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Rothschild Steps Into The Light
By Margareta Pagano
eFinancial News
11-22-3


 
You can't get much hotter than Jacob Rothschild. Over the past few weeks this doyen of finance and the arts has flown as close to the sun as one can get by stepping into two of the world's most controversial corporate and geo-political hot spots.
 
He is the new deputy chairman of BskyB where Rupert Murdoch's son, James, has just been elected chief executive, and he was rumoured to be the trustee of shares in Yukos owned by the jailed Russian oligarch Mikhail Khodorkovsky - reputedly Russia,s richest man. What is so extraordinary is that Lord Rothschild, a rather quiet, highly cultured grandee who has always shunned the public spotlight in his business affairs, should choose now to tread the boards.
 
Since 1980, when he so famously left the family bank, NM Rothschild, following a row over strategy with his cousin, Sir Evelyn Rothschild, he has pursued a relatively quiet career steering clear of the oxygen of publicity by keeping his interests unquoted. Until BSkyB, Rothschild has sat on the board of only one listed company.
 
Instead, he spent the past two decades building a series of highly successful companies in insurance, banking and investment including Five Arrows, St James,s Place Capital, which he ran with Sir Mark Weinberg, and J Rothschild Assurance. Today, he runs RIT Capital Partners, an investment management company with a portfolio of 700m ($1bn). His personal fortune is reputed to be 400m.
 
The great exception to his pursuit of the quiet life came in early 1989, when, with Sir James Goldsmith and Kerry Packer, he created Hoylake to bid for BAT, the tobacco group. He enjoys having invented the notorious 'unbundlin' expression, which was to be used by many an entrepreneur as they went about breaking up monoliths.
 
So Rothschild,s decision to join the BSkyB board is all the more astonishing. Even people working with him in his office at RIT have been asking why he is doing it.
 
Close friends are equally mystified. Perhaps he likes to surprise, to do the unpredictable, just as he has done through his friendship with the jailed Khodorkovsky, whose political ambitions are said to have troubled President Putin and led to his arrest.
 
There are a few clues. He knows Rupert Murdoch well, having been friends since the Australian newspaper proprietor first came to the UK in the 1960s. The job is clearly a challenge the 67-year-old finds irresistible, one made all the more fascinating simply because of all the fuss kicked up by investors furious at what they considered Murdoch,s blatant nepotism in pushing through his son,s appointment.
 
But as one friend said, Rothschild is likely to have considerable sympathy for the view that Murdoch is probably more ruthless and 'self-selecting' in his choice of heir than anyone else, having already knocked his older children, Elisabeth and Lachlan, out of the race. "Jacob is a very loyal man. Maybe he likes the idea that he can play elder statesman to the younger Murdoch while helping the father too. He will also be powerful in helping bring new fresh blood on to the board which needs reform. He,s not frightened of being a rebel," he said.
 
One of Rothschild's supporters was Allan Leighton, a BSkyB non-executive director since 1999 and the new chairman of its audit committee. He had suggested Rothschild to the headhunters Spencer Stuart as someone who was "confident, independently wealthy, and could add enormously to the board".
 
Meanwhile, Rothschild's links with Russia's Khodorkovsky, until recently head of the Yukos oil company, go back three to four years and stem from their shared love of the arts and philanthropy. Rothschild met Khodorkovsky through their patronage of the Hermitage Rooms at London's Somerset House but the two struck up friendship when the Russian businessman invited Rothschild to become a trustee of the Open Russia Foundation that he opened in London to promote educational and cultural ties between Russia and the West.
 
But the true extent of their relationship became muddied last week after reports that Khodorkovsky, who was jailed last week for fraud and tax evasion, had transferred his share stake in the event of arrest to Rothschild, who would act as a trustee. However, Menatap, the Gibraltar-based holding parent company of Yukos, has consistently denied that Rothschild had any rights or links to the shares or that he was a shareholder himself.
 
Menatep's Yury Kotler has said Rothschild had no involvement but that the shares were held in trust by Leonid Nevzlin, himself a big Yukos investor, now in exile in Israel. Rumours have been swirling in Russia for months that Rothschild might even become chairman of Yukos, but these have all been dismissed.
 
Rothschild's London office maintains a Soviet-style silence on the issue, refusing to make any comments on the share stake, other than to report that "Khodorkovsky is a progressive businessman who is devoted to Russia".
 
Nathaniel Charles Jacob Rothschild is the head of the UK Rothschild family, having inherited the fourth baronetcy from his father, Victor, an eminent zoologist, who married a Strachey, one of the Bloomsbury set. His father was a sometime MI5 agent, interested too in politics, having chaired Prime Minister Edward Heath,s Central Policy Review Staff in 1971, often known just as the Think Tank.
 
Rothschild was brought up in a conventional upper-class British way: Eton, and Christ Church, Oxford, where he gained a first in history. He worked for years at the family bank, running the corporate finance department, and was chairman of the executive committee before quitting suddenly in 1980 after the row with his cousin. The job of running the family bank had already passed to Sir Evelyn because Lord Rothschild's father had chosen science rather than banking as his career.
 
Like that slightly older generation of Jewish aesthetes, such as Sir Isaiah Berlin, whom he knew well, Lord Rothschild is extremely proud of his heritage and has worked passionately to strengthen ties with Israel.
 
He is chairman of Yad Hanadiv, the Rothschild foundation, which built and gave the Knesset government buildings and the Supreme Court to Israel, and chairs the Jewish Policy Research, dedicated to promoting issues affecting Jews worldwide.
 
At the same time he is equally energetic in the UK's art world and is a dynamic patron of a multitude of cultural projects. He caused a stir by spending some 10m on refurbishing Spencer House, the former home of the late Princess of Wales, family, in which he lives. As chairman of the National Gallery from 1985 to 1991, he oversaw the building of the Sainsbury wing and has just finished six years as chairman of the National Heritage Memorial Fund, during which he helped donate 1.25bn of National Lottery money for heritage works in the UK. On a more quixotic note, he has worked with Lord Sainsbury for the conservation of archeological sites in Butrint, Albania. He also looks after Waddesdon Manor, given to the National Trust by a cousin, Mrs James Rothschild, and is a director of the State Hermitage Museum in St Petersburg.
 
There aren't too many families like the Rothschilds that demonstrate so well the ability to pass on good genes. After all, they have been the power behind the throne of many a government since the family first arrived in Britain in the 1700s, emigrating from the Frankfurt ghettos.
 
Their first fortune was made out of the Napoleonic War, when they supplied the Duke of Wellington's soldiers fighting in the Peninsular War with gold for their wages. By the middle of the 19th century, they were spreading their wealth around Britain and France, investing in great properties and vineyards, while helping fund Disraeli's UK government to build the Suez Canal.
 
Rothschild's children have not joined the family firm. His son, Nat, works for Atticus Capital in New York while his three daughters have an eclectic mix of work and leisure out of the public eye. No wonder Murdoch wants a little advice from his old friend on how to really maintain an empire.
 
mpagano@efinancialnews.com
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