CORRESPONDENT SPECIAL | IRAN | ISRAEL | SOUTHSUDAN | BRAZIL | INVESTINGINAFRICA decemBeR 2015 | ft.com/wealtH 36 Issue ds Re aR mo ook Bo al in Bt ci on NLY lu ow an oRdon en in tt %c hG om Ra en ef 30 sa th Rw YISUP By

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Ft WeALtH contents decemBeR

@hugo_greenhalgh

30%club: the 12 next chapter

On the same daythe women —and twomen —of the 30% Club gathered for our photoshoot, Lord Davies released the latestchapter in hisongoing reviewintothe representation of women on boards. Theclubhad been founded in 2010 with the express purpose of increasing the number of women in C-suite positions; Lord Davies’finalreport was keenly anticipated. After five years of work, and lobbying by the 30% Club, his findings were positive: women filling FTSE 100 board positions passed the 25 per cent “milestone” earlier this year. Anew target of 33 per cent female representation has been setfor 2020. Thenumbers stand testament to the work undertaken by the 30% Club —ateverylevel. Not only lobbying ministers and the Cityfor change, but also acting as role models for the emerging female leaders of the future. 56 Eventually,asSarah Gordon notes in her cover FeAtURes storyfor this edition of FT Wealth,its members 12 iRAnUncoveRed hope there will be no need for the club. “I’dliketo Atrial is exposing this see the 30% Club redundant and wound up,”says closed society’s links Heather McGregor,managing director of Taylor between moneyand politics Bennett,“because women on boards become so commonplace thatit’ssimply not needed anymore.” 18 tHe30% cLUB Moving from the ambitions of the 30% Club in Howwomen have the UK (although theyare keen to exporttheir taken on the old boys’ model globally), this edition also focuses on those of network of UK companyboards the wealthyaround the world, with aCorrespondent Special reporting from South Sudan, Israel,Brazil, 24 in on tHeAct Iran and the US. Arts groups are challenged to be ever more creative in wooing td Hugo Greenhalgh Editor wealthysponsors ml [email protected] il 32 moveR And sHAkeR sf ca

App king UriLevine lu bloomberg;

on his questtohelp mages; michael YoUR neXt Ft WeALtH s: ordinarypeople save time yi oto crabtree; 11 mARcH2016 and money ph gett

4 |Ft.com/WeALtH sar od oney nd Le ion Go H|5 rof iberras at oa eputy is Coste nhalgh to

rts CORRESPONDENTSPECIAL | IRAN | ISRAEL | SOUTHSUDAN | BRAZIL | INVESTINGINAFRICA DECEMBER 2015 | FT.COM/WEALTH 36 ISSUE Lt ormer lem FT’s eX di sd la Boulton ew ea sf horne sia ublic eA aduate Daniel hicag ye Gree zil leri sUS FT’ rusa ’s ggi Ley tT ronFTM FT’ gr sA ra th-L Dominic is the sC gHt Va enkov /W go Je aduate trainee Ja ronicle, FT rrish FT’ is founder of ’s rrie FT sB FT’ is news editor of gr reelanc Ru ApH FT’ aP Hu Pa ip director for is the Ch chael Crabtree he om is the is companies FT is deput eporte af ty ,anFTp Ha FT’ FT gR st Rti Mi is the Rohit i is .c is an ar ion is the spondent Am WRi Andrade Kos is the to is at Ft Fo ditor nson Philip ley zorgmehr is the ne mily RDS yriakou incent is an vestors is the ean ts OA n-Ami OOK ias- azlehurst orre lationsh rdon n- se Ho tor BT ditor lin WIN MORE Fo Fa NLY In Bo Ma LU NONB Cl ANCIAL nshi lberge yK GORDON Fr tc TTO %C gazi wV An Be FIN ec OME alth editor EN 30 Pa UR Go SARAH ye yH frica correspondent (now on public at Rp RW YISUP BY HE EO eahy ir FO Mc ON THE st he WT aA BLISHM Mu ntRiBUtoRs ES Ma TA HO AC We tA ve WA TH ES nB PL ly jmeh FT si il blishing systems manager dwes uise Lucas td ul oduction editor nior designer hn Reed eL rem hran correspondent imone co co dA As Mi Adam Aliya Ram trainee Ne Eas book leave) Pa Jo bureau chief Matt news editor Katrina companie bureau chief Lo Stephen Wilmot editor an FT Deput IPE Na Te Stephen Business S Financial Adviser Jo Pr Da investment correspondent Sarah business editor Je Ar Sub-editor Special reports editor Global sales director writer Daniel Picture editor Global re banking and finance Pu Andrea Advertising production Ju ark ive rt at alance yp rr ddle yofa hether uch as ab Na Mi peciAL peciAL peciAL ss wealth ions :s :s :s he et ’s LtH ficacy how of force ss ions ef eA at yint as seum of pA ised FUnds ce et ner Mu sW dv eisonastow FFi tling pondent pondent pondent onderful displa ge -A as at ment ment gHt at es outh Sudan es es es Yo uc eb ower and rowth of gadg aw st st een he wealth wS Uiti ep ed eg eL miL tisb rt tw insi East, it is about finding be mobile phones is powering the metals mark pHiLAntHRopY Th of altruism coRR eq Th there are assets in acronyms FA Fo inve Th Ho their assets outside the country coRR Th Ar coRR Corruption in Brazil is bringing forth donoR Dafs are gaining in popularity with affluent altruists on both sides of the Atlantic inve Building assets in music manuscripts and instruments is beginning to resonate AmBitioU Complexities of modern philanthropy and the fraught issue of naming rights 44 46 38 40 42 48 50 52 56 58 18 nto Africa cUs mn Umn lobal industry gi gs Fo LU oL ag owin in ristmas sc ree can be for life, not Ch ment pproach to learning eA yisfl en or st id sa ne wat tf ia’ nve op has spawned Mo in the global hunt for yield tHe RicH co Ho jus tHe As 8 10 6i 48 AFRICA FOCUS ADAM PALIN

@adampalin

THEHUNTFOR YIELD

ften described as the final frontier of global investing, Africa promises investors the possibilityofrapid Oeconomic growwth fuelled by its young population and vast natural resources. Critics, however,point to poor corporategovernance and widespread corruption thatdeter investments 182m in the continent’svolatile markets. Nigeria Among sub-Saharan countries, only South Africa, home to the continent’s largeststock market,isconsidered an emerging marketbyMSCI EM index. Investment and liquidityrisks notwithstanding, moneyisflowing into Africa in the global hunt for Sub-Saharan In Africa, thereis... yield. In 2014, the region was the world’s fastest-growing destination for Africa GDP growth foreign direct investment, according to 7.6% research by FDIIntelligence. Global oil reserves Forindividual investors, there are 5.0% agrowing number of Africa-themed 2014 funds, offered by the likes of Investec 5.8% and Templeton,thattend to focus on larger economies such as Kenya and 3.75% Global energyproduction Nigeria. 2015 (forecast) Global companies listed on more established exchanges thatcentre on 3.2% the continent, such as London-listed Global energy consumption brewer SABMiller,can also offer $87bn 4.25% lower risk playsonthe rise of African Foreign direct investment 2016 (forecast) consumption. in Africa in 2014 Thefateofthe continent’s growth in the near future, however,remains peggedtoglobal commodityprices. 14% Oil production Itsdependenceonprimarygoods is of global total (barrel/day) illustrated by downgraded IMF growth forecasts for 2015. There is little doubt thatAfrica investors mustcommit Largest according to FDI Nigeria Angola themselves for the long term. Frenchenergy company Totalplans to invest 2.4m 1.7m 20m $16bn M-PesausersinKenya to develop the Kaombo (from a46m population, 2015) offshoreoilfield in Angola

6 |FT.COM/WEALTH GRAPHIC BY RUSSELLBIRKETT

Sub-Saharan Africa Sub-Saharan 23 fiscal balance forecasts Africa inflation forecasts number of stock exchangesinAfrica -4.3% 6.9% 2015 2015 84,000km -3.6% 7.3% Distance of African railways 2016 2016

1.19bn FTSE/JohannesburgStockExchange African population All-ShareIndexperformance: (2015) (South African stock x) of which largest: Totalreturn, to Oct 30,2015:

12 months 3years 11.6% 58.6% 99m Ethiopia

60 years Lifeexpectancyin Africa (2010-15) 760m Mobilephone subscriptions in Africa 37% Mobile phone penetration by population (2010) 43% 80% Electricity coverage in (2015) Africa, by population

Forecast Africa population

2030 2050 1.68bn 2.48bn

Sources: United Nations, African DevelopmentBank,IMF,BPStatisticalReview2015, FDI Intelligence

FT.COM/WEALTH|7 theRIChColumn mAttheWVInCent

@MPJVincent

FoRaYiNToThe FoResT

very Christmas, we invite In the UK,IPD Annual Forestry them into our homes and what Indexputs the averageannual return happens? We spend the whole over 22 years at 8.9per cent,which, time pouring them drinks, as Gresham House notes, beats UK efinding them headache pills equities and bonds. Dalwood attributes and catering for their fussy tastes in this outperformance to the “illiquidity food. It takes days to clean up after premium”: the extrareturn investors them. And it still feels likethey’re expectfor not having the abilitytosell under our feetweeks later.No, not the at shortnotice. “Returns have been in-laws. Irefer,ofcourse, to Christmas good,”hesays. “Intimber,weare in the trees. early stages of people getting used to According to experts (or at least this. Theilliquiditypremium should the people who were contacted by a reduce over time, as appreciation for Daily Mail reporter for aDecember the assetclass increases.” space-filler twoyears ago), the AnthonyCrosbie Dawson, portfolio averageChristmas tree will drink a manager at rival forestryadviser FIM, third of apint of water aday,but also argues thatgetting used to the long- require regular top-ups of vodka and term nature of the assetclass is what lemonade, to kill offbacteria and gives timber investors an advantage provide glucose for its cell structure, over those in other real assets. “Forestry as well as salicylic acid from aspirin has big advantages over farmland,” tablets to prevent fungal infection; he says. “You don’thavetoharvest and the ongoing absence of bananas annually.” He cites the example of or other fruit thatemit ethylene gas, as ‘forestry has advantages 2008-09, when housebuilding “fell off this can cause premature needle drop. acliff”and timber prices plummeted. But even ifyou went to all these over farmland.you don’t FIM kept its trees in the ground and let lengths, the chances are your central them add more volume —and deferred heating will reduce even the juiciest have to harvestannually’ value. spruce to twigs by the FeastofStephen Timber price volatilityremains a —leaving you to pick needles out of the The annual Christmas shares the viewofDigby Guy,chairman risk —FIM maynot payits target 3 shagpile well pastTwelfth Night. tree at the Rockefeller of Aitchesse, thatthe risk/return per cent tax-free income distribution At £200 or $200 for asix-foot fir, Center inNew York characteristics of forestryare “such a to investors if low prices mean it has to it is alot of expense for something good fit for institutions and families”. harvesttoo manytrees to fund it. But, that, when discarded alongside your Similarly,try to see the wood for the instead, FIM might look to payalarger neighbours’ in thatfirstweek of 35m Christmas trees in the US —in distribution once prices have recovered. January, will form one of the most particular the 5.3m hectares of wood Sunaina Sinha, managing partner of depressing of all suburban tableaux. If thattimber group Weyerhaeuser will Cebile Capital, even sees evidence of a only families realised atreecould be for own after agreeing to acquire Plum secondarymarket developing, enabling life, not justfor Christmas. Creek three weeks agofor $8.4bn. her to advise clients on half adozen Thankfully,there is now achance Rick Holley, chiefexecutive of forestryassetsales. of this messagegetting through, Plum Creek, believes the $100m of Add in sustainable policies and tax following tworather larger coniferous costsynergies will enable investors breaks for long-term investors and transactions. Never mind the 6m to “capitalise fully on the improving it is possible to see whytrees have small British Christmas trees that housing market”. been apurchase of choice in recent will enter landfill sites next month, Timber itself,however,appears a festive seasons. In December last think instead of the 30,000 hectares market on which wealthyfamilies year,Aitchesse advised the Church of

of forestthatassetmanager Gresham could scarcely improve. In the US, England on adeal to buy 15 forests for imaGes

House can letyou buy into, having the National Council of Real Estate £49m. No need to worrywhere this TY acquired Aitchesse, aforestrymanager, Investment Fiduciaries indexshows the year’s vicarageChristmas trees will eT :G

lastmonth for £7.7m. Tony Dalwood, annual return on timberland over the come from. But the vodka, on the other To chiefexecutive of Gresham House, past28years has averaged 13 per cent. hand... Pho

