From Economist.com
Dec 19th 2007
Ivar Kreuger was the world's greatest swindler. He would have thrived today
VADSTENA, a lakeside medieval town in central Sweden, has for centuries drawn pilgrims through the surrounding cornfields to the tomb of Saint Birgitta, a 14th-century noblewoman and mystic. Five minutes' walk from the abbey where her remains lie stands an imposing castle, surrounded by a moat, its tall Baroque tower looming through the mists that swirl off Lake Vättern. In the cellars of this fortress are racks upon racks of cables, letters and documents, stored in plain cardboard boxes. Two kilometres of them pertain loosely to one man, Ivar Kreuger, who in his heyday had a stature far more revered—at least in the world of finance and international diplomacy—than that of his devout countrywoman, Birgitta. Occasionally his papers still lure curious visitors to Vadstena.
If Birgitta is the patron saint of Europe, Kreuger was the patron saint of sinners; he was arguably the most brilliant and ambitious swindler who ever lived. In the first three decades of the 20th century, he built up an industrial empire founded on the most humble of innovations, the Swedish-made safety match, that lit a fire of speculative excess around the world creating, then burning through, fortunes that would be measured now in the billions. In the words of John Kenneth Galbraith, writing in 1961, “Boiler-room operators, peddlers of stocks in the imaginary Canadian mines, mutual-fund managers whose genius and imagination are unconstrained by integrity, as well as less exotic larcenists, should read about Kreuger. He was the Leonardo of their craft.”
This quiet man, who corresponded succinctly in many languages, could so nearly have become one of the 20th century's great individuals. When he shot a bullet, with steady-handed precision, through his heart in his Paris apartment on March 12th 1932, it felt to many as if a light had gone out across a darkening inter-war Europe and Depression-era America. His resounding optimism and his attempts to combat the era's despair by channelling money from rich nations to impoverished ones had earned him admirers everywhere. This newspaper, writing a week after his suicide, described the tragedy as one worthy of Aeschylus or Sophocles. “His death in Paris last Saturday by his own hand represents the veritably tragic wreck of a career which in its sphere was unsurpassed by that of any individual in living memory,” it said. Kreuger, it added grimly, in seeking to be a “force for good”, was crushed by the bleakness of his time.
So when The Economist, three weeks later, reported that chartered accountants had discovered “deception and manipulation of accounts” in his business empire, this paper was not alone in feeling bitterly humiliated. The world threw up its hands in horror as details emerged of assets inflated by double counting and, worst of all, the forgery in Kreuger's hand of $142m of Italian bonds supposedly sold to him by Benito Mussolini's government. In Sweden, where Kreuger had been considered a national treasure for 25 years, the suicide rate rose and the prime minister fell. It soon became clear that Kreuger's businesses owed more than the country's national debt. In America shares of his international holding company collapsed, taking with them the life savings of thousands. His reputable New York underwriters, Lee, Higginson, disbanded in shame.
After the “Kreuger crash” shook Wall Street, America's Securities Act was passed in 1933 strengthening disclosure requirements for all companies selling stock. It stemmed directly from the Kreuger experience. It took five years for investigators to disentangle the accounts of his 400 companies. The reckoning? In a 15-year career he was estimated to have burned through about $400m of his investors' money.
His biographies sought to explain how a man of such genius and apparently noble aspirations destroyed so much. One of the best, “Kreuger, Genius and Swindler” was written in 1961 by an American crime reporter, Robert Shaplen. He traced the magnate's life from bourgeois beginnings in Sweden, where he was a boy of prodigious intelligence and mischievous temperament (“a kind of Swedish Dennis the Menace”), to greatness, and then calamity. It ends unable to conceal the author's awe at his bewitching subject, likening Kreuger to Dostoyevsky's anti-hero in “Crime and Punishment”: “Kreuger was a Raskolnikov of finance: he believed that superior men were not restricted by ordinary laws, and that the end justifies the means.”
“There is the dangerous cliché in the financial world [that] everything depends on confidence. One could better argue the importance of unremitting suspicion.” Galbraith
Shaplen tries to draw a thick line under Kreuger's legacy. “The things he was able to do in carrying out his swindle would never again be possible, and in that sense he may also be said to have been the last of a free-wheeling breed.” Yet that was written in strait-laced America when finance was still firmly under the knuckle of Depression-era regulation and money rarely travelled east of the Statue of Liberty.
Today's financial world looks rather more like the era of rootless, trans-oceanic finance that Kreuger entered when he first arrived by ship in New York in 1900, with $100 in his pocket. Once again, credit has ballooned and capital flits around the world faster than any human being can travel; those with the audacity to channel it where it is needed, as Kreuger did, can make unparalleled fortunes. And once again, financial innovation is moving faster than rules can keep up with it, which can lead to disastrous speculative excesses. Kreuger's story is a lesson in the dangers of excessive confidence, and fickle liquidity, that may be as relevant today as they were in the Roaring Twenties. As Galbraith, a scholar of speculative excess, pointed out when referring to Kreuger: “There is the dangerous cliché in the financial world [that] everything depends on confidence. One could better argue the importance of unremitting suspicion.”
The movement of capital was already transforming Sweden when Kreuger was born in 1880. The country, long one of Europe's industrial backwaters, sat on vast forestry and mineral assets. International capital poured into Swedish factories, which were busy finessing new technologies. One of the best-known, if more commonplace, inventions was the safety match, after a Swedish professor developed a non-toxic type of phosphorous, and stuck it on the side of match boxes. Ivar's father owned two match factories, but the young engineering graduate found little allure in the provincial family firm and at the age of 20 travelled to New York to seek his fortune.
Kreuger found a job as an engineer, helping build New York's Plaza Hotel and other landmarks. He resolved to apply what he had learned about new construction techniques back home in Sweden, and in 1908, aged 28, he set up a company in Stockholm with a friend. The Kreuger & Toll partnership quickly gained a reputation as the best construction firm in Sweden, built the country's first skyscraper and went public in 1914. But by then, Kreuger's restless mind was absorbed with another venture, which, though so rudimentary compared with engineering, he intuitively sensed had grander scope.
Backed by a trio of Sweden's top banks, he took over his father's match business, and hoodwinked his uncle, who was drunk at the time, to let go of his British match interests. When the outbreak of the first world war restricted the supply of aspen and chemicals used in Swedish matches, Kreuger found an opportunity to outflank Sweden's biggest producer and force it into a reverse takeover. By 1917 Kreuger was done with construction engineering; he founded the Swedish Match Company and his reign as one of the world's great monopolists—and financial engineers—began in earnest.
Just over a decade later in 1928, The Economist, writing of Swedish Match, noted: “It is curious that of the great international trusts in the industrial world there is none more firmly established than the colossus that has been built on matchsticks.” But the humble matchstick is not as puny as it sounds; indeed, the ability to cup flame in the hand, rather than rubbing sticks together for hours, must count as one of the greatest innovations of all time. After the war, its use spread around the world with gas ovens and cigarettes. A letter written by Kreuger to a friend in 1931 reveals his profound faith in his product's ability to hold its own in good times and bad. Swedish Match, he confided, had “not felt any effect of the present crisis...Often great unemployment causes an increase in the consumption of matches because people seem to smoke more cigarettes when they are not working.”
Striking a match
Matchmaking, however, is a fairly rudimentary business, and in post-war Europe, it took very little capital to run small, inefficient match factories that made just enough money to survive. Kreuger's vision was to consolidate them, and he did so in a way that brilliantly served a dual purpose: making him immensely rich and powerful on the one hand, and helping recapitalise Europe's shattered post-war economies on the other.
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After secretly acquiring factories around Europe during the years of post-war Depression in the early 1920s, from 1925 onwards Kreuger began offering a bargain to penniless governments that many found hard to refuse. Kreuger would, he said (usually with great secrecy), lend money to countries that provided him with a national monopoly on match production. His monopoly and skilled marketing would increase sales (Kreuger was a first-rate salesman, too: he is said to have propagated the myth that it is unlucky to light three cigarettes from the same match). Governments taxed matches, so the higher sales would raise tax revenues used to repay the loans. It was, boasted Kreuger, an almost foolproof business plan: the loans were secured against revenues that he controlled; the monopolies, meanwhile, ensured generous returns.
