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T his book is a fast-moving and highly entertaining account of one of the most audacious scams in Australian corporate history.

Author: Gerard Ryle
Publisher: Allen & Unwin
274pp
RRP: $35
Reviewed by Michael Sexton 

Those who grew up in the 1950s will remember fuel-saving pills that could be put in car petrol tanks. They never worked. The US Environment Protection Agency has been testing fuel-saving and emission-reducing devices since 1971. It has not approved any because none proved effective.

It was this fantasy, however, that was the basis for a global corporate empire built by Tim Johnston, born in Brisbane but later based in Perth, after an early career in pyramid selling schemes in Sydney and New Zealand. On its face, the empire was a complex network of companies, many based in South Pacific tax havens. But it was effectively controlled by Johnston and the huge sums that were available to him came not from the manufacture and sale of its so-called product but the purchase of shares by investors, most of them acting on the recommendation of financial advisers associated with Johnston.

In all of this he received enormous assistance from Australian diplomats and trade officials. At one meeting in Moscow, he had four bodyguards from the Russian special forces that had been organised by the Australian embassy there. In 2000 Firepower received almost $400,000 from the Australian Government in export grants for its non-existent product.

Johnston understood that access to what passes for high society can be quickly purchased in this country. Firepower became a major sponsor of the South Sydney rugby league club, the Sydney Kings basketball team and the new Super 14 entrant the Western Force. The book provides an account of how the Western Force, with Firepower's assistance, spent wildly to buy players from the older established teams.

The highlight of Johnston's sporting sponsorship was the launch of the Sydney Kings' 2006 season on board HMAS Sydney with investors and high-ranking Defence Force officers on board. Johnston continued to rise and rise. He had dinner at the Lodge with John Howard. He had a private meeting with Pakistan's president, General Pervez Musharraf, and presented him with a $30,000 ornamental dagger. He moved into a $16million house in Perth.

Eventually, of course, the music had to stop. The beginning of the end came in January 2007 with the first of a series of articles by Gerard Ryle in The Sydney Morning Herald although the same week Johnston sat on Russell Crowe's table at an Australian trade function in Los Angeles.

After this it was all downhill for Firepower investors. Sponsorship funds dried up as well: the Sydney Kings ceased to exist and the top players in the Western Force are now heading back east.

In 2008 the Australian Securities and Investment Commission brought proceedings in the Federal Court against some of the Firepower companies. But it can be assumed that most of these companies are simply shells and that the investors will never recover their money. As for Johnston, he lives in London and cannot be forced to take part in these proceedings.

Is there anything to be learnt from all this? These kinds of exercise are as old as the South Sea bubble in 1720. They indicate that it is almost impossible to protect gullible investors from putting their money into fraudulent schemes.

This, of course, raises a question as to the utility of the immensely detailed systems of regulation some might say over-regulation of corporate affairs that are administered by bodies such as the Australian Securities and Investments Commission and the Australian Competition and Consumer Commission.

But the real question that emerges from the book is the role of Federal Government bodies in assisting the rise of Firepower. Is someone in the Government in Canberra doing a risk assessment of Austrade and the Department of Foreign Affairs in the wake of this fiasco?

Whatever the answers to these questions, the Firepower saga is an enthralling story and very well told by Ryle.  

Firepower by Gerard Ryle - an edited extract

Firepower was a $100 million fraud on investors too eager for profits and too distracted to demand proper answers to the right questions, writes Gerard Ryle.

Tim Johnston needed a distraction. In Australia, none comes bigger than sport, a national obsession. Where else would athletes regularly nudge aside doctors, scientists and humanitarians to the nation's highest honours?

Johnston's friend Peter O'Meara had a sporting team. O'Meara was chief executive of the Western Force, a Perth-based franchise in the world's best rugby union competition, which pitted against each other the finest players from Australia, New Zealand and South Africa. But O'Meara's team was the league's worst. Could O'Meara get Johnston the big distraction he wanted?

It was 2006 and by then Johnston had moved from poverty to plenty with barely a hitch in his stride. Already people were tipping him for greatness. Just as Thomas Edison had revolutionised the world with the invention of the light bulb, many believed Johnston was about to radically affect the biggest emergency facing mankind - the global energy crisis. Some of Australia's brightest business leaders figured him to be the new Bill Gates, the founder of the world's biggest company, Microsoft. Johnston was surely about to enjoy the same commercial success. Like Edison, his product also fitted neatly into the palm of one hand. It was a little brown pill about the size of a 5 cent piece.

Johnston was 50 and given to hyperbole. He had been asked by the then prime minister, John Howard, to advise the country on the pressing issue of climate change. The British prime minister, Tony Blair, was a silent investor in his various schemes. Both houses of the Russian parliament had ordered his technology to be adopted in every farm, factory and furnace. The contracts were worth millions. Perhaps billions.

It was difficult to know where untruths began and ended with Johnston. His world was filled with unexpected surprise. John Howard invited him to dinner at the Lodge, the prime ministerial residence in Canberra.

They dined with Julie Bishop, the minister for science, and they discoursed on the issue of Johnston's great invention. The prime minister invited him back to dine again. And Johnston, who liked to study the Bible, gave thanks to his God for the meals. His favourite topic of conversation - outside his yearning to save the planet - was his professed desire for honesty and integrity.

The contradiction was not always immediately apparent.

Johnston began his marketing career as a shampoo salesman. His clean-cut image served him well when he moved to other things. Like selling bacteria that ate cow dung, or cures for medical ailments, or paint that was so light that aircraft manufacturers were animated about its fuel-saving possibilities.

And it was here, in the area of fuel saving, that he finally hit it big. Not with the paint, but with the little brown pill.

