Euromoney Limited, Registered in England & Wales, Company number 15236090
4 Bouverie Street, London, EC4Y 8AX
Copyright © Euromoney Limited 2024
Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement


A fallen hero; a dog’s dinner; up the Swiss; and the fascination of Murdoch.

One Saturday in late April a friend was strolling down the Fulham Road in London. As he idled by a flower stall, his attention was caught by a limousine purring to a halt. A diminutive figure darted out and purchased a luxuriant arrangement of posies. It was Lord John Browne, former chief executive of BP.

A few weeks before his world fell apart, Browne was able to perform mundane chores. Had I been him, I would have been under the duvet, gulping gin from the bottle. Of course, being ferried around in a limo to do the Saturday shopping is not ordinary life as we know it. Nevertheless, I am impressed.

Last Tuesday, Browne failed to obtain an injunction preventing publication of allegations by his former lover, Jeff Chevalier. However, the lethal bullet was that Browne had lied to the court about where he met Chevalier. He claimed to have encountered the young man while jogging in Battersea Park. The truth was much more 21st century: the two had connected over the internet. Newspapers reported that the intermediary was not Lady luck but a gay escort agency called The site promptly crashed as zealous journalists, potential clients and prurient bystanders rushed to log on.

So far, so amusing. However, before we laugh too loud, we should remember that a man’s reputation and livelihood are at stake. He that is without sin, let him first cast a stone. Which of us has led such an exemplary life that we can judge another? Lord Browne didn’t tell the whole story, which was a massive error of judgement. This undermines his standing as a revered business leader. Browne is on the main board of Goldman Sachs. It will be fascinating to see if the sanctimonious and fastidious investment bank parts company with the fallen hero. Masters no more

The more I think about the demise of UBS’ hedge fund, Dillon Read Capital Management, the grumpier I become. The formation of DRCM was announced in June 2005. Many considered it to be a plaything for John Costas, who had resigned as chief executive of the investment bank to head the new venture. Costas shepherded 120 of the investment bank’s top proprietary traders into his brave new world.

John Costas, who had resigned as chief executive of the investment bank to head the new venture, DRCM

"The formation of DRCM was announced in June 2005. Many considered it to be a plaything for John Costas, who had resigned as chief executive of the investment bank to head the new venture"

The intention was to obtain co-investment from “sophisticated, principally institutional, clients.” The press release trumpeted: “In this way, UBS will build a new stream of investment management fees from what has until now been a purely in-house trading activity.” It didn’t happen. UBS struggled to raise money from outside investors. Apparently, it gathered only some $1.5 billion of client monies before defenestrating – the master-of-the-universe prop traders had failed to prosper outside the investment bank.

The Dillon Read Capital Management episode is as unsavoury as the dog’s regurgitated dinner. My instincts tell me that the traders were probably given large guarantees to move to the new hedge fund. The Financial Times reports: “The UBS move will trigger a $300m restructuring charge, $200m of it being distributed to the 250 DRCM employees via stock for deferred compensation and retention payments.” I am appalled. Talk about rewards for failure. I am also confused. I don’t understand why, if the proprietary operations were spirited away to DRCM in the global asset management division, their losses were accounted for in the investment banking division. A charming spokesperson explained: “The losses on the prop book were incurred in the investment bank due to the fact that investment banking invested the money with global asset management.”

Nevertheless, I still find this arrangement odd – and unappealing because accountability was blurred. I also don’t understand why after CHF150 million ($123mln) of losses, DRCM is to be closed. That’s not a huge amount of money in the hedge fund firmament. After all, Goldman’s Alpha hedge fund was allegedly down 6% last year and it still exists.

In a press interview in March 2003, Costas stated: “We never push the edge of the envelope. If it is super-controversial, we just won’t be involved and we forgo profits to make that happen.” Well, as far as I’m concerned, DRCM was all about pushing the envelope. Mike Hutchins, Dillon Read’s chief investment officer has resigned. Costas should too, instead of clinging on by his finger-nails in a Paul Wolfowitz-like fashion.  What do you think? Mayfair’s hedgehogs

It was a relief to distract myself with a quick trip to Geneva. Geneva is a sleepy town on the edge of Lac Leman. It’s the sort of place where you could eke out an unremarkable existence. I was reminded of Flaubert’s heroine, Madame Bovary. However, beneath the dreariness bubbles excitement. Philippe Jabre, the former star trader of hedge fund GLG, has started a new hedge fund in Geneva. Jabre Capital has some $2 billion under management – eat your heart out Mr Costas.

It crossed my mind that the London regulators need to be careful. One false step and the Mayfair hedgehogs may scuttle over to Switzerland – everything is so clean and it all works. “The Swiss view their country as an investment bank,” a source opined. “If there’s a problem, they address it and move on.” The price of central London property is in bubble territory and the cost of living is out of control – a 10 minute journey in a London cab costs over £10. And please don’t get me started on the vomit-strewn streets and the stabbings in suburbia. Hot tip from the Abigail with attitude column: consider buying a flat in Geneva. If the hedgies never materialize, you can always rent it to an international bureaucrat.


Last week, News Corporation pounced on Dow Jones, the company that owns the Wall Street Journal. I am fascinated by News Corporation’s chief executive, Rupert Murdoch. Murdoch is part of a feisty gang of geriatric business billionaires who believe retirement is for wimps. I recall an anecdote concerning a senior Disney executive who met the mighty Murdoch to discuss a television project. News Corporation owns Fox, the American television network. “Ah yes, Disney Television,” the great man intoned as the visitor was ushered in to his office, “What is that exactly?” The Disneyite was covered in confusion as he tried to explain.

One-upmanship is a vital negotiation tool. Commerce is not a popularity contest. One way or another, Murdoch will get the Journal. And then the real battle will begin.

Next week: OGL – our glorious leaders? Please send news and views to

 See more from Abigail Hofman      
Abigail's biography    

Add your comment to Abigail with Attitude. Click the "Add Comment" button below:

Click on "View Comments" to read and respond to other comments.


Gift this article