8 |ft.Com/WeAlth

THEIDEAS COLUMN LOUISE LUCAS

@louiseflucas

TOPOFTHE CLASS

hen atalented tutor is schools in China. Eton says profits from offered $11m to jump the venture will be decanted into its ship to arival teaching bursaryprogramme. house, you appreciate Other venerable British schools Wthe importance Hong have gone further.Winston Churchill’s Kong places on education. alma mater,Harrow,has replicated And whynot? Education is big its playing fieldsinChina, Hong Kong business across Asia. Ditto profits: and Thailand; boaters and bluers gains at Beacon Group, current home remain de rigeur,humidityand heat of the fought-after super-tutor Lam notwithstanding. Dulwich Collegeis Yat-yan, almostdoubled in the two in Singapore, China and South Korea, years to the end of July andthere are while Marlborough Collegecan be plentyofpeople who would argue this found in Malaysia. Haileyburyhas is moneywell spent. taken the daring step of opening its Asia’slove of learning has spawned doors in Kazakhstan. books such as US writer AmyChua’s This expansion has it risks. In 2005, Battle Hymn of the Tiger Mother,about Dulwich Collegesevered ties it had the use of discipline in child rearing, maintained for eight years with its and has inspired much hand-wringing franchise in Thailand after arow over in the west—Singaporean methods management at the Thai school. and teachers, for example, have been In total, British privateschools have employed to shakeupmaths teaching setup44overseas campuses, educating in the UK.The Asian approach almost25,000 pupils, according to the has inspired envy,griping and even Independent Schools Council —more lawsuits. In November 2014,agroup IN FAR-FLUNGREACHES than double the 2012 figure. called Students ForFair Admissions OF JAPANITCAN BE EASIER Foruniversities, big brains mean Incfiled alawsuit, which is being big fees, but before theycan persuade contested, againstHarvard Collegein TO FIND ATUTOR THAN the finestminds to enrol, so-called the US alleging its admissions office ACOFFEE placement agents pop up to taketheir was discriminating againstAsian and cut. Ranging from honestbrokers Asian-American applicants. to the plain unscrupulous —again, But more than anything, demand Children whose education is not Primaryschool operating both in physical premises from Asia has spawned amultibillion- supplemented privately are in the children in Pingjiang and online —theypromise to scour dollar industryoftutors, agents, online minorityinparts of Asia. Data from County,Hunan the region to bring students and Province,China courses and staid British schools the Hong Kong Federation of Youth universities together.Some takeafee setting up shop in humid climes far Groups’ Youth Research Centre fromuniversities, others from students, from their rainyplaying fieldsathome. show 72 per cent of secondaryschool and more than afew from both:tales “Thereishugedemandfor the students in Hong Kong in 2012 used abound of moneydisappearing with no British brand,”saysRichard Howorth, privatetutors —still behind Taiwan (75 offers of places in return.

aformer hedgefund manager who is per cent on 2010 numbers) but ahead Others, for ahandsome fee, will IBBY

looking to recruit teachers for an online of South Korea’s71per cent (2011) and write and submit essays to educational EB tutorial companyheissetting up. Japan’s 53 per cent (2007). institutions in fluent English for

Lamand Beacon are tinycogs in the Tutorial offices proliferateacross the students whose grasp of the language CHARLI privatetutoring wheel, an industry continent: crammed into cheek-by-jowl is far more rudimentaryand who then forecasttobeworth nearly $200bn office blocks in Hong Kong. In far- struggle on enrolling. MAGES;

globally by 2020, according to Global flung reaches of Japan it can be easier Indeed, so popular and lucrative is YI IndustryAnalysts. Theconsultancy to find atutor than acoffee. the education business thateven travel GETT

pinpoints Asia-Pacific as the biggest Online learning is proliferating too: agents are getting in on the act: one P/ and fastest-growing market,with a among recent entrants is atrading parent recounts atale of seeing one S: AF

projected compound annual growth subsidiaryofthe UK’sEton College, “with posters on its walls of schools TO rateof10.7per cent over the period. which has formed partnerships with thatnolonger exist”. PHO

10 |FT.COM/WEALTH the Israeli and US flags trampled under foot at ashrine in the north of tehran

12 |ft.com/wealth Iran uncovered AcoRRuPtiontRiAl is exPosing this closed society’s linksbetween moneyAnd Politics

BY NajmehBozorgmehr iN TehraN

or years Ihaveput my life at risk for Godand this country,”Babak Zanjani, dressed in blue striped prison uniform, told aTehran courtonOctober 31. “I have been imprisoned for twoyears under difficult conditions in asmall room which is likeatoilet.” Iran’s mostnotorious billionaire, who has claimed euteRs he has more than 60 companies inside and outside :R

to Iran, stands accused of corruption, fraud and forging documents. In his defence, Zanjani Pho

ft.com/wealth|13 ‘The oilkeepscreaTing newrichclasses. iran’s rich arenoT enTrepreneurs andnone areknown in Theworld’

claims he served his countrybyhelping its authorities manoeuvre around EU and US oil and banking sanctions introduced in 2012 “when Iran could not sell one barrel of crude nor could transfer one US dollar”. In response, Iran’s oil ministryclaims it is owed more than ¤2.7bn for oil exports, which Zanjani says were frozen by sanctions. But the Zanjani saga signifies more than justatit- for-tatbetween the stateand acolourful businessman. Thecase is amicrocosm of contemporaryattitudes towards wealth in Iran’s closed society —wealth thatis associated, as greatfortunes usually are, with political patronagerather than individual entrepreneurship. Following the 1979 revolution, Islamic rulers denounced capitalism and advocated an economy based on an amalgamation of Islamistand socialist ideology. But in practice, theycreated aclass of oligarchs, nominally operating in the privatesector,linkedtoand dependent on the survival of the regime. Thestate will not letthe privatesector become too rich, instead keeping it at about 20 per cent of the economy, which many argueistoprevent the independent business 1. communityfromattempting to influence politics. “Wehavefallen into an oil trap since 1974, which has increasingly put the economyunder statecontrol and 1. keeps creating newrichclasses who are linked to oil babak Zanjani on 3. rents and political power,” says Mousa Ghaninejad, an trial forcorruption, fraud and forging economistatIran’sstate-run Petroleum Universityof documents Technology. “Iran’srich are not entrepreneurs and none 2. of them are known in the world.” iran presidenthassan Rouhani addressesthe erversely,Iran’seconomywas shaken by the oil un generalAssembly in newyork this bonanza produced under Mahmoud Ahmadi- september Nejad, the populistpresident in power between 3. p2005 and 2013. Thestate received $650bn in oil Former iran income, yetlittle trace of thatmoney can be found in presidentmahmoud

Ahmadi-nejad hAhi the form of newinfrastructure in Iran today, economists say. TransparencyInternational, the anti-corruption tk watchdog, has described Iran as one of the world’s most hemmA

corrupt countries. s; Indeed, despite having described itself as “the cleanest

government ever”, billions of dollars of oil revenues went imAge

missing under the lastadministration. ty et

Zanjani, some say, is being made ascapegoatby ;g the centristgovernment of Hassan Rouhani, which vine

has seized on the case as an example of asupposed ye

crackdown on corruption. Thegovernment has ramped i/e up its efforts to attractforeign investment significantly s: uP

since the landmark deal with world powers this July to to limit Iran’s nuclear activities. Pho

14 |ft.com/wealth 2.

‘wheneverThe rich grow Toobig and arousepublicsensiTiviTy, Theregime uses TheirweakpoinTsand knocks Them Zanjani’scase also serves as adistraction from other, possibly bigger, examples of corruption thatcould be down.Zanjani showed offToo much’ embarrassing for the Islamic regime and potentially destabilising at atime when youth unemployment has hit 25 per cent and inflation stands at 14 per cent. individuals and groups. Indeed, his refusal to disclose the names of anypartners or the whereabouts of the resident Rouhani faces atough battle against allegedly stolen moneyalongside the existence of corruption —one thatisnot being helped by bountiful overseas assets fuels suspicions thathestill endemic political infighting. Analysts note that enjoys powerful backing in political and militarycircles. ppowerful hardliners in the elite Revolutionary Guard, parliament and judiciaryare infuriated that anjani began his working life as an entrepreneur their sanctions-dodging, and therefore verylucrative, exporting sheep skins to Turkey from where, in business interests are being undermined by the nuclear turn, he imported shampoo, non-alcoholic beer, agreement. Zcoffee and olive oil. Hisbusiness grewquickly in Faced with 50,000 pages of indictment, brought into Iran and Turkey,and he founded acreditinstitution in the courtroom in asupermarket trolley, Zanjani has the United Arab Emirates and abank in Georgia, and denied being afront for anygovernment involvement. bought partofMalaysia-based FirstIslamic Investment But he had admitted previously thathewas “number Bank. In an interviewtwo years agowith Aseman, a one” in Khatam-ul-Anbia, the construction arm of the now-defunctIranian reformistweekly magazine, Zanjani RevolutionaryGuard, in securing credit. TheGuard put his personal wealth at $10bn. runs an opaque business empire alongside its military Yetthe level of his wealth was starting to attractthe organisation, as do other religious and revolutionary wrong sortofattention in austere Iran. “Whenever foundations. the rich grow too big and arouse public sensitivity, the YettomanyordinaryIranians, the storyseems regime uses their weak points and knocks them down,” veryfamiliar.Tothem, Zanjani is justone of many says one analyst. “Zanjani showed offtoo much.” little-known oligarchs who actasafront for powerful Wealth can equal theft in Iran. ThemanyPorsches

ft.com/wealth|15 and Maseratis seen on Tehran’s roads driven by people in their 20s lead manytoquestion where the national wealth has gone. BijanNamdar Zangeneh, Iran’s veteran oil minister and whistleblower who has vowed not to retreatuntil he has obtained “the people’s money”,insists Zanjani has partners. When the Financial Times asked the minister whyhehad not disclosed the names of these supposed accomplices, he said the government was already in “enough trouble by naming Zanjani” —aclear indication of the influence of the suspected partners. YetZanjani’slawyer,Rasoul Koohpayehzadeh, denies anyconnections between his client and any politicians: “Myclient is agenius in international trade and banking and was not supported by anypolitical group,”hesays. “If he had not been in jail over the past twoyears, he would have made much more than the $2bn [he owes].” Thedisputed moneyisinthe world’s banking system, the lawyer adds, and can only be transferred once sanctions are lifted. In court, Zanjani himself has 1. claimed he has ¤22bn in cash.

oone knows how manybillionaires there are in Iran. There is no known record of wealth and there are manywaystoevade the inefficient ‘asTronomical sums areheldbypeople ntaxation system. But manyobservers are amazed no onehas heardofand youdon’T at the lavish lifestyle of little-known businessmen. “Astronomical sums are held by people no one has know Thesource of Theirmoney’ heard of and you don’t know the source of their money,” says asenior private-sector trader. Aformer bodyguard of an ex-president has put aside have created manydollar millionaires. One 67-year-old $300m to bring afamous Swiss jewellerybrand to in the northwestern cityofTabriz inherited land many Iran, says one senior businessman familiar with the decades agothathas risen in value so much thatshe has case. He adds thatanother entrepreneur,who travels 1. become abillionaire, according to afamily friend. Again, frequently around the world and has operations in the the Revolutionary this is awoman without apublic profile. “She is someone guardinanannual US and elsewhere, is unknown even among top business parade in tehran Iranians have never heard of and maynever hear of in circles. “Hehas 150 watches, each of which is worth 2. their lifetime,”the friend says. more than $100,000. Ionly recently realised thathe Acurrencytrader with Acommitted gambler,she is said to have 49 gaming owns twohigh rises in Tehran with 300 apartments, rial banknotes outside tables in the basement of her mansion in Tabriz and has each with an average200 sqmofspace.This alone atehranbazaar hosted an averageof50guests everyevening for the past 3. makes him abillionaire.” oilminister bijan 15 years —except lastyear,when she moved to the US Skyrocketing property prices over the pastfew decades namdar Zangeneh for her daughter’s cancer treatment. “Lastyear,inthe middle of sanctions, we transferred $30m to the US after her big losses in casinos,”the family friend adds. 3. Tens of these “unknown billionaires” live in Tabriz and other larger cities such as Mashhad and Isfahan, analysts say, and do not admit their wealth in order to avoid attention from the public —and thetax authorities. During his trial, Zanjani indicated there were other businessmen, richer than himself,who enjoy immunity from the state. He has wondered, for example, whythe name of one individual who owed the oil ministry$5bn was not

disclosed. Theoil minister replied thatthe moneywas in ombeRg asafe place. lo ;b

Whether this defence and self-promotion can help es

Zanjani escape the death sentence, which was handed Ag out lastyear to Mah-Afarid Khosravi, abusinessman im ty

linked to a$2.8bn fraud case, remains to be seen. et “For my co-operation [with the oil ministry], my /g companies faced sanctions,”Zanjani told the court AFP s:

defiantly.“Iamaneconomic genius… execution doesn’t to scare me. Ihaveserved this country.” Pho

16 |ft.com/wealth 2.

ft.com/wealth|17 THE30% CLUB HOWTHE WOMEN—AND MEN— TOOK ON THEOLD BOYS’NETWORK TO GAIN GREATEREQUALITYAND ARE NOWTAKINGTHEIR CAMPAIGN GLOBAL

By saRahgoRDoN PhotogRaPh By DaNBuRN-foRti

manythankstothe Sky Garden at 20 fenchurch (developed by land Securitiesand canarywharfGroup) covershoot assistants: william Bond; Jude Barrett-hambling; henrywillmore