According to a 1930 article in Foreign Affairs, Swedish Match struck such deals with nine European states and three South American countries in the 1920s. The loans totalled $253m, a fortune at the time. Germany received $125m; France, which never granted a full monopoly, $75m. In 1930 Kreuger even sent an emissary from his New York broker, Lee, Higginson, to China to persuade the Chiang Kai-shek government to give it a monopoly. The response was positive; the finance minister, Kreuger's envoy wrote, “is one of the few Chinese with whom one can feel an accurate interchange of ideas is possible.” The country was at war over Manchuria, however, and Kreuger doubted the Nationalists' ability to guarantee a monopoly. He called the talks off.
From the outset, the monopoly-for-loans quid pro quo enabled Kreuger to portray himself less as a naked profiteer (he was obsessed with maintaining “stable” ie, high, match prices) and more as a statesman, with the interests of European political and economic stability at heart. When much of Europe was starved of capital and balkanised after the Versailles peace treaty, he looked like a one-man Marshall Plan. Many of his loans were put to good use; he helped Germany, for example, to pay its war debts; he then mediated at the 1930 reparations talks between France and Germany. He could have accomplished none of it, however, without identifying another golden opportunity in that lop-sided era: the surplus capital in America and the greedy speculative spirit that accompanied it.
As Foreign Affairs put it in 1930, “the world war enriched America and impoverished Europe.” America's government was loth to finance the reconstruction of the Old Continent, but on Wall Street, when Kreuger came knocking, the doors swung wide open. In 1923 he set up the International Match Company (IMCO) in New York, and in less than ten years he raised an estimated $150m from American investors. All but $4.5m of that was transferred abroad, to finance government loans and expansion of the match empire. He hooked investors with an intoxicating cocktail of rising dividends and tax-exempt foreign earnings.
But despite the apparently flawless business model, match monopolies, it turned out, were not all that profitable. In order to offer spectacular returns, Kreuger paid dividends out of capital, not earnings. He was, in effect, operating a giant pyramid scheme, reliant on confidence to maintain a steady inflow of cash.
He rewarded their faith handsomely; the stockmarket value of IMCO rose, according to Foreign Affairs, by 1,100% between 1923 and 1930. Even during the stockmarket crash of 1929, there was a mere hiccough before prices sailed higher. In 1931 a New York Times advertisement stored in the castle at Vadstena summoned investors to take part in an IMCO issue of $50m 5% convertible gold debentures. By then, it says, the company controlled 250 factories in 43 countries, many of which were operated under government-granted exclusivity. The resources, it said, were to expand capacity in Poland, as well as buying German, Turkish and other government bonds. The match business, it averred, by and large had “not suffered from the general business depression”.
The dazzling chutzpah with which Kreuger wheedled money out of American and other speculators was especially evident in the way he handled his companies' finances. It is here, perhaps, that Kreuger's misdirected genius finds its most powerful resonance today. A forthcoming book “The Match King” by Frank Partnoy, professor of law at the University of San Diego, will argue that the line of many of today's most dazzling financial innovations can be traced directly back to Kreuger. So can America's landmark Depression-era securities and accounting laws, which still shape the world of finance. So, too, can some of the most famous instances where those laws have been breached, such as the case of Enron, the collapsed American energy company.
Long before modern financiers created a market in asset-backed securities (the source of this year's turmoil) Kreuger was a master of the art. Effectively, the securities he sold to investors provided loans for governments secured against assets that he himself controlled. The assets were held offshore, which today's tax planners would welcome, and mostly off-balance sheet, the custom at Enron and many of the banks that have suffered this year. He invented the activist investor's dream of being able to control a company's destiny without owning it, by separating A shares from B shares (a practice until recently still common in Sweden). That enabled him, in Shaplen's estimation, to control a $600m empire with ownership of just 1% of the shares. He wrote the book on mystifying Enron-style accounting practices: when Foreign Affairs took a bold stab at exploring his accounts in 1930, it said the value of combined assets of all his companies was estimated at $630m. Of that, only $200m were match-related; another $400m were simply lumped together as “other investments” (it had $30m in the bank).
Like other free-wheeling entrepreneurs, Kreuger did not disguise his contempt for accounting norms. In a rare interview in 1929, he told Isaac Marcosson of New York's influential Saturday Evening Post that the key to his success was “silence, more silence, and even more silence”. (In a sycophantic letter to him found in Vadstena, Marcosson writes, “I regard it as a great privilege to be your Boswell.”) Secrecy, and his extensive network of paid informers around Europe, served him well; not only did it keep investors in the dark, but also enabled him to do deals with rival governments, such as republican France and fascist Italy, who loathed each other.
Yet amidst the telegrams and letters bundled in boxes in Vadstena, evidence of a growing concern about his affairs emerges after 1929 that suggests a cataclysm is in the making. By late 1931 Kreuger is, for the first time, unable to provide a colleague with a definite assurance on IMCO's dividend payments—the bedrock of the company's allure. A yellowing letter with frayed edges from one of his brokers at Lee, Higginson that year advises him, in unfailingly polite terms, that a couple of his bank creditors “insist that they are not as completely informed about the company as they should be”. Apologising for the imposition, his correspondent relays their request for what is meant in his accounts by “real-estate investments outside Sweden” and “other industrial shares”. In an eerie precursor of today's concerns about American subprime mortgages, he is asked to explain, too, what he means by “loans secured by real-estate mortgages”. Kreuger replies curtly that he is “greatly disappointed” by the attitude of the banks.
Corbis An ignominious end
Kreuger's luck was running out, and his unswerving confidence was beginning to look like a con-man's desperate manoeuvring. Short-sellers were targeting his companies. Though he remained outwardly composed, a jotting on a cable reveals his private fears. “There is at present a bear attack going on and it is very important.”
The end, when it came, was quick. Desperate to keep his creditors at bay, he sought to arrange the merger of one of his companies, the Ericsson telecoms group, with America's International Telephone & Telegraph. With his back against the wall, he acceded to IT&T's request for an audit: they discovered a hole in his accounts.
In Sweden he was bailed out at the eleventh hour by a government which realised the economy was at risk from a Kreuger crash. But by this stage, he was promising as collateral assets that he had already pledged to others. A few creditors and colleagues believed there was one secret card remaining up his sleeve; the Italian government bonds (pictured above) he had locked in his safe in Stockholm.
Only Kreuger knew that he had personally falsified the signatures on the bonds. When it looked as though there was no alternative to owning up to the forgery, Kreuger walked to a gun-shop and bought a 9mm automatic pistol. That night, the man who had never married, who kissed women on the wrist rather than the hand for fear of germs, had a last tryst with a young Finnish girlfriend. The next day, lying on his bed in a pin-stripe suit, he shot himself, blowing out the last flicker of illusion in a hopeless age.
donderdag 20 december 2007
vrijdag 2 november 2007
The Traitorous Eight - Silicon Valley’s founding fathers
From The Financial Times
By Chris Nuttall
Published: October 30 2007 17:24 | Last updated: October 30 2007 17:24
Long before Brin and Page, Yang and Filo, and Jobs and Wozniak put their entrepreneurial stamp on Silicon Valley with Google, Yahoo and Apple, there were the “Traitorous Eight”, the founding fathers of a company that became an industry and gave the Valley its name.
Fifty years ago this month, Julius Blank, Victor Grinich, Jean Hoerni, Eugene Kleiner, Jay Last, Gordon Moore, Robert Noyce and Sheldon Roberts formed Fairchild Semiconductor, the company that was to perfect the manufacturing process for silicon chips and invent the integrated circuit.
William Shockley, the wayward co-inventor of the transistor, called them the Traitorous Eight, a label now viewed with affection, when they left his company, Shockley Semiconductor, en masse. Such departures were to become a regular occurrence in the Valley as Fairchild begat company after company of “Fairchildren” – 65 in all, including, most notably, Intel, founded by Mr Noyce and Mr Moore in 1968.
