Wednesday, 9 February 2011

Fat cats, fat cheques, fat chance

"Yesterday the chancellor made much of his decision to raise the levy on financial institutions by £800m. While the new total of £2.5bn sounds a lot, it is roughly the same as the pool for bonuses at just one British bank, Barclays. It is less than the £3.5bn raised last year by Labour's bonus tax, and about a fifth of the money that will be paid by shoppers and businesses as part of the coalition's VAT rise. Scrambling around for new policies, all Mr Osborne managed was to bring forward a tax rise that he had already announced last summer. So much for a new toughness. "Cash for the economy – not cash for the bonuses," promised Mr Osborne in one of his many tough speeches as shadow chancellor. In office, however, he and Mr Cameron have presided over the very opposite." The Guardian

"Some 58.5% – £9,150,064 – of Tory donations in 2010 came from the City, with 60 fat cats handing over £50,000 of their own cash – enough to buy them a face-to-face meeting with the PM. The top 10 City donors [below] gave £13.1million over five years, and two of them – Stanley Fink and George Magan – were made peers in 2010.” The Daily Mirror

1. David Rowland - £4,031,016

Such was the uproar last year when the prime minister appointed David ‘Spotty’ Rowland as Conservative party treasurer that the property tycoon and former tax exile resigned before taking up the post. Stories appeared in the media about his private life and business dealings that cast doubt about his suitability for the post in the minds of Tory MPs. In the 60s and 70s Rowland, nicknamed Spotty because of his ­lingering acne and relative youth, made his mark as a swashbuckling financier, who built a personal ­fortune of £700m. He retreated to the Channel Islands to avoid the steep tax rates for millionaires imposed by the Labour governments of Wilson and Callaghan. But Rowland, 65, returned to the UK from Guernsey two years ago, where he became a leading party donor, giving the Tories nearly £3m in the run-up to the 2010 election. The son of a scrap metal dealer who left school without qualifications, he is said to have made his first million by the time he was 23.

2. Michael Farmer - £2,973,850

In the City, Michael Farmer is known as Mr Copper after he turned MG Metals into the planet’s biggest copper trader during the 1990s. Within months of floating his company on the London Stock Exchange, he received a takeover bid from Enron, the US energy company that crashed amid a massive fraud. The offer price was 60% higher than the float price and was in cash. Farmer walked away with tens of millions, secure in the knowledge he would never have to work again. But he couldn’t stop making money (although he took two years off studying the Bible). He founded RK Capital Management whose main fund, Red Kite, is one of the world’s biggest industrial metals hedge funds. He said last year: “I’m giving away (money) because I believe the Tories will be a far better government than Labour. I’ve always tried to keep a low profile but this is important.’’ Both his parents were alcoholics. His father, a successful metals trader, died when Farmer was four.

3. Stanley Fink - £1,945,141

Stanley Fink, the Conservative party treasurer, has been described as the “godfather” of the UK hedge fund industry, building up Man Group into one of the largest global hedge fund companies; his personal fortune is estimated at about £120m. Educated at Manchester grammar school and Trinity Hall, Cambridge, Fink was chief executive at Man between 2000 and 2007, stepping down, some would say shrewdly, a year before the worst of the financial crisis after the collapse of Lehman Brothers. In late 2008, he emerged from retirement to become head of International Standard Asset Management, a small hedge fund group, in partnership with Lord Levy, former chief fundraiser for the Labour party. His charitable giving increased markedly after a brush with death four years ago when he was diagnosed with a brain tumour. In one year alone, 2006, the 51-year-old gave away £35m to charity. Fink backed Boris Johnson’s successful campaign to become the mayor of London.

4. Michael Hintze - £1,235,000

Michael Hintze, an Australian who founded the hedge fund CQS in 1999, is worth more than £1bn, according to the latest Forbes rich list. After a stint in the Australian army, Hintze moved to the US where he embarked on a career on Wall Street. Later, he moved to London with Credit Suisse First Boston before defecting to Goldman Sachs where he became head of equity trading and one of the investment bank’s star performers. A regular giver to the arts in London, Hintze supports the Old Vic theatre, the V&A museum and Wandsworth museum.

5. Adrian Beecroft - £537,076

Adrian Beecroft was chief investment officer at Apax, the private equity fund, and now chairs Dawn Capital, a venture capital investment fund that is backing, the short-term loans company, among others. Beecroft has chaired the industry body, the British Venture Capital Association, and is well known in private equity circles. His former firm Apax owns Hit Entertainment, the owner of the Thomas and Friends and Bob the Builder brands. The Sunday Times Rich List in 2010 suggested Beecroft was worth just shy of £50m.

6. Jon Wood - £500,000

Jon Wood founded Monaco-based hedge fund SRM Global. He invested about £50m in Northern Rock after it ran into trouble but before it was nationalised, losing his stake, and was a vocal critic of Labour’s handling of the crisis. He also had a bruising spat with former business partners at the Gadget Shop which ended in court – the judge concluding that Wood was an unreliable witness, saying: “I do not consider that he is being honest in everything he says. I found him evasive in the witness box.” Wood was not a fan of Gordon Brown and his handling of the economy. “For reasons of nothing more than his own self-interest, the prime minister has destroyed the good work of the previous two decades before he became chancellor. I off-the-scale hate Gordon Brown,” he said in an interview.

7. James Lyle - £500,000
James Lyle is a partner and chief investment officer at Millgate Capital, a US-based hedge fund which he co-founded in 1997. Educated at St Edmund Hall, Oxford, he has had spells with leading financial institutions including investment bank Morgan Stanley and fund manager Fidelity. Lyle is vice-chairman of the Network for Teaching Entrepreneurship and a “friend” of the Atlantic Partnership, an organisation that aims to foster debate about the relationship between the United States and Europe.

8. Peter Hall - £493,540

Peter Hall is an Australian fund manager whose company only invests in companies which it believes are “ethical” and do not harm the environment. Hall gives away a quarter of his income to charities and other worthy causes. A founding member of the Sydney Rainforest Action Group (SRAG) and a campaigner against whaling, Hall believes property rights may be the solution to environmental problems. “I believe the oceans should be turned into property. If people had economic interests in preserving biodiversity and biomass through taxes and tax credits, we would be in a much better position,” he told the Sydney Morning Herald in 2008.

9. George Magan - £485,000

George Magan, a former treasurer for the Conservative party, was one of the founders of Hambro Magan, a small City investment bank, and is currently a partner in Rhone Group plc, a private equity firm. But it hasn’t always been plain sailing for Magan. In 2005, he put Lion Capital Advisers, the private equity firm he launched in 2001, into voluntary liquidation. Magan, non-executive chairman of Lion, said at the time that “certain directors had severe concerns as to the financial position of the company.” From 1996 to 2001, Magan was a trustee of the Royal Opera House.

10. Paul Ruddock - £465,000 [pffft! lightweight! – Ed]

Paul Ruddock, with his partner Steve Heinz, are the founders of London hedge fund Lansdowne Partners. According to Trader magazine, the pair earned £75m-£100m each during the last year of the boom in 2007. Lansdowne manages about $8bn in assets and its two co-founders have stakes in the company worth an estimated £200m apiece. Lansdowne had the City gasping when it reaped an estimated £100m in profits from its short position in Northern Rock, which it had started to build up four years before the credit crisis. Although its normal investment philosophy has been to take large long-term positions in companies such as Tesco, Lansdowne is also prepared to take more opportunistic bets. It wins more than it loses.

Sources: BBC News, Daily Mail, Daily Mirror,  Daily Telegraph, Guardian