The Billionaire Who Wasn't (43 page)

While Feeney's philanthropy achieved brilliant success in Australia, his one major business venture there was more problematic. This had its origins in the 1989 purchase by the then head of InterPacific, Paul Slawson, of part of South Stradbroke Island off the Queensland coast, as a potential site for a Club Med-type resort that would attract Japanese tourists. The fourteen-mile-long island, just south of the Brisbane suburbs, had ocean beaches, sand dunes, and tropical palms, as well as the golden wallaby, found nowhere else in the world.

“We found this piece of property on this island and were smitten by it,” said Dave Smith, then chief financial officer of InterPacific. “It has the ocean on one side for deep-sea fishing and the bay on the other for windsurfing, etc. Then we started running the numbers. We realized eventually it was not going to work. You have to have a facility on the mainland to park people and dock your ferries and take them over to the island after a flight to Sydney and on to Brisbane. Everything we needed on the island would have to be shipped there. Then there was the problem of garbage disposal. We sort of considered it to be a rather bad idea. We let it sit.”

Feeney and Ken Fletcher took the forty-minute ferry ride to the island to have a look on their first visit in 1993. They were doubtful about its suitability for a resort, recalled Fletcher. Instead, they arranged with the state government to swap the island property for a thirty-one-acre site on the mainland where InterPacific could develop a sports and fitness center and donate the profits to the city. That fell through, however, when the government asked for
AU$3 million extra. Feeney refused. He was frustrated by the failure of Brisbane officials to realize the seriousness of his effort to provide the city with a super sports center, said Fletcher. “He can be stubborn, can Chuck.”

Ron Clarke, manager of Cannon's fitness club in London, went to see the island when on a Christmas visit to Australia in 1994. He found it “breath-takingly beautiful” and returned to London in some excitement with architect's sketches and photographs to show to Feeney. He recommended Couran Cove in the northeast of the island as the “perfect setting for an environmentally based family resort” and persuaded Feeney to let him return to Australia to develop a resort there for InterPacific. Clarke was just as homesick as Ken Fletcher had been. After thirteen years managing Cannon's, he was ready to do something new. Feeney agreed.

The directors of InterPacific were taken aback. They pushed against the idea of giving the former runner carte blanche to build a resort. Chris Oechsli sent a note to Chuck saying Clarke needed oversight. Jim Soorley said he told Chuck, “Don't go there, you will lose your ass.” He believed that Feeney's anger at the state government over the failed land swap might have been a factor in his deciding to build the resort despite the advice he was getting. “Chuck is a bit like myself, a pigheaded Irishman.” But Feeney saw Clarke as a shirtsleeve kind of operator and a great athlete, and he respected what he had achieved at Cannon's, recalled Jim Downey.

Fletcher bitterly resented the intrusion of Ron Clarke into his territory. He sensed that Chuck “went cool” toward him because he opposed the Couran Cove development and knew he did not like Clarke. Oechsli was critical of the fact that Clarke “took off on his own, like a solo runner” and began the development without providing InterPacific with a proper business plan. He recalled that there were inadequate feasibility studies, an incremental approach taken to the development, and little accountability. Distracted by the drama over the sale of DFS, Feeney had little time to make his own assessment of what was going on.

The problems of developing an eco-resort on a Pacific island were formidable. Some 225,000 tons of acid sulfate soil had to be shifted and a swamp dredged to create a natural lagoon. As it would be on an island with no power links to the mainland, the resort would have to generate its own power, purify the water, and get rid of waste.

The cost of the resort was originally estimated at AU$30 million, “but the next thing we knew, it was AU$60 million dollars and everything just kept
escalating,” said Chris Oechsli. It rose to AU$90 million and then by the time of its completion in September 1998, to a staggering AU$185, making it one of the most expensive holiday resorts ever built in the world. The figures would have broken many developers, but General Atlantic Group Ltd., the parent company of InterPacific, showed a return on investments that year approaching US$1 billion. Fletcher was scathing about the cost overruns. “How Chuck allowed Clarke to run up the expenses, I will never know. Chuck is such a good man.”

