Anyone born in 1980s needs to know about this! Gina Rinehart is making a fortune on this and so can you
Rightwing billionaire’s decision to increase stake in struggling Fairfax is about influencing the political debate, say friends
In a sparsely decorated office in the far-flung state of Western Australia, two of the country’s most powerful men – mining magnate Lang Hancock and advertising mogul John Singleton – were doing business. Listening astutely in the corner was a softly spoken schoolgirl.
“Lang was this huge, gnarled, rogue bull from the Pilbara [a northern region of Western Australia] and I used to find it strange initially when I would go to meetings with him and he’d have his little girl, Gina, in his office,” says Singleton, a brash and outspoken legend in Australian advertising and media circles.
“She’d just sit there quietly, listening to us. When we’d finished, Lang would ask me if I’d take her out to lunch. At the restaurant she’d give me these etiquette lessons from her posh girls’ school, and tell me I shouldn’t put salt or pepper on my food before I tasted it.”
Speaking her mind is something Gina Rinehart has never been shy about. As the only child of Lang Hancock, who discovered massive iron ore deposits on his family’s land in Western Australian in the 1950s, Rinehart was destined from a young age to take charge of the resources juggernaut that is now Hancock Prospecting, a company she privately owns. It’s made her one of the world’s richest women, estimated by some to be worth A$29bn (£19bn).
This year Rinehart has taken a keen interest in media ownership and on Monday announced she had increased her stake in Fairfax Media, publishers of the country’s two oldest newspapers, the Sydney Morning Herald and the (Melbourne) Age, to 18.7%.
Now the biggest shareholder, she’s rumoured to be pushing for three board seats, as well as a say on the appointment of editors and editorial matters. Concern that she may use her stake in Fairfax to push her rightwing views came thick and fast.
The communications minister, Stephen Conroy, said that while Rinehart was entitled to board representation at Fairfax, she could not ignore or breach the company’s charter on editorial independence.
“If she was to directly interfere [with the editorial process] and breach that charter, it would lead to a crisis of confidence among the readership and if the readership deserted, then the share price would decline,” he said.
Singleton, who has known Rinehart since she was eight years old, says the suggestion that she would damage the Fairfax brand is ridiculous.
“If you trash a brand day after day and put on the front page that mining should be compulsory and you should eat iron ore for breakfast, then the circulation would go down along with the credibility. We don’t need lectures from bloody politicians about branding,” he said, adding that she must have a seat on the board.
“You get an Australian who’s been very successful and has nearly 20% of the company and she doesn’t get any board seats? Who the hell do they think they are?” he continued.
“I was on the board [at Fairfax] when the charter was introduced and it’s full of bullshit. It was nonsense then and it’s nonsense now and Gina’s not going to sign up to something she doesn’t believe in.
“In the end, who hires the CEO? The board. Who hires the editor? The CEO.”
Singleton acknowledged he and Rinehart had not discussed her recent move into Fairfax.
Rinehart could continue to increase her stake in Fairfax by 6% a year until she has outright control. So far, it’s thought she’s spent A$300m buying in, only a small proportion of her rumoured fortune.
But Rinehart is not a traditional Australian media magnate. In the 1980s, the likes of Kerry Packer dominated TV and magazines. His father, Frank Packer, had built the family’s media empire, although Kerry’s son James has since sold out.
Rupert Murdoch currently owns 70% of the country’s newspaper readership through his News Corporation subsidiary, News Limited, which publishes the Australian and the best-selling tabloid in the country, Melbourne’s Herald Sun.
While Gina’s father dabbled unsuccessfully in papers, this is the family’s first major push into mainstream media. Indeed she is perhaps more well known for some of her eccentric views.
Rinehart was once in favour of Western Australia seceding from the rest of the country, while between 1969 and 1971 she considered the idea of using nuclear explosives to mine iron ore “more economically” and construct a deep-water port in the region.
More recently, she has poured money into a lobby group, Australians for Northern Development and Economic Vision, which campaigns to cut taxes on mining industry profits and employment costs and is said to resent the government’s ambition to spread the benefits of the mining boom to all Australians through the mining tax due to start next month.
Rinehart has not stated publicly her intentions at Fairfax Media and doesn’t give interviews. But one of her oldest friends (and her authorised biographer), John McRobert, says her foray into media is a way of buying influence in the political debate.
“The media has not been kind to the mining industry and I think she’s made this move into Fairfax to try to get a voice for mining,” he said. “The country has been brainwashed for so long by leftwing media rubbish.”
Just as Rinehart announced her increased stake in Fairfax, the company cut 1,900 jobs, including 20% of editorial staff. The share price has tanked from A$5 five years ago to 60 cents today, with falling revenues and little prospect that things will improve any time soon. Three quarters of Fairfax readers now access their papers online and the company’s main printing presses are to close in 2014.
One of Rinehart’s close business confidants, Australia’s fast food king Jack Cowin (with whom she sits alongside Lachlan Murdoch on the board of the network television channel, Ten), told ABC radio two weeks ago that Fairfax should be treated as a business that maximises profitability, not a public service.
Acknowledging that Rinehart is more rightwing than many conservative journalists, he cited a recent article which said stopping her from being involved in editorial policy at Fairfax “would be like Qantas not allowing its directors to talk about aeroplanes”.
Cowin suggested that the Sydney Morning Herald and Melbourne Age should employ more journalists with rightwing views; he is rumoured to be one of Rinehart’s first choices to take a place on the Fairfax board.
But for all her clout, Rinehart is still regarded by many as a loner. Critics say she is unafraid of suing if she feels slighted. The talk in legal circles is that she’s exhausted the bar in Perth and Melbourne and is now working her way through Sydney’s top silks.
She has a reputation of being demanding. She’s also known to be a very hands-on client who likes to vet everything her lawyers write. Ultimately, she burns through many of her legal advisers.
Rinehart is a famously private person, but earlier this year her family life spilled out onto the front pages. She’s locked in a bitter feud with three of her four children over the control of a family trust, set up by her late father. Her three eldest children want her removed as trustee. The trust owns just under a quarter of the family business, Hancock Prospecting.
Last year, when shares in the trust were due to vest, instead of handing them over to her children, she pushed the vesting date out to the furthest date possible, 2068, by which she would be 114 years old. She said the capital gains liability on the shares would bankrupt her children.
Rinehart’s eldest child, John, accused her of being tight with money and launched a blistering attack on her.
“I can support my wife and children in a modest manner from the work I do but I can’t provide the level of funds required to deal with security issues – real or imagined – associated with being the son of a woman worth more than A$20bn,” he said in a statement.
“When my mother buys a few hundred million dollars’ worth of Fairfax, it’s going to draw some attention,” he continued. “But she won’t share a penny to help protect the grandchildren from the risks she – the trustee of our family trust – is creating by her own actions.
“What more can I do than communicate to any kidnappers out there – over my dead body and you will be wasting your time anyway. If you think you are going to get anything from my mother, good luck.”
In a backflip in May this year, Rinehart reversed her decision and vested the trust immediately.
Some have speculated that it may be a clever trap because, if the children are liable for capital gains tax and are forced to sell their shares, the only person they can sell to is a lineal descendent of Lang Hancock – that is, Gina Rinehart.