Pod Insights ABC Rewind Friedrich the Fraud About this episode Was he Australia's greatest con artist? That was the title given to John Friedrich, the former head of the Victorian Division of National Safety Council of Australia. Back in the 1980s, he famously made $293 million of investors’ money disappear. When his fraud was uncovered, he went missing himself for sixteen days, prompting a nationwide manhunt and a media storm that reported both facts and the fictions.
Guests:
Barry Whitehead - former NSCA operations manager
Frank Bongiorno - professor of history, ANU
Peter and Ann Synan - regional historians & Sale residents
Zyg Zayler - criminal lawyer, Melasecca Kelly & Zayler
Credits:
Composer - Matthew Crawford
Sound engineer - Tim Symonds
Producer - Lyn Gallacher
Transcript 0:00 Speaker 00 ABC Listen, podcasts, radio, news, music and more.
0:15 Speaker 01 In Shakespeare's great tragedy Othello, the villainous Iago proclaims, "I am not what I am."
0:20 Speaker 02 This is also how John Friedrich describes himself in his autobiography.
0:25 Speaker 01 The mystery surrounding John Friedrich's life culminated in early 1989, when he disappeared for 16 days following the multimillion dollar collapse of the council.
0:35 Speaker 02 John Friedrich is the former head of the Victorian Division of the National Safety Council of Australia, and his autobiography, Codename Iago, is the story of how $300 million of investors' money went missing. Hello, Kirsty Melville here with you on the History Listen.
0:57 Speaker 02 Producer Lynne Gallagher is with former Safety Council employee Barry Whitehead. John Friedrich was his boss. They're at West Sale Airport in East Gippsland.
1:08 Speaker 03 How are you?
1:09 Speaker 04 Very well, thank you.
1:10 Speaker 03 Thank you so much for meeting me.
1:11 Speaker 04 No, not a problem.
1:12 Speaker 02 And a warning? This story discusses suicide.
1:18 Speaker 04 Barry, Barry, Barry.
1:20 Speaker 03 Tell me about where you worked.
1:23 Speaker 04 I was involved in operations, which was basically controlling search and rescue, firefighting ambulance, or other emergency support. We can see the end of the building down there. And when I look out here now, like the, you know, there are cracks in the tarmac and there's weeds growing up everywhere. It's starting to look like a bit of a ghost town.
1:49 Speaker 02 As Iago, John Friedrich deliberately doesn't deny working for the CIA.
1:55 Speaker 05 The Defence Minister, Kim Beazley, said claims the council was involved in intelligence or surveillance activities are totally baseless.
2:06 Speaker 02 Which because of Friedrich's military security clearance, became an embarrassment.
2:12 Speaker 05 He's been described as secretive, clever, and a possible spy.
2:17 Speaker 02 In court, he declared the rumour...
2:19 Speaker 06 Completely out of nonsense, and if you can lead us a little bit into that direction, we would like to know who that was, because live proceedings could bring us a lot of money.
2:29 Speaker 06 The company has, over the years, not published accounts. It's a private company. Therefore, it didn't have to cause us suspicion.
2:38 Speaker 03 And we all love suspicion.
2:43 Speaker 03 That suspicion, though, hurt many. One of them being loyal Safety Council employee, Barry Whitehead.
2:51 Speaker 04 We also had catering here. We had sleeping quarters for crews, plus all the associated training facilities for the various, um, aspects of the NSCA operation.
3:03 Speaker 03 I'm astonished at the scale of it. How many buildings do you think there are here?
3:07 Speaker 04 Oh goodness, I've never stopped to count them.
3:10 Speaker 03 Twenty-one, twenty-two, including two indoor swimming pools, a helicopter SIM setup, an audiovisual studio, basketball courts, squash courts, a gym, and a home for the Safety Council's rescue horses, dogs, and pigeons.
3:26 Speaker 04 We're about to hear an aircraft start up. There is still aviation activity taking place over there, but back in the day, this, uh, standing hardstand area here would be covered with anything up to a half a dozen helicopters, three or four fixed-wing aircraft. Yeah, it was a hive of activity.
3:53 Speaker 03 Imagine a storm, an overturned yacht.
3:57 Speaker 03 There's lives at risk. A call to help comes to NSCA operations. Barry alerts the para-rescue team. They drop from the sky. Survivors are plucked from the ocean.
4:18 Speaker 03 These vital rescues are the job of the Safety Council. Extreme rescues that no one else can do. Before John Friedrich became the Executive Director of the Safety Council in 1982, it was a modest, non-profit organisation dedicated to road and industrial safety awareness. Back in the 1920s, when it began, this involved activities such as accident prevention lectures on the radio. So the transformation from that to a helicopter rescue organisation was astonishing. And for this, Frederick was awarded an Order of Australia.
