Russel Pillemer and Alex Turnbull (Images: Supplied)

The Turnbull family and Sydney fund manager Russel Pillemer are facing off in the NSW Supreme Court — but it is not the first time those names have appeared on a witness list. 

Crikey readers with long memories will recall that Malcolm Turnbull and Pillemer were both up before the HIH royal commission in 2003, giving evidence about their dealings with Rodney Adler and FAI Insurances. Suffice to say, the noble profession of investment banking did not cover itself in glory.  

This current court action dates back to the relationship the two forged while working together at Goldman Sachs Australia. After leaving the bank — where they advised Adler and FAI — they started up boutique funds management business Pengana Capital Group in 2003. But when Turnbull went into politics in 2004, it became an issue — for any politician, the potential conflicts of interest in running an investment business are too problematic.

The evidence from this case is that in 2008 he lent the shares to Pillemer and eventually sold them to him in 2017 for $6.1 million.  

In November 2015, two months after Turnbull became prime minister, he transferred the loan to the plaintiff in this matter, Maurtray Pty Ltd, a company owned and operated by the two Turnbull children: Alex and Daisy. 

Alex Turnbull gave evidence yesterday that at the time of the share sale, Pillemer hadn’t told him that Pengana was about to merge with investment house Hunter Hall. This “misleading and deceptive conduct” could have increased the value of the Turnbull family’s stake in Pengana by millions, he claims. Maurtray is suing Pillemer for damages of up to $12 million. 

Alex Turnbull was giving evidence from Singapore. He denied he changed his evidence on the instruction of his father and that he ­deliberately tried to conceal his ­father’s stake in Pengana while he was PM. 

How times change. Back in the late ’90s, everything was smooth sailing between Turnbull Sr and Pillemer. 

‘Business opportunities’

The former PM told the HIH royal commission that Pillemer spoke to him in 1997: “My recollection is that Mr Pillemer said to me he thought there could be some business opportunities in and around FAI and did I know [chief executive] Mr [Rodney] Adler, and I said I did, and he said: ‘Well, why don’t we go and have a chat to him?’ So we did. That’s what investment bankers do.”

Turnbull recalled that he had probably first met the Adler through business in the late 1980s. HIH launched a $300 million takeover bid for FAI in September 1998, and the FAI board retained Goldman Sachs for financial advice.

It was a long and sorry saga, but HIH eventually went under with total losses of $5.3 billion, earning the title of the largest corporate collapse in Australia’s history. 

Pengana Capital earned a profit of $8.7 million last financial year. The last annual report records $2.34 million paid for “aggregate compensation” to directors and key management, with Pillemer earning $636,293.

Bird of prey

Pengana is the name of an ancient bird of prey, with special ankle joints that enabled it to bend its feet in all directions. The group’s website says: “This made it an expert hunter, with a significant competitive advantage. It not only had the ability to identify its prey from a long distance, but also to use its flexible joints to reach into hard to access places, giving it the ability to extract prey unavailable to its competitors.” 

Are the Turnbulls more agile than an ancient bird of prey? The case continues, with Alex Turnbull still in the witness box this morning.