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THIS week’s announcement that Gunns, the timber company that once bestrode the forests and valleys of Tasmania like a brooding behemoth, had entered voluntary administration is a case history that should focus the minds of many corporate boards - particularly in the mining industry.

It is difficult to conjure the all-pervasive nature of Gunns at its height, such is the speed of its fall. Not only did it dominate the timber industry in Australia, it spread its roots into a bewildering array of unrelated assets, including hardware stores, wineries and walnut plantations. All are now sold or on the block. Its net assets are stated to be $24 million. Just four years ago, this was a $1 billion company contemplating a $2 billion investment in one of the world’s largest pulp mills.

And it was this pulp mill that sank the company, not the markets as some politicians and commentators are now suggesting. Earlier this week, referring to the pulp mill proposal, this comment was made: ‘‘Gunns showed reckless disregard for established procedures. The lesson to be drawn from all of this is the way Gunns set about getting this proposal up. Hopefully, no one will ever try again.’‘

Did these words come from among the vocal opponents and environmentalists who ran a long campaign against the mill, of which I am one? No, they came from Saul Eslake, the local chief economist for Bank of America Merrill Lynch.

In part he was referring to Gunns’ ‘‘decision’’ in 2007 to pull out of the public hearing process instituted by the Tasmanian government into environmental and related matters concerning the mill. It was, of course, the state government that closed down the hearing, not the company, but in Tasmania it was often difficult to separate one from the other.

And this was the acid rain that fell on the forests and wilderness areas and even the cities of Tasmania for decades, and blighted its landscape and divided its communities. The poison was the nexus between the state’s largest company and successive, submissive governments.

There are well-documented examples of this, although some remain to be properly investigated. When the government introduced legislation fast-tracking the mill through parliament, Gunns’ lawyers ‘‘assisted’’ with the drafting. The legislation includes a provision that explicitly prevents legal action under criminal law by the public against the mill, even if evidence of corruption is found.

An unusual clause, you say? Not many did say, even in the media. Such was the awe in which Gunns was held, so palpable was the fear of lawsuits and other intimidation for which the company was renowned, that only a few brave souls spoke out. And they were hounded, persecuted and sued. These practices included the infamous ‘‘Gunns 20’’ case in which the company sued Bob Brown, leading Wilderness Society officers and pretty much anyone else they could conjure up in a failed effort to silence dissenting voices. It cost the company millions and cemented a hardening opposition into an immovable object.

Even the well-known instances of possible corruption, widely spoken of in Hobart’s coffee shops, seldom found their way into the mainstream media. One such classic instance was the renovation of then premier Paul Lennon’s substantial Georgian home. Strangely, this renovation was undertaken by a division of Gunns, not a division that normally worked on domestic projects. It was not until author Richard Flanagan co-wrote a story on a website (Tasmanian Times*) that any other media outlet, including the ABC, made mention of it . You could hardly blame them. One ABC journalist told me she had had to leave the state for years because of Gunns.

It was said by many at the time that we couldn’t get a local Tasmanian issue onto the national political agenda, but we did. It helped that there was a federal election looming, that many courageous Tasmanians risked demonisation to step forward in protest against this oppressive company and its political cronies.

Yet Gunns continued to tell its shareholders it was close to financing the mill. When bank support fell away, when deadline after deadline was missed, still the company reassured its shareholders all was well. Surely the regulators will scroll back through this long list and call the directors to account. Surely also, the lessons from this appalling mess are clear to the directors of other companies. In part, they are that if you ignore community interests, contrary voices, environmental issues and proper governance, you will cause pain and suffering to your shareholders, employees and, probably, creditors.

The old paradigm that you can invite the minister or senior staff to the corporate football box and stitch up a deal is broken. The concept that once government approvals are in place and conditions that mean nothing and are never policed have been neatly inserted into an agreement, well then, the debate is over - that concept is dead. Along with Gunns.

Sydney businessman Geoff Cousins is a writer and environmental activist. 

First published today in The Age:
http://www.theage.com.au/opinion/politics/tasmanias-divisive-timber-mill-project-reduced-the-mighty-gunns-to-a-pulp-20120927-26o0f.html#ixzz27hnqDLW1

• Tasmanian Times publicly questioned Paul Lennon here: Good morning Mr Lennon. This article includes links to earlier questioning of the relationship of then Premier Lennon and Gunns Ltd. The links take you straight to comments ... click back to article to read the incredible saga ...

• Also in The Age today: The man who pulped the mill ... a feature on Bob McMahon and TAP:

He says the long pulp mill dispute hampered Tasmanian progress for almost a decade. ‘‘But our campaign is often misunderstood,’’ he says. ‘‘Everyone thinks it was purely environmental. It was actually a community campaign, a socio-economic campaign that began because of a great sense of injustice, because the costs and the risks were going to be borne by the community and the benefits, if any, were going to be gained by private enterprise with massive government support.’‘


The Examiner: The Chinese can build the mill, says John Gay:

The former executive chairman of failed timber group Gunns, John Gay, has said Tasmania needs the pulp mill and supports any investor in the project at Bell Bay, including a Chinese investor.

“Anyone that can come in and wants to build the pulp mill is a good thing,” he said yesterday. Mr Gay fought for years to get the controversial $2.3 billion project built. He was ousted by shareholders in 2010 after a collapse in earnings and the share price.

“Clearly I have been out of there for several years, so have not had much to do with anything,” Mr Gay told The Australian Financial Review.

“Tasmania needs a pulp mill and needs an industry to employ its people and keep the economy going ... If it had not been for the anti-forestry people, the pulp mill would be up and running. All the good plantations are in Tasmania. The pulp mill is still certainly a viable option.”

Mr Gay started in forestry when he was 14, working in a sawmill. He joined Gunns in 1973 and transformed it from a sleepy, privately owned company into a public group. He is due in court on Monday on two charges of insider trading brought by the corporate regulator. He has pleaded not guilty.