Hamilton Island owner Bob Oatley overlooking the island’s main beach. Photo: Quentin Jones
Bob Oatley: Setting his own course
Originally published in Fairfax Media’s Good Weekend, 1st September 2007
He owns three Bentleys, four homes, a tropical island paradise and a super-maxi yacht. But, whatever you do, don’t go calling wine magnate Bob Oatley a billionaire. The notoriously taciturn, er, very rich guy gives a rare interview to Nikki Barrowclough.
Bob Oatley is looking out to sea. I watch him studying the ocean, a tall figure in a canvas hat, with a weather-beaten face. Once or twice he looks my way as we sail into the big blue beyond Sydney Harbour on his celebrated racing yacht, Wild Oats XI, but the 79-year-old stays put in his position on deck and says nothing.
Oatley is known for his silences, a trait influenced, perhaps, by the meditative effects of a lifetime spent gazing at one horizon or another.
The day we go sailing, the only information Oatley volunteers is that he has just flown back to Sydney on his private jet from Mudgee, in central-western NSW, after visiting the family’s vineyards. “Seventeen minutes,” he says with satisfaction of the flight time, without mentioning the sort of jet he owns. When I tell him I’ve read that a Cessna Citation X (that’s the sort he owns) is the fastest non-military aircraft on the market, he doesn’t reply – just looks at me. The breeze has died, and now our conversation is becalmed as well, leaving me to wonder if I’ve said entirely the wrong thing.
The Oatley family patriarch has always been exceedingly private, although you’d be foolish to mistake his reserve for timidity. He’s genial and courteous, but there’s also something of the autocrat about him. He made his first fortune in the 1960s, opening up Papua New Guinea’s coffee and cocoa markets, before making another fortune after founding Rosemount Estate and turning it into Australia’s biggest family-owned wine company. “I love the sea and the soil,” he emphasises when our conversation picks up again.
The Packers and the Murdochs might be better known, but Oatley is just as shrewd a businessman. Six years ago, he sold Rosemount for an astonishing $1.49 billion – including $880 million in cash – to wine giant Southcorp, just before the wine industry hit hard times. The timing of the deal was remarkable, as was the amount of money that flowed into the Oatley family’s coffers.
Oatley is no Rene Rivkin, though. The thing he dislikes intensely, aside from people discussing him with reporters (which is why hardly anyone will), is any mention of his wealth – so much so that he once asked journalist and ABC news presenter Juanita Phillips if she would “be so kind” as to not use the word millionaire or billionaire about him in her column in The Bulletin magazine. Perhaps by merely mentioning his Citation X, which costs about $22 million, I’ve already blown it.
But it’s a glorious day, and now the breeze has returned, and we’re off on the 30-metre super-maxi that has been first home in the Sydney to Hobart race two years in a row, getting a triple win in 2005: handicap and line honours, and record time. Oatley has owned a succession of racing yachts over the years, all called Wild Oats. Four years ago, the one before this one scooped one of the world’s most prestigious yachting prizes, the Admiral’s Cup. The billionaire didn’t race himself, but he was there, at race’s end, bobbing up and down on the ocean in a rubber dinghy off Cowes in southern England, dispensing pizzas and bottles of Rosemount to his ecstatic crew.
The pity of it was, only six weeks after his Admiral’s Cup triumph, he and the rest of Southcorp’s shareholders were grappling with the news that the company had posted a consolidated loss after tax of $922.9 million.
The so-called Southcorp affair is a painful subject, and Oatley rarely talks about it. He’s certainly not going to discuss the saga this afternoon. As we sail back down the harbour at afternoon’s end, past the sunlit mansions of Vaucluse, he takes the helm of his beloved super-maxi. Sandy, his eldest son, who’s 55, stands next to him. “Sans”, his father calls him. Sandy (real name, Andrew, though no one calls him that), was deputy chairman of Rosemount for 10 years, before his father made him chairman. The two of them talk with their heads close together – they’re a formidable pair – and at one stage I’m sure I hear Oatley senior remark, “I defy anyone on the harbour to beat us.”
But when I repeat this back to him, hoping he’ll reveal whether Wild Oats XI is going to have a third crack at this year’s Sydney-Hobart race (a subject of some debate in the yachting world), he denies he said any such thing.
Still, he’s in an amiable mood when he disembarks, and says he’ll see me in a week’s time.
Seven days later, Oatley is standing on top of a hill on Hamilton Island, off the Queensland coast, gazing at another expanse of ocean. He bought the island four years ago, for just under $200 million, and has a cliff-top villa here.
