The Sunday Times, Uncategorized

April 5th, 2009

Divorce, the one bad bet a City tycoon is unable to shrug off

‘Mummy, mummy, mummy, I want my toys back. I know I said I’d share my toys with that girl, but now mine are all broken and I want hers. Please, Mummy.” That is the infantile position of the City tycoon Brian Myerson, the unhappy ci-devant multi-millionaire who has just tried, and failed, to get the Court of Appeal to renegotiate his divorce settlement with his ex-wife, now that his share of it has plummeted to next to nothing. How I laughed when I read about it. One doesn’t usually look to court reports for a good giggle, but Myerson’s story is painfully funny. It has an agreeable little moral lurking within it as well. I don’t mean a sexual moral: I know absolutely nothing of the details of their divorce, or of their very long marriage. One of them may indeed have been guilty of home-wrecking in some sense, and I am old-fashioned enough to think that makes a difference. However, all that is irrelevant. The point is that last year, after 26 years of marriage, he agreed with her on a divorce settlement. It was not imposed upon either of them. Admittedly, the settlement sounds entirely daft to me. I cannot see why, however fragrantly marvellous she may have been in every respect, Mrs Myerson should have got 43% of the assets of the marriage, which were then nearly £26m. And if 43%, why not 50% or 40%? Is there some sort of check list for the very rich when they break up, with so many hundred thousand for having been particularly cooperative in bed, so many half-millions for not having had a live-in nanny, a ski chalet for having forgiven an affair and so on? How does one estimate the worth of the poorer spouse, usually a woman? Actually, if one does the sums carefully – so much for sexual availability (divided by two, as that works both ways), so much for childcare, so much for housekeeping – it comes to thousands, not millions, as my husband once proved in an argument with a very rich man’s wife in the 1980s. Her worth for the services she claimed she provided was, he reckoned at that time, at commercial rates, about £40,000 a year at the very most. Divorce settlements among the rich are truly incomprehensible to most of us, and probably to all concerned. But again, that’s not important. What matters is that the Myersons agreed upon a full and final settlement, “full” and “final” being words that most people find easy to understand. She chose to accept a South African beach house worth £1.5m and £9.5m in cash (to be paid to her over four years) while he chose as the bulk of his deal to keep his shares in his excitingly ambitious and “activist” company, Principle Capital Investment Trust. How words such as those frighten the horses these days. However, in those bright and confident times, only a year ago, Mr Myerson’s shares were worth £3 each, and his total divorce settlement worth £14.6m. No longer! Principle Capital Investment Trust shares are now worth less than 30p,and Mr Myerson has been largely wiped out, at least on paper. In these circumstances – and he has also just been thrown out, after a shareholder revolt, as chief executive of Principle Capital Investment Trust – he is going to find it a bit of a stretch to pay his wife the rest of the money he owes her. In fact it would, as things stand now, leave him in the red. So he is solemnly trying to get out of it, in the Court of Appeal, no less. What does this remind you of? Myerson reminds me of all those masters of the universe, bound up in their financial fantasies and their alpha-male delusions, their infantile sense of entitlement and their curious blindness to anyone unimportant to them, who think that reward is for them while risk is for other people. These are the men (usually) and this the mentality that have almost destroyed the world’s financial systems and brought us to extremities of debt and unemployment, worldwide, that we are only just beginning to appreciate. Such men expect the shareholder or the investor or the taxpayer or anyone but themselves to suffer the cost of the risks that they alone, in their arrogance, took on. Such a man is Myerson – a man who simply could not see that he could get anything wrong, or that high rewards almost always involve high risks. And yet he has often seen – has sometimes been involved with – the downfall of others. Whether he was intelligent enough to appreciate it or not, Myerson took risks, through his business, with money that he knew he owed his wife. There is no reason she should suffer for his folly or even for his bad luck, after a full and final settlement. Perhaps he was encouraged, in his attempts to bilk her of her money, by the way that taxpayers and shareholders have in so many other cases recently been made to suffer for the failures of international investor types like him; perhaps he was tempted to believe he could shuffle the costs of bad risk off onto others, just as countless others are doing. Fortunately, the Court of Appeal wouldn’t let him. “When a businessman takes a speculative position,” said Lord Justice Thorpe, one of the appeal judges, “in compromising his wife’s claims, why should the court subsequently relieve him of the consequences of his speculation by rewriting the bargain at his behest?” It shouldn’t, of course, and it didn’t. Myerson’s argument is that his divorce settlement has been rendered unfair, in retrospect, because he is the victim of “an unforeseen combination of forces at play within the global economy”. Well, tough, one can only say. Besides, he cannot be very much of a high-flying investor if only a year ago he was really unable to anticipate any downside or downturn in the markets – most people I know were already anxious about it. But that’s irrelevant. When he made the settlement, presumably he could have paid her in full or put the money aside, but instead he chose the path of risk, without, it seems, being willing to accept responsibility for the consequences to his wife. It may be unfair to be so harsh on Brian Myerson. It may be wrong to see him as typical of a much wider phenomenon, a sign of the times, a small exemplar of one of the nastier creatures in the human bestiary. However, it is hard not to enjoy the homespun little morals of his tale: in this country, in the courts, even today, a man’s word is still his bond, so he should bear in mind that what goes up may come down, just as pride goes before a fall.