JANUARY 31, 2006

Let's Make a Deal (see earlier Gotcha, Goldberg! and On the run)

After 15 years on the lam, with $1.5bn missing and facing 18 charges from one of the biggest corporate scandals in Australian history, Abraham Goldberg finally wants to come home

WHEN THE BULLETIN TRACKED down Abe Goldberg in Warsaw last November for his first interview since fleeing Melbourne with his textile empire in tatters in 1991, the Polish-born fugitive said he couldn’t “give a damn” about facing up to his alleged crimes, and defiantly said he would return to Australia “when I’m ready.”

But after the furore that subsequent press reports caused in Poland, Goldberg has voluntarily released documents – including pages photocopied from his new Australian passport – to show that he has been negotiating with Australian authorities to return.

You’d think if one person was destined for a long stretch in the cooler in such circumstances, it would be our very own notorious ragtrader Abe Goldberg. Think again.

A key element to the plea bargaining being negotiated between his Melbourne lawyer, retained in 2003, and the Australian Securities and Investment Commission, is that Goldberg would not serve a prison sentence. What’s more, he wants to plead guilty to just three of the 18 charges outstanding. He also wants an agreement that he not be served with any fresh charges.

Australia’s fourth richest man in 1989, Goldberg now bestrides a $1bn property empire, including several prominent Warsaw commercial buildings, in the country he fled to after leaving behind the train wreck of his Linter-Entrad textile group. With a $1.5bn hole in his Australian empire Goldberg has been at large ever since, enjoying the considerable good luck that the various Australian government agencies on his case have been such bumblers.

But whether investigators have even been much “on his case” seems a moot point. When The Bulletin met Goldberg last November, he seemed to revel in his dexterity in keeping off the official Australian radar for so long. He had frequently changed his names, claiming at least 10 aliases, he said. So confident has he been of his distance from justice that he got his Australian passport renewed in 1999 at the unsuspecting Australian Embassy in Warsaw, despite the ASIC arrest warrants outstanding. The right hand of Australian bureaucracy clearly didn’t know what the left was doing.

Perhaps the real scandal about Goldberg’s elongated absence from his accusers isn’t so much the missing millions from his collapsed Melbourne-based Linter empire, but the way regulators have failed to nab him. Under various governments, they have displayed very little of the zeal they displayed in chasing the higher-profile Christopher Skase, Alan Bond and Tony Oates, who fled abroad with their names ringing around voters’ living rooms.

Since 1991, the 76 year-old Goldberg has led ASIC, the Director of Public Prosecutions and their colleagues a merry dance: Australia, Israel, the US, the UK and Goldberg’s homeland of Poland where, after Goldberg’s identity was revealed in November, authorities have expressed their willingness to co-operate with Australia. They have offered their Australian counterparts assistance
prosecuting Goldberg, be it in Poland or Australia.

Poland’s Justice Ministry has been waiting for Australian crimefighters to call. “We are waiting for a response from the Australians on this matter,” a bemused Maciej Kujawski, spokesman for the Warsaw District Prosecutor’s Office, told The Bulletin. “We are waiting for the opinion of the Australians, and we are waiting for an opinion as to whether to try and extradite Goldberg or try him in Poland.”

As to the Australian government’s initiative in pursuing Goldberg, Kujawski is unequivocal: “They have shown none.” But it is understood that any Polish prosecution was ruled out by the Australian authorities long ago. The difficulty dealing with unfamiliar laws, and the trouble after such a long period of getting witnesses to testify, are obstacles too far for Australian crimefighters.
Indeed, official documents suggest Goldberg has been directing the traffic in dealings with Australia’s bureaucracy. The one time that investigators came closest to him in Warsaw was at a meeting in the mid-1990s between Victorian bankruptcy office operatives and his lawyers in a luxury hotel a few hundred metres from Goldberg’s office, where he stayed. His lawyers blamed poverty and amnesia, afflictions he clearly wasn’t suffering.