4:58 Speaker 03 All came tumbling down.
4:59 Speaker 06 He admitted that he forged signatures.
5:01 Speaker 03 When the organisation's accounts just didn't add up.
5:03 Speaker 06 That he lied to auditors.
5:05 Speaker 03 And Friedrich couldn't be found.
5:07 Speaker 06 That he claimed that hundreds of empty shipping containers were passed off as containing millions of dollars of safety equipment.
5:18 Speaker 03 Essentially, Friedrich's frauds were simple. He'd get a bank loan for a container or crate full of expensive safety equipment. He'd then go out and buy an empty container and pocket the difference. All he had to do then was fake an invoice to make it look like the Safety Council had legitimately earned that money. Then he'd be free to spend the money on another helicopter, say, making the Safety Council look like it had much more money than it actually did. Professor of history at the Australian National University, Frank Bongiorno.
5:54 Speaker 06 This wasn't really about lining his own pockets. It was about self-aggrandizement. It was about advancing his career. And he did that very successfully. An organisation that had 100 staff in 1984, not long after he took over, by 1989, had 450 staff, based on massive borrowing that he'd undertaken, often in a fraudulent way. I mean, one of his tricks seems to have been to show banking officials certain equipment in crates with the implication that a whole bunch of other crates had similarly expensive equipment in it that, you know, could be used as collateral, and the crates were empty.
6:33 Speaker 06 And so the organisation turns into this massive paramilitary-style search and rescue outfit that was, you know, contracting out services nationally and then eventually even internationally, providing firefighting services, for instance, to other countries. It had 22 helicopters at its peak, 10 planes, a 42-metre flagship, a midget submarine. It had an elite para-rescue group, which he was very proud of. He liked surrounding himself with these, you know, athletic, fit young men who did this kind of rescuing. But very mysteriously, as the organisation internationalised, no one could work out why he never went overseas himself.
7:15 Speaker 03 Of course, the answer was he didn't have a passport that would have allowed him to get back into the country. His fraud would almost certainly have been exposed if he'd done that. So he was extremely clever as well as being extremely charismatic.
7:29 Speaker 01 Sale became a centre for people to visit, distinguished people, famous people, powerful people.
7:39 Speaker 03 This is Peter Sinan. Peter and his wife Anne are sale locals and regional historians. When the Safety Council first moved to this Gippsland town, Peter was also the mayor.
7:50 Speaker 01 I was mayor of Sale at the time and we thought it was a very prestigious thing to be the host city for the organisation. It gave us a lot of prestige. I remember at the time thinking that how I'd love during my time as mayor to see Sale's economy diversified. We're very much an economy based on service, RAF and SABHB on offshore oil. But this was a diversification which had a lot of excitement and drama attached to it. It was sort of the cutting edge of so many things.
8:28 Speaker 01 The para-rescue side of it was almost James Bond-ish really in 007 and a mystery to it all.
8:40 Speaker 03 And it was a big thing in Sale when it fell over. The families, like the kids went to the private school, so they lost those children. The partners worked at places like at the hospital or in other professional capacity around the town. It just made a big hole in the economy.
9:02 Speaker 03 But it did provide the services that it said. But there were a few empty shipping containers? Not that we knew until later.
9:16 Speaker 03 It was 1989 when it all went belly up. The chairman of John Friedrich's board, Max Icy, became suspicious and asked Friedrich to explain some financial anomalies. Friedrich kept saying he'd deliver the accounts and that everything was in order.
9:30 Speaker 01 The state bank could lose $100 million its loan to the Safety Council.
9:34 Speaker 03 When the auditors insisted, rather than front up, Friedrich disappeared for 16 days. But first, the nation's most fascinating fugitive for a long time has been
9:46 Speaker 03 And that prompted a police manhunt and a media storm.
9:52 Speaker 06 He was looking very suspicious and whatever. And then three detectives come out one car and he just stood there and I took him away. AM, Easter Monday.
10:02 Speaker 03 When John Friedrich was arrested on that Easter Monday back in 1989, the journalists were keen to know who this fugitive really was. Authorities are not just asking where is John Friedrich, but who is John Friedrich? Eventually, it all came out. He's been described as secretive. His name was not Friedrich. Clever. Nor Yago. Alouf. But Hohenberger. And a possible spy. Johann Friedrich Hohenberger. And the Safety Council, a CIA front. Back in 1975, 14 years previously, he'd entered Australia illegally. He'd embezzled 200,000 Deutschmarks from a West German construction company.
