MICHAEL Wright doesn’t want his descendants to go through the legal and emotional difficulties that have plagued him for the past few years, and restricted his ability to capitalise on opportunities created by recent economic turmoil.
MICHAEL Wright doesn’t want his descendants to go through the legal and emotional difficulties that have plagued him for the past few years, and restricted his ability to capitalise on opportunities created by recent economic turmoil.
The son of iron ore magnate Peter Wright – the business partner of Lang Hancock – Mr Wright is preparing to hand over the business empire he inherited and developed to two of his three children.
In doing so the 73 year old sees not only the need to properly establish the grounds for transition, but also the possibility of a long-term role for himself as a peacekeeper.
“The parent has to sit in judgement to keep the peace between the children,” Mr Wright said.
“There is no point in having a succession plan if the kids tear each other apart.”
It is a view borne of experience as much as from advice taken from others. Mr Wright’s business life has been occupied for the better part of the past decade with legal dramas relating to the estates of his father and Mr Hancock.
He and his sister, Angela Bennett, settled a long-running legal dispute with the children of their brother Julian, who claimed they were owed more from Peter Wright’s estate despite their father’s decision to sell his interests to his siblings some decades ago.
More recently, Mr Wright and Mrs Bennett have been locked in a legal battle with Mr Hancock’s daughter Gina Rinehart over ownership of a 25 per cent stake in the Rhodes Ridge iron ore deposit, which is 50 per cent held by Rio Tinto. In March, the WA Supreme Court ruled in favour of Mr Wright and Mrs Bennett. That decision is now subject to appeal.
While the Wright and Hancock fortunes are immense due to the value of the iron ore deposits they found and royalty agreements created, there are many other families and partnerships with similar bitterly divisive issues that fail to make the headlines.
“I would like to get rid of these legal issues,” Mr Wright said.
“Why at my time of life do I have to deal with the bloody things that have been going on since 2000? I don’t know.
“They are fatiguing and frustrating and, if I want to feel sorry for myself, I could say they are demonstrably unfair, but there is no point thinking like that, you are stuck with them and you have to deal with them.”
While these legal issues have impacted on the internal transition, the Wright family succession plan is now gathering pace.
Mr Wright said both his daughters had decided to become directly involved in the business, while his son had opted to stay out of it and concentrate on a career in theatre sector. His interest in the family estate will be catered for in a way that will not give him any say in the business the other children have chosen to join.
For reasons of privacy, Mr Wright declined to discuss his family, except to say that one daughter had been involved in the business for a decade and running his winery, Voyager Estate, for the past couple of years, while her older sister had opted to join the company recently after having children. Both have commercial experience outside the family business.
“Firstly you have to decide if your children are capable of taking over; that is a matter of maturity and to a limited degree experience,” Mr Wright said.
“I was very fortunate, in that respect, that my kids did not join the business till they were in their 30s.
“The second thing to decide is if the children want to be in it, and lastly if there’s a career path before they are in a position to be considered because it is analogous to a senior executive position; it is a major change of management and that can’t be done unless there is a track record.”
Mr Wright said there was the potential for strong emotions during this period of deciding if succession could take place within the family.
“If they don’t want to be in it; that is disappointing,” he said.
“If they do want to be in it and they are not capable, then that is heartbreaking.”
In terms of the transition, Mr Wright envisages a slow handover of the business during a period of years, though he believes he’ll need to stay personally on top of the big legal battles until they are finished.
“They (legal battles) occupy an incredible amount of time,” Mr Wright said. “Once they are out of the road they [his daughters] will work a business plan for the future, which I will contribute to.”
Diversification is most likely, though Mr Wright can’t say into what fields at this stage.
“Those businesses must be what they are interested in,” he said.
“The world is so mercurial it is difficult to exist on one business, we think we need two or three.”
While Mr Wright is not planning to exit the business any time soon, the changes taking place are not just designed to accommodate his desire for a change of pace. He sees an orderly handover to his daughters as critical.
“When people believe they have to hang on that is when things start to collapse,” Mr Wright said.
“You can see these families, if they don’t permit the transition they start to self-destruct.
“I have never known, for want of a better term, an old fella to be 100 per cent perfect until the day he dies.”
The Cottesloe-based businessman has bought a 600-hectare rural property in the Wheatbelt, which he sees as something of a retreat and a way of continuing his long interest in farming.
“I was always involved in farming one way or another,” Mr Wright said.
Voyager Estate, one of the highest-profile wineries in the highly credentialed Margaret River region, is another example of this desire to invest in agriculture and farming, though it is the only major asset of its nature in the family business.
The wine business does make money for the family but Mr Wright admits it is a business you have to want to be in.
The key driver for the descendents of Peter Wright is ownership of iron ore deposits and royalty streams from mine developments, including at least 25 per cent of the disputed Rhodes Ridge deposit.
The family also controls a big portfolio of commercial property in the US states of Texas and Nevada, including significant land and buildings in Las Vegas just outside the main gambling zone.
“I am the biggest land holder on the Las Vegas strip,” Mr Wright said.
“My father started that.
“I think he felt he ought to go international.
“He was in the energy business in America. I am only in energy to a very limited degree; I prefer real estate to energy.”
While the US property sector has been a good hedge in times of the weak Australian dollar, Mr Wright admits he is frustrated that various legal actions he is dealing with are preventing him from extending his property empire overseas at a time of weak prices and a strong local currency.
Mr Wright is cautious regarding the detail of his legal battles and how they restrict his commercial activity in the property sector but it is clear that he does not want his children to encounter such problems.
“Let’s just say I can’t take the best of opportunities,” he said.