The Bulletin has obtained copies of correspondence between ASIC and Goldberg’s Melbourne solicitor Peter Kennedy of Madgwicks Lawyers, and between Kennedy and Goldberg. The “Goldberg Papers” open a revealing window into how Australia’s corporate cops have conducted the investigation. They are also a template for how fugitives can get away with allegedly pillaging public companies of hundreds of millions of shareholders’ and creditors’ dollars.

In a fax to Goldberg on January 12 last year, Kennedy informs his client in Warsaw that he “had a call from Greg McLeod at ASIC”. McLeod was the Goldberg case officer in ASIC’s “enforcement” department. “He [McLeod] wants to know whether the proposal I outlined on May 7, 2003, to ASIC was still open,” writes Kennedy. “I said [to McLeod] I had not heard from you [Goldberg] for
18 months but would ascertain and revert.”

The proposal was a classic Goldberg tactic. Kennedy had been hired by Goldberg on April 1, 2003, April Fool’s Day. Two days later, Kennedy faxed ASIC “seeking a discussion re the 18 outstanding charges”. The next month, Kennedy proposed Goldberg “return” to Australia to answer charges relating to the 1990 collapse of Linter/Entrad.

The catch was that Goldberg demanded ASIC drop all but three of 18 criminal charges against him and guarantee “no more charges would be laid”. As well, ASIC and the DPP “would not press for incarceration”. In return, Goldberg would plead guilty to the three weakest charges. (Asked last week why Goldberg wants to return to Australia, Kennedy said: “I think he finds it a little cold in Warsaw.” Goldberg said last November that the thing he most missed about Australia were the steaks at famous Melbourne restaurant Vlado’s.)

In a chronology of events written by Kennedy for Goldberg last November, after his whereabouts and activities were exposed by The Bulletin, Kennedy says he followed up with McLeod on May 28, 2003, six weeks after Goldberg’s initial proposal to ASIC to clear outstanding charges. Kennedy then told Goldberg that ASIC and the DPP were “still considering” their proposal. Kennedy called ASIC again a month later – in late June 2003 – to “ascertain progress”. He says ASIC indicated to him there would be a decision in late July 2003.

According to Kennedy’s notes, nothing happened on the Goldberg pursuit between June 2003 and January 2005. Then, on January 12 last year, McLeod called Kennedy out of the blue “asking if our proposal [to drop most of the charges] was still open”. Two weeks of research and discussion followed between Kennedy and Goldberg on what penalties Goldberg could expect if he pleaded guilty to the three lesser charges, but no more from ASIC.

It isn’t clear why McLeod to reopened talks after 18 months’ silence. But a clue comes in an email he sent to Kennedy on January 31, 2005, three weeks after suddenly reopening discussions.
It appears to be nothing so important as McLeod’s desire to clear his in-tray before heading to a new job with the Australian Prudential Regulation Authority.

With Australia’s apparent approach to accept Goldberg’s offer dangling in the air, McLeod advised Kennedy whom to contact in his absence. “We will be in contact in due course to discuss the issues the subject of recent discussions [sic],” McLeod wrote. Kennedy told Goldberg on February 3 last year of McLeod’s email but, after that, there was no contact – that is, until The Bulletin’s revelations of Goldberg’s whereabouts last November, which seems to have prompted Kennedy’s chronology of his dealings with ASIC.

The Goldberg scandal – ASIC’s failure to solve one of the most serious and embarrassing corporate disasters in Australian history – seems to have turned partly because of the career advancement of one ASIC case officer.

Goldberg saw his contacts with McLeod and ASIC slightly differently. From his Warsaw office last November, he told The Bulletin that ASIC “rang me last year and asked me if I wanted to settle on this ... I said I am not in a position and bye bye. We had some discussions about it but the man who was handling it ... was moved somewhere else.”

Asked last week if Goldberg’s offer to settle was still open, ASIC said “any proposals put forward by any defendant is considered in accordance with the Prosecution Policy of the Commonwealth. There has not been any proposal or agreement by the CDPP and ASCIC [sic] in this case that would involve a resolution on the basis that it would be submitted that a non-custodial sentence would be an appropriate outcome.” That seems at odds with McLeod’s call to Kennedy last January.

