It is clear that Deripaska is a highly disciplined survivor. He got through the aluminium wars of the 1990s. When other Russian oligarchs fell out of favour, he survived again. Mikhail Khodorkovsky is in prison and Boris Berezovsky is in exile in London, but Deripaska is still in business. The financial crisis of 2008 posed another mortal threat. I ask Deripaska how close he was to going out of business – ‘Very close,’ he replies. ‘I remember certain bankers in February 2009, trying to explain to me that there was no chance.’ He points out proudly that, in fact, no debts have had to be written off.
The strain of the financial and economic crisis in Russia seemed to sour his relations with Vladimir Putin, who by then was prime minister. In a famous confrontation in the small Russian town of Pikalyovo in June 2009, Deripaska was subjected to a televised humiliation, as Putin ordered him to sign a document, safeguarding the future of a local factory, and then added caustically, ‘And give me my pen back.’
Some regarded the confrontation as a sign that Deripaska’s days were numbered. Others saw it as a carefully staged mock-confrontation between close allies. Deripaska insists that neither version of events is right. Putin, he says, was simply misinformed about the facts. ‘But he called you a cockroach on television,’ I protest. ‘That is exactly the point,’ Deripaska replies, ‘it was not against me. It was against other people who were trying to run away from the business.’
Certainly, any misunderstanding appears to have been cleared up. A few months later, the Russian government agreed to prolong vital loans that kept Deripaska’s business empire intact, when many analysts were convinced that it was on the brink of breaking up. As Deripaska sees it, the government simply realized that he was far better able to rescue a precarious situation than any state-appointed bureaucrat – ‘They have no idea what to do to restructure the company … Because, if you’re bankrupt, afterwards you lay off automatically more than 2m people … You can’t just kill a big white elephant and say, “OK, I have done the right job.” ’
Some analysts put Deripaska’s remarkable survival down to his impeccable political connections. He is married to the daughter of the chief-of-staff of a Russian former president, Boris Yeltsin. (They have two children.) He is also reputed to be close to both Putin and the new president, Dmitry Medvedev. In Britain, he befriended Lord Mandelson, the godfather of New Labour, and hosted George Osborne, now Chancellor of the Exchequer, on board his yacht. But Deripaska denies being particularly well connected. He says he was bewildered by the fuss that the British press made over his connections with Mandelson and Osborne, and professes never to see either Putin or Medvedev socially.
I ask him about the big question in Russian politics – whether Medvedev is really independent of Putin. He chuckles and skirts the question but adds that the two men represent different generations and have different outlooks. Will Putin and Medvedev run against each other for president in 2012? Deripaska says that nobody really knows – ‘I think at some point they will discuss this,’ he says, laughing heartily.
With his business empire safe, Deripaska’s worst worries seem to be over. But there are still problems on the horizon. There is the London court case. And there are his continuing problems with entry to the US. Last year, he was allowed to visit the country twice. But these seem to have been specially arranged visits. I ask him whether his visa problems are over – ‘I don’t know. I don’t care,’ he replies. I remark that it must be annoying ‘because it’s very damaging to your reputation’. ‘History will judge,’ he replies quietly. Hasn’t it been damaging to his business interests, I ask, not to be able to travel freely to America? ‘Yes, but it gives you more opportunity … When they started making a problem, I just went to Japan and I got much more.’ His companies are also taking an increasing interest in China.
Despite his problems in the US, Deripaska has powerful friends and allies in the west too. Bob Dole, a former US presidential candidate, has lobbied on his behalf. Nat Rothschild, a scion of the famous banking family, is a close confidant. James Wolfensohn, a former head of the World Bank, has also been a business partner. Deripaska’s western defenders portray him as a great industrialist and a patriot. Questions about his past tend to be brushed aside – or dealt with by references to the murky origins of the fortunes of some of the great American industrialists and philanthropists of the 19th century. (Deripaska is also a big donor to charity.)
