Bonfire of the billionaires
The global rich list just got shorter. Billionaires are an endangered species after the crunch cost them $2trillion, Stephen Foley reports
Thursday 12 March 2009
If you are a sub-prime mortgage borrower, struggling to hold on your house, or an employee facing the threat of redundancy, you may not have a thought to spare for the world's wealthiest, but here's another line on the credit crisis: billionaires are suffering, too.
An eye-popping $2trn of the combined worth of the planet's billionaires has been evaporated over the past year. More than 300 people who could claim that prestigious label last year can no longer do so – that's 30 per cent of them. Warren Buffett, the US investor who used to be the world's richest man, has taken a $25bn (£18bn) hit, putting his bridge partner Bill Gates back at the top of the pack. The 10 biggest dollar-losers between them have this year lost more than the annual GDP of Ireland.
All these statistics and more are contained in the latest survey of the global billionaire set by Forbes magazine, which is the official arbiter of these matters. With stock markets plunging, businesses failing and bankers calling in the giant loans that they ill-advisedly extended during the boom times, the super-rich are facing difficulties they never prepared for.
"We are chronicling something unprecedented: the billionaire bust," says Steve Forbes, the multi-millionaire founder of the magazine. "The global economy has been battered by a financial hurricane. Without the easy flow of credit, the economy shrivels, and that is what is happening today. It is no surprise that billionaires are being battered, too.
"Of course, no tears will be shed for the billionaires whose net worth is going down but remember that these people created their own businesses – they are innovators and entrepreneurs, and they have made it possible for other people to get ahead and realise their dreams."
As the credit crisis has spread from the US, sweeping through Europe and on to the once-booming emerging markets of India, China and others, fortunes have revealed to have been built on sand. Russia, flush with riches from oil and other commodities, boasted 87 billionaires this time last year. Now it is down to 32 – and many of those are living on the largesse of the Russian state, thanks to an estimated $11bn in government bailouts. India and Turkey have each lost well over half their billionaires. Across the globe, the number of those who can boast a fortune over a thousand million US dollars has shrivelled from 1,125 to 793.
There is something lustrous about that title "billionaire" which makes the annual Forbes list a must-read, not just for voyeurs of the rich and famous, but also for the rich and famous themselves. Some tycoons have been known to hire public relations firms to make sure that the magazine does not miss them off. Donald Trump, the orange-haired icon of capitalist excess, once sued the writer of a book that claimed Forbes had got it wrong and he was not really a billionaire at all. (For the record, the magazine this year calculates Mr Trump's wealth at $1.6bn, despite the bankruptcy of one of his casino businesses. That is down from $3bn in 2008, but not as bad a hit as it could have been. "We're not going down, we're going up," he insists. "We're buying things we couldn't have dreamed of buying two years ago.")
The vast list of people who have lost their claim to billionaire status is every bit as interesting as the list of those that remain – if not more so.
British casualties include the two founders of Carphone Warehouse, Charles Dunstone and David Ross, and Sir Tom Hunter, Scotland's richest man. The new owner of London's Evening Standard, the Russian oligarch Alexander Lebedev, saw his fortune plunge from $3.1bn down into 9 digits. Viscount Rothermere, the man who sold it to him, has also dropped off the list, because of the declining fortunes of his Daily Mail & General Trust media business. Sir Anthony O'Reilly, controlling shareholder of Independent News & Media, owner of The Independent, is another name to disappear this year, having seen parts of his Waterford Wedgwood china and crystal business fall into receivership.
But it is the finance industry, the epicentre of the earthquake and blamed for the economic tsunami that followed, where the lost fortunes are the largest. Sandy Weill, the man who built Citigroup, is no longer among the American billionaire set – and his company exists still only thanks to $45bn in federal handouts. Hank Greenberg, whose expansion of the insurance company AIG saw it morph into a trader of toxic derivatives, can no longer enjoy a billionaire's retirement – and his company had to be nationalised by the US to avoid its losses bringing down the entire financial system. The City of London's derivatives king, Michael Spencer, of the brokerage Icap, is also off the list this year.
Of the men who remain – and they are largely men; only 72 are women, and just seven of those are self-made billionaires – few can boast of increasing their fortunes in the maelstrom of the past year. Michael Bloomberg, the founder of the business information company that bears his name, is a rare exception, bolstering the claim to economic competence that he is using to justify a third term as mayor of New York in elections this year.
And there are some newcomers, too, including Mansour bin Zayed Al Nahyan, the Abu Dhabi royal who bought Manchester City last year, whose fortune is estimated at $4.9bn, and two Chinese businessmen, Zhou Chengjian, the designer-turned-retailer, and Wang Chuanfu, whose firm makes electric cars. Also on the list is Mexico's most wanted man, drug baron Joaquin Guzman Loera, who has a $5m bounty on his head from the US government for flooding the country with cocaine.