As people who know Oatley keep impressing on me, he has several homes, and lives in all of them in turn. In Sydney, he and his wife Valerie, who’s even more media-shy than her husband (she declined to be interviewed for this story, confirming only that they met through sailing), have a historic waterfront mansion, Finisterre, at Stokes Point on Sydney’s Pittwater. Its views extend all the way up past Palm Beach and Lion Island. Oatley is believed to have paid almost $20 million for Finisterre, which he bought in 2002.
There’s also a historic sandstone homestead near Mudgee, part of the Chardonnay Park vineyard that Oatley has owned since the early 1990s. Then there’s a fourth house in Sardinia, where the Mediterranean laps at the bottom of the lawn. The couple go there each northern summer for the European sailing championships. “It’s a beautiful house. Stone walls and all that sort of thing. The water is absolutely clear,” says Oatley.
The golf buggies everyone drives on Hamilton Island are chugging up and down the hill behind us as we talk. Some tourists turn up – a couple with a small boy. They want to see inside the little white chapel on the hill, a pretty building with an old-fashioned belltower. The boy’s parents have no idea who Oatley is, but they smile indulgently when he encourages the child, who’s about nine, to go and ring the church bell. “Now, son, you’ll always remember the day you rang the church bell on Hamilton Island,” Oatley tells him afterwards. Billionaire and small boy beam at each other.
As the family departs, a thought suddenly strikes Oatley. He turns around. “Do we own the church?” he calls out. His question is addressed to the three Oatley offspring, who have accompanied their father on his fortnightly visit to the island. They’re a close-knit bunch, Oatley and his children (and yes, they do own the church). Sandy, who’s executive chairman of Hamilton Island Enterprises, is here with his younger brother Ian, who turns 54 in September, and sister Ros, 50.
All of them were involved in the running of Rosemount, and are equally involved in Oatley’s latest business ventures – the redevelopment of Hamilton Island, and the family’s new wine company, Oatley Wines. The company is centred on the vineyards Oatley and his sons have long owned in Mudgee, plus others they’ve purchased recently. Not surprisingly, the wine industry is watching the second coming of the Oatleys closely, especially as Oatley Wines is now the biggest private grower and producer in the Mudgee region.
Surrounding himself with people he has absolute confidence in, starting with his children and extending to employees, is how Oatley does business. He sometimes talks about “the family group” – a collection of friends and advisers who act as a sort of brains trust. “Bob has always had very close, long-term colleagues who have always looked after his private interests – I’m talking about people he has known for 40, 50 years,” says Chris Hancock, the former managing director of Rosemount, who has worked for Oatley for more than 30 years and is now deputy executive chairman of Oatley Wines. “They’re very high level in finance and law. He trusts them absolutely.”
Oatley never drops names, never talks about whom he socialises with, although his inner circle includes former Deutsche Bank chairman Clive Smith, and Bill Buckle, boat lover and sometime Sydney sports car manufacturer, who brought the Goggomobil sports car to Australia in the 1950s.
In the sailing world of course, Oatley knows everyone. One good friend is the yachting writer Rob Mundle, author of the bestselling Fatal Storm (an account of the 1998 Sydney to Hobart race during which six sailors died). He’s also close to yachting legend Iain Murray. Since adding Hamilton Island to his portfolio of views, he’s now the lord of the island’s annual sailing regatta, playing host to such business heavyweights in their tubs as property magnate Lang Walker, and Equitilink founder Laurence Freedman.
In time, Oatley would like to see the world’s best super-maxis coming to Hamilton for race week, along with their international sailing superstar owners, like King Juan Carlos of Spain, who lost the Admiral’s Cup to Oatley four years ago.
Not surprisingly, in view of his ambitions, Oatley is also planning a new yacht club for the island. However, a huge chunk of the money he’s pouring into upgrading Hamilton – “I’ve never added it up” – has been spent on building a luxury resort, Qualia, on the island’s northernmost tip. It’s said to have cost him $75 million.
Did he ever imagine he’d become a developer? No, he did not, Oatley replies, as we arrive at one of the resort’s luxurious villas. Nor does he really want to give an interview to Good Weekend, of course; getting some publicity for Qualia is what lies beneath it all.
“I still can’t believe we’re fortunate enough to own a piece of paradise, and it’s a big responsibility to develop it in a responsible manner,” he says.
Inside, there’s quite a crowd waiting for him: Queensland architect Chris Beckingham, Sydney interior designer George Freedman, project managers, assorted advisers, men in hard hats (work was still going on when Good Weekend visited) and Oatley’s security cordon: his three children.