Deripaska himself, although he has a ready laugh, is earnest and ascetic. I notice that he has eaten just one half of his fish. The waiter reappears. I am feeling a bit peckish and hope that my guest will order a pudding. But Deripaska just asks for a black tea without sugar and I settle for a coffee.
As the lunch draws to a close, I ask him if he is ever tempted to go into semi-retirement and just enjoy life, like his friend the London-based Russian oligarch Roman Abramovich, who has bought a football club, acquired a new girlfriend and dabbles in modern art. Why not cash out? I ask. Deripaska looks faintly indignant – ‘And do what?’ he asks. As well as his current industrial interests, he wants to invest in nuclear power and in space exploration.
We walk out into the sunshine together. A large black car is waiting for him, just outside the restaurant, and a large man in a black suit is holding the door open. Deripaska steps in without a backward glance and the car moves silently off. I still feel vaguely hungry, so I walk down to Pret A Manger and buy myself a fruit salad.
In September 2012 Mr Deripaska and Mr Cherney reached an out-of-court settlement in their case over a $1bn stake in UC Rusal, the world’s biggest aluminium producer.
ST JOHN
26 St John Street, London EC1
* * *
lemon sole £18.40
Old Spot chop £20.80
1 × double espresso £2.50
1 × Assam tea £2.50
1 × bottle of sparkling water £3
* * *
Total (incl. service) £47.20
* * *
26 JUNE 2009
Stephen Green
God’s banker
The executive chairman of HSBC, who is also an Anglican priest, breaks bread and discusses the ethics of globalization, moral ambiguity and being rewarded for failure
By Lionel Barber
Stephen Green arrives three minutes early for lunch but apologizes for being late. Tall, soft-spoken and wearing a dark suit, the 60-year-old executive chairman of HSBC is courteous, almost to a fault. We are at a small table in Le Pont de la Tour, a Thameside restaurant favoured by City bankers during the Blair–Brown boom. (Green originally favoured another City restaurant, the Bleeding Heart, but feared the name was an invitation to poke fun at him.) There are lunch guests on the terrace outside but inside the place is empty, testimony to the Blair–Brown bust.
The timing of our gastronomic encounter in the shadow of the Tower of London could not have been better. Hours earlier, Sir Fred Goodwin, disgraced former boss of the now state-controlled Royal Bank of Scotland, had bowed to popular demand and surrendered a third of his £l6.6m pension pot. As a conversation opener, the capitulation of Sir Fred is irresistible.
‘I am not going to talk about individuals,’ says Green, firmly. I push back, gently. The smile turns into a squirm. ‘No, no, no. That’s not fair … No … Not even off the record.’
Green’s reluctance to pronounce judgment is curious on two counts. First, he is an Anglican priest who has thought long and hard about right and wrong. Second, he has written two books about ethics and business in the age of globalization, and it’s the publication of the second, Good Value, that, I remind him, is the reason we are having lunch in the first place.
Happily, a waiter arrives before our verbal skirmish goes any further. We study the menus. Green orders soused mackerel as a starter, followed by roast cod. I go for gazpacho and then roast chicken. In search of common ground, I suggest a shared side order of spinach. Then I return to the ticklish question of bankers being rewarded for failure.
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The previous evening, Mervyn King, governor of the Bank of England, had delivered a stern speech at the Mansion House, admonishing bankers for failing to absorb the lessons from the global financial crisis. The Bank of England, he suggested, was like a church where the congregation turned up for weddings and funerals but paid no attention to sermons. ‘Yes, I was there,’ says Green, as he glides into a two-minute discourse on the governor’s plans for tackling systemic risk to the banking sector. It’s fascinating but not exactly relevant. What does Green say about bankers receiving handsome pay-offs when they have driven their institutions into the ground?
Green, sipping a Virgin Mary, counters with studied even-handedness. One must distinguish between bonuses and pension rights. Then again, there have been ‘market distortions’ regarding pay, not just in the financial sector. The era of ‘my word is my bond’ is over but people should not be starry-eyed about the age of the gentleman banker when insider trading was rife. Most important, ‘rules are never sufficient to enforce morality’, a theme we will return to during our 90-minute lunch.
