June 30th 2001

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Articles from this issue:

Editorial :Winning elections ... or governing the country?

Canberra observed - Beazley falters in pre-election " phoney war"

Economics - Industry policy where to now?

National affairs - One.Tel collapse- shades of Fawlty Towers

Straws in the Wind

Clark allegations leave political players lost for words

Barley deregulation - Victorian ALP backs agribusiness

The Media

Letter: Insurance failures - who should pay?

Raymond Aron - an idealist with common sense

Hague self-destructs: so why won't the Tory Party?

17,000 US scientists say greenhouse theory wrong

New opportunities in life issues debate

Out of Ireland

Is news what the Big Six say it is?

60th anniversary of Baltic deportations

Film - Pearl Harbor, a film that will live in infamy

Books promotion page

National affairs - One.Tel collapse- shades of Fawlty Towers

by R.J. Stove

News Weekly, June 30, 2001
Well, Ernest Heming way did famously tell Scott Fitzgerald that the rich are different from the rest of mankind because "they have more money", but One.Tel's shenanigans - which resulted in a $291 million loss last year - inspire the query: are the rich that different? Was it something in their bathwater that prompted One.Tel supremos Jodie Rich and Brad Keeling to indulge in behaviour that, if you or I exhibited it, would get us hauled off to the nearest bughouse?

Any novelist who dared invent such stuff would immediately be pigeonholed under the rubric of science-fiction. Consider the reports by Robert Gottliebsen (The Australian, May 31) and Alan Deans (Bulletin, June 12) on the imaginative ways in which One.Tel's fools and their money were soon parted.

Example No. 1: You would think, wouldn't you, that if you were selling telephone services to punters, you might be advised to bill them occasionally. I mean, even for those of us who never actually got around to passing Year 7 commerce exams, this would seem fairly obvious, wouldn't it? But it wasn't obvious to One.Tel.

The One.Tel system for collecting customers' money was, um ... er ... well, they didn't. That's right. You could use One.Tel's telephone services for weeks, months, and possibly years, without once getting a piece of paper in the mail politely suggesting that if you wanted to continue using them, you might graciously condescend to cough up some moolah before a certain date!

Not only were individual customers not receiving these pieces of paper in the mail; neither, according to Gottliebsen's account, were One.Tel's corporate customers. "They [the billing problems] were not discovered by the Murdochs and Packers", Gottliebsen writes, "until the due diligence as part of the cash raising, although some had an inkling that things were wrong." Don't you love that "had an inkling"? Can't you imagine addressing your plumber, or your landlord, similarly? "Well, yes, I 'had an inkling' that I'd failed to make any payments to you since 1995, which is why my lavatory's still clogged up/I'm now sleeping out on the streets"?

Example No. 2: The Fiendish Plot of Dr Feng Man Chu. Seems that Keeling and Rich were great believers in importing Feng Shui masters from Hong Kong (obviously your common or garden Feng Shui master from Footscray or Cabramatta couldn't possibly cut the mustard) to give them the good oil, or good incense, on office design. To quote Alan Deans:

"Mirrors were strategically hung on the walls to deflect negative spirits. Numerous gold dragons were positioned looking out into the street to ward off bad external forces. Fish tanks were loaded with exotic species, a powerful Feng Shui symbol of wealth ... Suitable offices were located in the [Sydney] CBD but the move was halted when the master said no. 'His word would override business decisions', [a former] One.Tel staffer says".

With anti-Micawberism on that epic scale, it's hardly surprising that One.Tel spent (Deans, op. cit.) $3000 for each employee's snazzy new flat-screen computer monitor, instead of the $300 that the average non-flat-screen monitor costs.

But maybe we shouldn't blame Rich and Keeling overmuch. Maybe there's something about telecommunications companies - as distinct from, say, widget manufacturers or used-car yards - that encourages, indeed necessitates, the fantasist. Outside Australia, Exhibit A in this case is surely that of Richard Li, CEO of Telstra's partner in China, Pacific Century CyberWorks, which in February this year bought Hong Kong Telecom from the American-based Cable & Wireless firm for a mere $US38 billion.

Anyhow, it seems Mr Li was not above telling pork pies - if we can fittingly use that particular Arfur Daleyism in a Chinese context - concerning his formal education, or lack thereof. The Times of India's April 23 issue announced an impending lawsuit against him, launched by an Indian dot.com outfit (Rediff.com).

Rediff had been led to believe from Li's data that he had graduated in computer engineering from Stanford University. Turns out he abandoned his studies there before scoring any qualification. Presumably no one actually thought to verify this fast-talking dude's bona fides before ushering him into the boardroom. How much would it have cost to make a phone call, or send an E-mail, to Stanford's admissions department - seeking confirmation, or denial, that Li had ponced about on at least one academic year's graduation day in his black gown and mortar board? In a halfway sane environment, this fact-checking is the first thing you do, not the last.

Still, making every allowance for particular industries' culture of learned helplessness, the One.Tel case clearly stands out even by the standards of the nation which gave you HIH. Being $291 million in the red didn't stop Rich and Keeling from helping themselves to $7.5 million bonuses each. "The lads", an awed Michael West noted in The Australian on the same day as Gottliebsen's piece, "had worked out their options package based on market cap rather than profits, or anything else for that matter ... [yet] 100 phone operators were paid as little as $27,000 a year. How's that for an eye on costs". Keeling responded to one innocuous journalistic E-mail with the following hairy-chested eloquence:

"In the morning, following this long correction in the telco sector, this long night, the dawn will reveal a robust, bright, brilliant new company, One.Tel. What is it exactly that you will be?"

Pure Napoleonic rhetorical genius. Or alternatively, pure demented rant, such as can be heard for free from the nearest park-bench schizophrenic.


Meanwhile, who will watch the much-touted governmental watchdogs? Where was the ACCC, which in practice bears the same apparent relation to "competition and consumer" vigilance which "people's democracies" bear to people's democracy? (The Allan Fels idea of competition enforcement involves bullyragging any mum-and-dad small business which charges 10c more than its rivals, while giving Murdochs, Packers and airline cartel enforcers the secular equivalent of a papal blessing. If Kim Beazley promised to sack Fels on Labor's first day in power, he would look even more inevitable an election-winner than he does now.)

It is difficult to suppress a hearty cheer at Adrian Tame's remarks in Melbourne's Sunday Herald Sun on June 10:

"Every time some 20-year-old master of the universe steps outside the stock exchange long enough to tell us that nobody could have possibly predicted the latest downturn, and really no one is to blame, the mask of competence slips further.

"Those of us employed outside the temples of high finance are expected to know, and to act, when things are about to go wrong. Otherwise we deservedly lose our jobs."

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