On a sunny October day at the Computer History Museum in Mountain View, a family reunion of sorts is taking place – founders and Fairchildren alumni are back in the heart of the Valley to reminisce on what it was like to work in this crucible of innovation 50 years ago and to consider the impact their inventions made on the world. Of the four surviving members of the eight, Mr Blank, Mr Last and Mr Moore are present, but Mr Roberts is unable to attend. They are joined by Arthur Rock, the financier who helped find funding for the company.
“There was no such thing as venture capital in those days. There was a little from Arthur Rock in Boston, but on the west coast there was essentially nothing,” says David Laws, a British former employee of Fairchild who helped organise the reunion and is putting together a timeline for the museum.
Eugene Kleiner was the leader of the Traitorous Eight and sought the help of east coast bankers Mr Rock and Bud Coyle to find financial backing. Fifteen years later, Mr Kleiner would found Kleiner Perkins, a venture capital firm that would help Amazon, Google and Sun Microsystems become billion-dollar companies and fund hundreds of other technology companies in a vital underpinning of the Valley’s continued success. But, over breakfast in a San Francisco hotel, this seminal company raised just $10 initially as the eight and the two bankers each signed single dollar bills to share as a symbolic contract among themselves.
Raising further money proved difficult. Mr Rock approached more than 30 companies as potential investors before hitting on Fair-child Camera and Instrument, an east coast aerial camera company owned by inventor Sherman Fairchild. He agreed to provide a $1.4m loan, the terms of which included an option to buy the new company for $3m, which he soon invoked.
Mr Kleiner located a building in Palo Alto and, although the money had not yet come through, Fairchild Semiconductor was founded.
“It was the most interesting year of my life,” Mr Last says. “We went into an empty building in October 1957 and by next summer we had developed a product that scooped the industry.”
The product was a flat or planar chip, which made a virtue of silicon oxide that had been forming as an unintentional and unwanted coating on Fairchild’s chips. Mr Hoerni realised this could act as an insulator and prevent short circuits.
The flat chips that were produced enabled mass production and led to silicon superseding germanium as the base material.
Everything was being invented from scratch, from workbenches to how chips would be assembled.
“The people we hired for the most part had no experience at all of semiconductor work, and they came from the canning industry in the Santa Clara Valley – it was not known as Silicon Valley at that time,” says Bob Skurko, who was a foreman in the assembly room.
“We wound our own diffusion tubes, we pulled our own crystals, there were so many innovations that were coming out on a daily basis just to manufacture the product, so it was very exciting – you would go to work and find it hard to leave,” says Murray Siegel, the Traitorous Eight’s first employee.
The planar process led to Fair-child’s next great invention, the integrated circuit. Mr Noyce realised it would be possible for not just the transistor but capacitors and resistors – an entire circuit – to be etched on a single silicon crystal. Jack Kilby, a Texas Instruments employee, also made the discovery, but Fairchild proved more successful at exploiting it.
Mr Siegel says: “We were in a meeting where we came up with the idea of the circuit designs that would be integrated, the rest then became a progression and it was rapid, it was literally idea after idea after idea.
“When you look back, you say: ‘Gee, why in the heck didn’t Fairchild go ahead with all these different process technologies, why didn’t we set up individual businesses?’ That didn’t dawn on us, we were semiconductor people.”
While today there are chip equipment makers such as Applied Materials and every kind of semiconductor manufacturer, Fairchild was at the start of an industry and had the task of pursuing every avenue itself. It was inevitable that its staff would see opportunities that were better pursued by leaving and forming another company.
“We had these brilliant ideas but rather than making the stuff ourselves, we’d just as soon get it out to someone else . . . so, bit by bit, it moved out into the Valley and it helped the Valley mature,” says Mr Siegel.
In less than 10 years, Fairchild Semiconductor grew to 11,000 employees and made more or less all the profits of its parent company, Fairchild Camera, which became the best-performing stock on Wall Street.
“They owned the semiconductor business in the 1950s and 1960s, but it was run by people on the east coast that were conservative, did not put in the resources needed and did not incentivise the staff,” says Mr Laws.
Mr Fairchild chose to waste his protégés’ profits by diversifying into unsuccessful areas elsewhere. Staff were belatedly offered stock options, but the share price of the parent was so high as to make them worthless. “You were better off out of the door and into a start-up, where you could get 50 cent, 70 cent or dollar stock options,” says Mr Siegel.
And that is what Fairchild’s best talent did, heading out into the Valley and not looking back.
Mr Laws observes: “Although it went through its ups and downs, there was an extraordinary feeling of camaraderie. People were trying to do great things at Fairchild.”
‘Fairchildren’ who came to dominate the world of technology
Fairchild Semiconductor was already in decline in 1968 when Robert Noyce and Gordon Moore departed to form Intel, which was to become the world’s biggest chipmaker. They took key staff with them, including Andy Grove, a future Intel chief executive.
Four others of the Traitorous Eight of 1957 – Jean Hoerni, Eugene Kleiner, Jay Last and Sheldon Roberts – had left in 1961 to form Amelco, a semiconductor company. Victor Grinich quit Fairchild in 1968 to teach at Stanford and Berkeley while Julius Blank left in 1969 to become a consultant. The dozens of companies formed by such “Fairchildren” include Intel, AMD, National Semiconductor, LSI Logic, Altera and Xilinx. Venture capital firms formed by ex-employees include Kleiner Perkins and Sequoia Capital. Mr Noyce was a mentor to Steve Jobs, who in turn gave advice to Google founders Sergey Brin and Larry Page.
As for Fairchild Semiconductor, it was bought by Schlumberger in 1979 and then sold to National Semiconductor in 1987. It became an independent company again in 1997, based on the east coast, and has been listed on the New York Stock Exchange since 1999.
By Chris Nuttall
Published: October 30 2007 17:24 | Last updated: October 30 2007 17:24
Long before Brin and Page, Yang and Filo, and Jobs and Wozniak put their entrepreneurial stamp on Silicon Valley with Google, Yahoo and Apple, there were the “Traitorous Eight”, the founding fathers of a company that became an industry and gave the Valley its name.
Fifty years ago this month, Julius Blank, Victor Grinich, Jean Hoerni, Eugene Kleiner, Jay Last, Gordon Moore, Robert Noyce and Sheldon Roberts formed Fairchild Semiconductor, the company that was to perfect the manufacturing process for silicon chips and invent the integrated circuit.
William Shockley, the wayward co-inventor of the transistor, called them the Traitorous Eight, a label now viewed with affection, when they left his company, Shockley Semiconductor, en masse. Such departures were to become a regular occurrence in the Valley as Fairchild begat company after company of “Fairchildren” – 65 in all, including, most notably, Intel, founded by Mr Noyce and Mr Moore in 1968.
On a sunny October day at the Computer History Museum in Mountain View, a family reunion of sorts is taking place – founders and Fairchildren alumni are back in the heart of the Valley to reminisce on what it was like to work in this crucible of innovation 50 years ago and to consider the impact their inventions made on the world. Of the four surviving members of the eight, Mr Blank, Mr Last and Mr Moore are present, but Mr Roberts is unable to attend. They are joined by Arthur Rock, the financier who helped find funding for the company.
“There was no such thing as venture capital in those days. There was a little from Arthur Rock in Boston, but on the west coast there was essentially nothing,” says David Laws, a British former employee of Fairchild who helped organise the reunion and is putting together a timeline for the museum.
Eugene Kleiner was the leader of the Traitorous Eight and sought the help of east coast bankers Mr Rock and Bud Coyle to find financial backing. Fifteen years later, Mr Kleiner would found Kleiner Perkins, a venture capital firm that would help Amazon, Google and Sun Microsystems become billion-dollar companies and fund hundreds of other technology companies in a vital underpinning of the Valley’s continued success. But, over breakfast in a San Francisco hotel, this seminal company raised just $10 initially as the eight and the two bankers each signed single dollar bills to share as a symbolic contract among themselves.
Raising further money proved difficult. Mr Rock approached more than 30 companies as potential investors before hitting on Fair-child Camera and Instrument, an east coast aerial camera company owned by inventor Sherman Fairchild. He agreed to provide a $1.4m loan, the terms of which included an option to buy the new company for $3m, which he soon invoked.
