I next heard about Allstate Explorations, in 2001, when the company had gone into receivership . It was ‘rescued’, in 2002, by what seemed to be an unusual transaction made by Macquarie Bank. From a report on that incident:
‘Of particular concern to … shareholders (of Allstate) who attended the Sydney meeting was a lucrative deal in which Macquarie bought $77.5 million worth of Allstate debt for $300,000 after promising creditors 5c in the dollar.A seemingly weird deal where, on the face of it, Macquarie gets close to $77.5 million for a $300,000 outlay without incurring much risk. Is this why they call Macquarie the 'Millionaire factory'?
The deal, approved at a creditors' meeting in March last year and subject to an ASIC investigation, was made at a time when the mine was apparently struggling and on the verge of being flooded.
However underground mining has improved both in terms of production and Beaconsfield is now mining well over 100,000 ounces a year - 38,578 ounces were produced in the September quarter.
This means Macquarie, already owed $21 million from Allstate, can get the first $77.5 million in profit generated from Allstate's 52% share of Beaconsfield, leaving unsecured creditors and shareholders to share in anything after that’.
In the past week, Beaconsfield has again come into the news. After 2002 it had become a very successful gold miner but, in the past week, there has been a mining disaster at Beaconsfield where a mine collapse has killed one miner and where two remain buried alive. Hopefully the two can be safely rescued over the coming days. It must be a terrifying experience.
But there are disturbing reports in the press that there had been geological instability problems associated with mining at Beaconsfield for 6 months before the collapse. The Australian suggests complaints about safety had been made by residents, miners and union officials.
But a difficulty in seeking attention to such complaints is that Beaconsfield is run by an accountant in Perth, Michael Ryan, for the major benefit of, yes, Macquarie Bank who presumably exert control. Macquarie won't answer questions about its role in the mine but yesterday said in a statement: ‘Our thoughts remain with the miners, their families and the Beaconsfield community.’ That’s nice and I am sure that the millionaires at Macquarie won’t forget their responsibilities to these men. If they do forget they should be reminded.
But, like the commercial deal Macquarie did with Allstate, is this accident an instance of pushing for profits too hard? The consequences are now more severe since people’s lives and not only the contents of their wallets are involved.
Meanwhile Kim Beazley has sought to make political capital from these miners by linking their fate to the Howard Government's industrial relations reforms. Something does seem wrong with what has happened but I doubt it is that.
There must (and will) be a full public inquiry into the events at Beaconsfield. And I hope a corporate historian will make the effort to carefully trace the role of Macquarie Bank in this.