“Detailed cost reports during construction were sent back to the U.S.A. on a monthly basis and were controlled by their accounting people, and explanations were provided for all variations,” said Clarke in an e-mail response to questions about how the costs escalated. “The major issue was the acid sulfate soils that inundated the area to a much higher degree than original surveys revealed and resulted in entirely new techniques in dealing with them having to be developed by the local university. Then the local government regulations added considerably to the infrastructure with their insistence on tertiary treatment of all sewerage with new treatment plants and stricter hydrological systems for the daily clearance of the lagoon.”

Couran Cove Island Resort opened in September 1998. More than 400 VIPs, including several Olympic runners and national figures, dined on a boardwalk terrace. The media hailed Clarke as a development visionary. Couran Cove won fifteen national awards for environment, design, architecture, and engineering. It had the greatest range of recreational and sporting facilities of any spa resort in the world. They included a 150-meter three-lane sprint track with advanced laser technology on which runners could race against lights five meters apart and break a laser beam to record their times. It had a heated twenty-five-meter swimming pool, tennis courts, basketball courts, climbing walls, high and low rope courses, bicycle track, outdoor gymnasium, shuffleboard courts, and baseball cage. There were nature cabins integrated into the forest, waterfront lodges, restaurants, an eighty-four-berth marina, a rain-forest boardwalk, an artist's studio, a store, and even a wedding chapel.

The resort, however, did not make any money. It returned losses year after year, and in May 2006, 100 permanent and casual staff, about one-third of the workforce, were told they would be laid off in a “workplace restructure.” Feeney's attitude was that they mustn't expect profit every year and that there would be a right time to sell it. The problem, he said, was that “we have all the costs of a five-star hotel and the income from an eco-resort.”

Feeney remained loyal to Clarke and gave him another project, overseeing the construction of a state-of-the-art sports center to be financed by InterPacific on land Clarke selected at Runaway Bay in Brisbane. The center was equipped with a Mondo running track, gymnasium, swimming pool, sports medicine facilities, and accommodation for athletes. Feeney intended that the profits be shared with the city council for more sports facilities and a charity called Children in Need. The costs similarly went up, from AU$10 million to AU$20 million to AU$30 million, said Oechsli.

When it was completed, Feeney backed Clarke's proposal to go to his home state of Victoria in southern Australia to set up and run the Council for the Encouragement of Philanthropy in Australia. Atlantic Philanthropies provided an initial AU$2 million of a three-year grant of AU$7.5 million. Clarke moved to the Victoria capital, Melbourne, where he launched the council in September 2001. He became a strong critic of the lack of a culture of philanthropy in Australia. “It is astonishing to me that we are lagging behind any country in our charitable donations,” he said.

Feeney had begun funding major university projects in Victoria, and Clarke recalled the American donor arriving from Brisbane early one morning and spending the day with him visiting a number of major beneficiaries, including the Royal Melbourne Hospital, the Walter & Eliza Institute, the Alfred Hospital, and Melbourne University, which collectively were receiving AU$125 million from Atlantic. “As we walked out of the university I turned right to hail a cab,” Clarke said. “Chuck asked, wasn't the way to the tram in the opposite direction? It was, and so we went left, jumped on a tram for the cross-city journey. I thought it ironic, $125 million given in gifts and $10 saved by not using a taxi.”

Clarke's relations with Atlantic Philanthropies frayed after a brief article appeared in the Melbourne
Age
on Sunday, April 1, 2001, which referred erroneously to Clarke as a “representative for the Atlantic Foundation and Trust” who had “helped raise AU$163 million of anonymous donations for a variety of Australian projects.” Harvey Dale suspected that Clarke was the source. “I was quite insulted, frankly, by him daring to think I had breached any confidences,” recalled Clarke. The relationship wasn't helped by a similar article on October 6, 2002, in the Queensland
Sunday Mail,
saying that “when the American altruist wanted advice on grant recipients in Australia, Clarke became his eyes and ears . . . They had arranged close to $200 million in donations in Australia before the latest grants, last month.”

