During the speech he gave before beloved friends and family at a surprise party to celebrate his 70th birthday in 2014, Salvatore Tarascio mused that he couldn’t help feeling he was born under a Sicilian lucky star.
The billionaire, now better known in the property development industry as “Sam senior”, arrived in Port Melbourne from Italy in 1949 as a five-year-old “outcast migrant child” with parents who had left behind their life in Sicily. They lived with two other families in a 12sq m house in the Melbourne suburb of Werribee.
The parents instilled in their son a work ethic and values that came to the fore when in 1972 they founded Salta Properties, now one of Australia’s largest privately-owned property developers.
Sam Tarascio and his wife of half a century, Christine, have passed on those ethics to their own children, the eldest of whom, Sam, became managing director of Salta aged just 30, in 2005. Six years ago, their youngest son, David, quietly established a venture capital and funds management arm of Salta. Their only daughter, Lisa, now runs her own business with her husband. Collectively the family is worth a cool $1.43 billion.
But bridging the generation gap hasn’t always been easy. “We have come across that little bit of difficulty where my aggression was maybe too great, or my expectation was too great. I don’t know; we are from different worlds,’’ says the now 75-year-old Sam senior, seated at a table with his two sons in Salta’s suave Melbourne headquarters in an office tower at the Paris end of Collins Street.
“Do I agree with everything they do? No, of course I don’t. Does that lead to debate? Yes. Does it occasionally lead to an argument? Yes,” he adds slowly, before his eldest son interjects with a single sentence, followed by a wry smile: “We have had some terrific conflicts!”
But his father continues, displaying a capacity for self-analysis rarely seen in family patriarchs, and one that has never been his forte.
“An entrepreneur who starts with nothing and creates a business sometimes struggles with the routine and the management system that is needed to run a business. I don’t think entrepreneurs are good managers of businesses,” Tarascio says bluntly. “They might be creative, but they are not good managers.”
He jokes that he once believed the fax machine was the best invention ever, and says for decades he never bothered to learn to use a computer because his personal assistants always knew how. “I could not get into the detail of running the business in the way Sam and David do it,” he says.
His decision to let go has seen a fundamental change in the structure and inner workings of the Salta empire and the Tarascio family, which they publicly reveal in this interview for the first time. Three years ago, the family agreed to bring in David Smorgon, himself a victim of the greatest family break-up in corporate history – the 1995 dismemberment of the $1.5 billion Smorgon Consolidated Industries empire.
“David would be one of the best people to have a view on this, having gone through a similar circumstance,” Tarascio says. “I know he is very supportive of the way we are going and what we are going to be doing in maintaining the business as an intergenerational business.”
In May 2018, Smorgon helped the Tarascios establish a formal business board, chaired by former Redflex CEO and Melbourne Water chairman Paul Clark. It replaced a loose and informal advisory board that had operated for many years. The two other external directors on the business board are former Aconex co-founder Leigh Jasper and Ted Yancken. The latter was for 20 years the group director of Melbourne builder Probuild Constructions, which most recently worked for billionaire John Gandel on the stunning glass-panelled roof at Chadstone Shopping Centre in Melbourne’s southeast. Also on the business board are Sam senior, Sam and David Tarascio.
Smorgon also helped the Tarascios establish a family board, which he chairs, a family charter, and a set of values for Salta that took two years to formulate. The values are encapsulated in three sentences: “The Tarascio Family values respect, trust and time for each other. We hold in high regard a strong worth ethic and commitment to the community, leading to success in our individual and collective objectives. We support each other through good and bad times, learn from them and humbly celebrate our successes, within a harmonious and united family.”
Smorgon says Salta’s values are living proof that wealth is never the glue that keeps a family together. “Shared values and principles, a willingness to learn and grow, together with genuine care, love and support for all family members, builds trust and respect, which in turn develops a healthy, harmonious and happy family,” he says, before adding dryly: “It is not about the dollars.”
Tarascio concedes that was hard to let go and bring in external expertise at Salta. “It was fairly difficult, to the degree that you always have done what you wanted to do in the way and manner you wanted to do it,” he says. But he doesn’t regret it for a moment.
“The reality of life is that you are not here forever. If you don’t make the provisions, then everything becomes a mess in the end. We have all seen heaps of examples of families suing each other. When there was a level of uncertainty as to where I was going, I thought it was appropriate and necessary.”
He frankly acknowledges that giving his own children senior roles in his business carried an element of risk. “That risk is not a pure business risk, but it is a risk that would go through the whole family if things didn’t work out,” he says. “You have to be confident of the capabilities, and you have to accept there will be a level of conflict; it has to happen. As long as it is constructive, it is OK. It is the aspiration of most fathers that you have a family business, and to that degree it is fantastic.”
