. Stay off the social scene

Networking is great, but people are such gossips. When Brisbane-based billionaire John Van Lieshout emerged in 2005, it was staggering how few of people in Brisbane’s tight-knit business community had heard of the man known as John Van. Ric Stowe is another who rarely ventured onto the social scene outside of the rarefied would of polo.

6. Pick your sector wisely

It’s easier to hide in some sectors than others. Entrepreneurs who run prominent businesses with multiple operations and large employee bases are typically very well known, even if their companies are private – take the late Richard Pratt, for example. But it’s a much different story for Australia’s top hedge fund managers, including David Hains, Angus and Richard Grinham and Phil Matthews. Their portfolios, investment strategies and particularly financials are kept well out of view and evaluating the size of their fortunes is extremely difficult.

7. Diversify

If you don’t operate in a secretive sector, then spreading your interests as widely as possible can help you keep a low profile. Stowe’s interest covered everything from cattle to coal to helicopters to property to office supplies, but he was just one of many players in those sectors. Many small empires are less prominent than a really big one.

8. Don’t flaunt it

At the end of the day, even the most reclusive billionaire likes to live well. A nice house here, a fleet of flash cars there – soon enough, someone spots you and gives the game away. But there is one exception: US immigrant Blair Parry-Okeden, a former school teacher who lives in the regional town of Scone. Last year, she was unmasked as Australia’s secret billionaire, with an inherited fortune of $US4.5 billion (she’s technically a US citizen, but she married and later divorced an Aussie and has two children living here). Parry-Okeden lived in Australia for years without being unearthed, which goes to show it can be done if you try hard enough.