The Melbourne billionaire demonstrated he is one of Australia’s great dealmakers by selling his company to the Japanese, which face huge losses.

Now, with their investment mostly or entirely lost, the Japanese are surrendering.
They are going through the process of putting a large part of Little’s creation up for sale, defeated by chaotic computer systems, the global pandemic and a structural decline in some of its customers, including department stores.
The Toll story, which former executives have shared in a series of articles this week, is a painfully human one too, and illustrates how organisations can be as flawed as the people who run them.
‘It was a culture of fear.’
By all accounts, Toll was a wild place. Bikie gangs used its trucks to transport drugs; top executives shouted at each other; divisions undermined expensive technology projects to preserve their power.
A former employee this week emailed to say: “I have both wonderful and nightmarish memories of my time there. It was a culture of fear.”
Many people loved, and presumably still do, working at Toll. In a world in which most people spend their working lives staring at screens, and often much of their leisure time, Toll people do stuff.
From flying helicopters to piloting ships, they are an integral part of a incredible, byzantine chain of movement that sustains modern existence.
It turns out that Little’s sprawling creation was probably beyond the control of one man or board, even one led by someone as well liked as executive chairman John Mullen, who also chairs Telstra.
As Japan Post painfully learned, bad behaviour flourishes without control.
Toll was accused of breaching UN Security Council sanctions by doing business in Iran and other banned countries. AP
Toll has a serious governance problem. Law-enforcement actions have cost Toll more than $200 million over the past five years, including dealing with allegations of bribery, customs evasion, corporate collusion and breaching UN Security Council sanctions, according to a source.
(On Friday, I incorrectly attributed the total amount just to the cost of settling 8000 sanctions breaches with the US Treasury. Toll hasn’t confirmed the details.)
The cost is greater than the loss to shareholders. For a business majority owned by the Japanese government, Toll’s finances are surprisingly precarious. An important Australian company is at risk.
Genius money
Toll has about $4 billion in short-term debt, mostly owed to three large Japanese banks. ANZ Bank, National Australia Bank and Standard Chartered are lenders too. Another $2 billion or so of liabilities has claims to its assets.
The pandemic world has been cruel to transport companies, which can’t easily cut their costs, and Toll’s big Global Express division is losing money, according to people familiar with its accounts.
Japan Post has only guaranteed Toll’s bank debt until June, which will take the business through to the end of March, which is the parent’s financial-year end.
After then, Japan Post has kept its options open. But without the parent’s support, Toll’s lenders will presumably balk at rolling over the loans.
Debt free, Toll is worth nothing like $6 billion. The accounts list assets around $3.6 billion, although there are industry estimates the company is worth as little as $1 billion or $1.5 billion. This week’s coverage might not have helped.
That means Japan Post, which is majority owned by the Japanese Government, is a negative equity holder.
In a worst-case liquidation scenario the Japanese could be in the hole for as much as $4 billion or $5 billion. That is on top of the $6.5 billion cash they paid to Little et al in 2015.
That’s a theoretical cumulative loss above $10 billion.
Which suggests Paul Little is a genius.