“How much are these lamps costing me, George?” he asks Freedman, as we all mill about in the bedroom. Two lamps, to go on either side of the bed, must be chosen from a line-up of candidates. Freedman answers with a ballpark figure – about $500 or $600 each. “We’ll only need one lamp then,” says Oatley slyly.
Everyone roars with laughter. Ros Oatley is as amused as everyone else, until she sees me jotting down the comment and hurries over to where I’m standing. “You mustn’t quote him saying that,” she says. Later on, another member of Oatley’s entourage feels the need to let me know that his employer was only joking. The nervousness is amazing.
As discussion about the lamps resumes, Oatley wanders over to the window to gaze at the Whitsunday Passage. “Sometimes you see whales and their calves out there,” he says when I join him.
I ask him what he thinks of the way fellow Rich List member James Packer is putting all his money into casinos, in places like Macau. Oatley looks thoughtful. “I’m very much Australian,” he says after a pause. “I’ve been to Macau. You can’t put your toe in the water there. It’s like soup. Casinos have their place – the people of the East love gambling and so do Australians, although not nearly to the same extent. We’re building [Qualia] for commercial reasons,” he goes on, “but we still want to build a thing of great beauty, and a landmark for Australia. I like to label myself as a very proud Australian. I think that’s very important.”
During the time spent trailing around after Oatley on his island, I lose count of the number of times he stops to study the sea. At one stage, after accompanying his children to check renovations at a fire-damaged restaurant on the shores of Catseye Bay, he wanders outside to a small terrace, where he sits down in a rickety old chair. “There’s a little coral reef just out there,” he says, gesturing towards the bay.
I broach the subject about why he’s so loath to have his wealth mentioned.
“I don’t like that at all,” he says heavily. “I am just a regular person. A lot of people associate wealth with being snobby.” He falls silent. There’s no wind; everything is still. “I have three old Bentleys dating back to 1928 – yes, I drive them – but I wouldn’t own a Rolls-Royce. Does that answer your question?” he asks suddenly.
Oatley often does this – fashions a reply to a question, then asks politely if his answer is sufficient. “Will that do?” he says. “Does that help?”
His extreme reluctance to tell a journalist anything at all is part of this, of course, but he also seems mystified by the idea of self-examination.
Oatley grew up in Mosman, on Sydney’s North Shore, an only child. His mother, Jean, died from a melanoma when he was still a baby, and he was brought up by his mother’s sister, Muriel, who moved into the house to take care of him. The future wine tsar’s father, Geoffrey, worked for the Goldsbrough Mort wool company, and was often away on business trips for weeks at a time. “He was around, but not all that much,” says Oatley, who has never spoken publicly about his childhood before. We’re by ourselves at breakfast at the Beach Club, a boutique hotel on Hamilton – although Sandy, Ian and Ros Oatley aren’t far away. No doubt they’re watching the clock. I have one hour.
Oatley’s childhood was a happy one. Muriel was a wonderful woman, he says. In the school holidays, whenever possible, his father would take him away on his trips. “From time to time he would deposit me, as a small child of five and six, with friends who were everywhere throughout the country. They were mainly graziers,” he says, adding that his love of farming started back then.
“I went to school at Mosman Public School,” he goes on, “as did my father before me. I soon developed a passion for the sea. My father didn’t sail – my grandfather did – although my father was an outstanding sportsman who played first-grade football and cricket. My first boat was a canoe. One day – I was about 12 – I had the bright idea to convert it into a sailing canoe.”
How did he feel as he set off around the harbour foreshore, a boy with a mast?
“Oh, very thrilled,” he replies, perfectly seriously. “I didn’t have to paddle.”
The experience that really changed his life, he emphasises, was being employed when he was 15 by the legendary business figure Rupert Alexander Colyer, the principal of the general trading company Colyer Watson in Sydney. “The job was to deliver the letters, because it was cheaper than mailing them, but it was really the start of a great commercial apprenticeship,” he says. “Mr Colyer was a great man. I still see his son, who’s now 86, once a week.”
As time went on, Colyer took the young Oatley with him on business trips around the world. “In my mind he was one of the great merchant princes of Sydney. He was very kind, wonderful to travel with, had great commercial attitudes, and in turn I think he enjoyed travelling with me because I’d always come up with new ideas. Business isn’t done that way now,” Oatley adds. “You’ve got to have a degree in something or other these days. I never had time for any of that.”
