Brouhaha over Shaha
Paul Wolfowitz, president of the World Bank, must have forgotten rule 1.01 of public life.
It has been a week so full of fascinating tidbits that I don’t know where to begin. So I will start with the brouhaha over Shaha.
Paul Wolfowitz, president of the World Bank, lost credibility last week when it was revealed that he had intervened to obtain a generous pay and promotion package for a female World Bank employee, Shaha Riza, with whom he was romantically involved. Wolfowitz must have forgotten rule 1.01 of public life – all actions must pass the tabloid headline test. Warren Buffett and I are united in our stance that all senior executive conduct should be judged against the backdrop of: “How would this look if it were the headline of a mass circulation newspaper?” So in this case: “World Bank Prez –whose job is to fight poverty – wangles his mistress extra cash.”
In one respect, I applaud Wolfie: his muse, Shaha, is a plump, middle-aged woman who has a master’s degree from Oxford University. She is unlikely to star as a size zero model on the cover of Vogue any time soon. I contemplate with wry amusement the dating habits of many of my sixty-something male acquaintances. They are seen around town with lithe nymphettes whom they proudly introduce as: “My niece.” “What do they talk about?” I asked my friend Fred. “Oh Abigail, don’t be so old fashioned,” Fred grumbled. “It’s about self-esteem, fear of mortality and lust fuelled by Viagra. The only thing it’s not about is talking.” What do you think? And talking of iconic, American-based organizations, Citi announced cost savings of some $4.5 billion over the next three years. The internal press release warbled about rationalizing technology platforms and middle-office and back-office ‘expense saving actions’. Some 17,000 employees will be expelled from the shelter of the big umbrella – although come to think of it, hasn’t the red umbrella logo also gone? Note to Chuck: I hope you received a good price for the umbrella as it’s the only part of the Citigroup brand clients can identify with.
"Vikram Pandit, who was part of the great walk-about during the Purcell era, is by all accounts a god in human form. Would a man like him, who has built a successful hedge fund in one year, abandon his autonomy to run a division of a creaking conglomerate? Unlikely"
The first paragraph of the memo refers to growing Citi’s core business, expense control and the quest for higher-growth markets. This is not a radical or visionary strategy. And please, don’t get me started on the purchase of hedge fund manager Old Lane for a rumoured $800 million. Old Lane was founded in 2006 by Vikram Pandit, formerly head of institutional securities, at Morgan Stanley. Pandit, who was part of the great walk-about during the Purcell era, is by all accounts a god in human form. He will now head Citi’s alternative investments division. This is bad news for handsome Michael Klein, Harry Potter look-alike Tom Maheras, and sassy Sallie Krawcheck, any of whom might have fancied themselves as ruling the Citi empire once Chuck Prince prances off. Would a man like Pandit, who has built a successful hedge fund in one year, abandon his autonomy to run a division of a creaking conglomerate? Unlikely. I suspect that Pandit was offered the prospect to be king-pin (or King Pan!). By the way, sources hint that Prince, who has been Citi’s chief executive since 2003, has one more year to deliver results before shareholders turn savage. Prince must hope that Chris Hohn, founder of hedge fund TCI, is too busy admonishing Rick Groenink to turn his attention to the other side of the Atlantic.
My last column mentioned the leaving party for Naguib Kheraj, the former Barclays’ finance director. The party was held at Spencer House, an 18th-century private palace, and hosted by John Varley, Barclays’ chief executive. I was wondering who paid the bill, Kheraj, Varley or Barclays? And if it was Barclays, wasn’t this a waste of shareholders’ money? Surely Barclays has some wonderful meeting rooms that could be used for such an event? A charming Barclays press officer e-mailed me: “Naguib Kheraj's farewell was a corporate event organized and paid for by Barclays and was an opportunity for the bank to offer hospitality to selected key investors, clients, media and staff.” Sadly no-one from Euromoney seems to have been invited. However, a fortunate guest told me that clever Kheraj is not leaving immediately but will linger on as Barclays’ internal corporate financier on the ABN transaction.
It also seems a little strange that Barclays’ management feels it needs to pay for more advice. The UK bank already employs five advisers on its bid – Citi, Deutsche, JPMorgan, Lazard and Credit Suisse – and has as its chairman a man upon whom other publications seem to have bestowed an additional honorific, consummate dealmaker Marcus Agius. The three banks bidding against it – RBS, Santander and Fortis – seem to be quite happy with just the one adviser between them, Merrill Lynch. Perhaps we should remember that Merrill, in the form of talented Matthew Greenburgh and gorgeous Andrea Orcel – was the leading light behind the two other major European bank mergers to date, Santander/Abbey and UniCredit/HVB.
May the best man, or pack of men, win.
One final word on the Barclays/ABN saga: some ABN insiders are suggesting, it’s to be hoped tongue in cheek, that the merged bank should adopt the first two initials of each bank’s name – hence ABBA. Does this mean Rijkman Groenink is finally facing his Waterloo?
Benoit d’Angelin, like Naguib Kheraj, is someone who turned his back on Canary Wharf. Mr d’Angelin left Lehman Brothers in 2006, after more than a decade, to join hedge fund Centaurus Capital. His last job at Lehman was as co-head of European investment banking. For a while, we had similar roles at competing organizations and I remember being slightly irritated when clients would tell me how remarkable Benoit was. Last week, thanks to a mutual friend, we finally met. And Benoit is indeed remarkable: bright, articulate and such fun. I was reminded of a cross between a koala bear and Alain Delon. Benoit is of course completely wasted in the arid world of finance. May I make an alternative career suggestion? There is a vacancy for the role of French president and I, for one, am bored with the whole Sego/Sarko/Bayrou battle. Fresh blood is badly needed.
Next time: warriors and diplomats. Which one are you? Please send news and views to email@example.com.
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