Ready to be judged again

Bruce Judge is considered one of the finest wings to have played hockey for New Zealand.

He was also one of the biggest dealmakers of the 1980s, who took unknown quarry company Ariadne from nothing into an Australian top 25 company in five years.

A national junior tennis champ at 16, a double Olympic hockey rep, Judge was nicknamed "silver tongue" in business circles for his powers of persuasion and sales ability.

A devout Christian, he is reputed to have donated $100 million to a charitable trust to assist the poor.

His is also one of the blackest names in corporate history, whose convoluted web of companies in the 1980s destroyed or diminished some of New Zealand's finest corporates, including NZI Corp, Rothmans, R&W Hellabys, Donaghys and Alliance Textiles.

The rise of new or shell companies into huge investment holding companies such as the Ariadne group and its complex maze of cross-shareholdings with sister companies epitomised the jungle that came crashing down on October 19, 1987.

The rise of Ariadne and its related empire of companies - Judge Corp, Impala Pacific of Hong Kong, Euro-National, Kupe and Renouf Corp - was as spectacular as the fall.

Ten cent shares in Judge Corp, already in trouble before the crash, had soared to over $10, but they could be used as wallpaper in November of that year.

Ariadne's 52,000 shareholders and those in its related companies, many of whom paid vastly inflated prices for their shares, saw virtually all their wealth wiped out.

Wellington merchant banker Bruce Ross was so angered by what he called the tale of greed, deceit and abuse of power that he wrote a book about it, The Ariadne Story.

"The Ariadne debacle has done more damage to the New Zealand and Australian financial markets than any other single happening," he said in 1988 when his book came out.

Even after the crash, Judge only ever acknowledged making one mistake - the failure to close a deal to sell Ariadne's half-share in Renouf Corp to the late Sir Frank Renouf.

That deal and subsequent patch-up deals in the months before the crash, which was supposed to yield Ariadne a $220 million profit, became so convoluted that Judge made the shock admission he didn't know who owned the stake. Judge Corp shares were heading south fast before the crash arrived.

Judge was born in Timaru in 1942. His parents owned a general store where he worked and, he later said, first began to understand business.

He completed a bachelor of commerce degree at Canterbury University and, at 24, was investment manager with Royal Insurance.

In 1972, he joined Brierley Investments (BIL) in its halcyon days.

He was mentored by Sir Ron Brierley, who put him in charge of BIL's entrepreneurial activities.

By 1979, Judge felt he had learned enough to strike out on his own, taking with him a young Paul Collins, later to become BIL chief executive.

Financed by wealthy Christchurch timber merchant Cyril Smith, and often backed by NZI executive Roger Clarke, he and Collins set up a small investment company which bought ailing companies, restructured them and flicked them on.

They took over listed broom-and-brush company Bunting - a not dissimilar company to Big Kev's - which became their investment vehicle.

They bought bigger and bigger companies, including building products companies Odlins and Winstones.

But after creating a mini-rival to BIL, they accepted a friendly takeover in late 1982 from Sir Ron and returned to the fold.

While Collins stayed to create his own disasters at BIL, Judge soon departed again to set up another investment company, Ariadne, and later Judge Corp.

In June 1982, Judge left his wife, Gillian Eldridge, and four children to live in Brisbane, later taking up with former air hostess Philippa Gibson.

From his Australian base, he bought into ailing quarrying group South Pine Quarries, reportedly just days from receivership.

He snared a 28 per cent stake for little more than $28 million.

A year later, the renamed Ariadne had reversed its losses and from this base he built his empire.

The move that launched Ariadne into an Australian top 50 stock was the takeover of Repco.

In a classically convoluted deal, each took 19.9 per cent stakes in the other but eventually Ariadne turned the tables with a bold $330 million takeover of the company five times its size.

Ironically, it was his attempt to lessen his exposure to the over-hyped New Zealand market that led to the Renouf deal and, ultimately, to the empire's demise.

The first deal fell over and Judge set up other, even more complex deals, some of which were not disclosed to markets.

Judge's credibility and reputation took a nose dive.

Even before the mess became public, shares of all the inter-woven companies began to slide. Then came the crash.

Angry Judge Corp shareholders tossed Judge from his position as chairman.

He was forced by Australia's then securities watchdog, the National Companies and Securities Commission, to quit as chairman of Ariadne or face investigation.

It didn't matter much, as shares in the company descended into the penny-dreadful class.

Author Bruce Ross said the Ariadne affair caused an entire generation of small investors to lose confidence in the sharemarket.

He didn't blame just Judge. Bankers, brokers, business with its lack of ethics, auditors, security watchdogs and even law makers were all responsible.

- NZPA