Rich kids get legacy of fear and failure

Most people can only dream of owning a fortune, but family wealth has its own problems, writes Mark Rowe
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The Independent Online
An Increasing number of children of the fabulously rich are pulling out of the family businesses or squandering their riches as they fail to cope with the 20th-century phenomenon of the self-made rags-to-riches millionaire.

Philip Beresford, an expert and researcher into the behaviour of Britain's wealthiest families, says the legacy of post-war self-made millionaires is becoming apparent now that their heirs and heiresses have grown up. The children are having to learn to cope with amounts of money most can only dream of. According to Mr Beresford, few manage to do so successfully.

Inherited wealth is divided into aristocratic and business fortunes, says Mr Beresford. It is the business inheritance, he argues, that is hardest for heirs and heiresses to come to terms with.

"Inherited business wealth brings problems to the second generation. The children suffer classic inadequacy feelings. The old man has done it all and spends his time reminding his children of it," said Mr Beresford.

"The father is busy through the children's formative years and is always away building up the business. He becomes a remote God-like figure who has done it all. He then feels guilty about never being around and decides to compensate them by shovelling the money in their direction. Sometimes the children feel pushed to emulate the father and end up being fleeced by sharks and charlatans."

The Moores family, of Littlewoods Pools fame, is a classic example of a dynasty weakened by inherited business wealth, says Mr Beresford. A money-making wheeze dreamt up by Sir John Moores in the dark days of depression in Manchester during the 1920s has spawned separate mail-order and stores divisions with combined sales of pounds 2.7bn.

Born of working-class stock, Sir John was an ambitious, ruthless social climber who sent his two sons to Eton and his two daughters to Cheltenham Ladies College and then castigated them for not having his drive.

Sir John handed over the reins to his second son, Peter, but returned and squeezed his son out when profits plunged from pounds 49m in 1977 to pounds 11.5m in 1980. The unthinkable corporate collapse had started to become a distinct possibility.

The blow to family pride was crushing. But it was Sir John's death in 1993, aged 97, that launched Littlewoods on its bumpy ride. Littlewoods has decided to throw its money behind home shopping but the Moores family is still there. Peter sold his stake in 1994. Another son, John, retired last year, and a fourth child, Janatha, has long kept her views to herself.

Paul Raymond, Britain's "King of Porn", is another who must have nightmares about his legacy. Mr Raymond opened his first Soho joint in 1952, made his fortune with Raymond Revue Bar and augmented it with property deals.

His son, Howard, is the only surviving child, and therefore presumed heir to a fortune estimated at pounds 350m. In the past 15 years the magnate has seen the drugs-related death of his beloved daughter, Deborah, and the casting into the wilderness of Howard for his former addiction to cocaine. Debbie was married twice and Howard once, with a further long- term relationship. All four unions failed.

The reclusive rich property developer Jack Dellal, known as Black Jack, is another magnate whose fortune has failed to ensure harmony in his family life. He came to the fore in the 1970s when he converted his small bank into a pounds 58m fortune.

His daughter, Suzy, died of a heroin overdose aged 25. Her sister, Gabrielle, began working for Paul Newman's drugs charity. Mr Dellal's son, Guy, was touched by the drug curse in 1978 when, aged 20, he received a suspended prison sentence in a cocaine smuggling case and was fined pounds 2,500. Happier endings are found among Jewish and Asian families because their traditionally close family bondings help them cope with the unique pressures, says Mr Beresford.

"Children in these groups are encouraged to take part in business discussions over meals and the importance of the work ethic is drummed into them from day one," said Mr Beresford.

Inherited aristocratic wealthcauses fewer problems. Cases like the Marquesses of Blandford and Bristol appear to be the exception rather than the rule.

The Marquess of Bristol has already lost his family estate and blown at least pounds 7m of his inheritance on a decade-long heroin and cocaine binge. He was banned twice for drink-driving, served 12 months on Jersey for smuggling cocaine in his helicopter and then notched up a pounds 3,000 fine for possession.

In 1990, he became the first British aristocrat to be deported from Australia after failing to tell immigration authorities about his record.

The Marquess of Blandford, son of the Duke of Marlborough, has been banned from driving four times and jailed twice.

"These two are classic black sheep. Most generations of aristocracy have it beaten into them at Eton and at home that the home and the land is important. But every generation of aristocrats gets the odd bad apple," said Mr Beresford. "The moral seems to be to work out how much money you really need, retire and get rid of the rest and don't give it to your kids.

This is a theory adhered to by Paul Sykes, creator of the Meadowhall shopping centre near Sheffield. A son of a miner, Mr Sykes moved into scrap metal and property development. Despite wealth estimated at pounds 220m, his children, Katie and Caroline, will not get a penny, although he has said he would happily buy them houses. He once explained his philosophy: "If I give the money to the kids it could interfere with their natural evolution. You have to let your children get on with it and not distort their lives with money."

The offspring of the fabulously wealthy can react to their fathers' wealth in different ways. The two children of Sir Graham Kirkham, the millionaire founder of the DFS Furniture chain, have shown little interest in their father's empire. Last year, Michael Kirkham, a charity worker, and his sister Julie, a former Yorkshire television employee, sold almost all of their 22 per cent stake in the company for pounds 112m.

Sir Graham, the son of a miner, left school at the age of 17 with no O-levels and founded his business in a former billiard hall near Doncaster. The family sold 48 per cent of the business for pounds 125m when DFS was floated on the stock market in 1993.

Sir Paul McCartney provides one of the few success stories of rearing a high-profile and wealthy family, apparently heeding the words of the Beatles hit Can't Buy Me Love. All four children, who are sitting on a nest egg of pounds 420m, were sent to state junior schools and comprehensives. Sir Paul admitted he thought about sending James, an accomplished musician, to boarding school. "I considered sending James to Eton, but I couldn't bear the thought of him coming home, talking all posh.

"You see, if my kids are going to inherit money, and they will, then I feel it's important they have their feet on the ground."

Mr Beresford said: "Money can never buy happiness for the future generations. You spend your life trying to get rich and when you get there you discover it's not worth it. You are even more insecure than when you were poor, you're fearful of losing it all, of being kidnapped and you worry about the effect it has on your kids."