I press him on the principle of restitution. Green refers me to the biblical tale of Zacchaeus, a corrupt tax superintendent who gives his ill-gotten gains to the poor. Once again this amounts to an artful dodge: Sir Fred may have been incompetent but nobody is suggesting he was corrupt. More fencing follows. Green simply will not be drawn into personal criticism. It is time to switch subject.
Green was ordained in 1988 and is a non-stipendiary minister attached to a church in London. He has stuffed Good Value with biblical references but also many literary ones, especially from Goethe’s Faust. He studied German at Oxford University – as did I, a few years after him. Green later switched to Politics, Philosophy and Economics, on the grounds that PPE was of more practical use than medieval High German. Nostalgia overcomes me and I challenge him to recite the opening verse in part one of Faust.
‘Habe nun, ach! Philosophie, Juristerei und Medizin … Durchaus studiert’ (I’ve studied now philosophy, jurisprudence, medicine through and through), says Green, deploying a more than passable accent. I join in, but he trumps me by invoking Faust’s thumping declaration: ‘Im Anfang war die Tat!’ (In the beginning was the deed.) The bookish banker is in full flow, eyes alight, long arms ranging across the table. Passion for German culture is a rarity in contemporary Britain.
I am mindful we still have to discuss the grand theme in his book – the ethics of globalization, personal responsibility and social progress – but first I ask about his circuitous route to the top of HSBC, formerly Hongkong and Shanghai Banking Corporation, and now one of the world’s biggest financial institutions.
After university Green worked in a centre for recovering alcoholics (‘a vicar came to Oxford and inspired me’) before starting his career as a civil servant at what was then the Overseas Development Administration.
‘The furthest I got was Paris,’ he recalls. Frustrated, he won a Harkness fellowship to the US, completing a master’s degree at the Massachusetts Institute of Technology. In 1977 he joined McKinsey, the management consultancy, and stayed until 1982, when, at 34, he was headhunted to join HSBC in Hong Kong. He has been with the bank ever since.
Our waiter arrives with gazpacho and mackerel, along with the bread basket. Munching a roll, I ask Green what were the highlights of his time in Hong Kong. It was, he says, setting up new business systems, then frets that he sounds like an ‘anorak’.
Green, with his wife Janian and two daughters, returned to Britain in 1992 when HSBC bought Midland Bank. He published his first book in 1996, which sought to reconcile serving God with serving Mammon. This is a genuine dilemma for Green, made more acute by the global financial crisis.
Good Value wrestles with the demands of individual responsibility and the market but it is set in a broader economic and historical context. Green’s ambition is to make the case for globalization as an inevitable, progressive force and as a human phenomenon.
‘Let’s look at the positives: human cross-cultural fertilization and enrichment; the delivery of economic development around the world; higher productivity … and in recent times globalization has lifted hundreds of millions of people out of poverty, particularly in China and India. These [benefits] are material, spiritual and cultural.’
And the negatives? ‘There is something about the market system which is inherently unstable,’ says Green, referring to financial bubbles from tulip mania in the 17th century to the 21st-century crash originating in the subprime lending market. ‘This is a tiger we are seeking to ride by its tail.’ Other negatives, says Green, include social marginalization and climate change. Green is in full flow so I pass on reminding him of HSBC’s disastrous foray into the subprime arena with the 2002 purchase of Household Bank in the US.
By now, he has polished off the cod, and my chicken is surprisingly succulent. It is time to press Green on his sunny view of social progress, especially in Britain, which he argues is less racist, less class-ridden and less sexist than a generation ago. ‘Well, I don’t know whether you can measure it … and it’s not like these things have disappeared. But about 80 per cent of this country considers itself middle class. I doubt that was true then.’