10:46 Speaker 03 When he was found out by the German police, he avoided arrest by going on a skiing holiday and faking his own death. Then, at the ripe old age of just 24, he snuck into Australia.
10:58 Speaker 04 He was a most unusual man. He had great foresight and a dream.
11:05 Speaker 03 John Friedrich's former manager of operations, Barry Whitehead again.
11:09 Speaker 04 Quite forceful, I guess, in terms of developing this organisation.
11:14 Speaker 03 Because there would have been none of this here before, nothing.
11:16 Speaker 04 No, no, no. So we're now at the entrance to what was the main reception.
11:23 Speaker 03 It still looks in very good nick. It's very 1980s.
11:26 Speaker 04 It is.
11:29 Speaker 03 One of the reasons Barry so enjoyed his time with the Safety Council was the scope of the organisation. Under Friedrich, the Safety Council had arrangements with like-minded organisations in Canada, France and Spain to rent out its firefighting equipment, helicopters and crew.
11:45 Speaker 03 By the time it folded in 1989, the autonomous Victorian branch had expanded into New South Wales, Queensland, Northern Territory and South Australia. These branches weren't interested in the big rescue jobs, so didn't mind Victorian bases being on their patch.
12:02 Speaker 04 Oh my goodness. We used to be able to look in the window of John's office, but as we stand here now, the garden has just grown right up almost to the roof line.
12:17 Speaker 03 When Friedrich disappeared for 16 days, it was traumatic for his wife and family. This is the public appeal from his wife Shirley. It kept being played on the national news. John, I hope if you hear or see this, you will come forward. You must feel very tired and frightened.
12:38 Speaker 03 We're all worried about you. The kids want to know where you are. All the family will support you. Please come and help sort out this mess, then we can start again.
12:53 Speaker 03 I love you.
12:57 Speaker 04 Testing, one, two, three, Barry.
12:59 Speaker 03 To this day, Barry Whitehead remains friends with Shirley. Whenever he organizes a council staff reunion, he invites her along. Together, they share memories of the council's achievements, which, by the way, is the story that Barry keeps close to his heart, not the story of Friedrich's fraud that the media loves. How did you cope with the feeding frenzy of the media at the time? That would have been quite difficult.
13:26 Speaker 04 It was... I've never seen anything like it. It was overwhelming because it was such a huge story and, you know, made even more fascinating because of the fact that John disappeared for a while and, you know, there was the search, where is he? And all of us will have, to a lesser or larger degree, copies of the newspaper clippings of the time of how it was being reported. But yeah, it was, it was pretty full on, pretty full on.
13:59 Speaker 03 And what about the long-term residents in the township of Sale? How did they cope when the story of the missing millions broke?
14:07 Speaker 03 Peter and Anne Signan again.
14:09 Speaker 06 I've got a really fat file on it all. Every paper was headlined, you know, and the local papers as well. It was a major event. It wasn't just for Sale, it was for Australia.
14:19 Speaker 03 It was huge all over, all over the country. The town was shattered because we were so proud of what was happening. It just sort of knocked the socks off. And there was a lot of probably misinformation that was never corrected anyway. And there was certainly a lot when John Friedrich left quickly. There was all sorts of myth and publicity, weird publicity about what was happening there. His family, his wife was a nurse, she worked locally. People had high regard for her. Family stayed on. And everybody working with them was very tight-lipped about it, like they were very loyal to John Friedrich.
15:02 Speaker 03 But other locals, those who hadn't just lost their jobs, were able to enjoy a few bargains.
15:08 Speaker 06 And the liquidated sale, sale people nearby with local knowledge and being local to the area were advantaged.
15:18 Speaker 03 Equipment and the facilities were sold off. Like there was massive fire sales and heaps of people went out and bought something of the Safety Council as a sort of souvenir. But the big things, the horses and the facility was bought.
15:32 Speaker 06 I recently, or just last week, I was speaking to someone who bought a horse. And he said it was the most wonderful horse, family horse, so well-trained. I think there's a lot of those sorts of stories. And they were obtained, acquired or bought very cheaply.
15:50 Speaker 03 And the catalogues for those liquidation sales of the Safety Council's goods and assets are still in the archive at the Sale Historical Museum. They're huge. But it was the story of John Friedrich, not the bargains, that interested Frank Bongiorno. I was at Melbourne University as an undergraduate. I can remember sitting in the cafe during this period and some wag, a student, came in. Wearing a John Friedrich mask into the cafeteria. You know, this is the kind of engagement and interest that it attracted. People wondered where he was, you know, had he left the country? Would he turn up again?
