No Time To Lose

Keith Rhind speaks about the personalities in the boardroom.

John Bateman was a great stickler for procedures. He had been on council, where things are often deferred over and over again. He thought that things should be tabled, discussed, and directors should go away and come back and resolve it the following meeting.

Roger would bring things to meetings, usually on paper, but sometimes supported verbally, but they were always well put together, and well prepared. There were times when he asked for a matter to be treated with some urgency and this did not go down very well with some of the directors. But sometimes it was very important, if a decision needed to be made immediately to save money or secure a business opportunity.

A classic example of this was the purchase of The Mekong Club in Cabramatta.

The Mekong Club had a bad reputation. Its founding chairman, Phuong Ngo, was eventually convicted of masterminding the assassination of local MP John Newman and sentenced to life imprisonment. The club had also been associated with a number of serious licensing breaches, and a shooting had occurred on the steps of the club. Other crime in the area had attracted intense media coverage.

One Friday, Cowan and John Wilson were travelling to a function with John Gould, then with Aristocrat poker machines, and The Mekong Club came up. 

John told us that the owner of the building had recently made the decision to sell it and close the club.  He said that after paying rent of $350,000, the club’s operating profit was currently about $500,000 per year.  The asking price for the building was $1 million.

On the face of it, it seemed like an unbelievable opportunity. But we had to act fast. We phoned from the car to see if it was still available and made an appointment to see the Mekong club manager that same afternoon. 

The Mekong’s receivers had already made approaches to about 14 clubs, and Gould said he felt that somebody was sure to grab it in the next few days. 

The next morning Cowan sent an email to the directors informing them of the opportunity and giving then some preliminary information. He said management would present a recommendation at the next board meeting, only three days away. 

That Saturday night, Cowan and a number of other managers did a tour of clubs in the area and then visited the Mekong
club. They became even more excited about the opportunity. The team worked on Sunday to have a report ready for the board meeting the following Tuesday.

Cowan could not recall whether particular responses came from Geoff James or Craig Terry, but remembers the exchange going something like this:

Cowan:

 Clubs in that area are amongst the most successful in the state, and they were all busy on Saturday evening. We visited the Mekong Club around midnight, assuming that if there were to be any problems they would be more likely later in the evening. In fact, we were impressed by the customers and by the staff. Our inquiries indicated that there have been no serious behaviour problems there for a long time.

‘f we move quickly, we can buy the premises for $1 million, and the Mekong Club will become a tenant paying $350,000 per annum. The club appears to be well managed, and profits are around $500,000 per annum. We don’t have to commit to amalgamation at this stage, but I want to forecast the likelihood that there will be a recommendation later.

James or Terry:

This is unsatisfactory. We have not been given sufficient notice to make a decision involving $1 million. It should be deferred to the next meeting.

Cowan:

If we can’t make a quick decision, it is almost certain we will miss out. A property investment showing a return of 35% a year is not going to hang around forever. The return could be 85% if we go to the amalgamation. There are other clubs looking at it as we sit here.

James or Terry:

We should have been given more notice.

Cowan (starting to show impatience):

We were not aware of the opportunity until last Friday afternoon.

James or Terry:

It is management incompetence rushing things this way.

Cowan:

You don’t seem to understand. We found the opportunity at 5 pm on Friday afternoon. Since then a team of managers has inspected the club, visited other clubs around it, talked to management and staff, and written a report for the board. It was simply not possible to give any more notice.

Terry:

Well, if we had better relations with the auditors, we would have been told about it sooner. So it’s still management incompetence.

Craig Terry apparently believed that because there had been a connection in the past between Panthers and the company that audited Mekong, Panthers should have known earlier what was happening.

James and Terry both voted against the proposal. The other members of the Footy Five did not join them, and the purchase was approved.

The purchase proceeded, and The Mekong Club subsequently amalgamated with Panthers.¹

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1. The Mekong Club operated as Mekong Panthers from 2001 until 2012. The club (and the building) was then sold to the Mounties Group as part of a broader financial restructuring of the Panthers Group aimed at reducing debt. ↩︎

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