Mr Kleiner located a building in Palo Alto and, although the money had not yet come through, Fairchild Semiconductor was founded.
“It was the most interesting year of my life,” Mr Last says. “We went into an empty building in October 1957 and by next summer we had developed a product that scooped the industry.”
The product was a flat or planar chip, which made a virtue of silicon oxide that had been forming as an unintentional and unwanted coating on Fairchild’s chips. Mr Hoerni realised this could act as an insulator and prevent short circuits.
The flat chips that were produced enabled mass production and led to silicon superseding germanium as the base material.
Everything was being invented from scratch, from workbenches to how chips would be assembled.
“The people we hired for the most part had no experience at all of semiconductor work, and they came from the canning industry in the Santa Clara Valley – it was not known as Silicon Valley at that time,” says Bob Skurko, who was a foreman in the assembly room.
“We wound our own diffusion tubes, we pulled our own crystals, there were so many innovations that were coming out on a daily basis just to manufacture the product, so it was very exciting – you would go to work and find it hard to leave,” says Murray Siegel, the Traitorous Eight’s first employee.
The planar process led to Fair-child’s next great invention, the integrated circuit. Mr Noyce realised it would be possible for not just the transistor but capacitors and resistors – an entire circuit – to be etched on a single silicon crystal. Jack Kilby, a Texas Instruments employee, also made the discovery, but Fairchild proved more successful at exploiting it.
Mr Siegel says: “We were in a meeting where we came up with the idea of the circuit designs that would be integrated, the rest then became a progression and it was rapid, it was literally idea after idea after idea.
“When you look back, you say: ‘Gee, why in the heck didn’t Fairchild go ahead with all these different process technologies, why didn’t we set up individual businesses?’ That didn’t dawn on us, we were semiconductor people.”
While today there are chip equipment makers such as Applied Materials and every kind of semiconductor manufacturer, Fairchild was at the start of an industry and had the task of pursuing every avenue itself. It was inevitable that its staff would see opportunities that were better pursued by leaving and forming another company.
“We had these brilliant ideas but rather than making the stuff ourselves, we’d just as soon get it out to someone else . . . so, bit by bit, it moved out into the Valley and it helped the Valley mature,” says Mr Siegel.
In less than 10 years, Fairchild Semiconductor grew to 11,000 employees and made more or less all the profits of its parent company, Fairchild Camera, which became the best-performing stock on Wall Street.
“They owned the semiconductor business in the 1950s and 1960s, but it was run by people on the east coast that were conservative, did not put in the resources needed and did not incentivise the staff,” says Mr Laws.
Mr Fairchild chose to waste his protégés’ profits by diversifying into unsuccessful areas elsewhere. Staff were belatedly offered stock options, but the share price of the parent was so high as to make them worthless. “You were better off out of the door and into a start-up, where you could get 50 cent, 70 cent or dollar stock options,” says Mr Siegel.
And that is what Fairchild’s best talent did, heading out into the Valley and not looking back.
Mr Laws observes: “Although it went through its ups and downs, there was an extraordinary feeling of camaraderie. People were trying to do great things at Fairchild.”
‘Fairchildren’ who came to dominate the world of technology
Fairchild Semiconductor was already in decline in 1968 when Robert Noyce and Gordon Moore departed to form Intel, which was to become the world’s biggest chipmaker. They took key staff with them, including Andy Grove, a future Intel chief executive.
Four others of the Traitorous Eight of 1957 – Jean Hoerni, Eugene Kleiner, Jay Last and Sheldon Roberts – had left in 1961 to form Amelco, a semiconductor company. Victor Grinich quit Fairchild in 1968 to teach at Stanford and Berkeley while Julius Blank left in 1969 to become a consultant. The dozens of companies formed by such “Fairchildren” include Intel, AMD, National Semiconductor, LSI Logic, Altera and Xilinx. Venture capital firms formed by ex-employees include Kleiner Perkins and Sequoia Capital. Mr Noyce was a mentor to Steve Jobs, who in turn gave advice to Google founders Sergey Brin and Larry Page.
As for Fairchild Semiconductor, it was bought by Schlumberger in 1979 and then sold to National Semiconductor in 1987. It became an independent company again in 1997, based on the east coast, and has been listed on the New York Stock Exchange since 1999.
zaterdag 27 oktober 2007
Jim Michaels
Oct 11th 2007
From The Economist print edition
Jim Michaels, transformer of business journalism, died on October 2nd, aged 86
HE WAS used to ordure, because at school (Culver Military Academy, Indiana), they had made him shovel it, “wet manure, which is not like dried manure. It's very heavy.” He knew about sludge, because as an ambulance-driver in Burma in the war he had spent long hours in it. So when Jim Michaels came to Forbes in 1954, charged with shaking things up, it was second nature to take the hacks' copy and wring it through his typewriter, digging out the buried leads and the smothered conclusions, cutting the waffle, and transforming “oatmeal” into lean, tight prose. He did this for 38 years of editing the magazine, from 1961 to 1999. Circulation rose sixfold while he was there.
Tiny though he was, he was terrifying. Business journalism, for him, was a tough trade. When writers joined they were given a tape recorder for phone calls, to give them crucial backing when they were hauled into court. They were hustled to get better stories than the competition, different ones, and sooner; covers were scrapped and copies pulped if a piece had appeared elsewhere. “No guts, no story”, ran a Forbes ad in his time. His journalists had to be brave, and one way to show their pluck was to survive working with Jim.
“Curmudgeon” was too soft a word for him. When editing, he was a man of shrill explosions and unmasked savagery. “EITHER FIX THIS OR DUMP IT,” ran his capitals, rampaging through the piece. “THAT ALL VERY TOUCHING BUT WHAT DOES IT MEAN”. “CAN WQE SPEAK ENGLISH HOWARD AND STOP THIS STTINKING JARHGON!!!!!!!!.” Shorter was always better; he could cut 15%, he said, from any piece, and was rumoured to be able to get the Lord's Prayer down to six choice words. A reporter once wrote a euphoric story about Nepal, ending with the plaintive line: “I don't know why they would ever want to leave such a beautiful spot.” “Ya dont. did you ever go hungry or jobless????” came the furiously typed reply.
The journalists who came, trembling, through his boot camp—many of them moving on to high perches at the Wall Street Journal, Fortune, the New York Times and even The Economist—clipped his comments and kept them. Some took his edits home, unpicking them at leisure, as they licked their wounds, to try to see exactly how their copy had been so improved. His edits, seen by everyone on the open filing system, were surreptitiously collected in the “Abuse File”. Some entries became famous outside the magazine, such as his wild reaction to “upscale”: “IF I SEE THIS WORD AGAIN ILL UPTHROW”. Copies are still circulating.
Mr Michaels was not a tyrant by nature. He had a streak of tenderness in him. A book of favourite poems was often in his pocket, and he once told a journalist, reporting for work the day after his first child was born, to “Go home and be a father.” (The same journalist, caught leaving the building with a dozen copies of the magazine, was told, with a smile, that he had excellent taste in reading.) He skewered stories, and people, because he wanted the copy in Forbes to be provocative, sceptical and dramatic. Each story was pushed to the edge, and the fact-checkers, legions of them, were made to justify the claims or get them taken out. If they let an error through (whisper had it), they were fired.
“Bah! Overvalued!”
Mr Michaels loved, and revelled in, American capitalism. (“Forbes: Capitalist tool” was an ideal slogan for him, hitting the lefties with their own language.) But he did not like corporate managers as a breed. Business iconoclasts he admired, but he hated sycophancy (“Why not just send them a nice lacy valentine and forget the prose?”), and once considered a cover story on phonies who had made it to the top. He refused to pay court to businessmen by going to their dinners or holidaying in the Hamptons. Forbes's founder, Malcolm Forbes, could do that. Mr Michaels—sharp-eyed, endlessly curious, unbuyable—would hold them to account.
