Sex, drugs and rock and roll: Australia's other boom

A container ship passes in front of the Sydney skyline as it departs from Port Botany terminal February 24, 2010.

Credit: Reuters/Tim Wimborne

By James Grubel

CANBERRA | Sat Dec 29, 2012 9:25pm EST

CANBERRA (Reuters) - Forget Australia's mining boom. The nation's strong economy, high currency and wages have made it a magnet for sex, drugs and rock and roll.

Foreign sex workers, drug smugglers and global rock acts are all targeting Australia to cash in on an economy growing at 3.1 percent when other developed nations are struggling to expand at all.

The alternative boom has emerged as Australian average full-time wages hit $72,500 a year, and with the Australian dollar trading stubbornly above parity with the U.S. dollar for the past two years.

That has made Australia even more profitable for fly-in and fly-out rock acts and prostitutes, and especially for drug traffickers who are taking bigger risks with the hope of windfall profits.

"Offshore organized crime syndicates perceive Australia to have a robust economy and to have been less affected by the global financial crisis than other jurisdictions," said Paul Jevtovic, the Australian Crime Commission's executive director of intervention and prevention.

DRUG PROFITS

Australian police made 69,500 illicit drug busts in the year to June 30, 2012, the highest in a decade, and have made record arrests in the first six months of this financial year.

In recent months, police have intercepted drugs hidden in a 20-tonne steamroller and heavy machinery, in a large wooden altar, and they have broken up a drug ring involving smugglers in Australia, Japan and Vietnam.

One of the biggest smuggling operations was a failed bid to bring in more than 200 kg (440 lb) of cocaine across the Pacific Ocean from Ecuador on a 13-metre (40-foot) yacht, found grounded on a small atoll in Tonga with a dead crewman aboard.

Australian police, who work closely with the U.S. Drug Enforcement Administration and authorities throughout Asia and the South Pacific, said the high prices paid in Australia and the strong dollar all helped make the country attractive for smugglers.

Crime statistics show why some are willing to risk up to 20 years in prison.

The Australian Crime Commission, which examines trends and works closely with police agencies, said heroin and MDMA, also known as ecstasy, sell for about eight times more in Australia than in Britain and the United States, though Australia is a much smaller market.

Crime Commission data given to Reuters shows a kilogram of cocaine is worth about $2,400 in Colombia, $12,500 in Mexico, and $33,000 in the United States.

The same kilogram of cocaine is worth $220,000 in Australia.

ROCK REVIVAL

Once a remote destination for big rock acts, Australia has been flooded with talent over the past year and faces a steady stream of musicians, including heritage acts, in 2013.

The strong dollar has made Australia the ideal place to perform for musicians wanting to make money at a time when touring rather than album sales is the main driver of income, with many acts charging a premium in a cashed-up economy.

In the first half of 2013, Australia will see tours by Bruce Springsteen, Pink, Guns N'Roses, Ringo Starr, ZZ Top, Thin Lizzy, the Steve Miller Band, Deep Purple, Santana, Status Quo, Robert Plant, Neil Young, Carole King, Paul Simon and Kiss.

The high ticket prices have upset some fans, who question why an artist like Springsteen charges $220 for a premium ticket in Australia, when the same ticket to the same show in Connecticut in October cost $90.

"You can't tell me it costs more than double per head to stage a concert here in Australia," said music fan Robin Pash, who has just returned from the United States, where he saw Springsteen and a series of acts for what would be considered bargain prices.

Entertainment journalist Jonathon Moran, however, said the higher prices reflected the higher cost in Australia, although Australia's strong dollar did make it more attractive to perform downunder.

"More people want to come here, and Australian audiences are comparatively well off and can afford the tickets," Moran, from Sydney's Sunday Telegraph, told Reuters.

SEX AND THE BOOM

Sex workers are also cashing in on the boom, particularly in remote mining towns, where the world's oldest profession is the latest to adopt fly-in, fly-out work practices. And more overseas sex workers are heading for Australia.

A 2012 report for the government in the most populous state, New South Wales, found a marked rise in the number of female sex workers from Thailand, Korea and China since 2006, with 53 percent of sex workers from Asia and a further 13.5 percent from other non-English-speaking countries.

The report, by the University of New South Wales, found a median hourly rate of A$150 for sex services in Australia's largest city of Sydney, although sex workers can charge double that in remote mining towns full of cashed up men.

In the gold mining town of Kalgoorlie in the Western Australia state, the Red House brothel, which has operated since 1934, advertises services starting at A$300 an hour.

Proprietor Bruna Meyers said women in her establishment earned up to A$4,000 a week at a busy time, or about three times the average full-time Australian wage.

"The girls who come here are mainly from over east (eastern Australian states). They come in, sometimes for two or three weeks at a time. Some are just girls who are travelling around the world," Meyers told Reuters.