The friendship between Chuck Feeney and Ron Clarke deteriorated in 2003 over a lawsuit Clarke and Runaway Bay lodged against ABC television. In November 1999, ABC claimed in its prime-time
7:30 Report
program that Runaway Bay Sports Super Centre had been built on a toxic landfill and was “one of the worst development scandals in Queensland history.” Clarke wanted to initiate a defamation suit in Brisbane, but InterPacific lawyers were opposed on the basis that it was difficult to demonstrate economic loss. Clarke pursued defamation action in Melbourne instead, demanding an apology and legal costs on the grounds that it was untrue. The sixty-four-year-old former runner was reported “close to tears” as he testified in Victoria Supreme Court on June 15, 2001, with trembling voice, that he had been depicted as an environmental vandal. On July 4, the six-person jury awarded the former runner AU$710,700 damages and Runaway Bay Centre AU$386,250 damages, ordering ABC to pay the court costs. It was the biggest defamation award ever granted in the State of Victoria.

ABC appealed, and the case was listed for hearing before a three-judge Victoria appeals court in June 2003. Clarke and Werner Graef, who was representing the sports center, agreed out of court to settle for a lesser sum: AU$405,000 for Clarke and AU$81,000 for Runaway Bay. Chuck Feeney insisted that the damages awarded should be held by the sports club, said Clarke, who initiated another legal action to establish his right to the compensation. On Chuck's advice, the suit was settled privately. “I made certain all the cash received went to charity,” said Clarke.

“It was the first time I have ever been sued by anyone in my life,” said Feeney. The episode marked the end of his relationship with the former runner.

Atlantic Philanthropies ceased funding the Council for the Encouragement of Philanthropy in 2003 at the end of the initial three-year contract period. It had attracted donated funds of just AU$1 million a year. There was little evidence that Clarke could persuade Australian philanthropists to match their American counterparts. Feeney was by far Australia's biggest philanthropist ever. Australia's richest person, publishing tycoon Kerry Packer, with a net worth of over US$4 billion, did not have a philanthropic foundation at the time of his death in 2006. Ron Clarke blamed a culture of meanness among the rich in Australia. “I hate to say it, but I feel our business community leaders remain as selfish as they have always been despite
Chuck's fantastic example, and the growing number of businesspeople around the world doing more for the community,” he said.

Feeney did not join in any recriminations over the failure of the Council for the Encouragement of Philanthropy. “A failed effort is still an effort,” he said. On a visit to Brisbane in March 2007, he noted that the 200 richest people in Australia had wealth of AU$100 billion in 2006. They had yet to discover the satisfaction of philanthropy, he said, and called on them for leadership.

Ron Clarke returned to Queensland, where in March 2004 he was elected mayor of Gold Coast, a resort city south of Brisbane renowned for its beaches and tourist attractions.

Sitting at a pavement café in Dockside, Brisbane, one sunny morning in November 2005, Ken Fletcher reflected on Chuck's generosity to Australia and to him personally. Only that morning, Feeney had arranged for Ken to see the top cancer specialist in Brisbane to check out his prostate condition. The specialist hadn't offered much hope. Fletcher wondered, half seriously, why Chuck had not just written out a check for a million dollars for him so he could have a decent life. “I don't understand, I am so loyal to him,” he said, adding with a grin, “If he had done that I could have taken all my friends on a cruise!”

Fletcher died three months later, on February 11, 2006. At a memorial service in Brisbane, there were many references to his legendary tennis prowess, but the highest praise given to Ken Fletcher in all the eulogies was that he had brought Chuck Feeney to Australia.

After the funeral, Feeney made a rare exception and gave his first television interview ever to Australian television to honor his friend. By then, despite the anonymity rule, he was becoming something of a cult figure in Australia. On October 23, 2006, he appeared with Queensland premier Peter Beattie at the opening of the Australian Institute for Bioengineering and Nanotechnology. The Brisbane
Courier Mail
managed to get a photograph of Feeney and Beattie laughing uproariously together. Reporter Tess Livingstone wrote, “Take a look at these two men. One is humble, shy and deserves much of the credit for recasting Queensland as the Smart State. The other is the premier.”