Sandra Navidi - SuperHubs - How the Financial Elite and Their Networks Rule our World

Helicopters, motorcades, and sirens are the hallmarks of the annual Clinton Global Initiative gathering in New York, which the Economist dubbed the “Philanthropy Oscars.”11 During the third week in September the city is bustling with energy and feels like the center of the universe. The event coincides with the United Nations General Assembly, for which representatives of 193 member states concurrently descend upon the city—including numerous heads of state, who typically stay in luxurious Midtown hotels. New York goes into virtual lockdown, with many streets blocked off for dignitaries and their police protection. Countless high-profile organizers take advantage of the presence of world leaders, CEOs, philanthropists, and Nobel Prize laureates and host shadow events.

The Clinton Global Initiative established itself a decade ago with much fanfare and, due to President Clinton’s convening power, quickly rose to unprecedented success in terms of the caliber of donors and the money raised. He is a superhub extraordinaire, because of his and Hillary’s positions and simply because he is so unbelievably popular that the world elite fawn over him. The mood is celebratory, and attendees network at informal events such as cocktail parties and private dinners.

Another fund-raiser that demonstrates how skillfully Wall Street uses superhub networks to optimize fund-raising is Mike Milken’s charity event for prostate cancer in the Hamptons. The now-reformed philanthropist was diagnosed with stage III prostate cancer after his release from prison, where he had been serving time for securities fraud. He fought the disease with the same tenacity and commitment with which he once conquered the bond market, made a full recovery, and to this day has remained cancer-free. Dedicated to numerous philanthropic causes, he mobilized his enormous network of financiers and influencers. Every year, he organizes a fabulous party at the favorite summer spot of the wealthy: the Hamptons, where all his billionaire friends like Leon Black, Steve Schwarzman, John Paulson, and Richard LeFrak make sizeable donations, and receive public recognition.

* * *

In Chapter 7, we visited the exclusive, international, invitation-only platforms of the financial elite and got a better sense of what life in the executive suite is like. While prestigious meetings and events seem glamorous to those of us on the outside looking in, the reality is that these tycoons are always working. To maintain their network positions and increase their power, they must regularly travel to cultivate existing relationships and develop new ones. Being a superhub requires sacrifices and comes at a cost to one’s physical and mental health, family, and quality of life. Chapter 8 will explore some of the negative aspects of belonging to the members-only financial elite.

CHAPTER 8

Opportunity Costs

The Downside of the Upside

MISSING OUT ON MEMORABLE MOMENTS

Paris is one of my favorite places, so I was delighted to receive an invitation to my friend Peixin Dallara’s birthday party in the city of lights. Peixin and her husband, Charles, are classic “work friends.” I had met Charles at one of my first IMF meetings and later been introduced to Peixin, a private equity professional, and over the years we have become friends. Charles had for two decades been head of the International Institute of Finance (IIF), yet another unexciting-sounding organization that is in fact incredibly powerful and important. The IIF is a global association of banks and other financial institutions that closely engages with policy makers to advocate for favorable policies. It also provides a platform for bank executives to meet with one another as well as with government officials and corporate CEOs. Charles was predestined for the job: A former high-ranking treasury and IMF official, he was immensely well connected across the entire spectrum of the financial industry and particularly so in the political arena. Likeable and articulate, he was well-connected across constituencies.

Together with Joe Ackermann, then CEO of Deutsche Bank, and Bill Rhodes, at the time senior vice chairman at Citigroup, Charles grew the IIF into the most powerful bank lobbying organization in the world. Over the years, it has become an integral part of the financial landscape and is represented at many internationally important meetings. As an advocate, he mostly worked behind the scenes, but things changed dramatically during the European sovereign debt crisis, when he represented the banks in the biggest sovereign debt restructuring in history.1 So much was at stake, including the potential breakup of the eurozone, and he was thrown into the center of the negotiations and the limelight that came with it.

At the time of Peixin’s birthday, Charles was stuck in endlessly tedious talks in Athens as chief negotiator for the banks, discussing which creditors would bear what losses in order to prevent an imminent default of Greece. Private creditors had to agree to some participation along with the eurogroup; otherwise a bailout would not have been politically feasible. Charles had always been a passionately committed workaholic, but now Peixin acknowledged, with a sigh, that he was literally on the road nonstop. Such was the case on the weekend of her long-awaited fabulous birthday party. It was planned to take place at the legendary Ritz Hotel at the historic Place Vendôme, a stone’s throw away from the Élysée Palace and the Louvre. The Ritz’s majestic marble walls had borne witness to numerous historic events and hosted royalty, heads of state, billionaires, and captains of industry. With its gilded furniture, heavy draperies, and elaborate artwork, the hotel’s Parisian elegance and old-world flair were reminiscent of times long past.

The night before the big bash, I met with Peixin at the beautiful hotel bar. As Charles had been consumed by the European debt crisis in the months preceding, he and his family had made many personal sacrifices that could not be replaced with money. She had always been understanding of Charles’s workload, but now she expressed concern. He had been scheduled to fly in that afternoon, but with impeccable timing, just that day the negotiations reached a dramatic high point, forcing him to stay in Athens. He had spared no effort or expense to thoughtfully organize his wife’s special celebration, and friends were flying in from all over the world. Yet below the surface of this sweeping glamour and luxury lurked potential disappointment and misery if the most important person in Peixin’s life—her husband—was unable to attend. Although Peixin had already mentally prepared herself for the possibility, it was inconceivable that Charles would fail to make it. In the end, he flew in last-minute on Saturday afternoon, although he continued the negotiations via phone nonstop from their suite and it was not entirely clear if he’d have time to attend the dinner. Eventually he did, and if he was completely stressed, he did not let it show. Both Peixin and Charles graciously hosted their friends, of which many were financial superhubs. Referring to the incident, the press reported that “Charles Dallara left Greece for a long-standing engagement in Paris” and “negotiations will continue over the phone.”2 It was a wonderful evening and the Greece situation was shortly thereafter brought to a successful, if temporary, conclusion.

This story illustrates how being a superhub can take a toll on family. While in this particular situation, Charles was thankfully able to attend his wife’s important birthday celebration, the uncertainty still caused significant stress. And there are many more times when a superhub is not so lucky and misses out on meaningful moments with family and friends. For a superhub, work is always the priority, and this can have serious ramifications on their physical and emotional well-being.