16 October 2002

Tycoon stirs a typhoon

The world's a stage for this flamboyant entrepreneur, writes Eric Ellis

WHEN you are a billionaire, you can do things that ordinary people cannot. You can own a private island. You can fly 200 of the world's most influential people onto it by helicopter for a weekend of power networking.
And you can fly in Luciano Pavarotti, who is naturally your "good friend", and the entire complement of the Orchestra Nazionale d'Italia - including timpani - to entertain them.
But there are some things you can't control. Like nature. And the mating calls of a randy Malaysian monkey.
Which is why, on a sultry tropical evening last month, on a beach before this power 200 audience, Pavarotti sang arias from Giacomo Puccini's masterpiece La Boheme, accompanied by a screeching simian in search, perhaps, of his own Mimi.
Headlines are also hard to control as this "power weekend's" host, Malaysian tycoon Francis Yeoh, has discovered in recent months.
What should have been a triumphant arrival on the international business stage for Yeoh, who part-owns South Australian power grid ElectraNet, has been one revelation after another since his $3.5 billion May purchase of British utility Wessex Water.
Yeoh's Kuala Lumpur-based family company YTL Corporation emerged as the surprise successful bidder in a beauty contest for Wessex, which shook loose when its parent Enron Corporation dissolved in a storm of scandal earlier this year.
In its first foray into Europe, YTL saw off better-known rivals such as Hong Kong tyro Li Ka-shing and Italian utility ENEL. It was a shock to the City, which had been expecting a consortium led by the Royal Bank of Scotland (RBS) to take this plum cash cow. London's The Sunday Telegraph newspaper screamed "WHO THE HELL ARE YTL" (Yeoh proudly posted the story on YTL's website).
But a few weeks after YTL was announced as the successful bidder, it emerged that Yeoh's group had paid Wessex's executive chairman Colin Skellet a special fee of almost $3 million.
In the post-September 11 crackdown on big and suspicious international cash transfers, Barclays Bank tipped off the City of London Fraud Squad. Police then arrested Skellet in a dawn raid at his house outside Bath, in England's West Country.
In Malaysia to see his new boss, Skellet denied the payment was a bribe or a fee designed to help YTL win Wessex. After years of "saving the asset from its shareholder" Enron, Skellet insists he wanted the British bidder, RBS, to win it.
"I had no influence in the bidding process whatsoever," Skellet says.
In an interview with The Australian, Yeoh insisted YTL is innocent of any wrongdoing and that the payment was a "golden handcuffs" fee to the well-regarded Skellet to encourage him to stay on.
Skellet has worked at Wessex for 28 years and has seen through its transformation from a struggling government-owned waterworks to one of Britain's most profitable utilities operating in one of its richest regions. Free on bail pending further investigations, Skellet says the police made a "terrible mistake".
But there's little doubt the affair has embarrassed Yeoh, a born-again Christian who prides himself on his squeaky-clean reputation.
"Why would we jeopardise relations with our 10 million customers around the world?" he asks. "That would be very stupid."
Yeoh is famous in Malaysia as one of Prime Minister Mahathir Mohamed's favourite ethnic Chinese businessmen. The colourful 48-year-old never misses an opportunity to praise Mahathir as "the world's greatest leader".
What might appear sycophantic in the West is for Yeoh standard operating procedure. In Malaysia, many in the Chinese minority are still regarded with some suspicion by the ethnic Malay bumiputra as wealthy interlopers, despite the fact that families like Yeoh's have been in Malaysia for generations.
Where Yeoh is also different in mostly Islamic Malaysia is in fervent embrace of his religion, which he wears on his sleeve.
The first Yeoh in 70 generations of Yeohs to embrace Christianity, he famously opens business lunches with grace and closes deals with prayers. He describes Christ as his "wise adviser" (whom an adviser from an Australian investment bank quips "doesn't charge as much as I do"). His home on his resort island of Pangkor, one of Malaysia's more Islamic regions, is a clash of cultural metaphors.
The sumptuous beach villa is designed in Balinese style, albeit on Western lines. His seven ethnic Chinese siblings live there with their ageing father, who likes to take his English tea and Chinese congee overlooking the pool of Japanese koi. His French-built private helicopter, in which he flew The Australian to his weekend, retreat sits nearby.
In the tower above, Yeoh maintains a chapel with rows of antique pews "saved" from English churches that modernised and abandoned the seats. Yeoh gives lay sermons in the chapel, often to his family, whom he claims have embraced Christ.
The Lord infuses every aspect of Yeoh's conversation; the Lord - and doing business. In an interview, he asks his interlocutor if he has embraced Christ - and goes on to explain how YTL managed to emerge mostly unscathed from the Asian financial crisis by not being exposed to volatile currencies.
"I brought the same discipline to our deal in Australia - buy in Australian dollars, borrow in Australian dollars," he says. YTL bought a 33 per cent stake in ElectraNet from Macquarie Bank in October 2000 for about $55 million. Macquarie had bought in a South Australian Government privatisation.
YTL now operates ElectraNet in joint venture with Swiss-Swedish engineering giant ABB and Queensland's transmission utility Powerlink.
That deal was described by an Australian adviser to YTL as "Francis's international trainer wheels". It was YTL's first big deal offshore and set up YTL with the experience to participate in coming privatisations in Malaysia and Singapore, where Yeoh is strong in building, infrastructure and transport.
In Australia, Yeoh sees ElectraNet as the launching pad for more deals in toll roads and privatised utilities.
"I love regulated industries," he says. "You know where you stand and in Australia, you have governments that generally know what they are doing."
And the man who helps illuminate Adelaide's AAMI Stadium for an AFL final, turns on a griller in Gawler or cranks up a computer on Kangaroo Island doesn't see the Wessex bribery drama as impeding his ambition either.
"It will blow over for the very simple reason that there is nothing in it."