A businessman at the centre of some of the biggest media deals of the 1980s reveals for the first time Kerry Packer and Alan Bond tried to bribe him to recommend corporate deals.

He was a director of ANZ Banking Group for 20 years until 2005, chairman of Woolworths, deputy chairman of Myer and one of the founders of Southern Cross Broadcasting, which was sold to John Fairfax Holdings for $1.5 billion in 2007.
Sally Young, professor of political science at the University of Melbourne and author of Paper Emperors: The Rise of Australia’s NewspaperEmpires, says Dahlsen was right at the centre of a tumultuous period in Australian media history when multiple assets were traded, regulations changed and Rupert Murdoch gained control of 70 per cent of newspapers.
Dahlsen’s startling revelations about bribery and corruption are in a 50,000-word document he wrote as part of his contribution to a documentary being made about the Murdoch family.
It is believed the Murdoch investigation has involved interviews with about 150 people and will be released next year.
Murdoch’s edge
Dahlsen is a Murdoch expert. He was chairman of HWT when Murdoch took it over in 1987 and, prior to that, worked in the media for 20 years.
He has strong views on the Murdoch business model, including its track record of putting cash flow ahead of paying tax and using leverage to expand by acquisition.
It was while Dahlsen was chairman of HWT that he came across a shocking example of boardroom betrayal that gave Murdoch an edge. Dahlsen discovered a non-executive director of HWT, Laurie Muir, leaked information to Murdoch.
The catalyst for the leak was a HWT board meeting a day after the Melbourne Cup in November 1986. The board had received a letter on that day from Murdoch saying a marriage of News Corp and HWT would be in the interests of shareholders in both companies.
When the board met to consider Murdoch’s letter, the HWT directors asked managing director John D’Arcy what he thought the valuation of HWT shares would be in a takeover.
In my time as a corporate lawyer this is one of the worst ethical performances I have seen of a non-executive director.
John Dahlsen
D’Arcy told the board his back of the envelope calculation was $12 a share. At the time HWT shares were trading between $6 and $6.80.
Dahlsen says Muir “encouraged Rupert Murdoch to bid, indicating the timing was right, and that it would be a great move for him to take control of The [Melbourne] Herald and continue with the great work being done by John D’Arcy and myself”.
“This was done without the knowledge of any Herald director,” Dahlsen says.
Largest takeover
He says Muir conveyed the $12 a share valuation to Murdoch and when News Corp made a formal offer on December 6, it was at $12 a share, valuing the company at $1.8 billion the largest takeover in Australian history up to that point.
“It was Laurie Muir, more than anyone else, who sparked the takeover of The Herald,” Dahlsen writes.
“It was not only a breach of confidence and trading in board information, but a lack of fidelity; it was extraordinarily naive and a breach of the law. In my time as a corporate lawyer this is one of the worst ethical performances I have seen of a non-executive director.
Rupert Murdoch was encouraged to bid for The Herald and Weekly Times. David Rowe
“Laurie alone was attempting to deal with the future of The Herald to the exclusion of his colleagues. He never initiated discussions at board meetings as to whether or not we should encourage Murdoch.”
Dahlsen says “we should have reported this to ASIC and at least informed our shareholders of what had happened. Maybe we were wrong not to do so.”
Muir, who was knighted in 1981, died in 2010. He was awarded a Centenary Medal in 2001 “for outstanding service to the business, financial and research community”.
D’Arcy, who died in 2008, mentioned Muir’s boardroom leak to Murdoch in a book he wrote, Media Mayhem, published in 2005.
Dahlsen says Muir tried to arrange for Dahlsen to remain as chairman of HWT and for D’Arcy to remain as CEO. But Dahlsen left the company.
D’Arcy was CEO of HWT until November 1988 when Murdoch gave him a choice of retiring or being a director of TheGold Coast Bulletin. He chose to retire.
Murdoch won control of HWT in January 1987 after lifting his bid from $12 a share to $20 a share. He was forced to lift the offer to beat competing offers from Robert Holmes a Court and John Fairfax Holdings.
Dahlsen’s analysis of Murdoch’s unique approach to business includes an appendix laying out his experiences with 1980s media barons Kerry Packer and Alan Bond.
Alan Bond: offered $1 million in cash and use of a yacht. David Rowe
“At the time [around 1987] Alan Bond was having financial difficulties and was at war with part of the Western Australian establishment.” Dahlsen writes.
“Bond wanted to buy the West Australian newspaper for a price which was probably double its market value. Bond rang me and asked me to meet him at the Southern Cross Hotel that day. He flew over from Perth and we met at 3pm.
“Apart from offering a ridiculous price, Bond offered me $1 million in cash to be paid into any overseas bank plus a large yacht to be made available at any port in the Mediterranean.
“This included all yacht staff including girls. I said I needed to talk to John D’Arcy. I wanted help to deal with this shocking situation.
“We had a problem as far as shareholders were concerned. It was a very substantial offer and you could argue that it was in the shareholders’ interests to accept.
“However, we both took the view that to sell a dominant newspaper in Perth, Western Australia, would absolutely devastate that community and Bond would use his editorial power for his own financial gain.
“We laughed about how we would share the bribe. I then rang Bond to say that we could not deal.”
Bond, who was convicted of fraud in 1997 and spent four years in jail, died in 2015.
Kerry Packer: tried to gain control of half of HWT. David Rowe
Dahlsen had one other indirect link to Bond. When he was a director of ANZ Bank there was a review of the bank’s $1 billion exposure to Bond Group. Dahlsen won’t reveal what was said at ANZ board meetings but the bank’s then CEO, Will Bailey, slashed ANZ’s exposure to $50,000 before Bond Group went under.
Dahlsen’s anecdote about Packer revolves around Packer’s failed effort to gain control of half of HWT through the sale of his Nine TV group and stable of Consolidated Press magazines in return for shares in HWT.
Packer, who died in 2005, wanted Dahlsen to remain chairman of HWT and D’Arcy as CEO.
“Packer, having discovered from Laurie Muir that I led the debate against the transaction, proceeded to try and bribe me,” Dahlsen writes.
“A Melbourne Packer friend offered me $250,000 to agree to the transaction. I was shocked and stunned.
“The donor did not surprise me but the messenger did. I suspect that the messenger was intimidated or too keen to please Kerry Packer.
“I am sure that he never expected that I would be the slightest bit interested. I also know the messenger very well and I would like to believe he was a passive messenger and under a strong obligation to carry Kerry Packer’s message without any real commitment.
“This transaction has worried me and I wonder how wide and deep it is in the community. I would believe with the people whom I mix with, the prospect of accepting such a bribe would be low.
“However, John D’Arcy privately told me that one of my problems was that I was too honest and by inference this has been career limiting. I reflected on this comment.
“One of the benefits of learning and practising the law is that it pushes you into understanding not only legal but also ethical boundaries and community expectations.
“When advising others you have a huge responsibility to explain to people the difference between the legal, the ethical boundaries and expectations. Thus I would believe that John DArcy’s comment applies to most lawyers.”
Today, Dahlsen says the decisions he made during his business life including standing up to people like Murdoch, Packer and others were “career limiting”.
He says too many people in Australian business go along with the status quo instead of standing up for their principles.