($1 = 0.9652 Australian dollars)

(Editing by Ron Popeski)

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Analysis: In ICE-NYSE deal, one CEO steps back, the other rises

By John McCrank and Jonathan Spicer

Fri Dec 21, 2012 1:11am EST

n">(Reuters) - Duncan Niederauer, the chief executive of New York Stock Exchange operator NYSE Euronext, once boldly proclaimed that his company could not be acquired.

Last year, even when Niederauer was prepared to sell his company to Deutsche Boerse, he insisted that he be chief executive of the combined company. The deal ended up being quashed by German regulators.

But with the agreement by IntercontinentalExchange to buy NYSE Euronext for $8.2 billion, Niederauer has accepted he will have to at the very least play second fiddle. He will become president at the combined company, while still running the New York Stock Exchange, and report to ICE CEO Jeff Sprecher.

"In a sense he must be very frustrated because some of the big things he was trying to do did not work out," said Andre Cappon, president of CBM Group, a New York-based consultant for global exchanges.

To an extent, the world may have left Niederauer behind. His expertise was in stock trading, a business that now has razor-thin margins and is increasingly left to computers.

Sprecher, on the other hand, has ascended as derivatives have become a key part of financial markets and the financial crisis made listed derivatives relatively more important.

Born in Indiana near the Kentucky border, and raised in Madison, Wisconsin, he has a down-to-earth aura that belies his ambitious type-A personality, say people who know him.

Sprecher has not met with constant success, but when something goes wrong, he moves on.

"He's not afraid to fail," said one person who knows Sprecher well.

Among his misses: a failed bid to buy the Chicago Board of Trade in 2007, not to mention a failed joint bid for the NYSE with Nasdaq OMX Group Inc.

He made his move for the CBOT at the annual meeting of the Futures Industry Association, in Boca Raton, Florida, where CME Group officials had expected to deliver a progress report on their planned acquisition of their smaller rival.

Sprecher slipped the formal offer under the hotel doors of CBOT Chairman Charles Carey and CBOT CEO Bernard Dan, at about 6:30 in the morning of the conference's first day.

CME Group later raised its bid for CBOT and clinched the deal in mid-2007 - but Sprecher would still finish the year with two key acquisitions, the New York Board of Trade commodity market and Canada's biggest grains exchange.

This summer both Sprecher and Niederauer bid for the London Metals Exchange and lost. Within four months they were talking to each other about a much larger deal.

LETTING GO OF EGO

There was some bad blood between Sprecher and Niederauer last year, when Sprecher's ICE was part of the group that made an unsolicited bid for NYSE Euronext.

NYSE Euronext was instead focused on a different deal: selling itself to Deutsche Boerse. Sprecher admitted in an interview with Reuters that he tried to wreck the Deutsche deal by "calling out every wart and pimple" on the transaction.

The two men stopped talking for about six weeks.

But after ICE posted good fourth-quarter results in February, Niederauer extended an olive branch with a surprising three-word email to Sprecher: "Hey, great quarter."

"He and I had a preexisting friendship and I wondered if it was going to survive my trouble making," Sprecher told Reuters. Then the email arrived.

"He was very magnanimous and so I knew that he saw through what I was doing and we were still very cordial."

Niederauer took over as NYSE Euronext CEO at the end of 2007, just after his predecessor, John Thain, had completed the landmark deal to buy Franco-Belgian Euronext.

After a 22-year career at Goldman Sachs, mostly in equity trading, and just nine months as head of NYSE's trading operations, he took control just before the 2008 financial crisis triggered a seismic shift in the exchange world, one that seemed ill-suited to his background.

Equity investors, burned by scandals and volatility, were trading less and less; meanwhile new regulations would drive more derivatives onto exchanges like ICE and CME.

The answer, Niederauer thought, lay in Deutsche Boerse. But when regulators nixed the deal in February this year, he quickly laid out a new strategic plan for shareholders: clearing and technology - two areas in which ICE already excelled.

By June, Niederauer was saying it was "make-or-break time" for NYSE's nascent U.S. futures operation, which was clearly failing to thrive in the shadow of established rivals.

In working together at the merged venture, Sprecher and Niederauer may each find a comfortable way to co-exist, each playing to his respective strength, some say. But several people, including a NYSE investor and a board member of a rival exchange, questioned whether the partnership can last.

In an interview, Niederauer said he would remain at least through 2014 as an "important senior member" of Sprecher's management team.

He added: "People get too caught up in titles. Let's just worry about making it work and my guess is that if it's still fun for both of us in 2014, or 2015, or whatever, we will keep doing it."

(Reporting By John McCrank, Jonathan Spicer, Josephine Mason and Jessica Toonkel in New York, and Ann Saphir in Chicago; Writing by Jonathan Leff and Dan Wilchins; Editing by Steve Orlofsky)

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