It was easy to see the attraction. By the time Johnston truly arrived on the scene in Australia, the public had breached another oil consumption record. The number of cars and trucks nearly matched the Australian population, and consumed 36 billion litres of petrol and diesel a year.

Johnston's little brown pill promised to cut this $29 billion annual bill by 20 per cent in one easy stroke. Moreover, he claimed the pill would effectively eliminate all poisonous emissions from vehicles.

The excitement over his invention allowed Johnston to collect money from all corners of the globe. The message was clear: invest in Firepower or lose out on the chance of a lifetime. The pill, he said, would make everyone extremely wealthy. By the time Johnston finished, investors had handed over more than $100 million.

Johnston surrounded himself with substantial people. His business partners included Gordon Hill, a former West Australian police minister.

There was Warren Anderson, one of the country's better known property developers, and Grigory Luchansky, a Russian oligarch who regularly featured in newspaper stories around the world. Both the former governor-general Michael Jeffery and the then Queensland premier, Peter Beattie, turned up for Firepower-sponsored events.

Bill Moss, the former Macquarie Bank director, was scheduled to be the chairman of Firepower and Firepower's chief executive officer was John Finnin, one of Australia's most senior public servants. Johnston told everyone they were going to be rich when he listed his company in London. Even in those heady days, Firepower appeared too good to be true. So good in fact that rumours sprang up that it was really a money-laundering front for the Russian mafia, or a product of the KGB or the CIA. The reasons were never quite clear. Nobody seemed to care as long as the money flowed.

And flow it did, while few took the time to learn what Firepower was really about, or to look into Johnston's colourful history.

Johnston spent much of 2006 on board first-class flights and on private jets. He spent long hours explaining the deals he was signing up. World leaders - prime ministers and presidents - begged for his help. They wanted to improve their refineries, their factories and their methods of food production. His technology, he indicated, also had military applications. That made it a danger to powerful interests - not least the big oil companies. Johnston came to feel the panic, the rush of doubt, well before the end of 2006. Various strands of his story grew contradictory. The portrait he had built up remained unconvincing.

Despite the millions of words that were poured into explaining the gulf between science and science fiction, the two remained unreconciled. In short, Johnston needed a distraction. He needed something to draw attention from the fundamental questions - the scientific proof, the stock market listing. Johnston found it in sport.

Johnston conceived his plan for the big distraction over Sunday afternoon drinks at his friend Peter O'Meara's comfortable pad in the Perth beachside suburb of Cottesloe, not far from the $16 million mansion Johnston had recently occupied. He began by luring the best rugby players in the land, including Matt Giteau and Drew Mitchell, the stars of the Australian national team. Johnston was soon the most powerful person in West Australian rugby.

But Johnston had mammoth ambitions. As his boasts grew, so did the distraction. He began to build the biggest sporting sponsorship portfolio Australia had seen. The Firepower name was soon brashly displayed across the country, in boxing rings, on horse tracks, on racing cars, on motorbikes, even on surfboards. He began sponsoring the Sydney Kings, Australia's best-known basketball team, and ended up buying the franchise.

Johnston's brash style often clashed with the culturally conservative, but many people were drawn to his fervour and his money. He was good at identifying weaknesses in others. He was good at understanding rules and laws and the ways they could be broken. He was good at making sure people who might have spoken up couldn't, because they were compromised.

Those who probably should have known better often left their good sense behind when they signed on for the camaraderie, the dollars, and the excitement. And like a children's party, people didn't doubt the integrity of the magician.

At the height of his popularity, in September 2006, a 4200-tonne navy guided missile frigate was handed over at taxpayers' expense for a gala sponsorship function soon after Defence Force chiefs became Firepower investors. HMAS Sydney was moored at the navy's base at Garden Island, with views over the Opera House, when it was used for the official launch of the Sydney Kings basketball season. By then, the Chief of Defence Force, Air Chief Marshal Angus Houston, the Deputy Chief of Navy, Rear Admiral Davyd Thomas, a former senior naval officer, Commodore Kevin Taylor, and the former air force chief, Air Marshal Errol McCormack, were all on board the dream as investors, though none was involved in the decision to hand over the ship.

Johnston's attentions were not confined to Australia. His sporting heroes were scattered across the world, from New Zealand to Tonga to Russia. He had his people draw up plans to sponsor Chelsea soccer club in the English Premier League and formula one motor racing. He was funding a Welsh rugby team.

All things seemed possible. Johnston began socialising with Russell Crowe, the Oscar-winning Hollywood actor, and Peter Holmes a Court, one of Australia's best-known businessmen. The two men owned the South Sydney Rabbitohs rugby league team. Firepower had just become a major sponsor, its millions helping revive South's on-field struggle.

Investors came from all walks of life - and included doctors, accountants, media figures and public servants. They came from the airy elite of international diplomacy, like the Australian high commissioner to Pakistan, Zorica McCarthy. They even came from the centre of Johnston's own big distraction - the world of sport.

A group of Australian rules footballers decided Firepower was the next big thing. Leading the investment scramble was Mark Ricciuto, captain of the Adelaide Crows, and Wayne Carey, the former all-Australian captain. Carey told current and former players it was a great way to increase their money tenfold. Most Adelaide Crows signed up, including coaches. And Johnston drew up plans to share profits from the sale of his pills with the Crows Foundation, the club's charitable arm.

A former player and Firepower investor hosted an Adelaide radio show on the Triple-M network. Players and former players began a game, competing on air to see how many times they could name Firepower during interviews. Adelaide's newspaper wrote about it in the social pages. The private comedy became public. And everyone was laughing at Johnston's distraction.

But the real joke was on them.

This is an edited extract from Gerard Ryle's Firepower, published by Allen and Unwin from Monday, $35.