News Column

Finance Jobs Beckon After Life of Politics

Nov. 8, 2012

Steven M. Davidoff

Al Gore, Jr.

Second careers in high finance have proved lucrative for ex- presidents and other former politicians.

Having found out who will be in the White House next year, do not pity the loser. He can always have a future career in high finance.

It is quite a lucrative one, too.

Take Tony Blair, the former British prime minister. In September, Mr. Blair was called to Claridge's hotel in London to mediate a renegotiation of the proposed acquisition of the mining giant Xstrata by the mineral trader Glencore, according to British news reports. Mr. Blair, who negotiated peace in Northern Ireland, put his skills to good use, apparently earning himself about $1 million for three hours of work.

That is not a bad hourly rate, and it is in addition to the reported $4 million a year he is paid by JPMorgan Chase to be a senior adviser and to "provide briefings on political trends." You will be happy to know, by the way, that Mr. Blair was able to save the Xstrata deal. Wall Street likes former politicians for lots of reasons. Perhaps, like Mr. Blair, they are good negotiators or mediators when a deal needs to be made.

But another reason is that they are simply good with people.

Remember Dan Quayle? Since 2000, the former vice president has worked at the hedge fund Cerberus Capital Management, where he is now chairman of the advisory board. His pay is not disclosed, but it is probably well into the millions, if not more.

And what does Mr. Quayle do for that money? According to his personal Web site, he "regularly travels throughout the U.S., Europe and Asia to meet with the heads of investment banks, corporations, buyout shops, potential investors and other business leaders," among other things. In other words, he is a very well-paid schmoozer. In fairness, the former vice president states he also does things like advising Cerberus on the conduct of business by its portfolio companies.

Not only can vice presidents make money in finance by chatting with people, they can also build empires. Al Gore shows that you can use Wall Street to become superrich and do it in the name of a cause, all while building your own franchise.

Mr. Gore is a co-founder and chairman of Generation Investment Management and a senior partner of the venture capital firm Kleiner Perkins Caufield & Byers. He is also a senior adviser to Google and a member of Apple's board, where he has options on about 98,000 Apple shares, according to the company's last proxy statement. Apple, by the way, is trading at about $583 a share.

Mr. Gore's efforts are part of his mission to alert the world to global warming and embrace the environmental causes he firmly believes in. It is unclear what the former vice president does at Kleiner, but Generation Investment is focused on investing in sustainable companies. Mr. Gore closed the fund in 2008, having raised $5 billion. Whether the strategy works is unclear, because the fund's returns are not disclosed, but as of Sept. 30, the fund still had at least $3.6 billion. Mr. Gore has made millions building a financial empire based on his beliefs.

Sometimes it is not for a cause, but simply for the money. Mr. Gore's former boss, Bill Clinton, is most widely known in his post- presidential period for his work with the Clinton Global Initiative. But the former president has also made millions working in finance. Mr. Clinton was an adviser to Ronald W. Burkle's investment firm, Yucaipa, and made at least $15 million in that position.

Mr. Clinton's job was apparently to promote Yucaipa and enhance Mr. Burkle's reputation, and as Mr. Burkle put it to BusinessWeek after the two had a falling-out, "When Clinton left the presidency, he had to make money, and there were certain limits on how he could do it." Until March of this year, Mr. Clinton also served as a paid adviser to another private equity and financial consulting firm, Teneo Capital. It is no surprise that the former president recently said that private equity was "good work." It was for him.

Private equity is a favorite of prominent former politicians because it is often less public than investment banking or other finance jobs. Private equity firms like the connections former politicians bring for deal-making. Private equity is also an equal opportunity employer across both sides of the aisle. George H.W. Bush was involved with private equity after his term as president was up, serving as an adviser to the Carlyle Group until 2003. Carlyle is a bastion of political refugees. Frank Carlucci, a former secretary of defense, served as chairman, and James A. Baker III, a former secretary of state, has also been an adviser.

And if working for the industry as a deal maker, schmoozer or adviser, or just as a name, is a problem, a former politician can always find freelance opportunities in speaking to the finance industry.

President Barack Obama's predecessor, George W. Bush, has largely stayed away from business ventures after leaving the White House. But he has taken to the speakers' circuit, where fees can run more than $100,000 a speech.

Last week, the former president gave a speech at the Ritz- Carlton on Grand Cayman Island at the Cayman Alternative Investment Summit. The speech was closed to journalists and raised some eyebrows, because the idea behind such a conference was to promote investing outside the United States. But according to the organization's Web site, Mr. Bush offered "his thoughts on eight years in the Oval Office, the challenges facing our nation in the 21st century, the power of freedom and the role of faith."

Such $100,000 speaking engagements are mostly arranged by financial organizations -- after all, they are the ones with the money. One of Sarah Palin's first speeches after her tenure as governor of Alaska was in Hong Kong, to the CLSA Asia-Pacific Markets meeting, a gathering of Asian investors that advertises itself as "Asia's premier investment conference." She was reportedly paid $100,000 for the speech. Bill Clinton and Al Gore have also addressed that conference, as has Mike Tyson.

So what does this mean for Mitt Romney? Well, it is hard to see him plunging knee-deep into Wall Street. Mr. Romney has already made his private equity money. That does not mean that he would pass up the occasional $100,000 speaking engagement.

I cannot begrudge politicians the chance to make money after years of relatively low-paid public service. But at best, this is clearly a case of not asking where the money is coming from. The wholesale involvement of politicians in finance as opposed to, say, working in industrial America or advising the country's educational and charitable institutions may be a serious misdirection of resources.

More sinister, as Simon Johnson and James Kwak contend in their book "13 Bankers: The Wall Street Takeover and the Next Financial Meltdown," a too-cozy relationship between Wall Street and Washington was a direct cause of the financial crisis.

Whether or not they are right, the ties remain surprisingly strong, making one wonder whether we are repeating the mistakes of the past.

Source: (C) 2012 International Herald Tribune

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