Cobra in the Bath

by Miles Morland

  It was not only the city that was bankrupt and was forced to reach an arrangement with its creditors. The financial services industry, which was meant to provide the tenants for the Twin Towers’ 218 empty storeys, was also all but broke; it was certainly in no condition to sign long leases for shiny new space in buildings which were not even on Wall Street. For instance, in 1970 the mighty Morgan Stanley, whose shareholders’ capital today is $20 billion, had capital of $18 million.

  No one took a lease. To the great delight of the vast majority of Americans the World Trade Center went bankrupt before it even started. The city authorities in the shape of the Port Authority had to step in and take over ownership of the building. They too were unable to find tenants on a commercial basis so New York’s left hand signed a series of long-term heavily discounted leases with New York’s right hand, and the towers were duly filled with floor upon floor of low-paid clerical staff employed by various municipal and state bodies.

  It is ironic that the World Trade Center, for so much of its early life a reminder of the wrenching disunities of the Vietnam War and of the gulf that divided New York from the rest of the country, should become in its death a symbol of unity and indeed of America itself. When the first building was struck, everyone who was watching, and within ten minutes everyone in New York was watching, thought it was a freak accident, a light plane that had wandered off course. The first true moment of horror came when the second building was struck in full and open view of ten million people. The watchers in the streets and from the upper floors of midtown skyscrapers realised then that this was no random event. Someone was out to get them. But, as the smoke rolled over the downtown city, there was also a jutting of the jaw. These buildings, like America itself, could endure anything anyone could throw at them; they had been built, so people informed each other, to withstand the impact of a Boeing 707.

  There was no one watching who thought for an instant that these buildings might fall down. That the New York police and fire service were, on 11 September, as brave as men in combat is certain. But it is also certain that, as they charged, reckless for their own safety, into the Towers, they knew that they would have to brave smoke, flames and debris, but none of those men and women who entered the South Tower thought for a moment that the whole building would fall down. That was an impossibility.

  And that was the moment of metaphor. A great lowing cry halfway between a groan and a shriek went up from ten million throats simultaneously as New Yorkers realised that they were witnessing an impossible horror. This was not like a building toppling over; it was not like a building being demolished when a charge of explosive knocks away its underpinnings. The top fifteen floors of the South Tower began to slide down and then they did not collapse, or fall. They and everything in them vapourised. After that first bellow of horror, there was a time, five seconds, maybe ten, of a silence more absolute than the city had ever known.

  Accounts written by the first people to visit Hiroshima after it was destroyed by an atom bomb all remarked on the same thing: everything was covered in a thick coat of the finest grey-white powder, as fine as talc. Four hours after the first impact, I walked the five miles downtown to Ground Zero, as it was already being called by the newsreaders, driven by some feeling that I wanted to be a witness to an event which might change the history of the world. Everything there was covered in a thick coat of Hiroshima dust. Public, and indeed private, transport had ceased in the southern part of the city. The streets were emptier of traffic than they had ever been. A tired and sombre army of Wall Street workers marched north on fifteen-mile walks to get home; some carried the high-heeled shoes that they had exchanged on 14th Street for sneakers. Knots of watchers stood on the corners of the avenues looking south at a cloud of smoke bigger than, well, bigger than the World Trade Center.

  By then the only traffic coming in to the area was a long stream of ambulances from Long Island, New Jersey and the outer boroughs. A hundred of them were lined up six blocks north of Seven World Trade Center, the nearest building of the complex still standing. This presented an extraordinary sight. Its outside was still pristine marble and glass. Through every one of its windows could be seen orange flames so bright and high that people, so used to seeing computer simulations, kept on asking each other if they were real. The building itself, externally so normal and solid-seeming, suddenly shifted and developed a distinct tilt to the east. Two hours later it too fell down.

