Mining magnate “Diamond” Joe Gutnick was once ranked among the wealthiest men in the country, with a fortune totalling more than $300 million.
Now the former Melbourne Football Club president has declared himself bankrupt, with debts totalling more than $275 million, after a deal with one of India’s biggest fertiliser groups turned sour.
Mr Gutnick’s statement of affairs, obtained by Fairfax Media, shows he owes his creditors $275 million, and has no other assets except for $16,087 in savings and a worthless portfolio of shareholdings.
It’s a long way from the peak of his career in the 1990s, when the BRW rich-lister had all the accoutrements that great wealth brings, including mansions, a Rolls-Royce, a luxury boat and a private plane.
The bankruptcy is the latest chapter in Joe Gutnick’s colourful career. Photo: Jesse Marlow
The $275 million collapse ranks him alongside the biggest bankruptcies in Australian history, although he still lags behind the $600 million owed by Alan Bond when his empire crumbled.
Mr Gutnick declared himself bankrupt on Friday, ahead of a court hearing on Monday to hear a petition by his former business partner Indian Farmers Fertiliser Cooperative (IFFCO), which was seeking to have him declared bankrupt over a $54 million debt.
Mr Gutnick: ”There have been many ups and downs …”
IFFCO is Mr Gutnick’s former partner in the Legend phosphate mining project in northern Australia. The Singapore International Arbitration Centre found last year that he and his company had made fraudulent representations about the deal.
In a statement of affairs signed by Mr Gutnick, IFFCO is owed $54 million. Mr Gutnick also owes Westpac $4 million, has run up credit card bills to American Express, Visa and Diners Club totalling in excess of $520,000, and owes the Australian Tax Office “$42,613 plus”.
The statement of affairs lists Mr Gutnick’s wife, Stera Gutnick, as a creditor, owed $30.7 million. The Edensor Consultants Trust is owned $61.4 million, the Hoydu Family Trust is owed $40 million and a company called Class Productions is owed a further $16 million. All are listed as “related parties” to Mr Gutnick.
Mr Gutnick also claims to owe tens of millions of dollars to a number of overseas creditors, including $33 million to one “N Sternberg” of New York and a further $13.3 million to “Machne Israel” of New York.
A worldwide search for Mr Gutnick’s assets will now take place, with special focus being paid to his offshore holdings, due to his long-time dealings in America, Singapore and Europe.
The bankruptcy means Mr Gutnick cannot be a company director in Australia for three years, or until he strikes a deal with his creditors that is approved by his trustee in bankruptcy.
It’s just the latest chapter in the colourful career of the man best known as “Diamond Joe”. In 1996 he was elected president of Melbourne Football Club, which meant he was walking the corridors of power as part of the Melbourne establishment. His money helped save the Demons, as the club had been in such dire financial straits that its members had voted to merge with Hawthorn.
In 1999, he and his business partner, Robert Champion de Crespigny, were found to have illegally structured a takeover of a mining company. Gutnick was ordered to pay $28.5 million to investors. His empire came crashing down. But he fought back. In 2014 his fortune was estimated to be more than $250 million, and he was on the BRW Rich 200 list.
Fairfax Media attempted to contact Mr Gutnick.
Last month, after his latest court loss, he spoke with Fairfax. “Yes, there have been many ups and downs, but I pray the graph will turn back up for me at some time very soon,” he chuckled. “It has in the past, and I pray it will again.”
The New Delhi-based IFFCO and its Dubai-based subsidiary Kisan International Trading took action to bankrupt Mr Gutnick after the Supreme Court of Victoria upheld a Singapore arbitration ruling that found he personally owed his former business partners $US28.05 million. His company, Legend International, was found to owe a further $US12.35 million.
As revealed by Fairfax Media in October, the legal battle centred on a deal for Mr Gutnick’s company Legend International Holdings to supply phosphate to IFFCO.
The deal was part of Mr Gutnick’s dream to create a fertiliser group to rival the $5 billion fertiliser giant Incitec Pivot seven years ago.
In 2008, to much fanfare, Mr Gutnick and his business partners announced a $100 million-plus deal to supply Queensland phosphate to IFFCO.
Under the deal, IFFCO was to invest the $103 million over two years in Legend International Holdings through acquiring shares and options.
United States-listed Legend International owns 100 per cent of the shares in the Mount Isa phosphate producer and one-time ASX hopeful Paradise Phosphate.
Yet the timing was far from perfect, with the global financial crisis and the credit freeze that went along with it cruelling Paradise Phosphate and Legend International’s plans.
In the end, IFFCO’s deal with Legend fell apart after Legend failed to deliver the phosphate to IFFCO.
Legend told America’s financial regulator, the Securities Exchange Commmission, that it had filed for Chapter 11 bankruptcy in May.