16:31 Speaker 03 Eventually, he was tracked down to basically near Perth and would be brought back to Victoria, obviously, to face the music. But, yeah, there was a manhunt, if you like, of almost two weeks. And, yeah, it was the news story of the period because it was such a remarkable story.
16:49 Speaker 03 In the days following his rest, reporters kept the story going by piecing together Friedrich's missing weeks. This is AM, I'm Peter Thompson. Back home and five days after the extraordinary news about the collapse of the National Safety Council. Friedrich then bought a Ford Falcon station wagon for $14,000 cash. It made everyone that Friedrich spoke to during that time newsworthy.
17:12 Speaker 06 He came in late Monday night and came in again today.
17:17 Speaker 03 This is to your delicatessen, is it?
17:18 Speaker 06 Yeah, my sister's jelly, yes. And what else did he do? He bought his $15,000 worth of goods in the shop. And now we've been joined on the line by Tony Harris, the driver from Swan Taxis who picked up Mr Friedrich this morning.
17:34 Speaker 03 Mr Harris, can you tell us, what time did you pick up John Friedrich? About 11.15 this morning. John Friedrich arrived in the caravan park in Baldiavis on Monday evening. Helen Hawkins, who runs the park with her husband Greg, says Friedrich booked the caravan in advance under the name Ian Paul.
17:51 Speaker 06 He just came into the office and rang the bell and I came out. He walked in and he picked up his backpack at the door when we went out.
17:58 Speaker 03 Did you recognise him?
17:59 Speaker 06 No.
17:59 Speaker 03 How did he look?
18:00 Speaker 06 Well, he had a hat on. He said who he was and that he'd phoned before for a caravan. He said he was staying till Saturday. He was just a nice, quiet type of a person.
18:17 Speaker 03 Which makes it in some ways, a bit of a sad story?
18:21 Speaker 06 Oh, there's a deep tragedy. There's a deep tragedy in this story. This is a man, obviously with deep personal flaws. He brought, obviously, enormous pain to his family. He brought enormous pain to his employees and to their families in a vulnerable regional area. And of course, he eventually would commit suicide shortly before his trial. And the story is that he greatly feared, not just going to jail, but he feared that he would also be deported and therefore would, you know, lose his family.
18:56 Speaker 03 By now, it's 1990. John Friedrich's been extradited to Victoria. He's out on bail and busy. There's a government inquiry, ongoing liquidation hearings, his own committal, and creditors wanting to sue. He's also privately dreaming up yet more financially questionable deals and issuing suppression orders. It's at this time that criminal lawyer Zig Zailer enters the frame to act in Friedrich's defence. There are many important features to this case, but in terms of the individual, I'm no psychologist. However, the way John conducted himself was not to enrich himself. Clearly, all the money that was defrauded
19:41 Speaker 03 was clearly traced by the fraud squad. And next to none of it was used by him personally. And his salary was a relatively modest salary for a CEO of a company purportedly of that size. He did it, well, I suppose, in order to be famous in a way. And that fame or approval of others was what he seemed to be looking for.
20:13 Speaker 03 When the Safety Council collapsed, Barry Whitehead was in Tasmania, on the brink of setting up a base for the Safety Council in Hobart. There were lots of remote bases like this all around the country, some of them being where the now infamous Empty Containers were stored.
20:30 Speaker 04 The bases that we had at various locations around Victoria, Portland, Benala, up in the high country, and at each of those bases we had a container. And in that container it usually had a supply of fuel in 44 gallon drums or 200 litre drums, fuel pump, so if a helicopter was deployed there it could refuel, and also some basic emergency equipment. These were the containers that...
20:59 Speaker 03 We're thinking like a shipping container?
21:00 Speaker 04 Yes, exactly the same. These were the containers that were purported to have a lot more in terms of emergency equipment in them, in terms of dollar value, than they really had.
21:12 Speaker 03 And some of them were empty?
21:14 Speaker 04 Quite a few of them were empty and had nothing in them, but they were shown as, or purported to be, containing all this emergency equipment, which was used, I guess, as a collateral, if I can use that word, to raise money with the banks to fund the organisation.
21:31 Speaker 03 Did you know any of that?
21:33 Speaker 04 No, no. It all came as a complete shock to us.