18 |ft.com/wealth ft.com/wealth|19 Previous page, from left: Seated: emily Lawson, chief people officer, Kingfisher; emma howard Boyd,chair,ShareAction; helena morrissey, chief executive, Newton InvestmentManagement; chairman, The Investment Association; anne Richards,chief investmentofficer, Aberdeen Asset Management; henriettaRoyle,chief operating officer, British Bankers’ Association; Brendatrenowden,head of Financial Institutions Group forEurope and global chair,30% Club; Front rowstanding: Katushka giltsoff, senior partner,The Miles Partnership; melissa Di Donato,area vice-presidentfor ISVand Channels,Salesforce; gaycollins,founding partner,Montfort Communications; elizabeth Passey,senior adviser,J.Stern &Co; melanie Richards,vice- chairman, KPMG; Jamie Brookes, managing director,MHP Communications; Baroness marygoudie, would liketosee the 30%Club wound up because HelenaMorrissey, chiefexecutive, NewtoN Labour Peer; women on boards become so commonplace that iNvestmeNt maNagemeNt Pavitacooper,founder, it’ssimply not needed anymore.” hen Helena Morrisseystarted trying to MoreDifference; Niamh corbett,vice- So says Heather McGregor,aFinancial Times getcompanies to takeonboard the goal of president, Investment columnist, better known as MrsMoneypenny, the 30% Club in2010she says theywere Banking, Morgan Stanley; who has been involved with the club since it W“initially dismissive”.Getting male chairmen tamaraBox,global chair, began in 2010. Herwish mayhaveseemed elusive to recruit women was the breakthrough the club needed. Financial IndustryGroup when the group was setuptoincrease women’s Now, she says, boards realise thatgetting abetter sian westerman,senior adviser,Rothschild; representation on the boards of the UK’slargest gender balance in senior ranks is “a business issue, not a heather mcgregor, companies. Nowthe goal looks achievable. women’s issue”. managing director,Taylor In the UK,women now makeupaquarter of Morrisseyhas been the mostpublic face of the club Bennett; FTSE 100 boards, avoluntarytarget mandated since its foundation. She provided the initial impetus Diana Brightmore- by the then coalition government and which has for the group six years ago—recruiting volunteers at a armour,CEO UK,ANZ; Back row: been monitored by areviewpanel led by Lord lunch she convened for the women she knewinbusiness. claudia Kohler,events Mervyn Davies. Anew target of 33 per cent As amotherofnine, and asuccessful woman in financial manager,Newton by 2020 has justbeen unveiled by the Davies services, she has also been atarget of the somewhat InvestmentManagement; Review, setuptoreportongender diversityin prurient —and sometimes critical —interestthatthe Nick Jarman,partner,PwC; boardrooms; agoal thatsurpassesthe 30 percent media continues to takeinCity“superwomen”. sarahwiggins,head believed by the club’s founders to be the tipping Now, alack of time has prompted her to hand over the of clients andsectors, Linklaters; point at which the representation of anyminority reins of the 30% Club to Brenda Trenowden. Jo Bostock,jointCEO, group achieves critical mass. Morrisseybelieves business leaders now understand Women’s SportTrust; Thefounders credit the club’s success to a better the benefits of adiverse board and workforce. francoise higson,senior number of factors. Thetime was right; the “A lot of progress has been made, but Ioften still feel project manager,CEO involvement of men, particularly chairmen veryisolated,”she says. “Wehaven’t gottrueinclusion Office,NewtonInvestment Management; of FTSE 100 companies, was critical; and the until women feel theydon’t have to be honorarymen and Joanna santinon,tax voluntarynature of the target, rather than a gays don’t feel theyhavetobehonorarystraights.” partner,EY; mandatoryquota, was key. claudia harris,CEO, “Having abalanced board is necessarybut it The Careers&Enterprise is notsufficient,” says Helena Morrissey, chief ‘a lotofprogress Company; executive of Newton Investment Management Liz Dimmock,founder and hasbeen made,but IstIll CEO, Women Ahead and one of the 30%Club’s founders. “Below that there is still along, hard road.” feel very Isolated’

20 |ft.com/wealth Brenda trenowden, heaD of theeuRoPe fiNaNciaL iNstitutioNsgRouP,aNZ ’m ahugesupporter of women’s networks… but to actually move women up in organisations, women’s networks haven’t been making adifference,”says “IBrenda Trenowden, who has justtaken over from Helena Morrisseyaschair of the 30% Club. Shesees the achievement of the Davies target of 25 per cent of women on the boards of FTSE 100 companies as merely the starting point, auseful “measurable target” thatmustnow be built on. Theclubisinvolvedina rangeofprojects, she says, to address the challengeof whythere are so relatively fewwomen in the “C-suite minus 1”. As aCanadian who moved to the UK in 1991, and has also worked in Hong Kong, Singapore and Bangladesh, Trenowden is particularly supportive of the 30% Club’s increasingly global reach. She believes there is still apowerful “old boys’ network” in the financial services industryinwhich she works and thatthere remains much to do to achieve diversityatthe top. Nevertheless, she says: “I think it’s become much biggerthan we had ever envisaged. We’ve ended up having far greater reach and influence.”

‘Wehavefar greater reachand Influence thanWehad envIsaged’

HeatHer McGreGor, maNagiNg DiRectoR,tayLoR BeNNett eather McGregor,the FT’s MrsMoneypenny columnist, says the beginnings of the 30% Club were not promising. “Helena [Morrissey] hdoesn’t really do tears,”she says, “but if Ihad been Helena,Iwould have done tears.” Thegroup’s initial attempts to getFTSE 100 companies to sign up to their goal yielded avery disappointing response, sometimes even “extraordinary rudeness”,according to McGregor.Itwas not until two chairmen —Sir Win Bischoff, then at Lloyds Bank, and Sir Roger Carr,then at Centrica —put their names down thatthe momentum took off. “Werealisedthis was not aproblem thatcould or should be solved by women on their own.” McGregor’s specific area of responsibilitywithin the club is for women between 25 and 35 years of ageand she says the keychallengefor them remainshow to combine motherhood with ademanding career.“Isay to them, career breaks are fine, but stay current and stay in touch,”she advises. McGregor believes much has changed since the club’s early days. “I think we’vegone from ‘Why do it?’ to ‘How

ICHAEL CRABTREE to do it?’.Lord Davies on [his] own wouldn’t have ;M changed the debate.” BY IB ‘I thInkWe’ve gone HARLIE B

S: C from “Why do It”to

OTO “hoW to do It”‘ PH

ft.com/wealth|21 Baroness MaryGoudie, LaBouR PeeR representation, arguing that“you only have quotas for saninhabitant of the world of politics rather aperiod, then you are back to square one”.She believes than business, unlikethe restofthe 30% Club’s the inclusive nature of the 30% Club hasmade it more steering committee, Mary Goudie sees her effective. arole partly as bringing together ministers with Baroness Goudie would liketosee “atleast40 chairmen and chiefexecutives. per cent”ofboards made up of women and believes Herunderstanding of the “machinery” of government headhunters have an important role to playinthis. “They is helpful, she believes, in getting dialogue going between should automatically send alistofthree [men] and three business and different ministries and being in the House [women candidates],”but she says theyprefer to search of Lords, she says, “gives you more power to make in a“golden circle” around London or even abroad rather change, gives you access”.She lauds its greater diversity than in the restofthe UK. than the House of Commons. “Theynever look out to Glasgow,toManchester,” she “There is agood mix of women and ethnic minorities says. “There are all these greatpeople out there —even and people with disabilities,”she says. “There are women men!” in the House of Lords who wouldn’t have gotselected [as aprospective parliamentarycandidate].” MelaniericHards, PaRtNeRaND uK BoaRD She believes the 30% Club,and other initiatives memBeR,KPmg around increasing female representation, will lead the itting a33per cent target on boards will be chargefor greater overall diversityinthe workforce. asignificant step in the right direction,”says “Wefight all the battles,”she says. “[Women] are the Melanie Richards. “But much more work change-makers, the leaders in everycommunity.” “hneeds to be done on the executive pipeline.” Likethe restofthe club’s steering committee, she Richards, who has worked at KPMG since 2000, is strongly opposed to mandatoryquotas for female believes one of the mostimportant contributions she has made to the work of the 30% Club istoprovide research to back up its work and future direction. ‘WefIght battles. Womenare Last year,KPMG published Cracking the Code, thechange-makers, theleaders areportproduced in conjunction with abusiness psychologistcompanyand the 30% Club,on“gender In everycommunIty’ intelligent”approaches to developing corporate

22 |ft.com/wealth ‘gIveout thatmessage that thecompany has therIghtculture’

Gaycollins, fouNDiNg PaRtNeR, moNtfoRt ay Collinshas worked for more than 25 years in public relations and became involved in the 30% Club becauseNewton Investment gManagement, for which Helena Morrissey works, was aclient of hers. She leads the club’s PR work, believes the media have been “absolutely vital” in getting its messageacross and thatsome of the mostsupportive journalists, such as AndrewHill, the FT’smanagement editor,havebeen men. “Female journalists have tended to be either massively supportive or verysceptical... whereas male journalists getit,”she says. Likeall the 30% Club members, she gives up her time voluntarily and spends as much as aday aweek on it. She believes that, although “the numbers have moved in the right direction”, there is adanger of complacency now thatthe firstDavies target has been met. “The easier fixes have been boardroom representation,” she says. “A lot of the progress has been made in people recognising thatcompanies have to change, but the pace of changehas been slower than Iwould have wanted. “If you want to be seen as aleader who is forward- thinking, enlightened, you’ve gottohaveadiverse board, you’ve gottohaveadiverse executive committee and you’ve gottogiveout thatmessagethatthe companyhas the right culturefor future employees.” leaders. Thereportdispelled some of the myths around workplace diversitybut also made practical suggestions about how companies could improve their talent pipeline —one of the keywaystodevelop “board-ready” candidates. “Where we can create more transparency, then you can be clear on whatneeds to be done,”she says. “You can’t promote unseen or unidentified talent.” Likemanyofthe women involved in the club, Richards pays tribute to the supportofher employer,whose chairmen was one of the original seven to sign up to it. She believes the club’s refusal to back mandatory quotas for female board representation, as well as the involvement of men right from the beginning, has been keytoits success. Internationally,she says, even countries thathaveimposed quotas are still interested in setting up 30% Clubs. Richards is helping to lead the chargewithin the club to getmore women on the boards of FTSE 250 companies, which still lag behind their bigger counterparts in the FTSE 100. Thechallenges for that group, where boards are often smaller,are different, she says. But whatiscrucial at anycompanyishow “mindful” its leadership is about the issue. “You need a tailored approach for different audiences,”she says. ICHAEL CRABTREE ;M BY ‘Where We cancreate IB more transparency,then HARLIE B

We canbeclear on What S: C

needstobedone’ OTO PH

ft.com/wealth|23 in on theact Corporatearts sponsors’Cash earnsperks and less tangible but mutual benefits

BY DalYaalBerge

ow about dinner on the stageofthe latest production of the Royal Shakespeare Company (RSC), surrounded by sets and props? Or perhaps a walk-on partinafilm? Otherwise, you could meet some of the world’s mosttalented orchestral players or have agallerynamed after you. These are among incentives offered to potential sponsors, both corporateand individual, by theatres, orchestras, museums and other arts institutions. In an ageofausterity, the challenge rsC for organisations is to be all the more creative in wooing potential patrons. tison/

Sponsorship, particularly corporate, is never at justabout giving,however charitable the gesture. hp Companies maydenyit, but theyexpectsomething eit alexhassell in an :k RScproduction in return and, indeed, it should be atwo-way of Shakespeare’s relationship, with benefits on both sides. But oto ph HenryV

24 |ft.com/wealth ft.com/wealth|25 1.

to chatwith actors, directors and designers, among 1. and 4. ‘WhatWeneed to groW others. “It’satop-end experience for those clients,” Compton Verney is this obligation that Mallyon says. “It’srelationship development for them.” fundraising and one TheRSC is also collaborating with Google and of itsgalleries theamericans have’ 2. Samsung, which are both interested in harnessing the the London Road latesttechnologyfor the theatre’s digital programmes. street party scene, Google has worked with the RSC on social media and with national theatre how do arts institutions compare in the beautyparade of streamed rehearsals, while the Korean group has created volunteer graham barker,front right whattheycan offer? And how do the benefits to sponsors the RE:Shakespeare smartphone app aimed at students. 3. compare between, say, atheatre and amuseum? But such high-profile sponsors are hard to findin newYork’s “It’sreally important thatit’sacreative relationship,” substantial numbers, which is all the more reason to metropolitan opera says Catherine Mallyon, the RSC’s executive director. makethe fewfeelextraspecial. Referring to the RSC’s Thetheatre group is particularly excited about next production of Matilda The Musical,Mallyon says: year’s international tour,made possible with support “There’s agreatswinging scene: we’vehad sponsors on from financial services group JPMorgan, enabling it the swings; we’vehad them on the stage… RichardIIhas to reach newaudiences in China, Hong Kong and the an enormous hydraulics system thatlifts the floor up and US.Tomarkthe 400th anniversaryofShakespeare’s down in the final scene. We’vehad sponsors actually in death, beginning in February, the touring programme thatspace, learning how the hydraulics worked. It’s just will include established actors such as Sir AntonySher verydifferent from awine and cheese party.” appearing in the Henry IV plays and emerging ones such At the National Theatre, benefits for sponsors include as AlexHassell in Henry V,following strong reviews. the chance to hear adirector discuss themes in aplayor “This is the firsttime we’vetoured on this scale,”Mallyon have apreview of sets and costume designs. Some even says. “This is an exciting moment.” appeared as extras in London Road,Rufus Norris’sfilm JPMorgan, which sponsors cultural organisations adaptation of the National Theatre musical about the worldwide, prefers not to specifyfiguresinvolved, murders of prostitutes in Ipswich in 2006. but association with prestigious arts “brands” can do Graham Barker,ahuman resources consultant, and wonders for opening business doors. Thefirm funds his wife Joanna, an investment manager,supportcauses different areas of the arts because it realises thateach such as hospices, but theyalso see the arts as “important” drawsdifferent clientele. for society and the National Theatre as “an outstanding On the RSC tour,itwill invite clients to productions, beacon of excellence”.Heworks as avolunteer alongside receptions and behind-the-scenes tours, with the chance the National’s professional fundraisers, encouraging

