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 suitedandbooted.com. 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 mans 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 didnt 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 banks top proprietary traders into his brave new world.
"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 Dillon Read Capital Management episode is as unsavoury as the dogs 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 dont 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 dont understand why after CHF150 million ($123mln) of losses, DRCM is to be closed. Thats not a huge amount of money in the hedge fund firmament. After all, Goldmans 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 wont be involved and we forgo profits to make that happen. Well, as far as Im concerned, DRCM was all about pushing the envelope. Mike Hutchins, Dillon Reads 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?
It was a relief to distract myself with a quick trip to Geneva. Geneva is a sleepy town on the edge of Lac Leman. Its the sort of place where you could eke out an unremarkable existence. I was reminded of Flauberts 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 theres 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 dont 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 Corporations 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 email@example.com.
See more from Abigail Hofman
Add your comment to Abigail with Attitude. Click the "Add Comment" button below:
Click on "View Comments" to read and respond to other comments.