Arriving at Forbes, he found a second-rate investment magazine running flattery about corporations. Mr Michaels proposed to help small investors in a different way, by telling them, in unvarnished prose, which stock picks were good and which were not. (He did the same, in retirement, on “Forbes on Fox”, where his “Bah! Overvalued!” kept TV audiences alert.) It was he who first thought of rating mutual funds. He was less keen on Forbes's annual Rich List of the 400 wealthiest Americans, partly because it was first tried out in his rival Fortune, but mostly because he thought it was a stupid thing for Forbes to do. He changed his mind as it improved.
Where he never wavered was over the importance of straight, short and timely reporting. He had learned that lesson young. On his first posting as a newsman, with United Press in India in 1948, he had managed a world scoop by witnessing the death of Mahatma Gandhi. It was a story that caused him agony to write. Gandhi was someone he revered. With not a word spare, and without sentimentality, he described the emaciated figure crumpling under the assassin's bullets, the last gesture of forgiveness and, the next day, the burning of the body on the banks of the Jumna. After that, perhaps, the pretensions of corporate America could never have had much hold on him.
From The Economist print edition
Jim Michaels, transformer of business journalism, died on October 2nd, aged 86
HE WAS used to ordure, because at school (Culver Military Academy, Indiana), they had made him shovel it, “wet manure, which is not like dried manure. It's very heavy.” He knew about sludge, because as an ambulance-driver in Burma in the war he had spent long hours in it. So when Jim Michaels came to Forbes in 1954, charged with shaking things up, it was second nature to take the hacks' copy and wring it through his typewriter, digging out the buried leads and the smothered conclusions, cutting the waffle, and transforming “oatmeal” into lean, tight prose. He did this for 38 years of editing the magazine, from 1961 to 1999. Circulation rose sixfold while he was there.
Tiny though he was, he was terrifying. Business journalism, for him, was a tough trade. When writers joined they were given a tape recorder for phone calls, to give them crucial backing when they were hauled into court. They were hustled to get better stories than the competition, different ones, and sooner; covers were scrapped and copies pulped if a piece had appeared elsewhere. “No guts, no story”, ran a Forbes ad in his time. His journalists had to be brave, and one way to show their pluck was to survive working with Jim.
“Curmudgeon” was too soft a word for him. When editing, he was a man of shrill explosions and unmasked savagery. “EITHER FIX THIS OR DUMP IT,” ran his capitals, rampaging through the piece. “THAT ALL VERY TOUCHING BUT WHAT DOES IT MEAN”. “CAN WQE SPEAK ENGLISH HOWARD AND STOP THIS STTINKING JARHGON!!!!!!!!.” Shorter was always better; he could cut 15%, he said, from any piece, and was rumoured to be able to get the Lord's Prayer down to six choice words. A reporter once wrote a euphoric story about Nepal, ending with the plaintive line: “I don't know why they would ever want to leave such a beautiful spot.” “Ya dont. did you ever go hungry or jobless????” came the furiously typed reply.
The journalists who came, trembling, through his boot camp—many of them moving on to high perches at the Wall Street Journal, Fortune, the New York Times and even The Economist—clipped his comments and kept them. Some took his edits home, unpicking them at leisure, as they licked their wounds, to try to see exactly how their copy had been so improved. His edits, seen by everyone on the open filing system, were surreptitiously collected in the “Abuse File”. Some entries became famous outside the magazine, such as his wild reaction to “upscale”: “IF I SEE THIS WORD AGAIN ILL UPTHROW”. Copies are still circulating.
Mr Michaels was not a tyrant by nature. He had a streak of tenderness in him. A book of favourite poems was often in his pocket, and he once told a journalist, reporting for work the day after his first child was born, to “Go home and be a father.” (The same journalist, caught leaving the building with a dozen copies of the magazine, was told, with a smile, that he had excellent taste in reading.) He skewered stories, and people, because he wanted the copy in Forbes to be provocative, sceptical and dramatic. Each story was pushed to the edge, and the fact-checkers, legions of them, were made to justify the claims or get them taken out. If they let an error through (whisper had it), they were fired.
“Bah! Overvalued!”
Mr Michaels loved, and revelled in, American capitalism. (“Forbes: Capitalist tool” was an ideal slogan for him, hitting the lefties with their own language.) But he did not like corporate managers as a breed. Business iconoclasts he admired, but he hated sycophancy (“Why not just send them a nice lacy valentine and forget the prose?”), and once considered a cover story on phonies who had made it to the top. He refused to pay court to businessmen by going to their dinners or holidaying in the Hamptons. Forbes's founder, Malcolm Forbes, could do that. Mr Michaels—sharp-eyed, endlessly curious, unbuyable—would hold them to account.
Arriving at Forbes, he found a second-rate investment magazine running flattery about corporations. Mr Michaels proposed to help small investors in a different way, by telling them, in unvarnished prose, which stock picks were good and which were not. (He did the same, in retirement, on “Forbes on Fox”, where his “Bah! Overvalued!” kept TV audiences alert.) It was he who first thought of rating mutual funds. He was less keen on Forbes's annual Rich List of the 400 wealthiest Americans, partly because it was first tried out in his rival Fortune, but mostly because he thought it was a stupid thing for Forbes to do. He changed his mind as it improved.
Where he never wavered was over the importance of straight, short and timely reporting. He had learned that lesson young. On his first posting as a newsman, with United Press in India in 1948, he had managed a world scoop by witnessing the death of Mahatma Gandhi. It was a story that caused him agony to write. Gandhi was someone he revered. With not a word spare, and without sentimentality, he described the emaciated figure crumpling under the assassin's bullets, the last gesture of forgiveness and, the next day, the burning of the body on the banks of the Jumna. After that, perhaps, the pretensions of corporate America could never have had much hold on him.
Haidar Abdel Shafi
Oct 4th 2007
From The Economist print edition
Haidar Abdel Shafi, a model for the Palestinians, died on September 25th, aged 88
IN THE spring of 1948, around March as he remembered it, Haidar Abdel Shafi found himself at nightfall, waiting, in a small mud hut by the side of the main road in Deir al-Balah. Around him stretched groves of olive and orange trees. Palestine, in those days, was a community of peasants and landowners; a man was judged by how many trees he had. Haidar's father had had none, preferring—as he told the astonished neighbours—to save money for schooling his six children rather than buy plantations. The lanky boy, with his dark brows, had shaken the dust from his feet and gone away to study. But he was back now, defending the land.
Beside him lay a bag of first-aid equipment. He was a doctor, trained in Beirut and Jerusalem, now based in Gaza, and one of only about a dozen practising in the whole southern sector of Palestine. With his few colleagues he had founded, in 1945, a southern branch of the Palestine Medical Society, and together they had attended the first Palestine Medical Congress. Since his student days, when he had first been inspired by Arab pan-nationalism, he had looked on doctoring as a form of resistance: to illness, to poverty and, by strengthening the common people, to political troubles and oppressions. When it came to organising Palestinians, a community not easily made coherent, a network of doctors, clinics and waiting rooms might serve as well as any political party. But crouching in a hut by the main road was not his normal mode of operation.
Somewhere ahead of him were a group of fedayeen, Arab guerrilla fighters, who had come to attack the Jewish settlement of Kfar Darom. The settlement, one of many built on purchased land in Palestine in the years before the establishment of Israel, was well-defended, surrounded by circle after circle of barbed wire. Within the circles the ground was mined, and the whole scene was overlooked by Jewish observation towers.
The battle, though it raged all night, was a bloody defeat for the fedayeen: 12 killed, with Dr Abdel Shafi's first-aid bag no match for the mines and the snipers. The Zionists seemed superbly organised. Indeed, it was usually so. All through his long career, in which he was a founder-member of the Palestine Liberation Organisation (PLO) and represented Gaza on the Palestinian Legislative Council (PLC), the doctor's chief lament about his own people was their disarray. They had little notion of democracy, being loyal instead to Yasser Arafat, a strongman who monopolised all decision-making and surrounded himself with thieves. And they turned out in the end to have no capacity for national unity, splintering into factions—Hamas, Fatah, Islamic Jihad and the rest—who then fought one another. The Israelis, as he often pointed out, needed only to watch the Palestinians destroy themselves, as they had watched that March night from their high, dark towers.