  Stretchers, gurneys and wheelchairs were drawn up on the road in front of the ambulances, ready for the survivors. Gradually the realisation dawned that there were no survivors from the Twin Towers. The people who had escaped before the holocaust had already joined the trudge north. Of those who were in the building, there were no living for the ambulances to treat. All the paramedics could do was look after sufferers from smoke inhalation and shock or those who had been struck by flying debris.

  The building of the World Trade Center had brought residents back to downtown. The excavation for the foundations of the Center had been tipped as landfill into the Hudson River next to the Center to create Battery Park City, now home to many thousands of residents. They had by now been evacuated from their homes and formed a refugee army wandering between the police roadblocks that had closed every street, asking questions to which no one had answers. The police, and the firemen, all clothed in uniform white-grey Hiroshima dust, knew by now of the toll that had been exacted on those of their colleagues and partners who had been the first to reach the area. Despite this, they continued their jobs with endurance and good humour. A weary man was stopped by a policeman next to me at a roadblock on Harrison Street. ‘You can’t come through here, sir.’ ‘I’m trying to get to the Staten Island ferry. An officer told me if I came this way I could get to it by taking the West Side Highway.’ ‘I’m sorry, sir. The Staten Island ferry is running but it’s not taking civilians.’

  Civilians. That is what New Yorkers had become. Civilians? This was now war? Against whom?

  25

  Starting Again

  By 2006 Blakeney Management had recovered from the setback of the late 1990s and put together six successful years as a result of our back-to-basics one-trick-pony strategy. Our success and the reasons for it did not go unnoticed. We had become known as the African markets pioneers, the people who had started it all, but others had started investing there too. That was gratifying but I was feeling restless. Visiting places like Egypt, Morocco and Nigeria in the early 1990s when no one else was going there and finding stock markets like classic cars left to rust in a garage was intoxicating. Fifteen years later these had become near-mainstream markets with crowds of analysts and other financial intermediaries. I liked going to places that others didn’t. Going to places where Euromoney was holding investment conferences held less appeal.

  I had been running Blakeney ever since it started in 1990. People would ask me how long I was going to go on for. For many years I had been saying, ‘Well, I’ll probably kick myself upstairs in three years’ time,’ but the three years stayed three years away. Then a moment came in 2006 when I was on the cross-trainer in the gym listening on the iPod to the Supremes singing ‘Stop, In The Name Of Love’ and stopping seemed like a good idea. Once that thought had lodged itself it seemed so obviously the right thing to do.

  The next day I told my partners that I would be handing over the firm to them. I gave them 80 per cent of the business, by now a valuable one, as a gift, and kept 20 per cent as the founder. I also wrote to Blakeney’s clients.

  I will be giving up all executive responsibility at Blakeney. That means I will not take part in investment decisions, will not be responsible for keeping in touch with clients, will not look after administration, and will toss any communication I get from the FSA [the startlingly ineffective UK financial regulatory body of that time, since deceased, replaced by another equally idiotic body] unread into the bin. I will, however, remain closely interested in what Blakeney is doing. As non-executive chai
rman I shall show up on a regular basis and find out what the active partners are doing and why. And if from time to time the partners ask my opinion on an investment matter I will be happy to caw a couple of words of ancient wisdom from my branch.

  I added,

  I have no intention of retiring and even less of learning how to play golf. Freed of Blakeney duties I hope to spend more time nosing around those places where the tap water is not safe to drink. Africa and the Middle East have never been as ripe as they are today with investment possibilities. ‘I like to think I have a good investment nose and a willingness to search for raisins among the turds.’ (The words of Charlie Munger, Warren Buffett’s partner, not mine.) What excites me is visiting virgin investment territory.

  I may invest a bit of my own money in some of these places if I find a raisin or two or, if I stumble upon large opportunities, I may act as an investment pimp and pass ideas along to friends with greater resources than I.

  The idea is not to make money; it is to go on learning and have fun. Playing golf makes you old; learning keeps you young.

