Gordon Gecko said in the movie Wall Street that “Greed was good”, and the 1980’s was a decade that showed that gaining great wealth and showing it off was considered almost a virtue, rather than as a trait of poor character. Australia was not immune to this – examples included Christopher Skase and Qintex, Alan Bond and Swan Breweries and John Elliott and CUB. One of the more interesting and notorious examples of the “Greed is Good” motto was the rise and fall of the National Safety Council of Victoria, and its charismatic leader John Friedrich.
The story began back in January 1975, when John Friedrich arrived in Australia from his native West Germany. John Friedrich wasn’t his real name, which was Friedrich Johann Hohenberger. Hohenberger was born in Munich in 1950, and started work for a road construction company there in the early 1970’s. In December 1974 it was discovered that Hohenberger had defrauded the company of 300,000 Deutschmarks. Before he could be arrested for embezzlement, Hohenberger disappeared, making it look like he had either committed suicide or had died in a skiing accident in Italy. Instead he caught a plane to the other side of the world to make sure that the West German police couldn’t follow him, and rearranged his name to make the name that would make him infamous a few years later.
After spending several years working in remote Aboriginal communities in South Australia, Friedrich landed a job with the National Safety Council, Victorian Division (NSCV) in 1977. The NSCV was founded back in 1927 to promote road and industrial safety, and was barely known to the general public. This anonymity would quickly change with Friedrich’s arrival.
Friedrich quickly rose through the organisation until becoming executive director in 1982, earning a yearly salary of $130,000. It was when Friedrich reached the top position in the NSCV that things started to get out of hand.
Partly organised on paramilitary lines, the assets of the NSCV included multiple helicopters, fixed-wing aircraft, flagship, midget submarine, search and rescue boats, vehicles, decompression chambers, computer equipment, infra-red scanners and much else that was shiny, flashy and expensive. Pigeons were being prepared for search and rescue missions, while dogs were going to be parachuted with their handlers into remote areas to look for missing people.
Friedrich surrounded himself with fit young men – some of whom he rewarded with expensive cars, and was especially proud of the elite rescue group, which was known as the parachute jumpers, or PJ’s. Staff of the NSCV had grown from 100 in 1984 to approximately 450 by the end of the decade. The NSCV often worked in tandem with the Australian Defence Forces, and there were rumours that the NSCV may have also had links with Australian intelligence services, or that the whole organisation was a front for the US Criminal Intelligence Agency (CIA).
Friedrich, who had been described as an affable, motivated workaholic, was able to transform what had been an obscure and sleepy organisation into a sophisticated search-and-rescue organisation by fraudulently borrowing hundreds of millions of dollars and eliciting the assistance of a few friendly business that helped him ‘cook’ the books. The purpose of the fraud was not for his own personal financial benefit – Friedrich lived a modest lifestyle on a farm with his wife and children on a property near the NSCV’s base at Sale in Gippsland. Friedrich was a classical narcissist, and the building up of the NSCV would put it (and thus Friedrich) in the public eye, where he could bask in the glory of the changes he had made.
Unfortunately for Friedrich, the house of cards collapsed in 1989, due to the use of millions of dollars that he borrowed as cash flow to keep the organisation running. When the NSCV chairman asked Friedrich to explain some anomalies in the financial accounts of the organisation, Friedrich disappeared, leading to the collapse of the NSCV with debts of over $250,000,000. Friedrich became the target of a police manhunt that attracted the attention of the media. Friedrich was reportedly sighted in all parts of Australia , but after a couple of weeks he was arrested near Perth and extradited to Victoria, where he was released on bail.
Multiple court appearances followed, and when Friedrich realised that he may be deported from Australia as an illegal immigrant, he committed suicide with a shotgun on the 26th of July 1991, shortly before his trial for fraud was to begin. After the collapse of the NSCV, the National Safety Council was restructured – the search and rescue function was disbanded, and the NSC concentrated on promoting safety awareness, occupational health and safety training, consulting and auditing – functions which it continues to this day.
So how did an illegal immigrant with a dodgy past rise to the top of such an organisation and build an empire based on lies and deception? Friedrich himself was one of the key elements – a driven and charismatic man, who was notably successful in persuading others to trust in his ability and integrity, and who had built up powerful connections with bankers, politicians, police, public servants, military officers. These connections protected him from serious scrutiny until there was substantial evidence of suspicious behaviour.
The other element was the attitude of the banks, and the way that they almost pushed money onto entrepreneurs like Friedrich. Between his arrest and suicide, Friedrich wrote his memoir “Codename Iago: The Story of John Friedrich”, which was released after his death. While the book contained many lies and falsehoods (Friedrich claimed that he was born in South Australia in 1945, and was recruited by the CIA, given the codename “Iago”, and worked against left-wing extremists before returning to Australia in 1975), his description of the behaviour of the banks when lending money seemed to have a ring of authenticity about it:
“[We] never once had to approach anyone to ask for money. They came to us every time and asked us if we wanted money….They made much more effort to sell their product to us than we did to buy it.”
This video clip gives some information on Friedrich’s life and running of NCSV.
The main source for this blog post was the book “The Eighties – The Decade That Transformed Australia” by Frank Bongiorno, Black Inc Publishing, Melbourne, VIC, 2015, pp. 140-142