26 |ft.com/wealth ‘sponsorshavelearnt aboutour hydraulics. it’s very different from a Wine andcheeseparty’

others to donate. In return, he says, the Barkers are made to feel involved in away that, “in my experience, is not equalled by anybody else”.Hewas invited to be an extrafor aday in astreetparty scene in London Road — “one of the mostextraordinaryexperiences of my life”, he recalls. He was also among six National volunteers who were taken to the London Road film setinEssex. “I thought we’d be watching from the side lines. But we were in the thick of it, being filmed.” Among the pied pipers leading sponsors to the music sector is the Royal Liverpool Philharmonic Orchestra (RLPO). It has captured imaginations with its “Adopt aMusician”scheme, which offers the chance “to get to know your adopted musician”. Section leaders cost £700 while the chiefconductor is £5,000. Theproject has attracted individual philanthropists rather than companies but has been “verysuccessful”,saysMillicent Jones, the RLPO’sexecutive director of marketing. oVe “Nearly all the 80-plus musicians are sponsored.” In the US,sponsorship figures can be vast.InNew York, for example, “signage, prime seating and pre- iCola d :n show dinner”are among the benefits for the “$100,000

2. oto CorporateCouncil Sponsor”atthe Metropolitan ph

3. Opera, and the Hood Museum of ArtinDartmouth, NewHampshire, received an extraordinary$10m gift lastyear.“That’s waybeyond anything even the big London guys can think of at the moment,”saysSteven Parissien, director of Compton Verney, the artgallery in Warwickshire, central England, which is comparable in size to the Hood. Britain, headds, has much to learn from America and its cultureofgiving. Beyond the big cities, the search for sponsorship is an uphill struggle for British regional arts institutions. Compton Verney, aGrade I-listed Georgian mansion in 4. 120 acres of Grade II*-listed CapabilityBrown parkland, has asignificant collection as well as aprogramme of temporaryexhibitions, including watercolours to be loaned by the Royal Collection. But Parissien says: “Because alot of corporates rightly want their stafftovisit —and let’sassume they’re all based in London or Edinburgh —it’sjusttoo far for them to come.”Hesaysstate funding for the arts is decreasing and thatthe government is looking to privatephilanthropists to fill the gap, as it does inthe US.“Whatweneed to grow is this obligation thatthe Americans have,”hesays. Colin Tweedy is one of the leading authorities on arts sponsorship, as former head of Arts &Business, partofthe UK’sBusiness in the Communitynon-profit organisation. More than 20 years under Tweedy’s stewardship, Arts &Business attracted more than £1bn from the privatesector for the arts: “Wecan’t claim it all —itwas amatching grant programme,”hesays. But thatwas ahugeachievement for the business

ft.com/wealth|27 1.

and arts communities. We did our bit… Theartswere 1. transformed by that.” sponsor Credit suisse ‘ifWeneglect business, Tweedy fears for arts sponsorship todaybecause so adopted ahoarding at the national gallery We Will damage private manyorganisations have abandoned corporatesponsors, 2. focusing increasingly on individual philanthropy.“If we an exhibit from the sector funding’ neglectthe business community, we will damageprivate british library’s2015 sector funding generally,” he warns. magna Cartashow, There seems little excuse when business sponsorship is which wassponsored There were jitters over alegal case brought by by linklaters tax deductible, he says: “It’samarketing activity, which 3. environmentalists againstthe Tate galleries and BP.In you can offset.” dinner on stage for 2014,aninformation tribunal ordered the galleryto Part of the problem, he adds, is thatthe UK no longer supportersatthe give details of its BP sponsorship. TheTatehad initially has areal picture of what’shappening. “Since 2012, rsCinstratford refused, claiming thatthe information could intensify the figures aren’t available,”hesays. “So it’s acomplete protests and harm its abilitytoraise moneyfromother guesstimate. Isense thatthe corporatesector is now companies. Thecase was brought by environmental dropping. Individuals maybedropping. We don’t know campaigner Brendan Montague, supported by the because no one’s doing the survey.”Funding body Arts charityPlatform, whose spokeswoman, Anna Galkina, Council England says asurveyis“in theworks”. said the sponsorship deal provided BP “with aveneer of There is also some nervousness about corporate respectabilitywhen in realityitistrashing the climate”. sponsorship. Last year,the UK’sMuseums Association Thetribunal accepted evidence that“arts sponsorship asked its members to consider whether accepting money can be understood as ameans of enhancing, maintaining from sponsors risks compromising museum values. or repairing BP’s brand”. TheTatewas forced to reveal its BP sponsorship between 1990 and 2006 totalled £3.8m. But this is arare instance. Most sponsorships are seen 2. as mutually beneficial. At London’s National Gallery, corporatebenefactors who payanannual£35,000 are offered twodinners or tworeceptions in the galleries for their clients. Credit Suisse, its sponsor since 2008, developed an app allowing the public to viewan imagined recreation of Leonardo da Vinci’sstudio and discover more about his paintings and their context in an exhibition at the galleryin2011-12. Hoardings outside the gallery, in place during maintenance work, promoted the bank, the exhibition and the app. Credit Suisse realises culture“has no language barriers” and its extensive sponsorship includes long- term partnerships with renowned arts institutions, from the Kunsthaus Zürich artgallerytothe NewYork Philharmonic orchestra. Other sponsors are drawntoprojects with an obvious link to their own business interests. They include City

28 |ft.com/wealth 3.

Carta manuscripts, to develop and deepen relationships ‘somecurious corporate with their keystakeholders.” guestsfindthemselves Dirk Heinrich, managing director for Germanyand Austria of Axa Art, an insurer,sayshis companyhas “two quitecaptivated’ targets” in sponsoring artfairs and specific artprojects worldwide: “brand visibility” and underlining thatAxa is “partofthe artcommunity”.Its artfair sponsorships ondon; lawyers Linklaters, which sponsored aBritish Library include tours with arthistorians and educational talks. Yl exhibition this year on the nation’s legal charter,the Sponsorships can also instil apassion for the arts in ller Magna Carta. “The relevance of our Magna Carta sponsors or their guests thattheyperhaps didn’t know ga

images exhibition to our sponsor,Linklaters, was clear from theyhad. Mallyon says some people have attended RSC

tY the verystart,”saysAlexMichaels, the British Library’s performances as “curious” corporateguests, having had et corporaterelations manager.“We involved them little experience of the theatre. “Theyfind themselves /g

od right from the startand, throughout the period of captivated,”she says. “Wehaveactually developed quite the national

wo sponsorship, theywere able to leverageanextensive regular individual audience attendance from people s: it programme of activities, including an eveningevent who’vecome to acorporateevent. They then have a nk oto around theunification of the four surviving 1215 Magna relationship with us, which is adouble benefit.” ph da

ft.com/wealth|29

moverand shaker appkingUri Levine is shepherdinghis israeLi start-UpsintobiLLion doLLar Unicorns

BY John Reed in heRzliYa photogRaph BY eYal waRshavskY

ri Levine could, if he wanted to, be doing something else UriLevine,says —or, indeed, anynumber of other things. he wants to save TheIsraeli entrepreneur co-founded Waze, the traffic people time and moneythrough and mapping mobile app thatdisrupted the in-car his apps navigation business and now has more than 50m users. He and the company’sother shareholders sold the companytosearch giant Google for areported $1.1bn in 2013 in one of the country’sbiggest high-tech “exits”. Levine will not disclose how much he made from the sale; Globes, the Israeli business publication, estimated at the time thathis stakewas 3per cent and he netted about $38m. It is safe to saythatthe deal made him veryrich indeed. Yetinstead of retiring early and indulging in his hobbies —heisanavidcyclistand skier —Levine has been involved in six other start-up companies, all with a common denominator: to save ordinaryconsumers time and money. “Doing alot of good for alot of people is the only thing Icare about,”Levine told the Financial Times at the Herzliya office of Feex,the highest-profile of his newventures. And by “good”, he says he means, “if Ican save you money, if Ican empower you, if Ican make things accessible to you thatwere not accessible”. Levine is one of anew breed of Israeli entrepreneurs who are holding on to their start-up companies for longer and shepherding them into the billion- dollar-plus valuation league known to investors as “unicorns”.Iftheydosell, theyare increasingly

32 |ft.com/wealth ft.com/wealth|33 1.

‘i am notdonewiththe 1. Levine says, wearing ablackFeexT-shirtand sunglasses Waze’s app offers perched on his greyhair.“Thegap between consumers revolutionsiwanttodo driver-generated and the industryisbig and dramatic, and there is ahuge maps opportunityfor disruption.” —there aresomany’ 2. telaviv is avibrant In acountrywhere manyofthe top 1per cent indulge city with ayoung in largehomes and lavish habits, Levine keeps alow ploughing their know-how and moneyinto new population who are profile. He lives in arentedflat in Kfar Saba, near Tel companies and becoming serial entrepreneurs. high app users Aviv,riding his bicycle to mostplaces; for longer trips, he Whereas Waze, with its driver-generated maps, drives his Alfa Romeo Giuliettaorhis children’s Renault obviated the need for expensive satellite navigation Clio. “Ingeneral, Idon’t believe in spending more than devices for its users, Feex is aiming to return to you’re making,”hesays. consumers some of the moneyinvestment managers While frugal in his own habits, Levine has grand chargefor theirretirement and other funds. In the US ambitions for the newcompanies where he is chairman alone, these fees add up to about $600bn ayear,Levine or aboard member.Hebelieves thatsome, while says, more than twice the size of Israel’s GDP. destined to remain small start-ups in their firstfew Feex,which advises users on how to switch their years, could become “unicorns” as theysucceed in solving investments into lower-fee vehicles, is advertising itself big problems and one daybeacquired for $1bn or more. as “the Robin Hood of fees”. This is something newfor Israel. Thecountry Levine’s other companies follow asimilar theme: he is nicknamed “start-up nation”has areputation for also involved in Zeek, an online marketplace for unused producing world-beating technologycompanies: Israelis store credit, and Roomer,which allows people to sell and pioneered antivirus software and invented the memory buy non-refundable hotel reservations. He is aboard stick, and are grabbing adisproportionate share of the member at Moovit, acompanythataims to do for public newcybersecurityindustry. Israel’s high-tech military transportation whatWaze did for cars. is afamous incubator for talents; Levine did his own Another of his companies, FairFly,allows users to militaryservice in Unit 8200, Israel’s cyber spy agency. rebook plane ticketsatalower costifthe fare falls after But the country’sgroundbreaking entrepreneurs are their original booking. Engie allows customers to use a also famous for their impatience. Historically,theyhave smartphone to diagnose whatiswrong with their car, been better at generating newideas than building their then feeds back mechanics’ quotations, taking some of companies into national champions. Venture capital the mysteryand murk out of car repair. groups and industrial investors from America, Europe “The mission is solving big problems for consumers. and increasingly China, are always scouting for new In manycases, these are things Iran into accidentally,” opportunities in Israeli technologyand are ready

34 |ft.com/wealth mstime ea /dr ro bLoomberg; sLideze s:

oto 2. ph

ft.com/wealth|35 buyers of fledgling companies. “If you are afirst-time 1. entrepreneur,itisadifficult dilemma: a$50m-$100m exit is alife-changing eventfor an entrepreneur in their 20s or 30s,”saysGadi Tirosh, managing partner of Jerusalem Venture Partners (JVP), Israel’s biggest venture capital fund. No longer.Israel’s high-tech sector,now 25 years old, is producing entrepreneurs, such as Levine, who are experienced and confident enough to scale up their companies into the billion-dollar league. Waze’s sale to Google setanew benchmark, or in Levine’s word, a“target”,for Israeli tech, tempting other company founders to hold on for longer. Another member of Israel’s newbillion dollar-plus club is Mobileye, aJerusalem companythathas captured acommanding share of the world market for devices enabling autonomous driving, with its cameras thathelp vehicles to brake, park, and drive themselves. Investors in CyberArk, acybersecuritycompanyin which JVP was an early investor,chose to build the companyinIsrael and listits shares on NewYork’s Nasdaq rather than sell to abig technologygroup. IronSource, an online software and mobile distribution company, was recently listed as worth $1.1bn as of August2014onaWall StreetJournal listof“the billion dollar start-up club”. When founder-entrepreneurs do sell, theyare more likely to do so at ahigher valuation and use the company to create newconcerns with biggerambitions. “Israeli entrepreneurs are getting more experienced, more mature and want not justtomakemoney, but to actually makeamark,”saysRubi Suliman, high-tech leader at PwC in TelAviv.“We are seeing more and more of these.” Mobile apps and the cyber-world have helped to level the field in Israel’s favour,given the ease with which mobile technologies can be tested and rolled out in foreign markets, with the help of small teams in the US, Europe or elsewhere. Israel’s small size —just8mpeople —was traditionally seen as adrawback in the drive to create successful big companies. Levine, however,thinks the country’s

‘assoon as you become good enough andfree, youwin’ companies are at an advantagevis-a-vis their American competitors, as theyare more likely to go international straight away rather than focusing on the local market. He joined Waze’s twoother founders in 2007. Theapp’s breakthrough concept, which Levine today compares with Wikipedia, the crowdsourced encyclopedia, was to use the collective wisdom of drivers and the GPS functions in their phones to create maps. Building the critical mass and working out kinks in the es ag

technologytook time. Thefirst, rudimentaryversion of im

Waze worked on aNokia phone. Thecompanylaunched ty in Israel and the US in 2009, then in the restofthe et :g world in 2010. As it went global, the company’spartners

oto 2. spotted areas where it was not good enough: Israel has ph

36 |ft.com/wealth 3.