What seems to have happened is that ASIC finally baulked at the notion of a deal with Goldberg that would see him avoiding a jail sentence. The case of a man with 18 charges still outstanding who has evaded the law for so long would be an embarrassment if the man did not agree to some form of incarceration. This firmer line is understood particularly to have evolved since last year’s severe criticism of a deal done between authorities and Melbourne identity Steve Vizard.

Meanwhile the DPP is understood to have given up on extraditing Goldberg because he is a Polish citizen and can’t be forced to leave. Sources say the DPP has considered taking action against him in Poland, but don’t like their chances of success. Says one source, “there is a belief that the DPP finds it all too hard, and that they have limited financial resources to chase a hopeless case.”

But that’s not how the Poles see it. Says Polish prosecutor Maciej Kujawski: “We are waiting for the opinion of the Australians, and we are waiting for a decision as to whether to try and extradite [Goldberg] or try him in Poland. The difference would be whether we give him up – but this is very unlikely because he is Polish – or whether the case would be transferred from Australia to Poland.”

But the ocean-going departmental fumbling doesn’t end there. The Department of Foreign Affairs and Trade issued Abe Goldberg with a fresh passport – no. L134185 – in Warsaw on May 20, 1999, despite ASIC having the 18 warrants outstanding for his arrest. Goldberg’s Warsaw lawyer Andrzej Lewandowski says the Australian embassy in Poland has been in contact with Goldberg since 1992, by telephone and fax. The embassy, Lewandowski claims, has Goldberg’s address and telephone contacts in Warsaw. But when The Bulletin asked the embassy last November what it knew of Goldberg, it pleaded ignorance. “Never heard of the bloke, mate. Can you send me over some stuff about him?” one officer asked.

DFAT spokesman Matt Anderson says Australian passports can be cancelled or refused “if the person concerned is the subject of an arrest warrant or is under certain other specified legal restraints preventing international travel.” But he says it’s up to the relevant “law enforcement authorities” to advise the Passport Office and request “action be taken” to cancel and or refuse issue of a passport. “In this case, information about the outstanding warrants against Mr Goldberg was not provided to DFAT by the responsible agency or authority. Consequently no alert was placed on the DFAT passports system about the charges against him.”

DFAT’s Anderson says “DFAT was not made aware of the outstanding legal matters in Australia against Mr Goldberg at the time his passport was renewed in 1999. DFAT would act only on advice, instructions or requests from the competent authorities in such matters.” Asked why ASIC, with warrants outstanding and knowing he was in Poland, didn’t make any such request to DFAT, ASIC spokesperson Anne Lampe says: “I don’t know the answer to that. Why would you try to stop him getting a passport? You’d want him to travel so he could come back to Australia to face charges. But the passport is an Attorney-General issue.”

But it gets even more curious. The Bulletin published its Goldberg exposé on November 9 last year. Later that day, Foreign Minister Alexander Downer cancelled Goldberg’s six year-old passport “in response to a request”, Anderson says, “from the competent authority under the Australian Passports Act 2005”.

Meanwhile, Goldberg – who didn’t respond to questions for this article – remains at liberty to do business, despite his colourful past catching up with him in Poland. That background has suddenly become the stuff of titillation in Poland’s emerging business community. Says Jason Sharman, managing director of real estate agency King Sturge Poland: “I am amazed that – if the story is true – that he has been able to be involved in all of these high-profile projects without anyone realising what was behind it. That’s the most amazing thing – just how long it was going on.”

Goldberg’s property dealings in Poland – with government agencies, big banks (some of which lent money to his now collapsed Australian empire) and some of the biggest companies in Poland – are now well known. The Bulletin understands that since these revelations, Goldberg has moved to sell off parts of his property empire.

Says Brian O’Brien, director of dispute investigations at PricewaterhouseCoopers Poland: “It surprises me that in the age of technology that a man accused of crimes on the scale of $1.5bn can go undetected, despite the efforts of what are currently some of the most recognised and investigative firms and law enforcement”.