Requiem for the olive trees
Dr Abdel Shafi was that rarest of figures, a secular and non-sectarian Palestinian leader whose integrity and outspokenness made him a model for all the rest. He was of the left, in an old socialist way, but was never a member of the Popular Front for the Liberation of Palestine; a doctor's role, he seemed to believe, was to stay detached from such affiliations. Far more useful was his decision to found and direct the Gaza branch of the Red Crescent, his own rallying organisation for Palestinian improvement. The Islamists attacked him, and in 1981 burned his clinic down; he noted then, stoically, that the Israelis who then ruled Gaza did not trouble to intervene.
On both the PLO and the PLC he was a gadfly, denouncing corruption and resigning with much publicity from the PLC, in 1997, because it was doing nothing to counter Israeli ambitions. The Palestinian Authority infuriated him because it would not control the intifada and was allowing Palestinians (though, he stressed, they had every reason to rebel) to commit random violence against Jewish civilians. He never ran for president in the 1996 elections, but might have done well if he had.
Though the Israelis twice deported him and then confined him to Gaza for his long-term refusal to co-operate, he did not oppose the existence of Israel. The Jewish presence was a reality, and the Jewish state had to be accepted. Nor did he dislike Jews: at Sabbath dusks, as a boy, he had been in demand to light the lamps of his Jewish neighbours. But there had to be a spirit of “mutuality and reciprocity”: two viable states, side by side, within the 1967 borders, and no Jewish settlers on Palestinian land. Until the settlements stopped entirely, he insisted, there was no point in any peace plan for the Middle East.
This was his message at the Madrid Conference in 1991 and at the Washington talks that followed—talks which he led and which were undermined, to his disgust, by secret accords made later at Oslo between Arafat and the Israelis. His speech at Madrid was perhaps the most eloquent the West had ever heard from a Palestinian: a plea for understanding, for sympathy and for territory. “What requiem can be sung”, he asked, “for trees uprooted by army bulldozers? And...who can explain to those whose lands are confiscated and clear waters stolen, a message of peace? Remove the barbed wire. Restore the land.”
From The Economist print edition
Haidar Abdel Shafi, a model for the Palestinians, died on September 25th, aged 88
IN THE spring of 1948, around March as he remembered it, Haidar Abdel Shafi found himself at nightfall, waiting, in a small mud hut by the side of the main road in Deir al-Balah. Around him stretched groves of olive and orange trees. Palestine, in those days, was a community of peasants and landowners; a man was judged by how many trees he had. Haidar's father had had none, preferring—as he told the astonished neighbours—to save money for schooling his six children rather than buy plantations. The lanky boy, with his dark brows, had shaken the dust from his feet and gone away to study. But he was back now, defending the land.
Beside him lay a bag of first-aid equipment. He was a doctor, trained in Beirut and Jerusalem, now based in Gaza, and one of only about a dozen practising in the whole southern sector of Palestine. With his few colleagues he had founded, in 1945, a southern branch of the Palestine Medical Society, and together they had attended the first Palestine Medical Congress. Since his student days, when he had first been inspired by Arab pan-nationalism, he had looked on doctoring as a form of resistance: to illness, to poverty and, by strengthening the common people, to political troubles and oppressions. When it came to organising Palestinians, a community not easily made coherent, a network of doctors, clinics and waiting rooms might serve as well as any political party. But crouching in a hut by the main road was not his normal mode of operation.
Somewhere ahead of him were a group of fedayeen, Arab guerrilla fighters, who had come to attack the Jewish settlement of Kfar Darom. The settlement, one of many built on purchased land in Palestine in the years before the establishment of Israel, was well-defended, surrounded by circle after circle of barbed wire. Within the circles the ground was mined, and the whole scene was overlooked by Jewish observation towers.
The battle, though it raged all night, was a bloody defeat for the fedayeen: 12 killed, with Dr Abdel Shafi's first-aid bag no match for the mines and the snipers. The Zionists seemed superbly organised. Indeed, it was usually so. All through his long career, in which he was a founder-member of the Palestine Liberation Organisation (PLO) and represented Gaza on the Palestinian Legislative Council (PLC), the doctor's chief lament about his own people was their disarray. They had little notion of democracy, being loyal instead to Yasser Arafat, a strongman who monopolised all decision-making and surrounded himself with thieves. And they turned out in the end to have no capacity for national unity, splintering into factions—Hamas, Fatah, Islamic Jihad and the rest—who then fought one another. The Israelis, as he often pointed out, needed only to watch the Palestinians destroy themselves, as they had watched that March night from their high, dark towers.
Requiem for the olive trees
Dr Abdel Shafi was that rarest of figures, a secular and non-sectarian Palestinian leader whose integrity and outspokenness made him a model for all the rest. He was of the left, in an old socialist way, but was never a member of the Popular Front for the Liberation of Palestine; a doctor's role, he seemed to believe, was to stay detached from such affiliations. Far more useful was his decision to found and direct the Gaza branch of the Red Crescent, his own rallying organisation for Palestinian improvement. The Islamists attacked him, and in 1981 burned his clinic down; he noted then, stoically, that the Israelis who then ruled Gaza did not trouble to intervene.
On both the PLO and the PLC he was a gadfly, denouncing corruption and resigning with much publicity from the PLC, in 1997, because it was doing nothing to counter Israeli ambitions. The Palestinian Authority infuriated him because it would not control the intifada and was allowing Palestinians (though, he stressed, they had every reason to rebel) to commit random violence against Jewish civilians. He never ran for president in the 1996 elections, but might have done well if he had.
Though the Israelis twice deported him and then confined him to Gaza for his long-term refusal to co-operate, he did not oppose the existence of Israel. The Jewish presence was a reality, and the Jewish state had to be accepted. Nor did he dislike Jews: at Sabbath dusks, as a boy, he had been in demand to light the lamps of his Jewish neighbours. But there had to be a spirit of “mutuality and reciprocity”: two viable states, side by side, within the 1967 borders, and no Jewish settlers on Palestinian land. Until the settlements stopped entirely, he insisted, there was no point in any peace plan for the Middle East.
This was his message at the Madrid Conference in 1991 and at the Washington talks that followed—talks which he led and which were undermined, to his disgust, by secret accords made later at Oslo between Arafat and the Israelis. His speech at Madrid was perhaps the most eloquent the West had ever heard from a Palestinian: a plea for understanding, for sympathy and for territory. “What requiem can be sung”, he asked, “for trees uprooted by army bulldozers? And...who can explain to those whose lands are confiscated and clear waters stolen, a message of peace? Remove the barbed wire. Restore the land.”
Bob Denard
Oct 18th 2007
From The Economist print edition
Bob Denard, mercenary and coup-master, died on October 13th, aged 78
THERE were usually several versions of any story involving Bob Denard. To explain how he came to be found, in the early hours of November 26th 1989, standing over the blood-soaked and pyjama-clad body of the president of the Comoros Islands, there were three alternatives. One: Mr Denard had shot him. (He denied it in court; though he had been in the same room, and very close to him, he had not pulled the trigger.) Two: the palace bodyguard had burst in wildly, filling the president with bullets. (“Inexplicable,” Mr Denard agreed, but true; “an accident arising out of a general state of madness.”) Or perhaps—mad theory three—an army commandant had fired off an anti-tank missile by mistake, which had crashed through the window of the presidential bedroom.
The French courts never worked it out, and in 1999 acquitted Mr Denard for lack of evidence. His long dark history as a mercenary in Africa, from 1961 onwards, had blurred everything about him. His name was Bob Denard, or Gilbert Bourgeaud, or Colonel Bako, or Mustafa M'hadjou. The wound that made him limp had come from a bullet in Congo, or perhaps in Algeria. His fascination with all things military sprang from a boyhood in the French resistance in the Médoc, or alternatively from his first entranced sighting of the shiny helmets, boots and guns of the German troops invading his village. He had been cashiered from the French navy, at 16, for running riot in a Saigon whorehouse or for burning down a restaurant. Fact or fiction: few knew for sure.
