Joseph Gutnick on Diamonds, Business and God

By Nassim Khadem (Business Review Weekly)
May 23, 2013

Joseph Gutnick is probably the world's only ordained Orthodox rabbi who has created fortunes by mining gold and diamonds. The 60-year-old makes this year's BRW Rich 200, with a fortune of $285 million.

The role of God and religion is the untold story of the Rich 200.

When asked in a rare interview whether he's first and foremost a rabbi or a businessman, Gutnick cautiously, answers: "I'm what the rebbe wants me to be … a mixture."

The "rebbe" is Rabbi Menachem Schneerson, a Hasidic rabbi who led the Chabad-Lubavitch movement until his death in 1994.

Gutnick has a large photo of Schneerson in his Melbourne office - it's not the only indication that the mining entrepreneur is religious. A "mezuzah", encased in a small wooden box and containing scripts of holy prayers, is affixed to his doorframe. (It's a Jew's biblical obligation to have one).

The office bookshelves are filled with gold mining reference material that sits alongside Jewish holy books including the Siddur.

The only non-religious object, apart from his stationery, computer, desks and chairs, is the Bloomberg screen giving him real-time prices of mining stocks across the globe.

Gutnick glances at the screen several times during our interview, but it's the powerful picture of Schneerson that holds Gutnick's gaze. He believes the rebbe - who decades ago advised him to look for "gold and diamonds" - is watching over him.

"In 1988 [after the sharemarket crash] he encouraged me to continue my search for gold, and brought up the idea of looking for diamonds," Gutnick says, while showing videos of himself and his geologist meeting the rebbe, armed with maps of gold deposits in Western Australia. Every visit thereafter was focused on the same topic - how soon and where would Gutnick find the diamonds? "Ask the geologist," the rebbe would say.

Gutnick's also looking for rubies and phosphate. But he remains convinced that one day he will strike it gloriously rich with diamonds. "Today, with the gold price down, it looks like the only good thing is diamonds," he says. "I believe that when I am successful with diamonds - like in the billions - then I will have left a legacy honouring his memory. That drives me, big time, to diamonds. It's why I spend tens of millions of dollars looking for them."

Like most Hasidic Jews, who live according to a series of concrete rules and regulations, God isn't a religious belief for Gutnick. It's a way of life. He has given tens of millions of dollars to philanthropic causes. He once ran full-page advertisements in The New York Times encouraging Jewish women to light candles on Shabbat (the Jewish holy day of rest).

Gutnick has 11 children, which is not unusual for ultra-Orthodox families like the one he was born into. His father, Chaim Gutnick, was the president of the Rabbinical Council of Victoria. His brother, Mordechai Gutnick, is a prominent Orthodox rabbi. "Belief in God was an integral part of our lives," he says. "Hopefully, by believing in God, it makes you a better person."

A way of life

The former president of the Melbourne Football Club (it was highly unusual for an orthodox Jew to be president of a predominately Christian establishment) says the Jewish religion is about more than going to synagogue.

"It's supposed to permeate in every aspect of your life - when you eat, when you sleep, and when you do business," he says.

Gutnick frequently cites the Ten Commandments - "honour thy mother and father" - and passages from the Talmud, a holy text holding the opinions of thousands of rabbis on Jewish customs, history, law and ethics.

He never does business deals on Shabbat. He strives to live life by Jewish principles and acts of mitzvah (human kindness).

For the most part, Gutnick says, he's been honest in his business dealings.

There are occasions where the pressure to succeed may, at times, have conflicted with his ethics and religion. He doesn't mention it, but in 1999 Gutnick and his then business partner, Robert Champion de Crespigny, were found to have illegally structured a takeover of Great Central Mining. Gutnick was ordered to return $28.5million to investors.

There have also been business ventures that have failed - his nickel business Centaur Mining & Exploration went into receivership in 2000. This doesn't make Gutnick a bad person, but does show the man isn't infallible.

"One of the first things you're asked after 120 years [of life] - this is what the Talmud says - is 'did you deal honestly in business?'" Gutnick says. "I don't know how I'd fare there."

There's a fine line between smart business and honest business. "You always want to do the best deal," he says. "If I sell a diamond to someone ... is it dishonest in trying to get the best price? Or is that part of business? ... But if you sell a diamond that's 1.6carats, and you say it's 2carats, you're a crook."