1. no ferries and fewtunnels, so it needed to find asolution moovit is apublic for whattodowhen auser’s GPS disappears. transportapp to make In 2012, says Levine, everything changed. “Assoon travelling in anycity easier as you become good enough and free, you win,”hesays. 2. Should Levine and his partners have held onto Waze cyberark security longer and built an even bigger concern? PwC’s Suliman company’snasdaq is doubtful. “Waze is an application thatisverydifficult bell in newyork to monetise if you are not Google or Facebook,”hesays. 3. mobileye,with “Ithad to be sold.” cameras to help brake Notwithstanding its exit, Waze remains partofIsrael, and park,enables cars where it has about half of its 200 global staff, mostof to drive themselves whom work on research and development. “Google owns us, but we are largely autonomous and have our own office space,”acompanyrepresentative says. Of Levine’s Feex venture, he says he gotthe idea for it in 2009, during the global downturn, when the funds in his own investment portfolio lost20per cent of their value, on top of which, he says, he was charged “a lot of fees”.When he approached the funds’ managers, he succeeded in having them reduced. Feex’s main focus is the US,where the majorityofits 25 employees work out of aNew York office. Theservice vets users’ portfolios and makes recommendations for similar investments with lower fees. Thecompanysays it has more than 30,000 users in the US and more than 100,000 in Israel. Feex aims to earn its keep through commissions it makes when it refers customers successfully to alternative investments. Thecompanygrewout of the Zell Entrepreneurship Programme, an academic course at IDC Herzliya, where Levine mentoredateam of students charged with solving “a big enough problem we could address”. Roomer,the marketplace for non-refundable hotel room reservations,came out of the same school year.The companyallows users to sell bookings theyare unable to use, and collects apercentageper transaction. Levine hints thatheisnot finished yet. Themedical care industry, he says, is another sector where consumers are “getting ripped off”and is ripe for disruption.

X “Weare doing more and more,”hesays. “I am not X X : finished with the revolutions Iwant to start—there are s o t so many.” o h p

ft.com/wealth|37 equities emergingmarkets

bY matthewvincent

assets in acronyms

usinesses never used to 15 per cent rebound in 2012, the past think about acronyms. But, four years have involved annual losses nowadays, thinking up catchy of 22.7per cent, 3.2 per cent and 2.6 buzzwords has become a per cent. It was perhaps appropriate, Bbusiness in itself. then, thatLord O’Neill later added In the earliestyears of my career, South Africa to the original quartetof Iworked in the same TV studio as geographies: anyone who invested in aregional broadcaster who thought recent years will now be truly Bras[s]ic. nothing (or certainly too little) of Even the newly Minted look alot promoting his eponymous holiday less well off, as Mexico and Indonesia’s business: StuartHall International earning power is hit by the fallen oil Travel. Ithen left to join ashort-lived price and Turkey’s by fallen borders. heritagemagazine thatmight have Writing in the Financial Times last achieved more prominent shelf space year,veteran CityinvestorTerrySmith had it been sold into stores under its said: “Forget the Mints or the Civets — unabbreviated name: Stately Homes how about Moldova, Uganda, Greece and Gardens. Iamjustrelieved thatmy and Suriname?These Ihavechristened current employer is being taken over by the Mugs, aprettygood description of Japan’s Nikkei and not merged with the anyone who would investonthis basis.” South Hertfordshire Advertiser. But investment managers with Assetmanagers, however,seem longer time horizons argue there is no to have spent more recent years President Vladimir need to be so literal, or too offended. contriving acronyms to enhance their Putin of russia, ‘moldova, Last month, Neil Williams, group credentials. It all started in 2001when right, greets china’s chiefeconomistatHermes Investment PresidentXiJinping uganda,greece, Jim, now Lord, O’Neill, erstwhile Management, pointed out thatthe Goldman Sachs’ chiefeconomist, suriname... mugs’ CinBrics canstill supportits equity noticed thatthe GDP growth of Brazil, market.Heargued thatChina could Russia, India and China had surpassed of years ago, research by Citywire cutreal lending rates from 4per thatofG7countries: on those Brics he found thatfund pickers were cent, further devalue the renminbi built afund, an indexand areputation already “sceptical” about “marketing and spend more on infrastructure. as an expertonemerging markets. Four buzzwords” and unconvinced by asset Rothschild Wealth Management has years later,heidentified Bangladesh, allocations driven more by vowels than noted arebalancing of the Chinese Egypt, Indonesia, Iran, Mexico, valuations. Even Lord O’Neill told economyalongside the slowdown. Nigeria, Pakistan, the Philippines, Bloomberg he worried about “going Similarly,Couttshas told its clients that Turkey,South Korea and Vietnam down in historyas... the guy thatjust service companies are taking over the as the next 11 growth opportunities constantly created acronyms”.And, prime position in China’seconomy, as it but wisely chose to call the strategy now,itwould seem, he has gothis moves from export and investment-led N-11 rather than INVESTPIMPB. Or wish: twomonths ago, Goldman Sachs growth to greater reliance on domestic VISITBNPMP.Or, indeed, anyother closed its Bric fund after the assets consumers. anagram. In 2010, HSBC tried to make under management fell to $100m, from As these Bric consumers benefit from the economies of Indonesia, Vietnam, apeak of more than $800m in 2010. rising wages, theyeven help the Mof Egypt, South Africa, Colombia and With China’seconomyslowing on all the Mints: rising labour costs in China Turkey sound more inviting by likening bar the official measures and Russia’s makeMexico appear an appealing base them to small furryAsian and African reeling from collapsing commodity for manufacturers wanting to export to es

mammals: the Civets. Then, ayear prices, it seems the countries could not the US. aG

later,Fidelitysuggested how much be anymore unappealing if theywere Williams prefers to viewthe Bric im investors might makeiftheystuck grouped with Andorraand Puerto Rico. slowdown as “the baton... being handed ty et

with Indonesia and Turkey,but added According to indexprovider MSCI, back to advanced economies to fuel /G Mexico and Nigeria: aMint. equityinvestments in Bric markets world growth”—helpfully reminding FP :a

Whether investors remain convinced have fallen 14.5 per cent over one year us all thatinternational travel need not to by anyofthis is debatable. Acouple and 5per cent over five. Apartfrom a be abad thing. Pho

38 |ft.com/wealth

familyoffice jeremy hazlehurst

@JHazlehurst

themiDDleeast minDset

he late literarycritic Edward Then there is politics. Areportby Said famously invented the Invesco Perpetual, the investment concept of “Orientalism”: manager,says85per cent of Middle the idea thatthe west’s Eastern family offices are connected to Tperception of the eastis sovereigns. Theline between sovereign coloured by western political ideology. wealth fund and family office can Agood example, arguably,isthe US be fuzzy and government policyand television drama Homeland,which spending commitments can affect follows the fictional adventures of investment strategy. American spies in the Middle East Because much of the region’s family and is widely seen by people in that wealth comes from commodities, region as depicting Arabs as suspect, explains Emile Salawi, head of family dangerous and untrustworthy. This, say offices at French bank BNP Paribas, the critics, reflects and reinforces the it is preytoprice fluctuations. This dominant US viewofthe Middle East. volatility, he adds, “makes them much Perhaps because this “Orientalist” more prudent in the management of viewissoembedded in western culture their assets —theywill look to diversify it iseasy to picture wealthyfamilies in away from the core business”. the Middle East, especially the Gulf,as These family offices’ assets tend to ime/aP

patriarchies populated by sheikhs in be less liquid than those of typical wt

dishdashas and Lamborghini-driving ho playboys. Thereality,ofcourse, is /s completely different, as family offices in ‘The volaTiliTy erel the region illustrate. av Theidea of “putting everything of TheirWealTh rB in abox called afamilyoffice” is a iDie makesThem :D relatively newphenomenon, says to Sailesh Barchha, an adviser to the

more prudenT’ Pho Kuwaiti royal family —who differ in several respects from their western counterparts. Forastart, there is the European institutions, which can also at Vestra PrivateOffice. “There are Homeland,with sheer amount of wealth generated, leverageexisting assets more easily.But some really dynamic families doing erstwhile Cia agent which means the moneytrickles in terms of investment, the differences some sophisticated thinking around Carrie mathison, playedbyClaireDanes down along way. “You are having come down to style. “The teamsare governance and succession planning, conversations about hundreds of relatively small,”saysSalawi. “You often more than in some western millions of dollars with people who are probably have one or twoindividuals countries, where asuccession can be veryyoung —children, really,” he says. who are veryclose to the beneficial taken for granted,”hesays. Thesource of the wealth is also a owner or royal family,whereas in This is being driven partly by the factor.Ifmoneybubbles out of the Europe you getamorecollegial return of the second or third generation ground, it is not surprising there is approach. There is one adviser who is who have been educated abroad. For amorecasual attitude to it than in a predominant and veryinfluential over family offices now,the question is family thathas worked hard to create the royal family or beneficial owner.” about balance: balancing the needs of and preserve wealth for multiple Despite this more informal approach the older generation with the dreams generations, and has embedded ethics —orperhaps because of it —there is a and aspirations of the young. of diligence and thrift. Those factors, focus on educating the next generation, rather than anyinnate profligacy, particularly female family members, Jeremy Hazlehurst is founder of explain the playboys. says AlexHayward, wealth strategist Business Family

40 |ft.com/wealth

investment rare earths

BY Paul Mcclean

objectsofpower andrisk

nSeptember 2010, alongstanding fewrare metals,”headds.“Themagic territorial dispute between Japan in [Steve] Jobs’glassscreen was due 1. and China turned nasty.AJapanese to adash of the rare metal indium [a coastguard vessel caught sight of minor metal rather than rare earth], IaChinese trawler offthe coastof which serves as the invisible link, a the uninhabited, Japanese-controlled transparent conductor between the Senkaku islands in the EastChina Sea. phone and your finger.Adusting Thecoastguard ordered the trawler of europium and terbium provides to leave. But, within moments of the brilliant red and green hues on the order,the twoboats collided. Asecond screen. Cerium buffs the glass smooth collision followed 40 minutes later, to the molecular level.” leading the coastguard to seize and Foralong time, this importance arrestthe captain of the Chinese ship: was reflected in their price. Shortly in retrospect, not awise move. after the Senkaku dispute, the price China’sresponse was furious and of rare earths rocketed over fears of immediate. Thegovernment moved to aChinese monopoly of the materials, cutoff Japan’s supply of rare earths, a creating abubble thatburst after just peculiar setofelements located deep afew months. A$100 investment in in the periodic table, which form the the Market Vectors Global Rare Earth/ bedrock of much modern technology. Strategic Metals ETF in October 2010 Such was Japan’s reliance on these would have been worth $148 in April materials thatmerely days after the 2011. That same investment is worth exportban, which Beijing maintains it just$20 today. never imposed, Japan relented and the This year,the price of rare earths, Chinese captain was released. and manyofthe companies thatmine “The strategic importance of rare and produce them, has fallen even earths is hugeand will only grow,” further.InJune, US miner Molycorp says Gareth Hatch, founding principal filed for chapter 11 bankruptcy at TechnologyMetals Research, a protection and in Augustitmothballed provider of market intelligence and its operation in California, the only US analysis on rare earths. More and more rare earth mine. Australian company elements such as cerium, praseodyium Lynas Corp, now the only rare earths and europium are being used to miner outside China, blamed illegal power and perfecteverydaygadgets, operations and excessive Chinese from iPhones and headphones to exports for its 11 per cent quarter-on- microphones. Even in tinyquantities, quarter sales fall in September. theyare also used as the driving force According to AnthonyLipmann, behind certain cancer treatments, chairman of the Minor Metals Trade nuclear reactors and X-rays. Association from 2003 to 2006, this

“Theyfulfil asimilar role to thatof price crash is representative of the rs yeastinpizza,”writes David Abraham, hugelevelsofspeculation in rare earth eute

author of The Elements of Power: investment. “The rare earth hype ;r

Gadgets, Guns and the Struggle for a convinced ordinarymembers of the rs Sustainable Futureinthe RareMetal public to investinthings theyhad no Age. “While theyare only used in small control over,” he says. s: reute amounts, theyare essential. But with prices so low and demand “Whole industries are built on justa growing, could now be agood time oto ph