Colyer Watson had a coffee division, set up because coffee growers in Papua New Guinea owed Colyer Watson money. Oatley sold their coffee, and was soon getting better prices for the growers than anyone else. His business acumen grew rapidly and at 41 he bought out the company, changing the name to Angco. He went on to open up Papua New Guinea’s coffee and cocoa markets to trade with Britain, Europe and the US, and was awarded the British Empire Medal for his services in 1985. He never lived in PNG, although he travelled there frequently, dealing one to one with the coffee plantation owners at the mills.
“I think New Guinea is a fantastic country,” he says at one stage. “We always used to say of the highlands that it was eternal spring there.”
Does he ever go back on visits? “No,” he replies. For a second, he’s far away. “I never go back. I find it hard to draw a parallel with how I feel about it. I genuinely loved the country and its people. I saw it perhaps at its best.”
Papua New Guinea gained its independence in 1975. Oatley sold Angco off in stages to the PNG Investment Corporation, and had cut all ties with his former company by the end of the ’80s. By then, of course, Rosemount Estate was well established in the upper Hunter Valley. Oatley and his teenage children had planted the first vineyards on a property he had bought there in 1968.
Throughout the ’70s, ’80s and ’90s, the family bought other wineries and planted more vineyards, in both NSW and South Australia. In 1982, Rosemount’s Show Reserve Chardonnay won double gold medals at the prestigious International Wine and Spirit Competition in London. Sales offices were opened in Britain, then in the US. By 1991, Rosemount’s annual sales had grown to $35 million, and it had a string of international wine trophies to its name.
“Bob has always been a very instinctive businessman,” comments Chris Hancock. “He becomes very emotionally involved. He’s not a detached manager by any means. He’s my best wine critic. I get enormous feedback from him. He understands intricate detail – how vines grow, what vines need, all that sort of thing.”
In the early 1990s, a shadow fell over Oatley’s Hunter Valley vineyards and his 19th-century heritage homestead there, Edinglassie, which he nostalgically describes as his home (even though he and Valerie had another house in Sydney).
A consortium of Australian and Asian mining giants was proposing to open the state’s biggest open-cut coal mine, Bengalla, within sight of the homestead and about four kilometres from Rosemount’s famous Roxburgh vineyard.
The Oatley family fought the consortium in a highly publicised battle through the NSW Land and Environment Court. Ultimately, the court ruled that the region was not zoned for mining. But in 1996, Bob Carr’s government intervened with legislation that ensured Bengalla would go ahead. To Oatley, it was inconceivable that the government could do such a thing.
“I walked out,” he says bluntly. “I left my clothes, the furniture, all the treasures bought from all over the world.”
How did Valerie react? “She’s used to me,” replies Oatley, who says later that he took all their possessions from the house (since sold) and put them in the house in Mudgee.
Chris Hancock suspects his employer’s long-term intention was to spend greater amounts of time in the Hunter Valley. “I think he had been developing Edinglassie with that thought in mind. He had his horses, his cattle, his antique carriages, his vineyards all there. And he liked life in the country. He was developing it as an estate in the English sense, as the place that he would eventually retreat to. Then the coal thing raised its spectre. It really destroyed his dream.”
Leaving Edinglassie was obviously traumatic for Oatley, though it pales in comparison to the Southcorp affair – which he doesn’t want to talk about in any way, shape or form. In the end, he does, briefly, keeping his answers to a minimum, although his sense of humour flashes when I ask him whether Rosemount was really sold for $1.49 billion. “I think it might have been a bit more,” he says. “But you don’t have to say that.”
Bob Oatley is a proud man, used to success. But the 2001 merger of Rosemount and Southcorp was a corporate disaster, described by The Australian Financial Review, for example, as “a deal so overblown and badly executed that it has become a textbook example of how to destroy a company’s value”.
Merging the two companies was sold to the market as a strategic fit. In a nutshell, Rosemount was a brilliantly run company, and known to be so. Southcorp had some famous brands, such as Penfolds, Lindemans and Wynns, but its share price was on the slide. Oatley has always maintained that he pursued the sale out of patriotic concern that Southcorp was vulnerable to a foreign takeover. “Yes, that’s absolutely true,” he says. “I thought it was possible to make something that was really super-strong, that would be a world leader, because Southcorp had really followed in my footsteps. I had built a worldwide company and the strength that could have come from a combined identity should have been great. But it didn’t happen.”
