LINKS CORPORATE MEDICINE WEB SITE Disclaimer The many extracts on these pages are from copyright material. They are owned by the reference given or its owner. They are reproduced here for educational purposes and to stimulate public debate about the provision of health and aged care. I consider this to be "fair use" in the common interest. They should not be reproduced for commercial purposes. The material is selective and I have not included denials and explanations. I am not claiming that all of the allegations are true. The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Links to Site Maps Central Initial USA Australian International Corporate Practices (to print) Path to this page Home Australia Austr Hosp Companies Mayne access page Other pages Entry to Privatisation Privatisation Background Australian states Gen. Pract. Corporatisation General Practice/Pathology:- Sonic&Co . . Foundation Lifecare . . . Endeavour Primary . . Revesco&related Hospital Companies Affinity Health Alpha Healthcare Austr. Hosp. Care Benchmark Healthscope Hosps of Austr (HOA) Insurer hospitals James Hardie & HCC McGoldrick's comps Markalinga & AME Mayne Health & HCoA Moran Healthcare Nova Health Ramsay Hlth Care US grps HCA & AMI Small Hosp groups Mayne Pages Mayne access page 1886-1994 - - - refs Collusion - - - refs 1995-2000 - - - refs Clippings 1998 Conflicts&Scan scam                         refs Privatisations 2000-2001 - - - refs Smedley - - refs Health Story 2002-2003 Purchasers Affinity Hlth & Citigroup 2004-2005 Break up Mayne Diagnostics Restrict Mayne Content Mayne's story prior to the plea to collusive practices and fraud in 1994. The development of a culture of ruthlessness, fraud and dishonesty and the origin of its approach to health care. Australian section      Mayne Nickless 1886 to 1994 The Early years

This page examines Mayne Nickless early history and follows its progress through to the appointment of Bob Dalziel in 1995. It refers to the various less endearing aspects of Mayne's behaviour and the impact of the price rigging scandal (1990-94). These scandals are described and analysed in a separate web page.

From Trucks to Hospitals

The very early years:- Mayne Nickless was founded as a parcels company in 1886 by John Mayne and Enoch Nickless. It provided parcel deliveries in Melbourne by horse and cart. I have not looked at its early history but a brief search turned up titles in 1978 and 1979 relating to operations in the areas of transport and security. Anyone wanting to study the early story may find more in "The birth of a transport giant": Australian Transport, (v.21), Oct 1979: supp.7, March 1, 1886

Expansion:- During the 1970's and 1980's Mayne Nickless expanded rapidly becoming a giant diversified multinational. Its prime areas of operations during the 1980's and early 1990's were freight/transport, security and telecommunications/computing as well as a number of other projects. It was a giant money making concern and this was reflected in a ruthless money making culture.

Culture:- A culture developed that made collusive practices not only legitimate but desirable. A whistle blower who exposed Mayne's price fixing racket believes that its vast empire was built on collusive and anticompetitive behaviour. My impression after reading the many reports is that this is very probable.

Culture and corporate growth:- Mayne is representative of the culture and practices of many of the large "growth" corporations. In far too many of these companies the measure of acceptable or even desirable conduct is whether it is legal. This soon translates to anything you can get away with and then to whether the profits justify the risks. The views, values and welfare of the wider community are peripheral.

Health care context:- We should understand the marketplace frames of understanding from which Mayne Nickless approached health care when it started shopping for hospitals in 1989. None of the material in my possession suggests that Mayne saw health as different to any of the other commodities and services in which it traded.

Collusion and Price rigging:- Investigations into Mayne's price rigging rackets commenced in 1990 and were progressively exposed between 1991 and 1994. Its trucking and security operations became less profitable during that period and subsequently. This was particularly so after the court imposed injunctions restraining its practices in December 1994. Mayne responded to the commercial consequences by shifting the main thrust of its operations to health care.

Links to a wider corporate marketplace culture

Other examples:- The sort of culture seen in Mayne Nickless is apparent in many large financially successful corporations. The "money for mouths" scandal is a good example. Banks and even QANTAS were paying radio commentators, whose on air comments should be totally independent large sums under the table for favourable comment. This was not strictly speaking illegal but by any other standard it was antisocial, immoral and unethical.

Sociopathy:- I have argued that in some domains of corporate activity, particularly those where misdemeanours are not immediately apparent this sort of corporate culture is the key to financial success. Health and aged care are good examples. The market fosters and selects for certain personality types. I have borrowed the term "successful sociopathy" to describe both the individuals and the culture. The responses made by the parties in the money for mouths scandal is illustrative. They indicated that these were normal commercial arrangements. They could not understand why there was so much fuss. They had developed frameworks of understanding which made these practices legitimate - even desirable. Mayne Nickless behaviour must be examined within this social context.

Training for the market:- It is interesting that more than 30 of Australia's most senior executives have been "schooled" at just five organisations - Citibank, Rio Tinto, Coles Myer, McKinsey & Co and Shell. These protige's have come out at the top of the system. Some of these groups would not rate highly in the average citizen's idea of a good corporate citizen. Shell has a particularly poor record.

Many would have reservations about some of the 30 senior executives, at least two of whom have been head hunted as managers of Mayne Nickless. Bob Dalziel came from Coles Myer and Peter Smedley from Shell. Ian Trahar CEO of Revesco also came from Shell.

