First published in The Age, December 19th, 1994.
FREED SKASE WANTS TO SELL STORY
Peter Ellingsen, European correspondent
The day after a Spanish appeal court freed him, thwarting a costly Australian Government extradition campaign, the fugitive bankrupt Mr Christopher Skase made it clear he would apply for Spanish citizenship and make money out of his imprisonment.
Supported by his wife, Pixie, and son-in-law, Mr Tony Larkin, Mr Skase, who is now free to stay in Spain, compared his 11 months in a Majorca hospital jail to the suffering of South Africa’s Nobel prize-winner, President Nelson Mandela, and to the UK Anglican peace envoy, Mr Terry Waite, who was a Middle East hostage.
“It is very, very difficult to put into simple words,” Mr Skase said. “But when I think of what I went through and how I’ve felt, then I read … about everyone from Terry Waite through to Nelson Mandela — you just think how incredible it is some others have gone through five years and in another case, what was it, 28 years? It is an experience that touches every physical and emotional fibre of your body.”
Mr Larkin told journalists they would have to bid for the rights to Mr Skase’s story. Mr Skase is wanted in Australia to face charges of abusing more than $10 million of company funds.
Mr Skase, bearded and wearing a track suit outside his million-dollar mansion on the island resort — where the superstar Michael Douglas and the supermodel Claudia Schiffer have homes — looked pale but spoke without the respirator that has accompanied his court appearances. He indicated that Friday’s decision by Spain’s Audienca Nacional to overturn an earlier court ruling granting his extradition, came as a surprise.
“It’s a very strange feeling: not to have seen the sun, stars, trees or sky for the best part of a year,” he said. “Yesterday started like day 300, or whatever it was, and all of a sudden I was home.”
While the court has yet to publish its reasons for overruling the extradition, there seems little doubt Canberra has lost its battle to have Mr Skase returned. According to Australia’s ambassador in Madrid, Mr Warwick Pearson, there are no other legal avenues of appeal.
“It’s the end of the line as far as I can see,” he said. “I’m not a lawyer, but the legal processes in Spain appear to be at an end.”
Mr Skase, 45, was due to face trial in Brisbane on 32 charges brought by the Australian Securities Commission relating to the alleged mismanagement of his Qintex group.
Shortly after the resort and media company, operator of the Mirage resorts, collapsed in 1989, with debts of more than $1 billion, Mr Skase fled to Majorca and a split-level mansion formerly owned by a Russian prince.
Standing at the back of the luxury home that some claim Mr Skase or his family bought for more than $2 million, he indicated that, while he would seek Spanish citizenship, he was not abandoning Australia.
He said there was a “small but growing army of people” who had supported him. “It’s just a great thrill and tremendous day for a lot of people; a day when justice was done,” he said.
He said he would elaborate on what it was like in the hospital ward later, adding: “I mean it was no Mirage resort.”
Asked if he had any words for the federal Attorney-General, Mr Michael Lavarch, who has pursued his extradition, Mr Skase said: “Look. I don’t want to spoil the day.”
He said there was a “whole raft of things to talk about”, but he would do that later. Sources in Majorca said Mr Skase kept a diary in the prison ward, and planned to publish a book.
Mr Skase claims to have no money, but a Majorca newspaper, the Diario de Mallorca, says that shortly before he was arrested in January, he boasted: “I will bring to Majorca the rest of my fortune — about 10,000 million pesatas (some $100 million)”.
The paper quoted Mrs Pixie Skase as saying her husband was broke, and another member of the family saying, “we are beggars”. But it noted that Mrs Skase was driving a Mercedes.
It won’t be clear until later in the week why the Spanish appeal court granted Mr Skase “unconditional freedom”. The Diario de Mallorca speculated that it was not based on humanitarian grounds, linked to his health problems. Mr Skase says he has a serious lung condition which would make air travel life-threatening — a claim rejected by Australian authorities.
But another Majorca newspaper, Ultima Nora, thinks medical reasons may be behind the judgment, along with the argument put forward by Mr Skase’s lawyer, Mr Antonio Coll, that offences Mr Skase faces are not regarded as seriously in Spain as they are in Australia.