42 |ft.com/wealth ‘scIentIstsare realIsIng theIr propertIes’

to investinrare earths? Lipmann is adamant thatpeople should shyaway from investing. “It’s... simply not an investment,” he says. “Itwould be delinquent in the highestdegree for anyone to purport to attractinvestorsinto putting money directly into rare earths —metals which takealifetime of professional involvement to handle and deliver to end users. [Itis] an investment undiluted by anybalancing factors — 2. an investment thatrelies entirely on a bet. That is not wealth management, Rare earths: justirresponsibility.” Abraham also sees the difficulties of Cerium investing in rare earths. “It’shard to ce (58) themostabundantof give an elevator pitch for something the rare earths,cerium no one has even heardof,”henotes. is asilverymetal that “Relying on unclear industryjargon, oxidiseseasily and manyinvestorsare often in the dark is used in catalytic regarding the risks.”However,hedoes converters, alloys and magnets. not rule out investment of anyform. “It’sariskyinvestment. But the future Gadolinium is bullish —the price of materials Gd (64) will increase because scientists are asilvery-white and toxic metal, justrealising the properties thatthey gadolinium is used have. Ultimately,ifyou understand to target tumours Chinese policyand the processing of in neutron therapy. the materials, you can be comfortable it is also used in investing into this space.” Mri scans to make certain tissuesand Hatch agrees. “The conventional abnormalitiesmore wisdom is thatifMolycorp can’t make clearly visible. it, then how can anyone else?But that’s overly simplistic. [Rare earths] are Lanthanum La (57) not alostcause, but investors mustbe oneofthe most more discerning.” reactiverareearth Compared with the boom of 2011, elements,lanthanum opportunities for rare earth investment is usedtomake are todayfew and far between. The carbon arclights and to reduce the Market Vectors Rare Earth Strategic phosphatelevelsin Metals ETF remains asmall possibility, the blood of patients with assets of just$33m, andits price with kidneydisease. has fallen 36 per cent since the startof the year. Lynas Corp is regarded by manytobe one of the fewsafer options in asector besetwith risk, though it is currently trading at A$0.08 againstahigh of A$2.60 in 2011. As the obscure elements thatsparked yetanother dispute between Japan and China continue to fall in price at agreater ratethan the restofthe 1. rareearth metals commodities market,manyare unsure bags arechecked at where to turn. amine in nancheng Their low prices are attractive, county,china particularly as their importance grows. 2. Forothers, however,theypose too great achinese fishing boat is inspected by a arisk and the tremors of the 2011 crash japanese vessel are still too strong to ignore.

ft.com/wealth|43 PhilanthroPy effectivealtruism

bY AliYA RAm

bangsper donatedbuck

tseems unlikely thata28-year-old causeneutral” and focusongiving a philosopher could reshape how the proportion of their income.Giving globally rich and powerful, from WhatWeCan,for example,challenges Silicon ValleytoDowning Street, people to donate 10 percent of their Ithink about philanthropy. income — which maybemore difficult But Will MacAskill, afellow in forpeople on lowincomes thanfor the philosophyatLincoln College, Oxford, verywealthy. is seeking to do justthat. He advocates “Moralitycan sometimes be very amore practical form of philanthropy, demanding, especially if you’re living in termed “effective altruism”, which this kind of moral catastrophe, which over the pastyear he has presented at Ithink we are,”MacAskill says of the Google’s headquarters in California inequalityinthe world. “I’mpretty and at Number 10. Hisphilosophy happy for people to give for whatever has also been endorsed by billionaire reasons theylikeaslong as theygive to philanthropists such as Facebook co- the right places.” founder Dustin Moskovitz. Walking to the bicycle shed outside Theidea is simple: effective altruists, his poorly lit office, unembellished influenced by philosophers such as except for acheap kettle on ashelf, JeremyBentham and Peter Singer, MacAskill says it is important to argue thatpeople can “do good better” anchor aculture of giving in economic by determining how theyspend their research and “good scientific thinking”. time and money. He acknowledges gathering evidence MacAskill says investors, politicians of cost-effectiveness is not always and philanthropists —indeed everyone possible, for instance, immediately —should analyse how theydonate after natural disasters, and can be time- time or moneysotheycan be confident consuming and expensive, but insists of having the greatestimpactor, put by encouraging people to work in effectivealtruism’s use it is necessaryfor charities to gain the another way, of improving the quality high-earning jobs, such as finance and of analysis is designed public’s confidence. “People are dying of peoples’ lives. consulting, and then donate partof to ensuretime or of easily preventable diseases and we moneyspent has the “Mostmoral philosophers think we their income to charity. greatest impact want to help, but it’s not enough merely should be doing something more with Matt Wage,aWall Streettrader, our resources to help the very poor than attracted media attention in 2013 we currently do, but veryfew people when he announced he had given ‘I’m happyfor are actually acting on that,”hesays. away $100,000, approximately half Effective altruism is primarily a his salary. He told the NewYork Times people to gIve,as practical movement, he expands. he had deliberately targeted ajob that long as It’s to “Ultimately it’s [about] how much you paid well so as to be able to give more are improving others’ lives per dollar. to charity. therIghtplaces’ Ithink likeaneconomist.” But according to MacAskill, the MacAskill setuptwo charities, main purpose of effective altruism is Giving WhatWeCan and 80,000 to wean people offclingingtotheir to help,”hesays, adding thatsavingone ck

Hours, while undertaking post- monthly wage. He retains aproportion life is “obviously great” but if ahundred to graduate studies at Oxford.The two (£20,000 in 2009 terms, rising with lives could be saved, “that’sobviously have subsequently been brought inflation) of his salarytolive on and more important”. together under the Centre for Effective gives the rest(roughly half his overall MacAskill feels his philosophycan Altruism, which seeks to “use evidence wage) to organisations such as health help to save lives. “I used to think I and analysis to help others as much as initiatives Deworm the World and the should getannoyed at myself because I possible”. AgainstMalaria Foundation. [was] going to study Wittgenstein,”he

When it was launched in 2011, So whyshould we allbecome effective says of his academic ambitions before pggutenbergukLtd/Is :I

80,000 Hours, which gives career altruists—and how? MacAskill effective altruism. “Now thatguilt has to advice to graduates, caused controversy says givers should be “explicitly gone away.” pho

44 |ft.com/wealth

correspondent: special southsudan

BY Katrina Manson

Fragilespark oF wealth

he mostconspicu- ous feature of South Sudan’s elite is its absence. Thenewest countryinthe world is in dire need of T committed, educated nation builders. But manyofits most wealthycitizens park everything from their assets to their families —and themselves —outside the country. Little wonder,perhaps. Thepeople of South Sudan spent decades fighting awar of secession with the Khartoum government to the north, only to plungeinto its own civil war soon after winning independence in 2011. In the pasttwo years, more than 2m people in anation of 12m have fled death and ethnic atrocities. An Augustpeace deal maysee government and rebels form an interim joint administration, but even ifthatcomes off, trenchant poverty and insecuritywill pervade for years. Alongside that, due to reduced petroleum output because of fighting, abad deal agreed with the north and falling world prices, the oil- based economyisshattered. Without incoming dollars to sustain central bank reserves, the currencyisnow in 1. meltdown. Yetmanyhavefound away to make money, thanks to the combined impact says Malok, whose business supports of oil revenues, aid dollars and an them all. LikemanySouth Sudanese, 3. unhealthydose of corruption. Many his firstwife lives in neighbouring are even proudthatSouth Sudan is one Uganda so the children, three of whom of the fewAfrican countries that, on are of school age, can getagood, safe balance, sends millions of dollars out education thatpoorerSouth Sudanese to its diaspora, rather than relying on cannot hope to access at home. remittances sent in from abroad. “For renting Ihavetopay $1,100 per Lual Malok, abusinessman who month,then for the food Isend another rents out warehouses and offices in $1,000, plus everythree months Isend the capital Juba, is among them. Every $3,200 for school fees,”saysMalok month he sends thousands of dollars to in his dishevelled Juba office. “All the his family in Kampala. business people here are the same: they “I have four kids; these are from my transfer moneyout to their families, firstwife. Then Ihavetwo younger especially for school fees; thatisa kids with my second wife. She’s here,” must.”

46 |ft.com/wealth 2.

1. Underdevelopment at home is only drives thatcirculate the leafysuburb the UN refugee camp partofthe explanation. One regional of Lavington. TheKenyan government at Malakal diplomatinvolvedinprotractedpeace has also put up South Sudanese 2. presidentsalvakiir in talks describes the South Sudanese politicians in an elegant hotel, while the capital Juba leadership as “shameless looters who the Ethiopian government hosted 3. are living in luxurywhile showing months of peace talks. amodel presents a breathtaking indifference [to their Even so, the streets of Juba bear creation by alocal people]”. the marks of much changeoverthe designer 4. South Sudan was ranked 171st past10years. While the citywas Developersare of 175countries in Transparency once adustbowl in which the only moving into Juba International’s annual corruption accommodation comprised shacks, perceptions index(CPI) last year,worse tents and containers, todayithas than Iraq, Pakistan and Bangladesh. high rises and even higher hopes. Therot setinearly.Within ayear Developers speak of creating roof-top of independence, President Salva cigar rooms to serve the country’selite; Kiir declared officials had already businesses from insurance to banks stolen horrifying amounts from the makerecordprofits. At the Da Vinci fledgling state. “Anestimated $4bn is restaurant, couples chatand pose for unaccounted for or,simply put, stolen family snaps beside ariver,sipping by former and current officials, as well beers as the sun goes down. Car dealerships are still doing a decent trade, but theyremember ‘manyhave wistfully the bestofthe good old days, when the newgovernment of 2011 put foundaway in orders for dozens of newvehicles To make money’ at atime for ministers and senior civil servants. Even todaythe odd Hummer hugs the streets and parks up outside as corrupt individuals with close ties late-night bars. But friends of the to government officials,”hewrote. owners caution it is afragile show of “Mostofthese funds have been taken wealth: manylive in run-down homes out of the countryand deposited in and can no longer afford the cars’ foreign accounts. Some have purchased upkeep. properties, often paid [for] in cash.” In acountrymarked by decades of An investigation commissioned by war,still home to an inflated army Avaaz, an online campaign group, consisting of hundreds of generals, 4. indicates South Sudan’s top leaders manyformer fighters at the helm have eUters

move considerable property and also always professed the ease with ;r

banking assets outside their own which theyare prepared to “goback to My la country, into eastAfrica, the Middle the bush”. reDUx/eyeviNe; /a s/

Eastand Europe. “Weare now spending less and it Us “While South Sudan goes up in means we can live within our means,” flames, the families of the elite enjoy a says asenior militaryofficer.Heoffers rk tiMe luxurious lifestyle outside the country this unlikely belt-tightening theory yo

subsidised by endemic corruption of to help dismiss the significance of a /New eNeDicte Desr ks statecoffers,”Sam BarrattatAvaaz dollar crisis so acute thatforeign-built ;B ic told the Financial Times lastyear as factories and formal businesses have es rh ag le diplomats pressed for sanctions. this year started to close. iM ty In Kenya’scapital Nairobi, “This austere style of economythat ty s: South Sudanese number plates are we have to have now is better for us,” et /g commonplace on the four-wheel he adds. oto aFp ph

ft.com/wealth|47 correspondent: special cHicaGo

BY neil munshi

Ashowofforce

n Star Wars,producer GeorgeLucas pitted ascrappy band of rebels 1. againstapowerful galactic empire bent on building amassivespace Istation at the edgeofthe galaxy. But in Chicago, it is Lucas who is being castasthe evil emperor and it is alocal civic group, Friends of the Park, thatsees itself as the only hope for the galaxy —orAmerica’sthird-largest city. Their version of the film’s Death Star bears afar less ominous name: the Lucas Museum of Narrative Art, agift from the producer to the city. Theparks group is suing to halt construction under a19th-centuryland usagelaw.But barring the unexpected, the museum, which will costhundreds of millions of dollars to build, will be among the largestgifts given to an American cityfor generations when it opens on the glittering shores of Lake Michigan by 2020. Themuseum has the backing of nearly everyprominent Chicagoan or institution, from Mayor Rahm Emanuel to Lucas’swife, Mellody Hobson, the president of Chicago- based Ariel Investments. it’s probably the biggest philanthropic 1. 3. Hobson says the projectis“something gifttoacitysince the time of the rendering of the thatisgoing to outlastusand hopefully robber barons.” proposed Lucas Museum of Narrative be an educational centre for people from Theunprecedented nature of Artinchicago all over the world”. Itsability to attract the giftishard to overstate. This 2. tourists is amajor reason the mayor is not naming rights on aroomat The lateststar wars lobbied hard for the museum after the Met. But it is the “robber”part film, The Force Lucas’soriginal pitch to the Presidio thatstrikes opponents, especially Awakens, will be released later this national park in his hometown, San when theyconsider thathugegift month Francisco, fell through. Though the notwithstanding, the cityhas offered a 3. museum has not released an official billionaire a99-year lease on 17 acresof The Lucas Museum price tag, the Chicagoprojectisroughly prime lakefront property for $10. is to be built on what is nowacar park, three times the size of the BayArea Themuseum itself could be “a but critics sayshould proposal, which Lucas had said would wonderful gifttothe cityofChicago”, become aparkland costhim about $300m to build. Lucas says Juanita Irizarry, executive director said then thathewould provide a of Friends of the Parks. “Weare just $400m endowment upon its opening againstthe location,”which is currently and another $400m upon his death. It home to acar park but advocates say was, to paraphrase LukeSkywalker,a should be turned into parkland. big womp rat for the mayor to bullseye. “Whatwefind extremely problematic Emanuel “understands the vision”, is, even if you think the Lucas Museum Hobson says. “He’ssupportive of it and should go there, whether Chicagoans sees whatthis can mean for Chicago— want our public lands to be given

48 |ft.com/wealtH 2.

