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Bailout billionaires

March 25, 2009 20:15 IST

Main Street loves to loathe AIG. Since September the insurance giant has taken $170 billion in bailout money from U.S. taxpayers and keeps coming back for more.

Now the company is trying to pay a slew of executives $165 million in retention bonuses, forcing a furious President Obama to spend more taxpayer money having Secretary Timothy Geithner look for a way to stop the payments.

But not all the rich guys associated with AIG and other bailed-out companies are making a mint off of taxpayers.

AIG's stock is down 98% since the company began taking bailout cash, erasing more than $10 billion in shareholder equity and wiping out the fortunes of many moguls who once were ranked on our list of the world's billionaires.

Former AIG Chairman Maurice "Hank" Greenberg was worth $1.9 billion last March; these days he's worth less than $100 million. Nearly the entire decline was from plummeting AIG stock.

Eli Broad's stake in AIG, which he got when he sold his financial services firm SunAmerica to the insurance giant in 1998, was worth north of $2 billion early last year. Now it's not even a rounding error on his current $5.2 billion fortune (much of which is made up of recession-resistant art). His investment in AIG is worth less than $25 million today.

Of course both Greenberg and Broad would have had their entire AIG stakes--worth more than most investors see in five lifetimes--wiped out had the government not stepped in.

The Treasury recently bailed out Citigroup, injecting up to $25 billion as part of the U.S. government's Troubled Asset Relief Program (TARP). In return, the U.S. government now owns 36% of the financial services company.

Too late. Most billionaire investors in Citi lost their money in the company long before the Feds showed up with their TARP dollars.

Prince Alwaleed Bin Talal Alsaud's Saudi-listed investment vehicle Kingdom Holding fell 60% in the last year as shares of Citigroup--once its largest holding--lost 90% of its value in 12 months. We estimate Alwaleed's net worth has fallen $7.7 billion in a year to $13.3 billion today.

A few money-men were able to get out. Gerald Ford says he hedged his shares of Citi with $80 million in put options several years ago; he recently sold out his entire position. Ronald Perelman, whose stake in Citi was worth nearly $1 billion last March, also claims to have sold his stake in the bank before its demise.

Russian oligarchs have felt the most pain from the financial downturn. According to our World's Billionaires list, Russian billionaires lost a collective $369 billion in the past 12 months. They would have lost a lot more had it not been for the Kremlin.

Russia's government has already spent $250 billion to maintain the value of the ruble, help companies refinance foreign debt, and stabilize its stock market, which is down 67% in the past year. Some of those bailout billions helped tycoons stabilize their personal balance sheets.

Oleg Deripaska, Russia's richest man a year ago, has lost $24.5 billion in 12 months. The Kremlin lent Deripaska, who was faced with margin calls, $4.5 billion to repay lenders so he could keep his stake in Norilsk Nickel, one of the world's largest nickel producers. Without Norilsk Nickel in his portfolio, Deripaska would have lost another $1.6 billion and put his billionaire status into further jeopardy. (Today he is worth $3.5 billion.)

Roman Abramovich also benefited from the Kremlin's generosity. Abramovich has lost nearly half his fortune in the past year, mostly due to the disastrous performance of Russia's second-biggest steel company, Evraz, in which he has a 38% stake.

The Kremlin loaned Evraz $7 billion so the company could pay a tax bill in the fourth quarter of 2008, stabilizing Abramovich's faltering fortune. Today he's worth $8.5 billion, down from $23.5 billion a year ago.

One of Iceland's billionaires got caught up in the meltdown. Last fall it was revealed that the tiny nation's top three banks had borrowed $100 billion--more than five times the country's gross domestic product. Iceland officials were forced to nationalize three banks.

Bjorgolfur Gudmundsson, owner of Landsbanki, lost his entire $1.1 billion fortune in the bailouts. The silver lining: Gudmundsson is apparently off the hook for tens of millions in unpaid debt he owed to the bank.

Keren Blankfeld Schultz, Forbes.com
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