Financial commentators and strategic analysts dubbed the merger a reverse takeover – the “Rosemounting” of Southcorp – not least because Oatley’s Canadian-born son-in-law, Keith Lambert, Ros Oatley’s husband, became chief executive officer of the merged company, and Oatley himself became deputy chairman. Sandy Oatley got a seat on the board as well.
Southcorp’s downfall is an extremely complex story. Within two years of the sale, the company had written down the value of Rosemount to $340 million. Do the sums, comments Dr John Rice, senior lecturer in strategic management at the Adelaide Graduate School of Business (and one of the authors of a 2005 report, Grape Expectations: A Case Study of the Southcorp-Rosemount Merger), and it shows that Southcorp paid far too much for Rosemount.
A worldwide oversupply of grapes and the tightening grip of supermarket chains over the liquor industry in the UK played a part in what happened, as did a radical discounting strategy across all the wine brands initiated by Keith Lambert. The upshot was that Southcorp’s sales and profits spiralled downwards dramatically, and the board lost confidence in Lambert. His exit from the company at the start of 2003 brought more headlines. “Southcorp shock as Oatleys sacrifice son-in-law,” read one. Oatley says only that he and Sandy “had no option” but to agree with their fellow directors “with respect to Keith Lambert’s position”. In other words, they decided that Lambert had to go.
Oatley won’t discuss the anguished conversations that surely must have taken place at the time between him and daughter Ros. But, says Chris Hancock, “You probably recognise that Bob is a very strong family man. I think the sense of family is probably the most important thing in his life.”
The patriarch is just as reluctant to discuss his time on the Southcorp board. But insiders point out that consensus decision-making simply wasn’t his style. For 30 years he had run his own family company his own way. Suddenly, he was no longer calling the shots.
“The board at Southcorp believed it was the executives’ job to fix up the company, to remedy any faults that may lie in the company. In a private company, the owner assumes that responsibility, which is the way I’d always worked. But Southcorp didn’t appear to want me to play that role,” is all he’ll say.
Yachting writer Rob Mundle points out that long, drawn-out board meetings were the opposite of how Oatley ran things at Rosemount: “Bob would typically run through some ideas with a bunch of mates in the middle of a vineyard, before jumping on a plane saying, ‘Let’s do it!’ ”
Oatley, who received $610 million in Southcorp shares when he sold Rosemount, spent another $580 million on more Southcorp shares after the merger, taking his stake close to 20 per cent. But he was now losing hundreds of millions of dollars of his own money as a result of the destruction of at least $1 billion in shareholder value, and, clearly, the situation couldn’t continue.
Mundle believes Oatley “hung in on the Southcorp deal” because of friends who were shareholders. By January 2005, though, he had had enough. Without informing the rest of the board of his intentions, he sold his 20 per cent stake in Southcorp to its arch-rival, Foster’s, triggering a $3.17 billion takeover of the company.
He insists he had the welfare of his fellow shareholders in mind when he sold to Foster’s.
“I did the shareholders an enormous favour, one that was gigantic, and I did myself a great favour too, because all I would have done was to continue to lose money because I was the largest shareholder in the company,” he says bluntly.
And Oatley’s relationship with Keith Lambert these days? Ambiguous, it seems. When I comment that I understand the relationship between the two men is cordial, Oatley replies, “You said that. I didn’t.” He’s adamant, however, that what happened hasn’t affected his relationship with his daughter. “Nothing could affect that,” he says sharply. “Nothing could ever destroy the relationship between myself and any of my children.”
Selling Rosemount to Southcorp took much more out of Oatley than most people know. While the merger was going through, he became seriously ill with Guillain-Barré syndrome, a condition caused by an inflammation of the nerves. “It was from stress,” he says, adding that he spent weeks in hospital, and ended up using a walking frame.
Learning how to walk again at the age of 73 must have been torture for someone as energetic as Oatley, who’s spent a lifetime jumping on and off yachts. How impatient was he?
“There’s no point being impatient,” he replies, almost loquaciously for him. “It was a difficult learning curve. Walking on the flat was one thing; walking up steps quite another. It took me some time to get over the whole thing, because it destroys your confidence in your own ability to walk. If I had to step over water, or onto a boat, I didn’t have the confidence to take that step. I still haven’t really recovered my confidence.”
A few hours after this conversation, he’s winging his way back to Sydney on his private jet – and within weeks he and Valerie have departed for their summer in Sardinia.
In June, news comes from St Tropez. Recovered in confidence or not, Oatley, on board Wild Oats XI, has decided that the super-maxi will definitely compete in this year’s Sydney to Hobart.
The big blue is waiting.