Tarascio still controls the discretionary trust that owns all the Salta entities, and he regularly pays a so-called lifestyle dividend to his children that is flexible and correlates with the performance of the business. But under the family’s succession plan, the Tarascio family board will become the successor appointee of all of the trusts on Sam senior’s passing – meaning the business becomes effectively owned by the family shareholders.
“The business needs to be ongoing for multiple generations,” his son Sam says. “We don’t want it broken apart by family members and dispersed. We want it to be a long-term, sustainable family business. We wanted there to be no disruption to the business no argument at the time that [his father’s passing] comes about, and that it be automatic – that there is total clarity.”
Sam’s sister Lisa, a former lawyer at Arnold Block Leibler, may have established her own successful conveyancing business with her husband Chris, but she still attends family board meetings and receives regular updates on the performance of the Salta businesses. In her father’s autobiography, published in 2018 and titled My Way, she noted that Tarascio wouldn’t allow her to work in the company warehouses during school holidays because of the foul language, and that he had always been very protective of his only daughter.
“I remember through the whole of my childhood sitting on my Dad’s lap wrapped in his arms and feeling that all with the world was right,” she said, before noting her father had always been “there to encourage and support Chris and me” through life’s challenges.
Tarascio’s wife of 47 years, Christine, is also on the family board. “She fits in as the glue that keeps the family together, and that is very important,” he says. In his book, he put it more eloquently: “There is no doubt in my mind that the family harmony we experience is a direct result of Christine’s influence and loving ways, which have had such an effect on all of us. Christine is a saint in every respect.” She has been the primary driver of the family’s recent decision to establish the Tarascio Family Foundation after many years of working actively with charities.
Somewhat surprisingly, Salta flirted with the public markets for a time. Two years ago, it engaged PwC and several investment banks to do the numbers for a potential float on the sharemarket. Tarascio says it got “very close”, but maintains Salta’s risk profile would never suit a public company. “I don’t think it will ever be off the radar as the business continues to grow,” he says, “but it is not something we are currently looking at.”
David Tarascio, who has just turned 40, has bold ambitions for the family’s venture capital arm, Salta Capital, which has an interest in companies across property development, technology, hotels and real estate, and a broad portfolio of shares. “It is a way of diversifying the business, born out of the fact that if you are in the same business and it is totally occupying your mind, it is hard to be open to other factors in the world that may impact the main business,” he says.
Salta Capital is raising $50 million for a new venture capital fund known as Baton Ventures. Meanwhile, the core Salta Properties business is now managing an estimated $5 billion project pipeline spanning the construction, commercial, residential, hotel and build-to-rent sectors. Its flagship projects of the past two decades include the 150 Clarendon Street residential tower in East Melbourne and Richmond’s Victoria Gardens Shopping Centre.
Tarascio and his sons still lunch together most days. The patriarch’s title is now founding director, having changed last year from executive chairman. “We have been good in managing the transition because in certain things Dad does recognise he is a fish out of water – some patriarchs don’t,” says Sam. “You have to recognise when the ways you have done things in the past are less relevant. It takes a pretty wise person to be able to recognise that themselves. We are lucky Dad has that skill and ability.”
He says one of his prime objectives every day is to ensure his father remains involved in the business in the areas that interest him most, notably early-stage project management.
His brother has a slightly different take: “The way I’d summarise Dad, he is very tough, he is very hard, but I actually think he is quite fair. Whether it is family or business, he tries to see things from all angles, which is something I have tried to do as well. The best deals are win-wins for all. He is very good at knowing what is motivating people in deals on both sides. It is easy sometimes just to see things from your own point of view in business, in family and deal structuring, and it takes constant effort to see it from both sides. He is always doing that.”
Tarascio senior took leave from the business for most of his 69th year to build a Hamptons-style house adjacent to the family’s 2500-strong olive grove plantation at Point Leo on the Mornington Peninsula. He wanted it finished for his 70th birthday and it was, but not before he experienced the only workplace accident of his life: falling from the roof of the half-built home, injuring his head, bruising his ribs and snapping the tendon in his arm.
He has always believed that his late grandfather, an olive oil processor in their Sicilian town of Vizzini, would be proud of his grandson’s latest hobby – producing Taralinga olive oil. “It is not about making money really, it is about producing the very best,” Tarascio says, noting the Taralinga brand won gold and silver medals at the 2019 New York International Olive Oil Competition.
Asked about the most important thing he has taught his children, he momentarily rocks back in his chair and then smiles proudly. “I have always maintained that a lot of kids grow up having an expectation that relates to the parents’ success. My kids have never had that. That is very, very important. While we now have a family charter and they now know where they are going, given all the work we have done, had we not done that, there was no expectation or feeling of entitlement. They would be just as happy being independent … The way I related to them through their formative years has contributed to that. That is something not many families are capable of instilling in their kids.”
Image: Salta managing director Sam Tarascio (right) with sons David (left) & Sam Jnr. Picture: Stuart McEvoy/The Australian