Sex under the desk, strip clubs at lunchtime – life in Macquarie Bank’s ‘Millionaires’ Factory’

Through its rise to the top as one of Australia’s most respected investment banks and a breeding ground for young and wealthy traders, Macquarie Bank has earned a reputation as a ‘work hard, play hard’ outfit with its fair share of scandals.

In the new book “The Millionaires’ Factory,” Macquarie’s turbo atmosphere included people having sex in the showers or under the desk, and drinking from the well-stocked liquor fridge while working 12 to 16 hours a day.

There was a culture of going to a ‘gentleman’s club’ down the street every Wednesday afternoon – but only for the male bankers – and one day pornographic magazines were found in one of the toilets.

And as the book, ‘The Story of How Macquarie Bank Became a Global Giant’, written by the Australian newspaper’s Joyce Moullakis and Chris Wright, reveals, there was an annual ‘White Envelope Day’.

This was the ‘much-anticipated’ day when bonuses were awarded and Macquarie’s senior bankers would be summoned to the head of department’s office to receive a sum of money that could mean buying a new car or a new house.

“You always knew who got a million dollars plus,” the authors quote an insider, and then the staff would retreat to nearby bars to party in “the high-octane debauchery that would follow.”

The liquor fridge opened in the afternoon, and by the early 2000s—when Macquarie’s after-tax profits rose from $250 million in 2002 to $1.803 billion in 2008—the party culture was endemic.

Young tiros made deals, and one of the cultures was celebrating the success of the banks – which, as the authors of the book went to press, had 19,000 employees and a current market cap of $70 billion.

The celebrations were held in five-star hotels, on yachts, and included lavish gifts for Macquarie’s loyal employees, including a key ring from luxury jewelry house Tiffany on Christmas Day.

The Millionaires’ Factory, co-written by Joyce Moullakis (above), charts Macquarie’s beginnings in 1969 as an Australian subsidiary of British investment bank Hill Samuel, its growth in the 1980s during financial deregulation, and the floating Australian dollar

New book “The Millionaires’ Factory,” co-authored by Chris Wright (left), exposes Macquarie Bank’s turbosphere amid its massive after-tax profits, ranging from $250 million in 2002 to $1.803 billion in 2008

The Millionaires’ Factory charts Macquarie’s beginnings in 1969 as an Australian subsidiary of British investment bank Hill Samuel, its growth in the 1980s during financial deregulation, and the floating Australian dollar.

Macquarie weathered the global stock market crash of 1987 remarkably well, thanks to a policy of risk management recognized by many unbroken history of profitability.

But Macquarie’s reputation as one of the best financial trading houses in the world did not come without scandal, and the book admits that Macquarie “had its fair share.”

Simon Gautier Hannes

In the second half of the 1990s, Simon Hannes was regarded as a great banker with a sharp mind who had earned the right to become Macquarie’s then-youngest executive director at the age of 29.

A private schoolboy closely related to the photographic industry pioneer and founder of Hanimex, Jack Hannes, was considered something of a genius, albeit a loner.

Hannes, one of the bank’s youngest executives at age 29, was later convicted of insider trading and served nearly 20 months in a NSW prison

In 1996, he oversaw the $2 billion acquisition of the transportation company TNT by the Dutch telecommunications company KPN, with Hannes advising his regular customer TNT.

Macquarie’s compensation was somewhere between $5 million and $10 million.

As court hearings would later reveal, Hannes began withdrawing amounts that would eventually amount to $90,000 in the name of Mark Booth.

He had opened a cash management trust account with a broker in that name and, the court found, requested that a broker invest the $90.00 in TNT.

Hannes was convicted of insider trading and served 15.5 months in prison before a retrial that added another four and a half months to his minimum sentence.

Ian Chalmers

In 2006, Ian Robert Chalmers – known at Macquarie Bank as ‘Rocky’ – was sentenced to five and a half years with a minimum of three and a half years.

But in 2007, then aged 43, the NSW Court of Criminal Appeal increased his sentence to 12 years, with a non-parole period of eight years.

He had been found guilty of conspiracy to import cocaine, no less than the commercial amount, into a smuggling ring, which used Sydney Airport baggage handlers to bring the drug to Australia.

In 2006, Ian Robert Chalmers – known at Macquarie Bank as ‘Rocky’ – was convicted of smuggling 30kg of cocaine from South America to Australia with the help of corrupt baggage handlers

By then he had left Macquarie, where he had been hired to work in markets and securities trading.

An expansive character known for his outrageous behavior even for the high-flying scene in Macquarie, his vocal performance in the trading pit caused his peers to say he looked a lot like Sylvester Stallone in the Hollywood star’s film series about boxer Rocky Balboa .

Chalmers was charged with smuggling 30kg of cocaine into the country in a scheme that would pay couriers to travel to South America and then return to Sydney on a flight carrying drug-filled luggage. Baggage handlers were involved in the scam.

He was a drug user who helped organize the cocaine flights, and when he appealed his sentence, three NSW Court of Criminal Appeal judges ruled that Chalmers’ crime was greater than originally thought.

Chalmers, who has since been released from prison, told the book’s authors that his sentence was about drug addiction, not a “play hard” culture in the banking industry and that it was “a problem across the board.”

Chilean travel scandal

Described by The Millionaires’ Factory as “one of the weirdest scandals to rock Macquarie,” the allegations came during a trip to Chile.

The report alleged that two colleagues from Macquarie Bank drugged each other with valium and laxatives more than a decade ago during a business trip to the South American country.

The story was only reported in 2017 and featured photos of the alleged victim with a smiley face and mustache drawn in black on the unconscious man’s face.

Within hours of the prank, emails circulated among Macquarie stockbrokers in Melbourne and Sydney saying, in a phony threat, ‘don’t fark with me, you’ll end up down the rabbit hole’

ASIC and Ross Hopkins

Last year, Australia’s regulator, the Australian Securities and Investment Commission, took action against Macquarie Bank for failing to monitor the conduct of third parties, including a convicted financial adviser who embezzled $2.9 million.

Ross Hopkins was not a director of Macquarie Bank, but rather a third-party financial advisor and the sole director of QWL, which advised clients on self-managed pension funds.

Hopkins stole pension funds from 13 clients, and ASIC uses his example to attack Macquarie for “insufficient monitoring” of transactions.

Ross Hopkins was sentenced to six years in prison for extorting pension funds from clients and spending the money on vacations, rent, paying his own credit card debts and repaying personal loans

ASIC claimed that a fraud monitoring system with manual checks to confirm transactions were legitimate would have prevented and detected unauthorized transactions.

“Macquarie failed to properly detect and prevent these unauthorized fee transactions, many of which exceeded $10,000 each,” ASIC said. .’

Macquarie rehabilitated Hopkins clients for approximately $3.5 million.

Between October 2016 and October 2019, Hopkins had exercised almost complete control over his clients’ super, allowing him to transact on their accounts.

He used his clients’ money for vacations, rent, paying his own credit card debts and repaying personal loans.

Hopkins was barred from financial services last year and sentenced to six years in prison.

The Millionaires Factory by Joyce Moullakis and Chris Wright, published by Allen & Unwin$36.99