  Once again, as in 1989, I found myself without a daytime job. And once again that set me off travelling to places unvisited by investors to see what was hiding beyond the horizons of the known investment world. I went off to countries like Ethiopia, Angola, Syria, Palestine, Sudan, Libya, Vietnam, Kyrgyzstan, Azerbaijan, Georgia and Iran. In some I had connections, in others I didn’t, but everywhere I went I was greeted with friendliness. The rule seemed to be that the more the American government disliked a country the nicer the people were. Nowhere were people more welcoming than in Iran, Syria and Palestine.

  In all of these countries there were opportunities, but I kept being drawn back to Africa, and once again I was struck by how wide the perception gap was between the reality of what was happening in places like Angola and Ethiopia and how they were perceived in the West. In 1990 countries like Nigeria, Egypt and Ghana were perceived as investment pariahs; now most people knew that they were doing well. But if you went to a posh dinner in 2006 in London or New York and mentioned Angola, Rwanda, Ethiopia, Mozambique, Algeria, Libya, Sudan and Sierra Leone, everyone would dismiss them because there were wars going on there.

  There were indeed wars going on, but they weren’t the cliché ‘tribal wars’ of fevered Western imagining but conflicts which could be traced back to the Cold War. When the British and the French, the Belgians and the Portuguese withdrew from their colonies in the 1960s the new powers, the US and Russia, hastened to helicopter in their tame dictator before the other side did. Hello, Lumumba; bonjour, Mobutu.

  The new superpowers were even more ignorant about Africa than the retiring colonialists but they perceived every country in Africa as having strategic importance. That gave us the big African wars of the 1980s, as the US and its proxies, usually the apartheid-era South Africans, with whom the Americans were theoretically not on speaking terms, and the USSR and its henchmen, the Cubans, Czechs and East Germans, fought for supremacy in countries like Angola and Mozambique. In 1990 the Cold War ended, and the USSR lost interest in Africa. The US, which had only been there to thwart the Russians, also lost interest. For the first time in a century the Africans were left to their own devices without interference from the white nations. The US and Russia had poured so much weaponry into the continent that it took a few years for things to calm down, but pretty soon they did and the terrible civil wars came gradually to an end.

  When I went travelling in 2006 and 2007 there was, for the first time in recorded history, no war taking place in Africa. Whenever I said this to Westerners they greeted it with disbelief and told me about Darfur, Eritrea, Somalia, Côte d’Ivoire and the Congo. There were terrible things happening in those places, but there weren’t actual wars going on, as there had been in 1990. And these were but five of fifty-three countries.

  The more I travelled around the more excited I got. Countries like Angola, Mozambique and Ethiopia which people thought were at war, were in reality peaceful and stable. What was more, these were the fastest-growing countries on earth and nobody wanted to invest in them. All three were growing faster than China. If the old truism about the gap between perception and reality held true, this was the widest gap on earth, and these were the places to invest.

  Perceptions of Africa were uniformly negative, largely thanks to the aid organisations and people like Bono and Geldof. Their mantra ran something like this: ‘Africa is locked in a vicious cycle of poverty. There’s no way the Africans can find their own way out of the poverty trap. Their only hope is for us to give them handouts, monitor the way they govern themselves, and teach them how to farm and fish.’ This was startlingly inaccurate. Far from being locked in a cycle of poverty Africa had become the fastest growing part of the world, and its fishermen and farmers, thanks to being more attuned to the natural world than their Western equivalents, were among the most efficient in the world. Some years ago I was quoted in a Sunday paper as saying that Bob Geldof had done more harm to Africa than Bob Mugabe. Mugabe, I said, had destroyed one country economically; Geldof had dissuaded people from investing in fifty-three.

  The opportunity that had led me to start Blakeney was the discovery that there were stock markets throughout Africa and the Middle East that no one was paying attention to, with the result that many of the companies quoted on them were selling far too cheaply. The opportunity I saw now was that there were whole countries like Ethiopia and Angola that no outside investors were paying attention to, thanks to the Bonos and the aid people, but that were growing faster than anywhere else in the world. That had to provide an opportunity.

