Sultan in trouble as world's richest ruler has to liquidate his assets

THE SULTAN of Brunei, the richest man in the world until recently, has been forced to liquidate millions of pounds of investments to pay off debts.

Within the last month, the Sultan, Sir Muda Hassanal Bolkiah, has liquidated up to pounds 1bn worth of internationally managed investment portfolios to repay loans for which they were collateral.

In the last year, the man who can afford to have his Aston Martin sports cars flown to the British factory to have the engine oil changed, has seen his personal fortune fall by an estimated $2bn (pounds 1.3bn). He has also lost his title as Forbes magazine's World's Richest Person.

The unprecedented cash-raising measures have been forced on the ruler of the tiny South-east Asian state by a combination of the wide-ranging economic meltdown in the Far East and the collapse on the world market in the price of oil - the source of most of Brunei's wealth.

Just how serious his problems are is not clear as details of the Sultan's wealth are considered a state secret. Any problems the Sultan is facing will obviously be affected not only by the uncertainties of oil prices, but how long the recession in the Far East lasts.

Yesterday, it was reported that the state-run Brunei Investment Agency (BIA) had run down funds with Morgan Grenfell Asset Management, JP Morgan - the American investment house - Citibank and the Japanese bank Nomura.

"This is quite serious," said one source yesterday. "It clearly shows there is a cash crisis of some sort that he is having to deal with."

The Sultan himself is taking the matter seriously. The Independent has learnt that last month he called his investment managers to the capital of Brunei, Bandar Seri Begawan, for a crisis meeting. But the prices and the recession facing the former high-growth economies may only be part of the problem that is threatening the finances of the man whose name has become synonymous with vast, unimaginable wealth.

In recent months, the Sultan and his brother, Prince Jefri, have been locked in a bitter dispute following a series of allegations that the Prince was leading a wild and extravagant lifestyle, financially and sexually.

Earlier this summer, one of Prince Jefri's companies - Amedeo Development Corporation (ADC) - was closed with outstanding debts of up to pounds 10bn. Prince Jefri himself was ousted as head of the BIA, the last post of any importance he held within the state, and he has fled to the United States.

From there he claimed that his dismissal was the result of the increasing influence of conservative government advisers who wished to turn Brunei into a fundamentalist Muslim state.

News of the Sultan's asset liquidation comes as teams of accountants work through records in Brunei's Ministry of Finance to ascertain exactly how much the country is worth.

Senior partners from the accountancy firm, Arthur Andersen, have also been appointed by the Sultan as special managers and inspectors to a number of companies, including the now defunct ADC.

"Clearly things have not been going as they should," said a spokesman for the accountancy firm. "It will be the job of the managers and inspectors to go in and have a look at what has been happening and make their report and recommendations for the future."

Most analysts believe the Sultan's wealth and the general wealth of Brunei are one and the same thing - he technically owns all of the 2,200- square mile country - and any reduction of his personal fortune could hit the country hard.

The population, around 300,000, pays no income tax, social services are free and lavish while the education system includes grants for overseas education, and enables children from poorer homes to enter professions.

All this has been achieved from the wealth of oil, which started to make Brunei rich in the early 1970s. But some estimates predict oil reserves will last no more than a further 25 years. Pressure on the Sultan to create alternative wealth is growing and things will not have been helped by the latest developments.

Perhaps it is too soon to start feeling sorry for the Sultan. While he may now be only the second-richest man in the world, this is more to do with the inexorable rise of the wealth of Microsoft's Bill Gates, rather than a collapse of the Sultan's.

It is worth bearing in mind that although Mr Gates has built up a resounding pounds 31bn, the Sultan has a respectable pounds 22bn. And he earns more than pounds 70 a second.

He is still very rich.

PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
people
News
A mugshot of Ian Watkins released by South Wales Police following his guilty pleas
peopleBandmates open up about abuse
Sport
Javier Mascherano of Argentina tackles Arjen Robben of the Netherlands as he attempts a shot
world cup 2014
Arts and Entertainment
The successful ITV drama Broadchurch starring David Tenant and Olivia Coleman came to an end tonight
tv
Sport
Four ski officials in Slovenia have been suspended following allegations of results rigging
sportFour Slovenian officials suspended after allegations they helped violinist get slalom place
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

SAP Data Migration Consultant

competitive: Progressive Recruitment: My client, a FTSE 100 organisation are u...

Programme Support, Coms, Bristol, £300-350p/d

£300 - £350 per day + competitive: Orgtel: My client, a leading bank, is curre...

Linux Systems Administrator

£33000 per annum + pension, 25 days holiday: Ashdown Group: A highly successfu...

(Junior) IT Systems Administrator / Infrastructure Analyst

£28000 - £32000 per annum + pension, 25 days holiday: Ashdown Group: A highly ...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice