Honesty is the biggest problem. Honestly.

Posted on December 6, 2012 | in Confessions of a Serial Entrepreneur | by Richard

In 1814, my ancestors, Mary and William, met and fell in love on a cruise from England to Australia. It must have been romantic sailing the 3-month ocean journey, eating fresh fish while watching the crimson red sunset merge with the sapphire blue waters. Except for one thing, of course. They were convicts. Both were sent to Tasmania for 10 year-plus sentences, doing hard labour. Eventually freed, they made their way to the mainland and started the long chain of sheep shearers, farm workers and the odd criminal, that I was born into, with my 10 brothers and sisters, six generations later.

We Aussies love to bang on about the unfair sentences inflicted on our convict forebears. “They were sent out just for stealing a chicken! Pommy bastards!” But the truth is, anyone who did anything hideous, such as murder someone or insult the king, was hanged. So a trip to Oz might have been a relief. And once there, according to our version of history, the “English” settlers did the bad things, such as the early mistreatment of the aboriginals, while the good stuff, like discovering the continent’s interior and learning to grow wheat, was heroic deeds by early “Australians”.

The fellow who researched my ancestors told me that William’s crime was fraud, and he arrived in Tasmania with a shilling, apparently a lot of money in those days. He suggested further research into how William got such an amount, but I said, “Don’t bother mate. It’s obvious. He nicked it.”

Despite any genetic influences, I’ve managed to stay on the right side of the law, and now days, in business, I rather find myself as the occasional victim of crime and dishonesty. In fact I would say I rate dishonesty as the biggest single business risk.

In the late 90’s I bought a small diamond mine in Sierra Leone. No blood diamonds, a completely legit operation doing wonders for the workers and local community. I’ll tell the story next week, but the summary is, the business failed. After months mining we found almost no decent sized diamonds. There was theft going on, but how? We had tight security. I was flabbergasted to discover it was the English manager, who was also siphoning cash.

Around the same time, I backed a friend in Monaco into two start-ups. Graham, a rather nerdy maths PhD, sat in my living room, while our sons played together, and told me outright lies. With the kiddy connection I trusted him. Later, one of the businesses lost everything when five small oil wells all mysteriously failed. The other, a listed US software company, announced a large “Microsoft order” that wasn’t legitimate. Graham is now wanted by the FBI.

Fortunately, these are probably my worst cases of being deliberately misled. More often, the problem has been somewhat more innocent. It’s almost human nature when staff exaggerate or downplay developments, particularly about sales prospects. Maybe if Tasmania beckoned, they’d be more careful.