Rise of a man with a magic mystery pill
The reported $3 million Firepower sponsorship deal with the
Rabbitohs was revealed by Russell Crowe.
FOR A man determined to remain a mystery, Tim Johnston makes some contradictory moves.
Over a series of remarkable weeks in November, the chairman of the little-known Perth-based fuel technology company Firepower was revealed as the main sponsor of the South Sydney Rabbitohs.
The reported $3 million deal was unveiled by the Rabbitohs' part-owner Russell Crowe - on Jay Leno's American Tonight show. The ink had barely dried on that when Firepower said it would also be throwing its financial clout behind the Sydney Kings basketball team, which changed its name to the Firepower Sydney Kings. Days later, Johnston bought the Kings.
In three smooth steps, Johnston had thrust deep into the Australian sporting scene. He went from zero to hero in a world that rarely asks too many questions as long as you have the answer when they throw out the challenge that matters most. It's the Jerry Maguire test: "Show me the money!"
And therein lies the real mystery of Tim Johnston and Firepower. Just how does the company make its money, and are its eye-popping business deals all that they appear? Firepower has been the beneficiary of enthusiastic Federal Government support in its push overseas, but there are questions over how much Australian agencies know about the company they support and the products it promotes. And those products - bits of fuel-technology wizardry, including a pill to improve vehicle efficiency and reduce pollution - may be the biggest Firepower mystery of all. Have they been properly tested, do they work, how many are sold, and who is using them?
The answers are obscure in a story whose ripples reach as far as the arms trade in Romania and a multi-level marketing scheme based in New Zealand, and features links to a Russian who won a multimillion-dollar legal suit against The Times in London over claims he was involved in one of the world's biggest money-laundering scandals.
It embraces the Prime Minister, John Howard; the Queensland Premier, Peter Beattie; and a former West Australian police minister, Gordon Hill. It also involves several Federal Government-funded trade missions, where some of the companies that have represented Australia are unknown to the corporate regulator.
Those familiar with Firepower's range of products swear with the zeal of an Amway salesman that they are the best thing since sliced bread. "Look out the window in Sydney and see the haze out there," urges Michael Powe, who distributes the products in Tasmania. "If everybody used Firepower you would probably would be able to reduce that by 50 per cent."
One of the products is a pill about the size of a five cent piece that you put in your fuel tank every time you fill up.
The pills cost $1.50 and anonymous testimony on the back of the product - from "Joseph and Julie in Fiji" - claims that they not only reduce pollutants, but make fuel 12 per cent more efficient.
The pills are claimed to be on sale in more than 50 countries. Press clippings state that Firepower's pollution reducing/fuel extending products - four are in liquid form - are used by heavy industry, in power generation, by railways and by the armed forces of Australia, New Zealand, Russia, Thailand and Indonesia.
Rumours abound - that the company has a joint venture with Shell, and that it is already in the pocket of Macquarie Bank.
On its website, Firepower says it is working in a technical capacity with General Motors Holden. Mr Johnston says it is about to list on the London Stock Exchange.
Prominent on the Firepower website is a picture of Mr Howard and the Pakistani Prime Minister, Shaukat Aziz at the signing of a memorandum of understanding in November 2005 between Firepower and a Pakistani company over a reported $US35 million facility to be built in Karachi.
The deal is one of many, collectively worth hundreds of millions of dollars, which the company says it has signed. Many are centred in Russia and other parts of the former Soviet bloc.
In June, Firepower and the Queensland Government - in that order - were sponsors of Australia Week in Moscow, an annual fair organised by the Australian Trade Commission (Austrade).
"The only thing wrong with Firepower is that they're not in Queensland," Peter Beattie told The Bulletin at the time.
The magazine reported that Mr Beattie, who attended the show, was trying to woo Firepower away from Perth after the company said it had ended the week with joint venture deals worth $400 million.
"Firepower Group is a wonderful example of the innovative thinking and advanced technology that Australian companies produce," said Gregory Klumov, Austrade's senior trade commissioner in Moscow.