Mr Denard could look gentlemanly, smart in grey suits or his spurious colonel's uniform. He thought the word “mercenary” insulting and torture “repugnant”. Visitors to his beach house in the Comoros might find him, surrounded by his children from seven different pretty women, sipping tea under a frangipani tree. Dom Perignon and paté de foie gras would be shipped out after him when his plots failed. But he was also a brawny, flamboyant soldier in camouflage fatigues, leader of “les affreux” (“the terrible ones”) in the Congo—in fact, le plus affreux des affreux, as he boasted to his men. He did a job in which killing was necessary, sometimes alongside underlings who stubbed out their cigarettes on prisoners' feet or roughly removed their teeth and eyes.
Money was an attraction. When he could, he built up business interests on the side. But he said he could earn more pay as an ordinary soldier; his stronger motives were adventure, “idealism”, and the fact that he was stifling in Paris, “bored shitless”, if he didn't make war somewhere. He fought in cold-war Africa for anti-communist rulers favoured by the West, and for any regime that would help the French, as they let go their colonies, to keep their investments safe and their influence alive.
In breakaway Katanga in the 1960s Mr Denard propped up Moishe Tshombe, a creature of Belgian mining interests in Congo, against a United Nations force. He tried to launch coups in Yemen and Benin and fought for secession in Biafra. His men—usually only a few dozen of them—were generally French, Belgian or South African, well equipped with guns and armoured jeeps, whipping the untrained blacks into shape. Mr Denard himself seemed less racist than his troops, and in the Comoros, having converted to Islam, he wore the robes and cap of a native as he limped to Friday prayers. But he laughed at the thought of democracy in Africa.
An amber light
At certain times his presence was benevolent. In 1964 he and his men saved the whites of the town of Stanleyville, in Congo, from being slaughtered by a drug-crazed mob. His coup in the Comoros in 1978, one of four he engineered in the archipelago between 1975 and 1995, brought in a decade of relative stability while he took charge of the army and the economy and his Garde Presidentielle, their food and black uniforms paid for by South African money, guarded the puppet ruler. He once claimed to be acting in the higher interests of civilisation. Frederick Forsyth, in “The Dogs of War”, may have borrowed from the glamour of his character.
Yet amateurism often dogged his enterprises. Invasions were launched from rusty trawlers and inflatable dinghies and once, in Congo, on bicycles. He crashed in flames more often than he succeeded. If the South Africans did not pull him out to the safety of suburban Pretoria, a French expeditionary force, shiny and efficient, sometimes arrived to remove him before he went too far. On his last coup attempt in the Comoros, in 1995 at the age of 66, his grandfatherly arm was taken gently by French officers before he was led away to face yet more criminal investigations.
A conviction followed in 2006, but no punishment. By this time Mr Denard was ill with Alzheimer's, but there was another reason. De Gaulle's spymaster, Jacques Foccart, had first recruited him for Africa. Subsequent officials at the Elysée had provided money and passports. Asked during one trial whether he had had a green light from the government for his plots, he said no, not exactly; just an amber light, meaning that there was no opposition. He was, he liked to say, a “corsair of the Republic”, implicitly given permission to proceed with dash and without compunction. And so he did.
From The Economist print edition
Bob Denard, mercenary and coup-master, died on October 13th, aged 78
THERE were usually several versions of any story involving Bob Denard. To explain how he came to be found, in the early hours of November 26th 1989, standing over the blood-soaked and pyjama-clad body of the president of the Comoros Islands, there were three alternatives. One: Mr Denard had shot him. (He denied it in court; though he had been in the same room, and very close to him, he had not pulled the trigger.) Two: the palace bodyguard had burst in wildly, filling the president with bullets. (“Inexplicable,” Mr Denard agreed, but true; “an accident arising out of a general state of madness.”) Or perhaps—mad theory three—an army commandant had fired off an anti-tank missile by mistake, which had crashed through the window of the presidential bedroom.
The French courts never worked it out, and in 1999 acquitted Mr Denard for lack of evidence. His long dark history as a mercenary in Africa, from 1961 onwards, had blurred everything about him. His name was Bob Denard, or Gilbert Bourgeaud, or Colonel Bako, or Mustafa M'hadjou. The wound that made him limp had come from a bullet in Congo, or perhaps in Algeria. His fascination with all things military sprang from a boyhood in the French resistance in the Médoc, or alternatively from his first entranced sighting of the shiny helmets, boots and guns of the German troops invading his village. He had been cashiered from the French navy, at 16, for running riot in a Saigon whorehouse or for burning down a restaurant. Fact or fiction: few knew for sure.
Mr Denard could look gentlemanly, smart in grey suits or his spurious colonel's uniform. He thought the word “mercenary” insulting and torture “repugnant”. Visitors to his beach house in the Comoros might find him, surrounded by his children from seven different pretty women, sipping tea under a frangipani tree. Dom Perignon and paté de foie gras would be shipped out after him when his plots failed. But he was also a brawny, flamboyant soldier in camouflage fatigues, leader of “les affreux” (“the terrible ones”) in the Congo—in fact, le plus affreux des affreux, as he boasted to his men. He did a job in which killing was necessary, sometimes alongside underlings who stubbed out their cigarettes on prisoners' feet or roughly removed their teeth and eyes.
Money was an attraction. When he could, he built up business interests on the side. But he said he could earn more pay as an ordinary soldier; his stronger motives were adventure, “idealism”, and the fact that he was stifling in Paris, “bored shitless”, if he didn't make war somewhere. He fought in cold-war Africa for anti-communist rulers favoured by the West, and for any regime that would help the French, as they let go their colonies, to keep their investments safe and their influence alive.
In breakaway Katanga in the 1960s Mr Denard propped up Moishe Tshombe, a creature of Belgian mining interests in Congo, against a United Nations force. He tried to launch coups in Yemen and Benin and fought for secession in Biafra. His men—usually only a few dozen of them—were generally French, Belgian or South African, well equipped with guns and armoured jeeps, whipping the untrained blacks into shape. Mr Denard himself seemed less racist than his troops, and in the Comoros, having converted to Islam, he wore the robes and cap of a native as he limped to Friday prayers. But he laughed at the thought of democracy in Africa.
An amber light
At certain times his presence was benevolent. In 1964 he and his men saved the whites of the town of Stanleyville, in Congo, from being slaughtered by a drug-crazed mob. His coup in the Comoros in 1978, one of four he engineered in the archipelago between 1975 and 1995, brought in a decade of relative stability while he took charge of the army and the economy and his Garde Presidentielle, their food and black uniforms paid for by South African money, guarded the puppet ruler. He once claimed to be acting in the higher interests of civilisation. Frederick Forsyth, in “The Dogs of War”, may have borrowed from the glamour of his character.
Yet amateurism often dogged his enterprises. Invasions were launched from rusty trawlers and inflatable dinghies and once, in Congo, on bicycles. He crashed in flames more often than he succeeded. If the South Africans did not pull him out to the safety of suburban Pretoria, a French expeditionary force, shiny and efficient, sometimes arrived to remove him before he went too far. On his last coup attempt in the Comoros, in 1995 at the age of 66, his grandfatherly arm was taken gently by French officers before he was led away to face yet more criminal investigations.
A conviction followed in 2006, but no punishment. By this time Mr Denard was ill with Alzheimer's, but there was another reason. De Gaulle's spymaster, Jacques Foccart, had first recruited him for Africa. Subsequent officials at the Elysée had provided money and passports. Asked during one trial whether he had had a green light from the government for his plots, he said no, not exactly; just an amber light, meaning that there was no opposition. He was, he liked to say, a “corsair of the Republic”, implicitly given permission to proceed with dash and without compunction. And so he did.
Lucky Dube
Oct 25th 2007
From The Economist print edition
Lucky Dube, singer against apartheid, died on October 18th, aged 43
LIKE the birds or the beasts, musicians can sometimes be seers of tumultuous change. Lucky Dube, the best-loved and biggest-selling reggae star in South Africa, looked much like a prophet, with thick dreadlocks falling to his chest and a craggy, bearded face. His singing, too, as he leapt around the stage, was high, light and oracular, simple words set to drums, bass and two keyboards, which nevertheless detected fault-lines the authorities often could not see.