21:43 Speaker 03 Back in the 1980s, when all of this was happening, there was a lot of money around. Banks had been deregulated and were eager to lend. In his autobiography, John Friedrich says he never asked the banks for money. They came to him, offering it in bigger amounts than he actually required. But he also says more borrowing created more justification, which led to more false documentation. John's lawyer is Exailer again. John had a way of painting a picture,
22:15 Speaker 03 which people tended to accept, including people who should have known better, many people who should have known better, because he was so convincing. He was articulate, he had very high energy, and he was capable of putting together a version of reality which people wanted to accept. So that some examples, a lot of the financial world works on trust. And John was fond of saying, if you knew how to use a silver service on the top floor of the State Bank of Victoria, they'd lend you any money that you want.
22:59 Speaker 03 That was cynical and suited John's methodology.
23:05 Speaker 03 But in fairness, a lot of the financial world does act on trust and handshakes and the documents are done later. So if someone can convince people of a reality, be it John Friedrich in business or politicians in politics, people will follow that reality because it's attractive.
23:32 Speaker 03 John Friedrich's autobiography, Codename Yago, was written while he was out on bail with the help of the Australian author, Richard Flanagan. In it, Friedrich claims he was recruited by the CIA and went by the name Yago. The book's been called one of the least reliable but most fascinating memoirs in the annals of Australian publishing. ABC Current Affairs journalist Di Martin interviewed Richard Flanagan for Saturday AM at the time of its publication in 1991.
24:02 Speaker 06 Well, he was known as a liar, but in fact, his modus operandi was to actually tell half-truths. And he always let the listener create the lie in their own mind.
24:12 Speaker 03 Do you think his book tries to justify his position, clear his name?
24:17 Speaker 06 No, not at this one. The really interesting thing is that people might think that he wrote this book to vindicate himself. The fascinating thing is that he didn't care less about the book. He didn't care what people thought about him. He wrote the book for one reason, which he freely admits in the book, and that was for money, because he was in fairly dire financial straits. Once and other interesting things that everybody looks for motives with John Friedrich. And as he says in the book, there were no motives. There were no reasons why he did things.
24:49 Speaker 06 Do you believe him? Yeah, I do. I do in that. I didn't for a long time. But I think he was just a person who lived in the immediate world. And you couldn't, he was like a recalcitrant child. You couldn't put him in any situation where he wouldn't just see to what limits he could take it before he got caught out.
25:13 Speaker 03 Richard Flanagan was given six weeks to pull together an early draft of Frederick's autobiography. But in the fourth week, Frederick was found face down in a paddock at the back of his Gipsland home. Which is why Flanagan was left to do the publicity for the book.
25:30 Speaker 06 Yes, because Flanagan has a really interesting role in all this because he was effectively tired to write the memoir that was posthumously published but was produced basically between Frederick being captured in 1989 and his suicide in 1991. It's a story that's had, I wouldn't say an enduring fascination, but often when I mention the name of John Friedrich, people have absolutely no idea who he is. But I think if you're roughly my age, you know, you're sort of 50 or above and you're around in the 1980s, he is someone who you would remember, again, because of the extraordinary amount of media coverage of when he went on the run. Test team, one, two, three, four, one, two.
26:12 Speaker 06 As this extraordinary drama unfolds, the National Safety Council scam looks more like the work of a brilliant fiction writer. But for those trying to pick up the pieces, it must be a nightmare.
26:22 Speaker 03 And it's nine past eight and 21 to wait for Northern Territory listeners. Who do you hold responsible for what's happened? Is it... Well, that's something that'll have to be decided at some future time. You don't know?
26:37 Speaker 03 Max Icy, the former president of the Victorian National Safety Council.
26:42 Speaker 03 John Friedrich was going to plead guilty to all of the charges against him, which is why Zigsala thought he'd only get five years in jail.
26:52 Speaker 02 But that wasn't to be.
26:53 Speaker 03 On the weekend prior to us going to the Supreme Court to do his plea, which we were confident would have a very good result in the circumstances, I was rung up in the early hours by the police to say that they'd found John. John had disappeared from home and they'd found him on his property and that he'd shot himself.
27:18 Speaker 03 They told me there's no doubt that that is exactly what had happened. And I drove out to the house and sat with Shirley and some of the closest, closer friends of his. And it was a very, very sad day. And that's how my time with John ended.
27:51 Speaker 02 You've been listening to Friedrich the Fraud. And if this story raised issues for you, you can call Lifeline on 13 11 14 at any time of the day or night. Our producer was Lynne Gallagher and the sound engineer, who aided and abetted her with additional helicopter music by Matthew Crawford, was Tim Simons.
28:15 Speaker 02 I'm Kirsty Melville and I look forward to catching you next time on The History Listen. See you then.
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