Gutnick says that perhaps a "really God-fearing person" would try to sell at the market price rather than capitalise on a deal. But is he a really God-fearing person? "I strive to be," he says.

A difficult time

There are other issues that invite questions. Gutnick remains vague about his knowledge of people in the Jewish community who were suspected of abusing children decades ago. Some in the Melbourne Jewish community went to great lengths to hide cases of alleged abuse. Gutnick says he did not know about any "specific proven incidents" despite media reports that his personal bodyguard, Adam Wright, told a Melbourne court in 2011 that Gutnick was aware of child sex allegations against a former Yeshivah College employee.

Gutnick says there were plenty of "rumours" but he didn't go to the police because there was no proof. "There was a rumour about this guy - about something being wrong with him - but did I have proof? I had no proof. You can't go to the police on a rumour."

He says, in hindsight, if it happened today he probably would be more likely to report suspicions without evidence.

Still, he regrets these incidents were not addressed by people who had knowledge at the time. "We should have nipped it in the bud at the time," he says. "You can't do much about the past. The person who committed the crime should be punished. Those who absolutely covered it up should be punished. We should bring in the strictest controls in schools as possible."

He says he is "extremely worried" about the damage sex abuse allegations may have had on Yeshivah College's reputation.

"My own family are worried - is there enough protection going on in the school? It's a worry. But hopefully the school is doing everything in their power to make sure it never happens again."

I've moved to wonderland

These days, Gutnick spends most of his time in Singapore. He's one of a number of wealthy Australian entrepreneurs. including Brett Blundy and Nathan Tinkler, who have moved there. Gutnick recently opened up an office in Singapore's Marina Bay Sands building.He says he wants to become a permanent resident of Singapore (still retaining his Australian citizenship).

"I've moved to wonderland," he says.

From a Jewish point of view "there's no anti-Semitism". He is in the process of starting a Chabad house (a place for traditional religious teachings and services). And from a business point of view the country's "a financial safe haven" with investors ready to plunge money into his mining ventures.

"I feel more at home in Singapore than I do in Australia," he says. "You can't walk down Carlisle Street [St Kilda] at 1 o'clock [in the morning], but you can do that in Singapore."

The South-East Asian country is also friendly with the Israeli government - the two countries have close military ties. Gutnick has spent much time and money urging Jews to uphold their Zionist faith. He is one of the biggest donors to Israel's Likud Party. "I am very supportive of Israel and the policies of the Israeli government."

The diamond dream

As a Rabbi, Gutnick's often called to speak to young people about Judaism. "I talk about the Holocaust, and about the state of Israel," he says. "About how the Jewish people have been given a miraculous opportunity to have a homeland and defend ourselves."

As far as business goes, he sees great potential in Singapore, which he says is full of pension funds and institutions looking to invest. Australia's junior resource sector is "dead as a dodo". "I have never seen it this bad - even since the 1987 sharemarket crash," he says.There is, of course, an "added side benefit" of doing business in Singapore. Corporate and personal income taxes are about half the rate of Australia's.

"But that's not my motivation for ... moving house, after having lived in this country [Australia] for 60 years," Gutnick says. "We have left our friends here [in Melbourne] and I've given up my position in the Chabad house of Caulfield ... I am doing it because the resource sector and investment environment is much better in Singapore. It's also quiet. I can read. I get peace."

Gutnick is back on the acquisition trail. He's looking to set up an investment fund, and is now a significant investor in Singaporean listed company Innopac, which he plans to use to buy small diamond mines struggling to raise capital.

He has also made a bid for Canadian company True North Gems, which mines rubies and sapphires. He says "rubies are an attraction because there's a shortage of them worldwide and big demand for them in Asia".

"I'm now looking for [diamond] acquisitions in Botswana," he says.

You'd expect the gold-miner to be worried about the plummeting gold price. But he's not. "Divine providence has guided me in the right direction," he says half-jokingly. "But I will be aggressive in buying gold assets when I think they've bottomed. A lot of people will be scrambling for funds to survive."

Whether Gutnick fulfils the rebbe's prophecy of becoming rich in diamonds or gold remains to be seen.

"I want diamonds to be the jackpot," Gutnick says.

But would he be upset if it was gold that brings him the billions? "I wouldn't mind it," he says. "But I'd prefer it to be diamonds. I am Diamond Joe."