From the extent of Firepower's sporting patronage, its public statements and press coverage, you might expect to find a $1 billion company. Aside from the Rabbitohs and the Kings, the company is involved in V8 Supercar racing, and is a patron of the Western Force rugby team, the Tongan national rugby team, the Porsche Carrera Cup and the Australian Superbike Championship.
But scratch the surface and it soon becomes clear that Firepower products are sold domestically in only a few dozen motorcycle outlets and truck stops in Western Australia and Darwin, and a marine supply shop in Hobart.
There is no joint venture with Shell, nor a technical agreement with General Motors Holden, nor any association with Macquarie Bank, according to representatives of those companies. And neither the Australian nor the New Zealand military has any record of having purchased Firepower products.
The Australian Securities and Investments Commission has no record of a company called Firepower Group Pty Ltd, the company presented by the taxpayer-funded Austrade as an export success story in Russia.
Nor does the commission have any records of a company that represented Australia in another Austrade investment mission to Malaysia in August last year - Firepower International Pty Ltd. The commission does not even have records of the company that appears on the Firepower website - Firepower Technology Ltd.
The business listed in the phone book - Firepower Operations Pty Ltd - is a $1 company, first registered in December 2004. It is owned by Firepower Holdings Group Ltd, a company with an address in the British Virgin Islands.
Mr Johnston offers little explanation. "I don't know you. You say you are from The Sydney Morning Herald but I don't know," he states, after demanding questions in writing. The questions are never answered. Meetings never take place. Conference calls never eventuate.
The latter offer comes at the end of weeks of trying to get information on the company, weeks that included the following exchange with a company spokesman:
What sort of sales did you have last year in Australia?
"No comment on that."
What about overseas?
Is there any reason?
"It is basically the way that it operates."
How does the company sell its product?
"Again, no comment. We have to leave it at that. I can't divulge any more On the website, that's the information that is released to the public."
Before another question can be answered, the spokesman hangs up.
Some of the wilder rumours share the features of a John Le Carre novel, taking in organisations such as the former Russian spy agency, the KGB, and the American space agency, NASA.
Take Firepower's joint venture partner in Russia, who was revealed at the Moscow trade show. He is Grigory Luchansky, a dual Russian-Israeli citizen who was the subject of a Time magazine investigation in 1996.
At the time, Luchansky was the head of a Vienna-based company called Nordex. According to other reports, Nordex was created in 1989 as a source of hard currency for the KGB.
Luchansky has reportedly been the subject of intense scrutiny by Interpol, Britain's MI6 and Israeli law enforcement. He has at times been banned from entering Canada and once was denied entry to Britain and the US.
Apart from spending some years in a gulag early in his life, he has never been prosecuted. He rejects the charges made by Time. Luchansky successfully sued The Times when it later reported that the CIA had described Nordex as an organisation associated with Russian criminal activity.
He was photographed at a White House fund-raising dinner with then-president Bill Clinton in October 1993, but the claims did not stop. The Times repeated allegations that Nordex may have been involved in the smuggling of nuclear material.
The newspaper also accused Luchansky of being linked to one of the world's biggest money-laundering investigations - an alleged plot to launder $US7 billion in Russian organised crime proceeds through the Bank of New York.
Luchansky has repeatedly denied all of the accusations levelled against him, and the Herald is not suggesting he or anyone involved in Firepower is guilty of committing any offence.
In refusing an appeal by The Times, the English courts held that the newspaper had no prospect of proving the laundering claim, and that it did not attempt to prove the other accusations.
The shadowy threat of Russian organised crime raised its head in relation to Tim Johnston last year when he allegedly received death threats after Firepower signed a multimillion deal with the country's largest coal producer, Kuzbassrazrezugol.
The Australian embassy in Moscow took the threat so seriously it organised four bodyguards from Russia's special forces unit to accompany Mr Johnston during the trade show. The bodyguards were paid by Firepower, an Austrade spokesman said.