about all that’swrong with architecture today: acelebration of object-making at the expense of public space, plus a shameless coddling of the powerful”. He has argued thatitshould be built inland so as not to “foul” an already crowded stretch of “Chicago’sgreatest public space, anearly 30-mile-long chain of parks and beaches along Lake Michigan”with more congestion. But the design has its defenders. In acolumn in the Tribune, architect Frank Gehrycompared criticism of the building with complaints thatinitially greeted his Guggenheim Museum in Bilbao and Walt DisneyConcertHall in LosAngeles. He said the design followed in the footsteps of Snøhetta’s Malmo ConcertHall and the flowing work of Zaha Hadid. Lynn Osmond, president of the ChicagoArchitecture Foundation, says the design fits a“cityofinnovation and risk… Ithink this is really pushing that envelope.” But perhaps the greatestendorsement the museum has received comes from the people whose rejection sent it away to rich people,”she says. Critics TheunprecedenTed to Chicago. Thepublic debate over have decried the process as aclassic the projectpitted old-moneySan backroom Chicagodeal. Some have naTure of ThegIfT Franciscans who had funded the caught awhiffoftake-it-or-leave-it Is hard To Presidio’s revitalisation and opposed the noblesse oblige.Public hearings were museum againsttech titans including only held after the site was announced. oversTaTe. Twitter’s Jack Dorsey, Netflix’s Reed Lucas ultimately hired amember of Hastings, Yahoo’s Marissa Mayer and the mayor-appointed site-selection 198 years for an extra$20. But it is the Google’s Eric Schmidt, who backed the committee, architectJeanne Gang, to museum’s design, by Chinese architect project. Ultimately,old moneywon out.

euM design the grounds. Ma Yansong, which has proved the Lucas’sproposed Beaux Arts design did

us Lucas did not help matters when mostcontroversial. not conformtothe trust’sguidelines

sM he told an audience in Chicagolast Depending on whom you ask, the for the space, though theyproposed an cA

AP year thatafter the San Francisco park interactive museum, which will house alternate site within the park thatthe Lu

D; rejected his proposal, his wife, who everything from film to comic books to museum rejected. of LT

sy has donated to Mayor Emanuel’s popular and digital art, looks like“an “The Lucas projecthad alot going

fiLM campaigns, said, “Don’t worry, I’ll talk intergalactic zit”oravolcano capped by for it —programmatically the board As

ourTe to the mayor.” Some wondered whether atoiletseat. It has been unfavourably and public were veryexcited about. uc sc ;L theyhad discussed it when Emanuel compared with Jabbathe Hutt. Therealchallengewas around design,” rT attended the couple’s wedding the year Blair Kamin, the ChicagoTribune’s says Joshua Steinberger,chiefof wiNg eA before. Pulitzer Prize-winning architecture strategyfor the Presidio Trust. “Itwas rA From the outset, there were critic, has called it a“vanityproject, the one of these projects… thatbrought s: D

To criticisms of the process and thatlease, Temple of George”.Hewrote that the out alot of excitement and we were all which can be renewed for an additional “mountainous blob… speaks volumes disappointed not to getitinthe end.” of NArrATiv Pho

ft.com/wealtH|49 correspondent: special brazil

BY Joe LeahY

ScandalondiSplay

rt lovers in Brazil’s visitors,”Juliana Vosnika, director of ‘there is uncertAintyAbout southern cityofCuritiba the museum, wrote in the guide to the have been treated to an exhibition. beingconnected to An elite unusual sortofshow Thecollection seemed designed involved in corruption’ this year.“Works Under to confirm the worstprejudices of A Guard”, at the Oscar ordinaryBrazilians: thatthe corrupt Niemeyer Museum, is an exhibition are fabulously wealthyand the income, it is hard to shock people of 48 important artpieces seized fabulously wealthymustbecorrupt. with displays of ostentatious riches. from allegedly corrupt businessmen Indeed, as Brazil slips into recession But in the pastyear,the lifestyles of who took partinBrazil’s biggest graft and unemployment rises, the scandal Brazil’s A-listhavebeenput underthe scandal, akickback scheme at state- and the economic meltdown have X-raylikenever before —with often owned oil companyPetrobras. made it unfashionable to be filthyrich surprising results. Theworks on display, including in Brazil, says Daniela Falcão, editor- Theexposés started with Eike pieces from the greatBrazilian in-chiefofVogue Brazil, the style Batista, an oil magnate who was eu uS

modernistpainter Cicero Dias, magazine. When Brazil is booming, Brazil’s richestman until he admitted iMaGeS e/M composer and painter Heitor dos she says, “it is even OK to spend alot acouple of years agothathis oil fields ty aS et /G Prazeres and manyothers, were because you are helping the countryto were lacking akey ingredient —oil. aw Fp

deposited with the museum because grow.Now,onthe other hand, there is He was accused of insider trading and oK ;a the federal police did not have the so much uncertainty…you don’t want ajudgeordered apublic auction of facilities to store them properly. to be connected to the elite involved in the belongings of the tycoon and his Marcell “The museum fulfilled its mission to these corruption schemes.” family.Brazilians watched as police ieMeyer S: conserve and house artcollections, and In acountryinwhich the wealthiest confiscated acollection of luxurycars, rn ca also to democratise access to them for 10 per cent control 54 per cent of yachts and jet-skis from the Batista oto ph oS

50 |ft.com/wealth 2.

clan’s manyresidences. But Batista’s is also accused of involvement in the trappings turned out to be modest Petrobras scandal by prosecutors. compared with whatwas hoarded by He had aLamborghini, Ferrari and those involved in the Petrobras case. Porsche briefly confiscated before One of the company’sformer directors, getting them back under acourtorder. Pedro Barusco, confessed in court These shows of alleged corruption statements thathehad stashed away and ostentatious wealth are cramping $100msolelyfrom the proceeds of the style of Brazil’s super-rich when it corruption —thatand another $1m he comes to doing whattheydobest— said he had spent on medical fees and spending prolifically,analysts say. 1. travel. Vogue’s Falcão says the elite are Another Petrobras director,Renato still consuming but doing so more Duque, is accused in documents made judiciously,investing inhigh-end 1. available in the federal courtofthe jewelleryand often offshore. They theoscar niemeyer stateofParaná of accepting artworks are keeping their purchases secret, Museum’s ‘works in exchangefor contracts—charges he especially the mostextravagant. under Guard’ exhibition denies. Hiscolleague, Paulo Roberto Retailers are having to be smarter 2. Costa, was “given”anew RangeRover to maintain an effective service for an untitled work by Evoque by his partner in the Petrobras clients who don’t want to be seen to be cicerodias from the scam, black-market money-dealer spending extravagantly,Falcão says. exhibition Alberto Youssef. Police found more Beyond this, the rich, likeeveryone 3. eduardo cunha, who than $500,000 in cash in Costa’shome. else, are worried about losing money has been implicated in Indeed, the Petrobras officials are in the recession, so theyare opting for the petrobrascase only the beginning. Politicians too have items thatshould hold their value. “If been accused of living the high life, you are buying diamonds or emeralds, among them Eduardo Cunha, head of it will be apiece that will lastfor the lower house of congress. Astaunch generations and be safe because even if evangelist—his big idea is to have a the economygoes bananas you will still “heterosexual pride” day—hehas been have this as an asset,”saysFalcão. implicated in the Petrobras case and As for the Oscar Niemeyer Museum is accused of having secreted millions in Curitiba, as long as wealth and of dollars in Swiss bank accounts. He corruption go together,itseems there denies anywrongdoing. will be no shortageofnew pieces to Former president Fernando Collor, display—the museum is preparing to who was impeached during his rule in exhibit anew batch of 139 works from 3. the early 1990s for alleged corruption, the Petrobras investigation.

ft.com/wealth|51 PhilanthroPy Donor-aDviseD funDs

BY SimoneY KYriaKou

models of efficiency

ark Zuckerberg “Unless it is professionally managed 1. alternatives, such as cars, land, fine is the one to and staffed, with the help of aclear The American Red artorwine. TheCAF sayssuch assets thank. In the last strategy, an autonomous foundation cross, seen here could be put into these schemes too. responding to asouth days of 2013, often proves demanding to run for carolina flood, is a TheflexibilitylentbyDafs might be the Facebook adonor,”says Luc Giraud-Guigues, beneficiaryofmoney useful for parents, who can make co-founder and secretary-general of Switzerland-based from the silicon an irrevocable donation of valuable his wife Priscilla Fondation Philanthropia, an umbrella Valleycommunity items to prevent future squabbles M Chan donated foundation. “Also, in the context of low foundation over inheritance. 2. 18m Facebook shares worth nearly financial return, afoundation whose Priscilla chan and Thestructure’s anonymityalso $1bn to adonor-advised fund (Daf) fiduciaryresponsibilityistopreserve mark Zuckerberg makes this type of fund more appealing called the Silicon ValleyCommunity capital for the mission decided by 3. than apublicly registered family Foundation, shining aspotlight on a its founder will need sizeable capital The Wildlife foundation if donors do not want conservation network scheme thatwas formerly little known to function and provide meaningful is another sVcf the world to know the family silver —inthe UK,atleast. supporttosociety.” beneficiary has been earmarked for WaterAid, Dafs are not new. Described by Setting up aDaf also involves less for example. “Sometimes prominent Guy Simonius, head of wealth and tax paperwork. “I’ve metseveral clients families appreciate the abilitytobe planning at Julius Baer,the private who setupatrust and ended up discreet,”explains Canady. bank, as “an efficient ytoiwa rrevocably feeling abit put out when theyrealised This maybewhy some people donate moneyfor charitable purposes”, theycould have had adonor-advised have criticised the scheme. In April theyhavebeenauseful means of tax- fund instead,”saysTom Hall, head of 2014,Marc Benioff, chiefexecutive efficient giving for US families since 1931. philanthropy services at UBS Wealth of business software company “Inthe US,people are opening Dafs Management. “A full charitable trust Salesforce, himself abillionaire at arateofthree to one, compared with could takethree to nine months to philanthropist, questioned the use setting up their own charitable establish, together with fees of upwards foundation, whether paying in $20,000 of £2,000. But we can open aDaf for or millions,”saysJohn Canady,chief our existing clients within aweek or 2. executive of NationalPhilanthropic twoatthe most.” TrustUK, aDaf manager. Dafs are not justfor billionaires Billions of dollars have been flowing either.Manyfirms in the US will set in: US Dafs’ charitable assets under up aDaf for $5,000. TheUKCAF’s ck

management had grown from $32bn averagestarting value is £10,000 and To in 2007 to $71bn by the end of 2014, while it has 100 client accounts in according to the NPT. excess of £1m each, with the largestat

TheUKisalittle waybehind. NPT’s £50m,the averagefund is £250,000. mAGes; is UK office, setupatthe end of 2013, Another attraction of Dafs is that yi has raised just£5m from UK donors, investors can put nearly anything in while the UK Charities Aid Foundation them. Foryears, the abilitytodonate s; GeTT (CAF) has run Dafs and Daf-like shares to these schemes has been abig os

funds since the 1970s and has 2,800 draw for US investors, and has become ed cR

donor-advised funds on its books, with more popular in the UK since former nR

£800m of assets under management. chancellor Gordon Brown introduced cA Investment bank UBS puts its latest charitable tax changes in 2000. total at SFr60m ($60m). This is not pure altruism but ki/AmeRi

Traditionally,philanthropists have sensible planning: rising stock markets Ws established foundations or charitable and share values create potential trusts. But the structure of afoundation capital gains tax liabilities, but fino oT

means thatwhile the family has great donating shares results in areduction TA

freedom over where the funds are to an individual’s CGT bill. nu invested, theyand the trustees must Cash and shares are the assets most dA s:

also bear the burden of administration, commonly held in aDaf,but portfolios To due diligence and compliance. are often laden with interesting Pho

52 |ft.com/wealth 1.

of Dafs in an interviewwith San Once donated, moneyina Francisco Magazine: “Silicon Valley Daf maynot be reclaimed —itis CommunityFoundation is abunch of earmarked irretrievably for charitable Dafs. Yougive your moneytoSVCF purposes. “Once it comes to us, it and getyour tax write-offfor theyear, belongs to the charity,”points out but [the foundation] has no obligation Keziah Cunningham, senior advisory to administer thatmoney.Where’s manager at CAFPhilanthropy.“We [Zuckerberg’s money] gone?What see ahugevariation among donors good is it doing now?” about how theywant to use their Daf, True, Daf accounts often hold but it hastobefor charitable purposes, donations for an indeterminate period. as long as these pass our robust Disbursement is at the discretion of validation process.” the founders or their successors. “A With their flexibility, anonymityand donor can hold aDaf in perpetuity tax efficiency, could these schemes ever and pass it on to the next generation,” replace foundations? Notfor everyone, explains Stefan Velvick, senior private thinks Canady.“Some people might be client manager at CAF Philanthropy,a fed up with the compliance and choose division of the UK foundation. to close their charitable trust, but 3. But hesitation to apportion others might prefer to have the family moneyisnot the same as reluctance: foundation and the complete control adonor maynot yetknow exactly and discretion this brings,”hesays. ‘a Donor-aDviseD funD can where theywant their donations to Noteverybenevolent billionaire end up. They only know theywish to wants complete control over their be an iDealvehicle to give charitably and tax-efficiently. charitable giving. It is no surprise, swellawar chest for Therefore, aDaf can provide an therefore, thatDafs are gaining in ideal vehicle to swell awar chestfor popularitywith affluent altruists on eventual allocation’ eventual allocation. both sides of the Atlantic.