Green’s preoccupation with ethical responsibility and social progress has deep roots, no deeper than his admiration for a relatively obscure Jesuit priest, palaeontologist and philosopher, Pierre Teilhard de Chardin, whose masterwork The Phenomenon of Man was first published posthumously in 1955.
De Chardin might be characterized as a sort of Thomas Friedman for the religiously inclined. Whereas the New York Times columnist is the bestselling author of globalization primer The World is Flat, the Frenchman saw the world as a sphere, both literally and metaphorically. In his book, Green quotes de Chardin’s view that the evolutionary ascent of human beings occurs in two stages. First, humanity expands around the globe, both in quantity and spiritual development. Second, in the 20th century, as the planet is increasingly populated, a collective memory is formed. Thus globalization is about something far deeper than economics, commerce and politics. Green tells me, ‘It is about the evolution of the human spirit.’
Green speaks in a calm, unruffled cadence but also with inner conviction. Disarmingly honest about personal matters, he confesses, for example, that he wrote his book with the assistance of the former FT journalist Richard Addis (once a novice Anglican monk). The two exchanged numerous drafts, often at weekends.
Even more striking is how he deals with his book’s second grand theme: the ‘pervasive moral ambiguity’ that he detects inside human beings and the outside world. At the end of the book, for example, there is a passage of poignant self-examination in which Green describes visiting Weimar, the home of Goethe at the time he wrote Faust, and which is close to Buchenwald, the notorious Nazi concentration camp.
‘We tell ourselves we cannot imagine working with human skin as if it were leather. But perhaps I can see myself getting caught up in such an ordinary procedure as this,’ he writes. ‘I can see myself losing sight of ulterior objectives, motives, values – becoming so engrossed in a debate about whether regulation a or b applies in situation x, that I no longer notice what x actually stands for.’
Green’s admission is superficially shocking but, as he argues in his book, can an individual ever know for certain whether he or she would have the moral courage to stand up to tyranny and totalitarianism?
Bringing the conversation back to the present, I say that the parallels with contemporary capitalism are obvious. Too many bankers followed the letter but not the spirit of the law. I wonder, therefore, whether it is fair to draw a distinction – as many Europeans do – between Anglo-Saxon capitalism, which elevates individual self-interest, and Calvinist capitalism, which emphasizes the collective good?
‘I am a European,’ says Green, with passion. ‘And so are you.’ He sees the British as European, and as a committed pro-European he believes there should not be a distinctio
n. I stand reprimanded. But I still want to explore whether Green believes in the innate superiority of different capitalist models, particularly the Anglo-Saxon emphasis on shareholder value. He says, ‘Shareholder value cannot and should not be elevated to the exclusion of all else. It is a by-product of providing goods and services. When the by-product becomes the end, then we distort the whole market. The market is necessary but not sufficient. So “No” to market fundamentalism.’
It is a nuanced view of shareholder value but he makes his point emphatically – and as he does so, with a sweep of those arms, Green knocks over a glass, sending a flood of water over my notebook. He is mortified: ‘I suppose that’s going to be published,’ he says, half pleadingly. ‘You bet,’ I respond, mopping up a sea of watery blue ink with a crisp white napkin.
Our waiter arrives with napkin reinforcements. We skip dessert and opt for herbal tea. I ask Green what he is reading at the moment. It’s Der Turm (The Tower), Uwe Tellkamp’s prize-winning 2008 novel set in the twilight years of former communist East Germany. He is ecstatic about this epic, nearly 1,000-page, book.
And this brings him back once again to the ‘heights and depths’ of German history and culture – and reveals a surprising ambition. Green’s dream is to write a history that captures the linear development of German culture and history: from Henry IV’s walk from Speyer to Canossa, where the German Holy Roman Emperor sought to reverse his excommunication; through to Martin Luther, the Thirty Years War, the unification of Germany, Nazism, and finally a reunited Germany regaining its moorings in a united Europe.
Lunch With the FT: 52 Classic Interviews Page 9