The speculator who cares

PUBLISHED : Sunday, 08 March, 1998, 12:00am
UPDATED : Sunday, 08 March, 1998, 12:00am

GEORGE SOROS In pursuit of profit or for charity, tycoons bail out companies and institutions that have fallen on hard times. They may provide a useful bridging loan for friends who have invested unwisely, or bankroll a pie-in-the-sky scheme just for fun. But it is not often that they go, in person, to the aid of the government of one of the world's biggest countries.

Last week, the familiar figure of international financier George Soros popped up in a new guise when it became known that he had given Russia a bridging loan of 'several hundred million dollars' last summer to enable it to pay some of the back pay it owed to state employees.

Whether Mr Soros charged market rates for the loan or advanced it out of the goodness of his heart is not known.

But the news underlined the change in the public persona of the man who became famous in 1992 for having bet successfully that the British Government would take the pound sterling out of the European monetary system - and earned himself GBP600 million (HK$7.6 billion) in the process.

Since then, through various foundations, Mr Soros has become an international benefactor, encouraging democracy in eastern Europe and even holding an evening seminar on the future of Hong Kong last year in a townhouse in New York. At the recent World Economic Forum in Davos, Switzerland, he appeared as a man far removed from the knife-edged multibillion decisions of the traders who operate his funds.

Instead, one saw a man deeply concerned with the dangers of unbridled speculation who now proposes the establishment of an international currency insurance system to prevent speculators like himself knocking the bottom out of weak currencies.

He is committed to issues such as peace in Bosnia, the arts, minority rights and democracy. He has foundations in Russia and eastern Europe which distribute around HK$3.5 billion year, the most he was allowed to donate under US tax law.

His concerns are genuine, but that does not mean the Soros empire has forgotten about making money for its investors.

He is reported to have bought into Taiwanese companies in a significant way in recent weeks, and regularly dips into US and European companies where there may be a share profit to be turned in the not-too-distant future.

The loan to Russia was granted a month before Mr Soros put up nearly US$1 billion (HK$7.73 billion) to help fund a successful bid for one of the most sought-after prizes of Russia's privatisation process.

The sell-off of the telecommunications company Svyasinvest has long been shrouded in controversy. It triggered a squabble between the losing bidders and the Government. And it was at the centre of a political scandal after it was revealed last November that Anatoly Chubais, President Boris Yeltsin's right-hand man and economics guru, and several other officials each accepted US$90,000 advances for an unpublished book from a publishing company linked with a bank which led the winning consortium.

Closer to the business which made his fortune and fame, his operators were busy hunting out currency profits as the East Asian crash set in last autumn.

The one place he came to grief, it seems, was Hong Kong, where officials pride themselves on having beaten back the assault and made a profit for the SAR in the process.

Mr Soros makes no bones about being a gambler, albeit now a gambler with a conscience. 'It just so happens that I play the game better and bigger than most,' he said from the 33rd floor of his New York offices.

His progress from Hungary to Manhattan is one of the folk stories of our times. Fleeing the invading Nazis, he moved from Budapest to Britain as a penniless refugee. After studying at the London School of Economics, he crossed the Atlantic and learned the financial game in New York.

When he was 39, he founded the Quantum fund. By 1972, the fund, registered in the Dutch Antilles but run from New York by Soros Fund Management, was worth HK$240 million. Now it is worth about HK$144 billion and Mr Soros ranks as America's 27th-richest person.

Evidently, Moscow was pleased with the help it got in the summer. In December, it was back for more. This time Mr Soros declined. He explained he did not want to make a habit of it.

That sounds only sensible. For all his attachment to progress and democracy, Mr Soros knows the value of remaining light on his feet.

The essence of his business is the ability to move money at a moment's notice. Not, in other words, the kind of business in which you tie yourself to a government that cannot pay its wages and pensions, and faces a revenue shortfall of US$8 billion.

Set beside the scale of Russia's problems, Mr Soros' loan may, after all, seem like a charitable drop in the ocean. But it has certainly won him another round of publicity as the speculator who cares.