Diamond Magnate Goes Bankrupt Over Fertilizer

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‘Diamond Joe’ loses his sparkle

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.

9 thoughts on “Diamond Magnate Goes Bankrupt Over Fertilizer

    • DH – Why throw all of your proverbial eggs into a “fertilizer” empire for a pile of crap? It had to be a more lucrative venture than that. Fertilizer is one of the key components to bomb making. It does not seem rational or logical that a diamond magnate would be fool enough to throw his money into fertilizer for the sake of spreading crap around fields. That is simply too far out there and there was far too much money involved. The guy was no idiot and if you take a look at the futures indexes at the time, there was no indication that fertilizer would suddenly become a great source of immense wealth. Our cockles were immediately raised when the article came to us and the fact that the decision to invest in that product made no rational sense at the time except perhaps as a form of currency for the purpose of bomb-making or making the bombs oneself gives us cause to believe that his intention was to get into that business.

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    • @dh – it appears we may be wrong on the bombs but that may have gotten us somewhere else. The type of fertilizer that his company produced is called DAP or Diammonium Phosphate. It is a popular fertilizer because it can also increase nitrogen in the soil and is water soluble making it spray-able. Quite the contrary from bombs, we are told, is that DAP mixed with another compound can be used as a flame retardant used in advance of oncoming fires which will then dissolve into the soil and fertilize it post fire. It became popular because of its stability and non-explosive properties. Interesting, though, it is used in polishing metals and can be made from ground phosphate rock found in other mines.

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        • Oh for gods sake. You people are a bunch of idiots. Almost makes me miss Scott and his habit of banning people who had the temerity to bitchslap his idiocy (that’d be me mainly.)

          Stop acting like a bunch of yentas in yeshiva creating bullshit stories out of rumours with your bizarre speculations and stick to the facts. The facts are more than sufficient yo damn the haredi world to hell repeatedly. Your irrational and often illiterate witterings diminish your message rather than strengthen it.

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          • Jay, we have no intention of banning people from the site. We would be grateful if you would keep the language to yourself and provide us with tips if you are to be of assistance in shedding light where you think we have gone wrong. If you are not happy with a particular story, ignore it. We are not wrong about Gutnick and the implications of the “Fertilizer Empire” as is coming out in recent press and will be published. But rather than criticize, provide information. You’d provide a help more than a hindrance.

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