The richest 30
Bill Gates: No 1 (last year: 3) $40bn, down $18bn
The Microsoft founder was the planet's wealthiest man for 13 years until losing the title last year, as he began to give his fortune away to charity. He is now back at No 1 because he lost less than his pal Warren Buffett and others at the top end of the list. Since Bill Gates gave up his day-to-day role, Microsoft has missed its profit forecasts like everyone else, but still looks relatively robust.
Warren Buffett, $37bn
Carlos Slim Helu and family $35bn
Larry Ellison $22.5bn
Ingvar Kamprad and family $22bn
Karl Albrecht $21.5bn
Mukesh Ambani $19.5bn
Lakshmi Mittal $19.3bn
Theo Albrecht $18.8bn
Amancio Ortega $18.3bn
Jim Walton $17.8bn
Alice Walton $17.6bn
Christy Walton and family $17.6bn
S Robson Walton $17.6bn
Bernard Arnault $16.5bn
Li Ka-shing $16.2bn
Michael Bloomberg $16bn
Stefan Persson $14.5bn
Charles Koch $14bn
David Koch $14bn
Liliane Bettencourt $13.4bn
Prince Alwaleed Bin Talal $13.3bn
Michael Otto and family $13.2bn
David Thomson and family $13bn
Michael Dell $12.3bn
Donald Bren $12bn
Sergey Brin $12bn
Larry Page $12bn
Steve Ballmer $11bn
Duke of Westminster $11bn
The biggest losers
Carlos Slim Helu
No 3 (2)
$35bn, down $25bn
In the past, the Mexican magnate vied with Warren Buffett and Bill Gates for the title of world's richest man, but the decline of the peso and the gathering economic storm in Latin America has pushed him down the list. He built on his father's business empire, snapping up cheap companies that include cigarette manufacturers and privatised telecoms firms.
No 34 (6)
$10.1bn, down $31.9bn
Anil Ambani never quite managed to close the gap on his estranged brother, Mukesh and, after being touted last year as the man who gained the most wealth of anyone in the world, he has lost all the gain. The two brothers carved up their father's Indian conglomerate, but shares in Anil Ambani's Reliance Communications, Reliance Power and Reliance Capital all collapsed this year.
No 7 (5)
$19.5bn, down $23.5bn
The boss of Reliance Industries, the biggest corporation in India, has held on to his title as Asia's richest man, but that will be little consolation for the wipeout he suffered as the country's stock market slumped and the economy teetered. It all makes his plans, revealed a year ago, to build the world's most expensive home – a 27-storey skyscraper in downtown Mumbai, costing upwards of $1bn – look like hubris.
No 164 (9)
$3.5bn, down $24.5bn
The Russian oligarch who embarrassed shadow Chancellor George Osborne last year became something of a political embarrassment in his own country, too, when he had to be bailed out with a loan from Vladimir Putin's government. His vast empire, which produces aluminium in Russia and vans in the UK, turns out to have been loaded with debt that he couldn't repay when the economy turned.
No 8 (4)
$19.3bn, down $25.7bn
The Indian-born, London-based steel magnate has lost more than half of his fortune – and the title of Europe's richest resident – because of the collapse in steel prices, now that builders around the world are scrapping projects. But while ArcelorMittal, the world's largest steel producer, has been retrenching, its founder continues to improve his standing among the global business elite, joining the board of Goldman Sachs last year.
No 178 (12)
$3.4bn, down $22.6bn
The past year has been a horrific late chapter in the story of a previously charmed career, as Sheldon Adelson's gambling empire totters on the edge of bankruptcy. East Asia's Sin City on the island of Macau is where the septuagenarian came a cropper, rolling out plans to develop new hotels and casinos there that proved too ambitious. Some 11,000 workers were laid off as the plans were scrapped at the end of 2008.
No 2 (1)
$37.0bn, down $25.0bn
Even the famed Oracle of Omaha has been crunched by the credit crisis, and his investment company's profits all but evaporated in 2008. Although he predicted the havoc that would be wreaked by derivatives he called "financial weapons of mass destruction", his stock market holdings have withered. Small investors, though, are still likely to flock to his annual meeting in Nebraska, to seek his wisdom on how to get out of this mess.
Kushal Pal Singh
No 98 (8)
$5.0bn, down $25.0bn
The exploding growth of the Indian economy had been one of the biggest stories of the global boom, and KP Singh rode its coattails to become the world's richest real estate magnate. He floated his Delhi-based empire on the stock exchange in 2007, put his son Rajiv and daughter Pia in charge of operations, and retired. Inevitably, with the sudden reversal in India's economic fortunes, its shares have crashed.
... and falling out of the charts:
$1bn, down from $9.6bn
There were many shooting stars in last year's list who have crashed to earth during the past 12 months, but none has fallen further than Ramesh Chandra, a banker's son who studied structural engineering in UK, then returned home to India to start a consulting firm. His company, Unitech, began building family homes in India in 1986 but it overstretched itself with moves into luxury developments, building projects in the bubble-economy of Dubai and the telecoms business.
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