"The threat came from Kuzbass, in Siberia, where we reduced fuel consumption [at Kuzbassrazrezugol] by 40 per cent," Mr Johnston told the Herald at the time.
"We've been selling a lot there, and the people who had been supplying [the mining company] with diesel fuel weren't happy. I didn't get a Christmas card. They said: 'Tim Johnston, you keep out of Russia, or else'."
The link between Luchansky and Firepower appears to have been known to Austrade. And it seems clear Austrade has been an integral part of Mr Johnston's recent success.
Deals cut in Russia, Kazakhstan, Malaysia and Romania with the help of Austrade have allowed his company to be portrayed as a multimillion-dollar exporter of fuel technology.
Those deals helped Mr Johnston parlay his small business of the late 1990s into a player on the international scene, with offices in Australia, Germany, Romania and Russia.
What also seems certain is that Austrade did not check whether all the companies that attended its trade missions or sponsored its trade fairs, according to the names that appeared in press releases, were registered in Australia.
"It concerns me," said an Austrade spokesman when the Herald produced the evidence that some were not.
"The Firepower Group is not a company, as you quite clearly [point out] They exist as an Australian business, they don't exist as a registered company."
He added: "We are not assisting the company that is registered in the Virgin Islands. What we are assisting is an Australian business that operates out of Perth, which is public knowledge and which is on the internet."
One of the deals set up through Austrade was to have a Firepower product - a machine that cleans fuel systems - manufactured in Romania under an arrangement with a British arms dealer, BAE Systems.
The Herald understands that BAE Systems assisted in the manufacture of the machines to satisfy what is known as an "offset agreement" with the Romanian Government. Offset agreements are common practice in large international arms deals. They require a supplier to direct some benefits - usually work or technology - back to the purchaser as a condition of the sale.
While the Herald does not suggest that the deal involving Firepower's products was anything other than a normal business transaction, allegations concerning some of BAE Systems' dealings in Romania and four other countries are being investigated by the Serious Fraud Office in Britain. The company did not respond to a Herald request for comment.
One of the people pictured in Pakistan with John Howard in November 2005 is Don Klick, who was described in the photo caption as Firepower's president for international business. Mr Klick also represented the apparently non-existent Firepower International Pty Ltd during the Austrade mission to Malaysia.
The Herald understands Mr Klick is an American Vietnam War veteran who once worked with the giant US military contractor Dyncorp.
Other people associated with Firepower include Mr Hill, a former police minister in the former West Australian Labor government of Brian Burke. Until February this year he was the only other director, with Mr Johnston, of Firepower Operations Pty Ltd, the company listed in the phone book.
The Herald understands Mr Hill was recruited to help get the company a listing on the Alternative Investment Market in London, which is part of the London Stock Exchange. It was something Mr Johnston boasted to The Bulletin would happen in October. The listing has yet to go ahead.
Mr Hill declined to comment on his directorship with Firepower other than to say he was no longer involved with the company. Nor would he comment on an action being taken in the West Australian Supreme Court by the wife of another former Firepower executive, Trevor Nairn.
Lawyers representing Rhonda Nairn and Mr Hill first appeared in court in October, where it was alleged that the value of 12.5 million shares in the company held by Mrs Nairn was lost as part of the restructuring of the Firepower group of companies in 2004 and 2005. The action is believed to have since been settled after shares were issued in the Virgin Islands holding company.
Mr Nairn, who also declined to comment on the case or on his involvement in Firepower, is a Perth accountant.
Mr Nairn and Mr Johnston were directors of a number of companies that preceded Firepower, such as TLC Engine Care System Pty Ltd and TPS Group Pty Ltd. These companies were registered in 2000 and 1999 respectively.
They were small companies. And back then, according to those familiar with the businesses, Mr Johnston was living in a rented house in Perth - just another struggling small businessman with a good idea.
Today, he lists his residence as a $9 million mansion in Perth, bought in April last year by the property tycoon Warren Anderson. Mr Anderson's involvement, if any, with Firepower is unclear. A spokesman said Mr Anderson preferred not speak to the media.