ft.com/wealth|53 book review famine,affluenceand morality

bY Daniel ben-ami

fighting povertyas aheroicventure

hatwould you do if you letting asmall child drown? However, were walking pasta acloser examination shows there are shallow pond in which reasons to question Singer’s moral asmall child was reasoning. In particular,the use of a Wdrowning? There can small child as astarting point risks be little doubt thatthe vast majorityof infantilising the people it is ostensibly people would wade in to save the child designed to help: the poor themselves. even if it came at the relatively trivial It casts western philanthropists as costofgetting their clothes muddy. heroic saviours of the helpless and This is the starting point of afamous those living in dire conditions as essaybyPeter Singer,anAustralian passive victims of dire circumstances. moral philosopher,firstpublished in An alternative starting point 1972. It has justbeenrepublished, would be to see human beings as along with twoadditional essays by capable of shaping and reshaping Singer and aforeword by Bill and their own circumstances. People have Melinda Gates. the abilitytotransform the world Of course, Singer does not stop with around them for the better,rather the example of the drowning child. His then simply lying back helplessly and next step is to argue there is no moral accepting their fate. difference between letting the child This sense of agencyisthe main force drown and letting one die in afaraway for eliminating poverty.Perhaps the orBis

countryasaresult of extreme poverty. moststriking recent example is China’s /c

Thetwo cases are different in widely acknowledged success in lifting ff ru

psychological terms, though. Thesmall hundreds of millions of people out of rt child in the hypothetical example is poverty from the 1980s onwards. This Ba in front of you whereas those living was achieved by adrive to transform its ve Da

in severe poverty are generally along economy, rather than allowing itself to s; wayaway. But in moral terms, Singer become the objectofwestern pity. ge argues, the challengeposed is the same. That is not to saycontemporary ma yi In both cases it is possible to China is perfectorthatits model eliminate the suffering at no risk to should be followed slavishly.Only

our physical well-being. We might get that, through their own efforts, heK/gett our clothes muddy or be able to afford people have often succeeded in lifting tot fewer luxuries, but thatisminiscule themselves out of poverty through when setagainstthe value of ahuman economic growth. life. Indeed, long before China’srapid hel/pho Over the years Singer’s argument utsc has inspired countless philanthropic tr initiatives around the world. With the ‘PeoPlehavethe ability as

endorsement of Bill and MelindaGates hom in this newedition it has gained public to transformthe World ,t recognition from perhaps the world’s around them forthe greatestphilanthropists. Perhaps its influence is not surprising better,ratherthensimPly since, at firstsight, its argument seems Kevin frayer lyingbackhelPlesslyand s: unimpeachable. Who, after all, would want to be seen arguing the case for oto accePtingtheir fate’ ph

54 |ft.com/wealth 4.

1. surgeindevelopment beganinthe life in aslum area of late 1970s, thatisprecisely how the Beira, mozambique west’sown prosperitywas created. 2.,3.and 4. starting from the Western affluence is primarily the bottomand working result of concerted action by earlier their wayupin generations, rather than the giftof Beijing, china external charity. This alternative viewdoes not, of course, preclude saving drowning children or even giving aid to those suffering in an emergency. Akey problem with Singer’s argument is precisely thatitblursthese exceptional circumstances with the everyday business of conquering poverty. In fact, Singer is, at leastinpassing, critical of the forces thatdomostto eliminate poverty.Inhis original 1972 essayonfamine he favourably cited 1. twoofthe mostprominent critics of economic growth of the time. There are additional reasons 3. to resistSinger’s arguments. His explicit condemnation of those who fail to accept adutytoeschewnew clothes or cars for the sakeofthe poor risks generating resentment. He is essentially trying to guilt-trip westerners into giving up luxuries. Yetthere is not afixed amount of wealth in the world. It is quite possible —indeed, it has been the norm in recent times —for theworld’s poor to have become richer at the same time as the affluent countries have also become wealthier.Those who want to contribute to famine relieforpoverty alleviation should be free to do so. But viewing the world’s poor as mere passive recipients of western charityis atemptation thatshould be resisted.

Famine, Affluence, and Morality by Peter Singer.Oxford UniversityPress.

The writer is the author of Ferraris for 2. All (Policy Press 2012)

ft.com/wealth|55 INVESTMENT PASSIONS MUSICMANUSCRIPTS

BY StephenWilmot

STRINGSTHATRESONATE

or collectors, music represents achallenge. It is by nature 1. ephemeral, fleeting; the precious objects associated Fwith it —instruments, manuscripts, autographed black-and- white photographs —are curiously silent, their significance usually evident only with experttraining. Yetwhere there is passion there are collectors. In the amateur camp, my father owns the autograph of Emil Gilels, apiano virtuoso from Odessa in whatisnow Ukraine, scribbled in one of my dad’s old Oxford University diaries. He also obtained the signature of ShuraCherkassky, another pianist from Odessa, when he sawhim at a concertgiven by SviatoslavRichter, perhaps the mostfamous Sovietpianist of them all, despite Cherkassky’s protestations thatmyfather should solicit Richter’s instead. But thathas been lost. My father took better care of his record collection, but mass- produced articles rarely have an investment value. My husband has taken on my father’s mantle, having picked up acharity shop score of Benjamin Britten’s opera Rape of Lucretia some years agothat included the composer’s signature. But his mostprized possession is adouble- sided sheetof15th-centurySpanish manuscript with an early form of music notation running alongside gorgeous black and red calligraphy. It came from adealer in Ohio, via the internetand aspecialistframer in the old printing districtofSouthwark, south London. It is, unusually,music as visual art. Limited supply is often cited as the keydriver of so-called alternative investments. But Nestor Masckauchan of Tamino Autographs, who claims to have the largestinventoryofopera and classical music artefacts in the world, running to about 75,000 items, also stresses the importance of demand. He says there are alot of signed photographs of Maria Callas

56 |fT.COM/wEAlTh ‘iFsomething is rare it doesn’t mean it’s very expensive.people also have to be interested in it’

2. 3.

1. on the market,yet because Callas is museum-style exhibition. “This is a Pinchas Zuckerman, the mostfamous soprano the opera world where everyone knowseveryone Jacqueline du Préand stagehas ever produced theyfetch and people want the discretion of Daniel Barenboim in the 1960s steep prices —typically from $800 to privatesales,”saysPaul Cutts, Christie’s 2. $2,000, depending on the messageand global managing director for decorative Maria Callasin1964 condition. “If something is veryrare arts. 3. it doesn’t mean it’s very expensive,”he Thelocation of the exhibitions in Title page of the says. “People also have to be interested Shanghai and Hong Kong is revealing. Parthenia with music scores by William Byrd, in it.” TheChi Meifoundation in Taiwan, an John Bull and Orlando These people rangefrom expert offshoot of the ChiMei petrochemical Gibbons collectors on the hunt for specific empire founded by Shi Wen-Long, items to novices looking for gifts. owns one of the world’s largest Masckauchan recently helped awoman collections of fine violins, yofman with little musical background find a which are loaned to players. Cutts is 25th wedding anniversarypresent for expecting aphilanthropistsuch as Shi, her husband. Knowing he enjoyed the rather than amusician, to stump up the music of GustavMahler,she settled on colossal sums required. “There are still the programme for aconcertconducted artists who own their instruments but by the Austrian composer in the early it’s increasingly uncommon,”hesays. 1900s, an objectthattypically fetches Theprice increases thathavepushed $300-$500. these antique instruments beyond “Itwas agood present; he loved it,” the reach of musicians have also reports the dealer. made them an excellent investment. But such artefacts mayprove TheStradivari Society has calculated harder to sell than more mainstream thatthe famous luthier’s violins cost investments if consumer sentiment $18,000 on averagein1960, risingto weakens. Masckauchan recalls that $7min2008 —aninflation rateabout business suffered in the 2008-09 10 times higher than thatofgold. Cutts downturn. “These are items people claims the market remained robust don’t buy when there’s arecession,”he through the subsequent recession. says. Others are less enthusiastic about At the other end of the price scale the high prices commanded by are the famous stringed instruments unique items. Lisa Cox, an expert in

IMAGES made in the workshops of Cremona, manuscripts, complains that“it has

Ty northern Italy,inthe 17th and early become almostimpossible for ordinary ET 18th centuries. Christie’s,the auction privatecollections to buy major /G

ET house, is marketing aprivatecollection manuscripts because the Chinese have

IOll of one Stradivari cello and seven come in and jiggedthe market”.

Rv violins, including four made by Antonio Globalising demand for scarce Stradivari and three by Guarneri del assets mayhavemadethe top tier of Gesù. Thecollection is valued at alittle the manuscript market,likethatfor more than $60m, partly because all the instruments, the preserve of the super-

IPNITZkI/ROGE instruments are associated with famous rich. But there are tiers below: printed

,l artists. music by such people as William Byrd, Thecello, one of only 65 made by the 16th-centuryEnglish composer, Stradivari, spent manyyears in the remains accessible, says Cox. possession of the cellistJacqueline Those of more modestmeans can ON ARCHIvE

lT du Pré, who in the 1960s became the console themselves with the thought popular face of British classical music. thatmanuscript is the next bestthing S: Hu They are not being auctioned but to music. And music, unlikemusical OTO sold by privatetreaty following a antiques, is not limited by supply. PH

fT.COM/wEAlTh|57 AMBITIOUSWEALTH STEPHENFOLEY

@StephenFoley

ALLINANAME

nthe US sitcom, Curb Your Equibust doluptas of precedent and of whatthe market Enthusiasm,inwhich writer and nem estaut aut et will bear,” he says. “Whatthe Harvards, comedian LarryDavid playsa volore, officil lanima ne Cornells andYales negotiate for their latus nus serum cone socially clumsy version of himself, sectur re rights is tracked by others.” Iour hero is honoured for his donation To the extent thatthere is similar to alocal museum. Except that, scrutinyondonations at less well- alongside the “LarryDavid Wing”, a known colleges, we have all justlearnt second wing funded by an anonymous that$20m is not the right price for donor is also being inaugurated, and rebranding Paul Smith’s.Thatisa guests are cooing over the modesty of useful market lesson, but it does not the other benefactor. answer the question of whether Mrs “Now it looks likeIdid mine for the Weill should giftthe moneyanyway. credit, as opposed to ‘MrWonderful Arguably,donating $20m without Anonymous’,” David huffs. strings would now be doubly generous, Thescene comes to mind because the resetting the bar so thatfuture donors social and reputational complexities of would need to chip in more. modern philanthropy,and the fraught donations came with strings. Big-name donors: Christopher Oechsli, president issue of naming rights, have come up MrsWeill gave no immediate public Chuck Feeney,above, of TheAtlantic Philanthropies, the in real life in upstate NewYork, in a response to the criticism and did not and Joan Weill organisation thatisgiving away an situation of such awkwardness that return amessageIleftwith the Weill $8bn fortune from DutyFree Shoppers it could have been conjured up by family foundation. Paul Smith’s has co-founder Chuck Feeney, has tussled LarryDavid himself. also been declining to answer questions with the question of naming rights Thefamous protagonistinthis case on whyshe walked away,citing the before —and his conclusions are is Joan Weill, wife of Sandy Weill, the confidentialityofthe negotiations. also not especially supportive of Joan retired banker who created Citigroup Thecontrarian in me wanted to Weill. Feeney’sname is not on any from the merger of Citicorp and write adefence of MrsWeill, if not building or institution. Travelers Group. MrsWeill is a on moral grounds then at leaston An Atlantic study found thatnaming long-time supporter of Paul Smith’s,a practical ones. Naming rights, after rights and publicitysurrounding grants small privatecollegeinthe beautiful all, are negotiated likeabusiness deal, can be of value to the recipient, Oechsli Adirondack Park, and asponsor of its aformal agreement complete with says. “When you lend your name to ambitious expansion into four-year contractual obligations on both something, it is an imprimatur.The degrees. However,the school community sides. If MrsWeill’s $20m cheque name is abrand and it can be a objected to aplantorename it Joan bounced, no one would expect positive thing for recipients to point ERICH

Weill-Paul Smith’s Collegeinreturn for Paul Smith’s to keep her name to aspecificmajor donor as an LP

afurther $20m gift. above the door.Itshould work example of whytheyare worthyof CA Naming buildings, professorial chairs the other way, too. grants from others.” AS ;P

or scholarships after their donors is one Iwondered whether there However,leaving one’s name ES

thing; tampering with ahistoric name might also be amarket-based offabuilding or aprogramme AG IM is quite another.Mrs Weill was roundly argument. Educational can be of even more value, he TY

criticised for asking for such athing. institutions have developed a says. That way, the institution ET Acourtagreed, saying it violated the sophisticated and verylucrative can still sell the naming rights /G terms of the Smith family’s founding system for the monetisation to someone else. Ultimately,it giftsome 70 years ago. of ego. MrsWeill’s withdrawal seems defenders of the Weills are One might have expected MrsWeill keeps thatmarket mechanism left with whatKosnitzkycalls “the to content herself with some other intact. golden rule: it’s their money”. commemoration in return for her gift. Mike Kosnitzky, apartner “Myattitude is thatthe rich LARKE/FILMMAGIC Instead, she withdrewit, provoking at lawfirm Boies, Schiller & are different,”hesays. “They NC vilification. Hercommitment to Flexner in Miami, has drafted a viewtheir name as partofhistory, Paul Smith’s was attacked as shallow fair fewofthese deals for clients. theyare thinking about issues of S: BRENT

and selfish; her right to call herself “Valuing naming rights is alot legacy. TheWeill name is important; TO aphilanthropistquestioned if her likevaluing artwork: amatter it’s historic.” PHO

58 |FT.COM/WEALTH