I question whether people who "graduate" from this sort of school should be entrusted to carry out the Samaritan traditions of our society.

Update August 2004
Reports indicate that Citigroup of which Citibank is a part have been leaders in recurrent financial fraud and scandals including the massive Wall Street frauds. They have paid or are negotiating to pay billions of dollars to settle claims that they participated in the Worldcom, Enron and other frauds. They are being pursued in regard to their role in the Parmalat fraud. In 2003 a group of Venture Capitalists led by a Citigroup subsidiary purchased all of Mayne's hospitals. Citigroups conduct is described in some detail on these web pages.

Commercial Activities

Transport:- In transport Mayne initially aimed for a "total transport service". The following descriptions used in reports suggest the breadth of this strategy over the years - contract logistics (planning, implementing and controlling the flow of goods and services), containers, freight, warehousing, express freight, time critical express, parcel freight, distribution businesses, contract warehousing and distribution operations, trucking operations etc.

Security:- In security the descriptive terms are guards business, security operations, security guards operations, armoured car business, armoured car market, Armoured Car Inc division, alarm monitoring, keyholding etc.

Technology:- Mayne was one of the earlier investors in computer applications, including an electronic legal information service, which was a land inquiry system for conveyancers. It's Maynenet computer data services were set up in direct competition with the state monopoly Telecom. In 1991 it became one of the largest investors in Optus, the main competitor to Telstra, the newly privatised Telecom.

Others:- Its activities in the waste business were described as waste disposal, and waste management. One of the reports suggests that it was involved in electricity generation in Victoria but decided to opt out. One of Mayne's divisions purchased the Victorian governments bulk stationery and office supplies unit, indicating its involvement in this area.

Market control was important for success and when Mayne remained a bit player it got out.

Multinational operations

While based in Australia and also operating in New Zealand many of the company's businesses operated in foreign countries. These included the USA and Canada. In Europe it operated in the UK, Holland, Belgium, France, Italy and Spain. It also operated in Asia including Indonesia and China.

Financial progress

Growth:- Not surprisingly in a company of this size, with so many operations in so many places its fortunes waxed and waned but overall it grew and grew until the early 1990's. At times it became top heavy and needed some rationalising.

In early 1983 it was "cruising well" but by the end of the year there was " an uphill battle to save -transport- industry". In 1985 things were booming and by 1987 it was making "big profits". It divested some of its computer operations in 1988 and was cashed up. An analyst noted "No industry based in Australia has performed better than transport over the past three years". It continued to grow rapidly selling some less profitable ventures in the USA but expanding in the UK, Holland, Belgium, Italy, Spain, France and Canada over the next 3 to 4 years.

Slow down:- Its $375 million investment in Optus in 1991 was a mixed blessing but it nevertheless found the money to continue its expansion in Europe during 1992 and 1993, although it was performing less well. By the end of 1993 it's shares were "taking a beating". Its Italian and Spanish operations were doing badly. Things remained tight in 1994 and it started looking to sell its holding in Optus but ran into difficulties with this.

Price rigging:- The Trade Practices Commission commenced its investigation of Mayne's fraudulent collusion over pricing practices in 1990 after a competitor took data he had been quietly collecting for many years to the Trade Practices Commission (TPC). The transport companies involved would have been forced to tone down these practices at this time.

Impact of the scandal:- There is no reason to believe that the collusive practices were restricted to Australia. They commenced nearly 20 years earlier in the 1970's and its MD is claimed to have acknowledged their importance for the company's performance - and growth. These collusive practices would have worked equally well elsewhere. The lowered profits between 1992 and 1994 are likely due to a multitude of factors, but Mayne's inability to continue its lucrative practices must have played a significant part. The court injunctions of December 1994 would have put an end to them.

But the stark reality is that since late January the all industrials index has surged 15 per cent from 2700 to a point where it is hovering near 3100. Mayne Nickless's throttle has been in reverse for most of that period, with the share price falling 8 per cent from $6.18 on January 31 to its present level of around $5.70. THE MAYNE EVENT THE AUSTRALIAN, FRI 14 JUL 1995, Page 031 (NB Mayne pleaded guilty in Dec. 1994)

One can only speculate about the likelihood that Mayne's vast international and local empire was, like that of the giant health and aged care multinationals in the USA built on fraudulent and collusive practices which harmed their customers - practices which Mayne staff persuaded themselves were legitimate business activities. The competitor who complained to the TPC is the person most likely to know. His comments indicate that this was so.

There was a boom in profits from 1988 through 1991, a flattening off during 1992-94 while the company was being investigated, and a poor performance (as the market improved) in the subsequent years. Mayne tried to divest itself of many of the transport and security operations that were no longer profitable.

The market's response:- The share price held comparatively firm in response to the adverse publicity surrounding the guilty plea in December 1994. In contrast the market responded very negatively to the subsequent decline in profits, perhaps largely consequent on the company's inability to continue its collusive practices. The market does not respond to social issues or profitable crime.The dominant concern of big institutional investors is not social responsibility but the impact on profits.

References and Extracts

The references provide support for this page. Scan the headings and glance at some of the extracts I have included.

Click Here to go to the reference material for this page.

This page created November 2001 by Michael Wynne Modified March 2002 and Aug 2004 Format changed Nov 2005