This made him dangerous—though the danger was hidden in the lilting rhythms and Mr Dube's dazzling smile. In the 1990s he performed once, because of a booking mix-up, in a military camp run by the South African Defence Force, and enjoyed watching the white soldiers dance while he sang, catchily and sunnily, “I am a prisoner in my own country”, and hummed Zulu insults at them.
He was already a thorn under the hide of the apartheid regime, singing things that were forbidden. He had started as a mbaqanga singer, making traditional Zulu “tourist music”, as he called it, and selling plenty of records. But from his teenage years he was in thrall to the music of Bob Marley and the chief guitarist of the Wailers, Peter Tosh, envying the drive and edge of Jamaican reggae. At his own concerts he would dive off into that music, with its undertow of social and political subversion couched in blatant English, and find that the crowd loved it.
In 1984 he dared to make a mini-album, “Rastas Never Die”. Though he had drifted into Rastafarianism out of schoolboy curiosity, believing only parts of it and smoking no ganja, the South African Broadcasting Corporation (SABC) saw the album as a challenge, and banned it from the airwaves. It sold a mere 4,000 copies. But he made another (“Think about the Children”, 1985), then another (“Slave”, 1987), all the time notching up more sales and ratcheting up the menace in the music.
“Slave” was ostensibly about alcoholism, which had broken up his own family before he was born. But it included the phrase “I'm just a slave, a legal slave”, which was not to do with drinking. To make the message clearer, Mr Dube renamed his backing band “The Slaves”. The record, though unplayed by the SABC, went to triple gold in three months.
The next year Mr Dube got bolder still. At a recording session he sang gently, on to the tape,
Too many people
Hate apartheid
Why do you like it?
His recording engineer stopped the tape, telling him he couldn't say that. But Mr Dube not only said it; he also persuaded the SABC to air it, the first anti-apartheid song to be played on a white station. The album, “Together as One”, sold 100,000 copies in its first five days, becoming the soundtrack of the anti-apartheid movement. In that week, too—as if Mr Dube had sensed the first ripples of the coming wave of change—eight of South Africa's long-term political prisoners were suddenly released from jail.
Down Highway 54
None of this seemed to be in Mr Dube's future when he was born, the sickly first son of a single mother on a run-down farm in East Transvaal. He began to work, as a child, trimming gardens in white suburbs. His first drums were “borrowed” from a school cupboard, his first guitar bought with the proceeds of a little play he had written. He might have sung Zulu township jive all his life, if he had not felt compelled to give “a message” to the world for which reggae was his ideal language.
The message was peace, unity, love and respect. It was much bound up with the clean-living Rastafarianism he had plucked out of the encyclopedia, but it was also drawn from his own South African experience. His songs, he said, were about life, not politics. Nor was his music just a borrowing from Jamaica: it was rooted in Africa, especially in the ancient drums that were used to communicate hope, fear or joy between one village and another.
With the end of apartheid in 1994 Mr Dube became a world star, signed by Motown. But there was still plenty to sing against at home. He took on drugs (“You go sniffling them glue/No good for you”); promiscuity and AIDS (“Don't you think it's time/to be a little more responsible”) and racial quotas (“We are tired of people who/think that affirmative action is the way out/and is another way of putting puppets/where they don't belong.”)
He also sang against South Africa's appalling crime wave, apparently unstoppable by bodyguards, police or high walls.
Do you ever worry
About your house being broke into
Do you ever worry
About your car being taken away from you
In broad daylight
Down Highway 54
It was not down Highway 54, but in Rosettenville, a suburb of Johannesburg; and it was not in broad daylight, but at 8.20 at night, that Lucky Dube's vehicle was carjacked by five men. He was shot to death in front of two of his seven children. But for his legions of fans throughout Africa and beyond it, mourning the senseless loss of a musician they also considered a liberator, his prophecy had come close enough.
From The Economist print edition
Lucky Dube, singer against apartheid, died on October 18th, aged 43
LIKE the birds or the beasts, musicians can sometimes be seers of tumultuous change. Lucky Dube, the best-loved and biggest-selling reggae star in South Africa, looked much like a prophet, with thick dreadlocks falling to his chest and a craggy, bearded face. His singing, too, as he leapt around the stage, was high, light and oracular, simple words set to drums, bass and two keyboards, which nevertheless detected fault-lines the authorities often could not see.
This made him dangerous—though the danger was hidden in the lilting rhythms and Mr Dube's dazzling smile. In the 1990s he performed once, because of a booking mix-up, in a military camp run by the South African Defence Force, and enjoyed watching the white soldiers dance while he sang, catchily and sunnily, “I am a prisoner in my own country”, and hummed Zulu insults at them.
He was already a thorn under the hide of the apartheid regime, singing things that were forbidden. He had started as a mbaqanga singer, making traditional Zulu “tourist music”, as he called it, and selling plenty of records. But from his teenage years he was in thrall to the music of Bob Marley and the chief guitarist of the Wailers, Peter Tosh, envying the drive and edge of Jamaican reggae. At his own concerts he would dive off into that music, with its undertow of social and political subversion couched in blatant English, and find that the crowd loved it.
In 1984 he dared to make a mini-album, “Rastas Never Die”. Though he had drifted into Rastafarianism out of schoolboy curiosity, believing only parts of it and smoking no ganja, the South African Broadcasting Corporation (SABC) saw the album as a challenge, and banned it from the airwaves. It sold a mere 4,000 copies. But he made another (“Think about the Children”, 1985), then another (“Slave”, 1987), all the time notching up more sales and ratcheting up the menace in the music.
“Slave” was ostensibly about alcoholism, which had broken up his own family before he was born. But it included the phrase “I'm just a slave, a legal slave”, which was not to do with drinking. To make the message clearer, Mr Dube renamed his backing band “The Slaves”. The record, though unplayed by the SABC, went to triple gold in three months.
The next year Mr Dube got bolder still. At a recording session he sang gently, on to the tape,
Too many people
Hate apartheid
Why do you like it?
His recording engineer stopped the tape, telling him he couldn't say that. But Mr Dube not only said it; he also persuaded the SABC to air it, the first anti-apartheid song to be played on a white station. The album, “Together as One”, sold 100,000 copies in its first five days, becoming the soundtrack of the anti-apartheid movement. In that week, too—as if Mr Dube had sensed the first ripples of the coming wave of change—eight of South Africa's long-term political prisoners were suddenly released from jail.
Down Highway 54
None of this seemed to be in Mr Dube's future when he was born, the sickly first son of a single mother on a run-down farm in East Transvaal. He began to work, as a child, trimming gardens in white suburbs. His first drums were “borrowed” from a school cupboard, his first guitar bought with the proceeds of a little play he had written. He might have sung Zulu township jive all his life, if he had not felt compelled to give “a message” to the world for which reggae was his ideal language.
The message was peace, unity, love and respect. It was much bound up with the clean-living Rastafarianism he had plucked out of the encyclopedia, but it was also drawn from his own South African experience. His songs, he said, were about life, not politics. Nor was his music just a borrowing from Jamaica: it was rooted in Africa, especially in the ancient drums that were used to communicate hope, fear or joy between one village and another.
With the end of apartheid in 1994 Mr Dube became a world star, signed by Motown. But there was still plenty to sing against at home. He took on drugs (“You go sniffling them glue/No good for you”); promiscuity and AIDS (“Don't you think it's time/to be a little more responsible”) and racial quotas (“We are tired of people who/think that affirmative action is the way out/and is another way of putting puppets/where they don't belong.”)
He also sang against South Africa's appalling crime wave, apparently unstoppable by bodyguards, police or high walls.
Do you ever worry
About your house being broke into
Do you ever worry
About your car being taken away from you
In broad daylight
Down Highway 54
It was not down Highway 54, but in Rosettenville, a suburb of Johannesburg; and it was not in broad daylight, but at 8.20 at night, that Lucky Dube's vehicle was carjacked by five men. He was shot to death in front of two of his seven children. But for his legions of fans throughout Africa and beyond it, mourning the senseless loss of a musician they also considered a liberator, his prophecy had come close enough.
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