The Botak
31-05-08, 02:19 PM
Out of pocket and too sheepish to speak up, stars pay again for Firepower follies
Jacquelin Magnay
May 31, 2008
WHEN deals so unusual they bordered on the improbable were scrawled on the back of beer coasters, or perhaps when paperwork never arrived, seeds of doubt began to sprout. When a contract did eventually arrive at the insistence of some savvy player managers, not everyone thought to check on the ABN number of the company or, indeed, whether the company they were doing business with mirrored the name of the firm. After all, when a company is throwing around hundreds of thousands of dollars in cash, and the man doing the talking adds thousands of shares to the deal, the fine print is not an issue.
Especially when the cheques arrive and are cashed without a hitch. Everyone is a believer.
A couple of years on and the situation is very different. The man is uncontactable. The cheques don't come. The shares? Well, they could prove to be nearly worthless. And in place of talk of deals worth hundreds of millions of dollars in Third World countries and plans to establish rival world sporting organisations in basketball and rugby union, there are suddenly promises of joint-venture partners and imminent financial rescue.
Sport stars, who by the nature of their profession are largely naive about business, are income rich. Initially it was AFL players in Adelaide and then in Melbourne who invested in Firepower boss Tim Johnston's company on the promise of a tenfold return when the company listed on the Alternative London Investment Market. (It still hasn't listed.) Word got around, especially in rugby circles.
Everyone wanted in. Shares that were initially sold for 5 cents skyrocketed to $1.33 and were traded furiously by high-profile sports people and other wealthy investors.
Johnston then started throwing the cash around: a $3 million sponsorship of the South Sydney Rabbitohs, a major sponsorship of the Western Force, $715,000 for the Sydney Kings. An added lure: players would be able to earn extra money by promoting the Firepower products - hence there were extraordinary deals, such as the underwriting of much of Matt Giteau's $4.5 million, three-year contract, and six-figure deals with another six Force players, as well as hefty proposed third-party arrangements with Rabbitohs Nigel Vagana and David Kidwell. Then Johnston went further, buying the Kings for about $2 million.
The Firepower product - a fuel-technology system that Johnston said was the subject of contracts worth hundreds of millions of dollars in Russia, Indonesia, Pakistan - has long struggled to be accepted.
For some time, the Herald has written about the company's problems. But Johnston, according to those who have had dealings with him, is a very persuasive man.
Firepower executives have declined to respond to a series of written questions put to them by the Herald. It has taken some time, but finally those who have been surveying their bank accounts are beginning to speak out.
Comedian Lehmo told this joke at last year's testimonial of Adelaide Crows footballer Mark Ricciuto: "Michael Voss told me that he was on Roo [Ricciuto] and he had a crack at him at the start of the game. Roo hit back mid game, as he does, and on it went. But Voss said Roo got the last laugh because after the game he sold him thousands of Firepower shares."
For Kings basketballers, struggling to pay their mortgages with wages that are paid late, and non-payment of superannuation, it has been no joke. The rugby players are in a better position as their salaries are tied to the Australian Rugby Union and the Force club and their outstanding Firepower contracts constitute only a portion of their salary package. South Sydney baled out after one year, their players having not started their proposed promotion of the company's products to mining interests. But it set back the sponsorship plans of Russell Crowe and Peter Holmes a Court.
For some time now, Johnston and Firepower have been the subject of various investigations, and the company is facing several court actions.
If the duped investors or unpaid workers had been anyone other than sports people - too embarrassed to admit they might have erred in believing the improbable - there might have been swift action. Instead, the saga continues, with Johnston now promoting a joint venture with someone out of the Philippines. Does anyone believe any more?
Jacquelin Magnay
May 31, 2008
WHEN deals so unusual they bordered on the improbable were scrawled on the back of beer coasters, or perhaps when paperwork never arrived, seeds of doubt began to sprout. When a contract did eventually arrive at the insistence of some savvy player managers, not everyone thought to check on the ABN number of the company or, indeed, whether the company they were doing business with mirrored the name of the firm. After all, when a company is throwing around hundreds of thousands of dollars in cash, and the man doing the talking adds thousands of shares to the deal, the fine print is not an issue.
Especially when the cheques arrive and are cashed without a hitch. Everyone is a believer.
A couple of years on and the situation is very different. The man is uncontactable. The cheques don't come. The shares? Well, they could prove to be nearly worthless. And in place of talk of deals worth hundreds of millions of dollars in Third World countries and plans to establish rival world sporting organisations in basketball and rugby union, there are suddenly promises of joint-venture partners and imminent financial rescue.
Sport stars, who by the nature of their profession are largely naive about business, are income rich. Initially it was AFL players in Adelaide and then in Melbourne who invested in Firepower boss Tim Johnston's company on the promise of a tenfold return when the company listed on the Alternative London Investment Market. (It still hasn't listed.) Word got around, especially in rugby circles.
Everyone wanted in. Shares that were initially sold for 5 cents skyrocketed to $1.33 and were traded furiously by high-profile sports people and other wealthy investors.
Johnston then started throwing the cash around: a $3 million sponsorship of the South Sydney Rabbitohs, a major sponsorship of the Western Force, $715,000 for the Sydney Kings. An added lure: players would be able to earn extra money by promoting the Firepower products - hence there were extraordinary deals, such as the underwriting of much of Matt Giteau's $4.5 million, three-year contract, and six-figure deals with another six Force players, as well as hefty proposed third-party arrangements with Rabbitohs Nigel Vagana and David Kidwell. Then Johnston went further, buying the Kings for about $2 million.
The Firepower product - a fuel-technology system that Johnston said was the subject of contracts worth hundreds of millions of dollars in Russia, Indonesia, Pakistan - has long struggled to be accepted.
For some time, the Herald has written about the company's problems. But Johnston, according to those who have had dealings with him, is a very persuasive man.
Firepower executives have declined to respond to a series of written questions put to them by the Herald. It has taken some time, but finally those who have been surveying their bank accounts are beginning to speak out.
Comedian Lehmo told this joke at last year's testimonial of Adelaide Crows footballer Mark Ricciuto: "Michael Voss told me that he was on Roo [Ricciuto] and he had a crack at him at the start of the game. Roo hit back mid game, as he does, and on it went. But Voss said Roo got the last laugh because after the game he sold him thousands of Firepower shares."
For Kings basketballers, struggling to pay their mortgages with wages that are paid late, and non-payment of superannuation, it has been no joke. The rugby players are in a better position as their salaries are tied to the Australian Rugby Union and the Force club and their outstanding Firepower contracts constitute only a portion of their salary package. South Sydney baled out after one year, their players having not started their proposed promotion of the company's products to mining interests. But it set back the sponsorship plans of Russell Crowe and Peter Holmes a Court.
For some time now, Johnston and Firepower have been the subject of various investigations, and the company is facing several court actions.
If the duped investors or unpaid workers had been anyone other than sports people - too embarrassed to admit they might have erred in believing the improbable - there might have been swift action. Instead, the saga continues, with Johnston now promoting a joint venture with someone out of the Philippines. Does anyone believe any more?