Spain’s Federal Court earlier this year ordered that the extradition treaty Madrid signed with Canberra in 1988 be invoked to return Mr Skase to Australia.
The court expressed concern about Mr Skase’s medical condition, but Australian officials agreed to spend more than $1 million to send a virtually new, high-technology ship to Spain to bring Mr Skase back. The ship, worth $20 million and operated by a crew of 16, was to be equipped with a surgery and medical team.
Mr Skase says he could not make a full recovery from his respiratory illness without a lung transplant.
A SORRY TALE WITH NO HOPE OF A HAPPY ENDING
Malcolm Maiden, Business editor
The losers in the Qintex affair are legion. But with the exception of the now-badly embarrassed Australian Government and its Australian Securities Commission, the damage was done long before the Spanish court gave Mr Christopher Skase his freedom.
Mr Skase contributed to Victoria’s biggest financial debacle, the collapse of the State Bank of Victoria. He was one of the biggest single borrowers from SBV’s out-of-control merchant bank, Tricontinental, which lent and lost more than $150 million to various companies in the Qintex group, and to Mr Skase himself.
A total of 4000 people held shares in Qintex, including Mr Skase, who controlled about half the stock. They backed Mr Skase’s vision of a global leisure and entertainment group, but they saw their shares declared worthless.
Many financial institutions that lent to Skase companies provided unsecured or second-ranking funds, and they also lost.
Qintex’s receivers have about $14 million left to distribute, an amount equal to about two cents in the dollar on debt totalling around $1 billion.
But the group of 10 senior lenders that took security on Qintex’s undeniably top-flight assets — its resorts and the Seven television network — did much better.
The senior banks, including the ANZ and Commonwealth in Australia and HongKong Bank and Bank of America, agreed to a complex receivership that saw Qintex’s resorts sold off and the Seven Network restructured, then floated for $700 million. Around $1 billion was raised and the gang of 10 have been paid out — an outstanding result in comparison with many of the other big ticket loans they made in the ’80s.
Tricontinental did not have first ranking security, and its losses were comprehensive.
In a classic control pyramid. Mr Skase’s family company, Kahmea Investments, controlled Qintex Ltd which controlled Qintex Australia Ltd. the owner of the resorts and television studios.
Tricontinental made its first loan to Mr Skase’s empire in the mid-1980s, at the beginning of its period of major expansion. The Qintex loans were soon so large that they breached Tricontinental’s own internal prudential guidelines which set a limit of $75 million on Skase exposure.
By early 1986 Qintex owed Tricontinental more than $100 million, and as the investment boom continued Tricontinental began to fund Kahmea, which needed funds to maintain its controlling stake in Qintex.
By mid-1988 Tricontinental had lent $79 million to a Qintex Australia subsidiary, another $69.5 million to Qintex Ltd which also needed to borrow to maintain its equity control over Qintex Australia Ltd — and $48 million to Kahmea.
The loans to Qintex and to Kahmea were effectively backed by Mr Skase’s controlling share-holding in Qintex Australia, and when it went bad the upstream lenders were stranded.
Tricontinental’s $69.5 million exposure to Qintex Ltd was a write-off. Its $48 million exposure to the Skase family company, Kahmea, is also now a closed book. The Kahmea loans formed part of Skase’s personal bankrupt debts of $172 million, mainly owed to Tricontinental and to the HongKong Bank. Before he headed for Spain Mr Skase declared assets of only $1167.
The debt taken on by Mr Skase in Kahmea financed his equity control of Qintex, and the money he used to pay his debts in the final years came substantially from Qintex itself via the payment of management fees to Qintex Management Services.
The fees were authorised by the board and were not illegal in themselves under the law of the time. They did not even have to be disclosed In Qintex’s annual report. But substantial amounts were involved. Qintex Management paid $12 million to Kahmea in 1988 and 1989, and Mr Skase has stated that the funds were used for loan interest and costs.
The charges that are now not likely to be tested largely relate to those management payments from Qintex Australia to the management company. Mr Skase was to face 32 company law charges alleging that he improperly used his position as an officer of Qintex to have just over $10 million paid from Qintex to his family company, Kahmea.
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