  There was a problem: me. I had proved during the Blakeney strategic investing period that my skill lay in identifying wrongly priced companies listed on stock markets. I was a listed-stock investor. But most of the countries about which I was now getting excited did not have stock markets on which to list. Investing there would mean buying large chunks of privately owned companies, going on the board and getting involved in their management. This was private equity investing and involved a process similar to strategic investing, at which I had already demonstrated my incompetence.

  That did not stop me. At a meeting with the management of an African bank in which Blakeney had a holding I met a Bangladeshi-American woman called Runa Alam. She was far better prepared than I and asked a number of brilliant questions. I was intrigued and talked with her afterwards. I discovered she was running a successful African private equity fund but was feeling itchy because she had no stake in the company she worked for and was ready to move. I told Runa my plans and she got almost as excited as I was. She agreed to leave and join me in setting up a new private equity company to invest in Africa.

  There are many things wrong with England, but it is probably the easiest place in the world to start a business. Open a bank account, go online with Companies House, and twenty-four hours later you have a new company. Runa and I formed Development Partners International (DPI) in 2007, with her as chief executive and me as chairman, and off we went. We resolved that we would do our best to hire only Africans and that DPI would be owned entirely by the people who worked for it.

  In 2008, when the financial world went into meltdown, we were out trying to raise money to invest in Africa, a challenge for a new firm. However, Runa and I had made a lot of people a lot of money at our previous firms and many of them were ready to give us a chance in our new venture. By bits and pieces we managed to raise over $500 million, much of it from people we already knew.

  Suddenly DPI had become a real company, and we were in business and ready to start investing. What gave me particular pleasure, as someone who despises the self-righteous nannyism of political correctness, was that our new firm was half women, half black, half Muslim and, with the exception of Runa and me, all African.

  26

  Ambushed in Abyssinia

  I met Teddy many years ago at a wedding in Switzerland. ‘Teddy’ is an English rendering of Te
wodros, his Ethiopian name. He is one of the most charming men I have ever met; thanks to his charm he is also a brilliant salesman. I have never been certain what his trick is, but he is one of those people that when they start talking, others leave whatever conversations they are having and creep over to listen to him.

  Teddy had started an oil exploration company in his native Ethiopia, a very large country which, ever since the Queen of Sheba trotted off to see King Solomon, has been reputed to be rich in oil and minerals, though most of these treasures have yet to be found. Teddy had licences to prospect in an area somewhat larger than Belgium in the Ogaden in south-eastern Ethiopia. He also had sixty-five people in a camp in the middle of the wilderness who had been doing seismic tests in the hope of identifying the best places to drill for the billions of barrels of oil that Teddy was confident lay under his vast concessions.

  Such was Teddy’s skill as a salesman that twenty minutes after I had met him at the wedding I was agreeing to invest personally in his oil company, an oil company which so far had no oil. However, according to the seismic work, said Tewodros, there could be literally billions of barrels of the stuff. Teddy asked me to go on the board of directors. I accepted because Ethiopia is a fascinating country and his invitation gave me the opportunity to get involved in it. The board comprised five other old white men, all investors in the company, and Teddy as chairman. We normally had our meetings in Paris or some other European city convenient for the majority of the directors.

  Not long after I joined the board Teddy suggested that we went to Ethiopia and had our meeting there. We would spend a couple of days in Addis Ababa, Ethiopia’s elegant capital, with its tall Orthodox churches, its Merkato, reputed to be the biggest market in the world, and its tree-lined boulevards. We would meet important members of the government, including Mr Meles, the prime minister. Then we would get in a small plane and fly to our camp, where we would stay overnight in shipping containers, watch the seismic crew at work and hold our board meeting around a table in the desert. Apart from our crew the only other inhabitants of the Ogaden, a vast and arid wilderness, were migrant Somali herdsmen with their cows and camels.