Prince Jefri Bolkiah of Brunei once was one of the wealthiest men in the world. Now he's worried he may soon be homeless and forced into bankruptcy.
"They want me to give it all back," he says, flanked by giant Dutch landscape paintings and billowing gold drapery in the cavernous living room of his London villa, where he resides with one of his three wives and two of his 18 children. "We don't know where we are going to live."
| Prince Jefri Bolkiah, the younger brother of the Sultan of Brunei and once one of the wealthiest men in the world, is worried he may soon be homeless and be forced into bankruptcy. WSJ's Mark Maremont reports. |
The 53-year-old younger brother of the Sultan of Brunei, Prince Jefri is on the losing end of one of the world's most colorful family feuds. It started a decade ago, when the prince was stripped of his government roles and later accused by Brunei authorities of misappropriating $14.8 billion of the royal treasury's money.
He denies that, but there's no doubt much had been expended on Prince Jefri's famously sybaritic lifestyle. The jet-setting prince bought mansions around the world, amassed a fleet of 1,700 luxury cars and acquired a 180-foot yacht that he named using a slang word for female breasts.
The Sultan since then has waged a legal siege on three continents to reclaim Prince Jefri's considerable riches. The Sultan scored a decisive victory late last year, when Britain's Privy Council -- which hears final legal appeals from Brunei, a former British protectorate -- ruled that the prince needed to abide by a 2000 agreement to return nearly all his remaining holdings.
On Tuesday, Prince Jefri effectively lost control of his most valuable remaining asset, the New York Palace Hotel, an opulent 55-story property formerly known as the Helmsley Palace. The Brunei government took ownership of the hotel following a New York court order. But the judge has restricted it from selling the property pending the outcome of further proceedings and the prince is disputing the change in control.
"Brothers should get along with each other," the New York judge, Justice Helen Freedman, admonished the lawyers for the warring royals at a recent hearing. Justice Freedman jokingly threatened to refer the case to a domestic-violence court.
Wealthy families often have squabbled over money. The Koch brothers of Kansas spent years in court in the 1980s and '90s, battling over their family's giant oil pipeline concern. In 2001, Chicago's Pritzker family decided to divvy up its $20 billion fortune after a bitter dispute among siblings and cousins. But Prince Jefri's experience represents one of the largest fortunes ever lost.
In the New York hearing, one of Prince Jefri's lawyers, Philip Le B. Douglas, likened the idea of Prince Jefri working for a living to Russian aristocrats who "froze to death" after being forced to sweep the streets without winter clothes following the 1917 revolution. The prince, Mr. Douglas said, "has had unimaginable wealth all of his life. Now he's going to go and bus tables?"
The Sultan's advisers have started legal proceedings to evict Prince Jefri from his London mansion, and the sides continue to wrangle over the fate of the Hotel Bel-Air, an upscale property in the Los Angeles hills still controlled by the prince.
"I spend too much time with lawyers," sighs Prince Jefri, a trim, soft-spoken man with a dapper moustache. He says he's "more or less agreed" to turn over the various assets, but is still hoping his brother the Sultan will let him keep enough money to maintain a more modest version of his prior lifestyle.
The government of Brunei doesn't seem inclined to go along. "Prince Jefri signed an agreement and he should stick to it," says Lindsay Marr, a London-based attorney for the Brunei Investment Agency, a government-owned fund. "Why should he be allowed to keep a large amount of money that wasn't his in the first place?"
Prince Jefri already has turned over billions of dollars worth of property, including the Plaza Athénée hotel in Paris, the giant yacht, the car collection, and more than 100 paintings by Picasso, Renoir, Modigliani and others. Late last year, he surrendered five rare diamonds, secured in a London vault, valued at roughly $200 million.
Situated in southeast Asia, Brunei is a small, oil-rich nation of 374,000 people on the northern coast of the island of Borneo, surrounded by part of Malaysia. The Sultan, Hassanal Bolkiah, is an absolute monarch who has ruled the Islamic enclave since 1967. Forbes ranks him as the world's wealthiest ruler, with an estimated fortune of $22 billion.
Prince Jefri -- whose full name is Duli Yang Teramat Mulia Paduka Seri Pengiran Digadong Sahibul Mal Pengiran Muda Haji Jefri Bolkiah -- is the youngest of the Sultan's three brothers. For many years, he was finance minister and chairman of the Brunei Investment Agency, which is charged with investing much of the country's wealth. Under Prince Jefri, some of the BIA's money went to improving infrastructure, he says.
But much of the BIA's money went to Prince Jefri. According to court documents, the prince spent $475 million on Rolls Royce cars, $78 million at Italian sports-car company Pininfarina SpA, and $900 million at British jeweler Asprey. He liked Asprey so much that in 1995 he bought the company, for $385 million. A firm owned by Prince Jefri paid $202 million for the Helmsley Palace hotel in 1993, using BIA funds.
The Bruneian royal aircraft fleet -- split between the Sultan and Prince Jefri -- contained 10 jets, including a Boeing 747 and an Airbus A-340, according to 1996 insurance documents. A 45-page list of individual recipients shows that scores of people benefited from Prince Jefri's generosity, from ministers to royal relatives to servants. One of Prince Jefri's fathers-in-law received $23 million in BIA funds; his badminton coach and acupuncturist each were paid $1.8 million.
Prince Jefri also amassed a world-class art collection. Under his tenure, the BIA paid $24 million for a Manet and $20.5 million for a Renoir, according to records filed in British court. The prince's favorite, though, was Edgar Degas: "I like the brilliant color and heavy stroke," he says. He bought at least 21 paintings by the French Impressionist artist, according to court documents.
Prince Jefri seems bewildered by the accusation that he misspent $14.8 billion. "It's not that easy to hide," he says. "I keep asking the lawyers, 'Where did it go?'"
Some of the Rolls Royce cars, he says, were used as a kind of "transport pool" for the 20-odd royal guest houses in Brunei. "We'd provide our guests with a car and a backup car, so they didn't have to rent from anybody."
The prince says his brother the Sultan was aware of much of the spending. For example, Prince Jefri says he spent several years building himself a sprawling beachfront palace in Brunei, with a sports complex. "He knew it was built," the prince says. "My civil list [government allowance] is only $20,000 U.S. per month. You can't build a house for that."
Prince Jefri says the Sultan would sometimes come over to his palace after one of their frequent badminton matches, and admire a newly-bought Picasso or Degas on the wall. "He'd say, 'Nice painting. Could you transfer this today?" to the Sultan's own palace -- a 1,788 room edifice that covers 49 acres.
Messages sent to officials in Brunei and its embassy in Washington seeking comment weren't returned.
In 1997, depressed oil prices triggered a financial crisis in Brunei. The Sultan's people brought in Arthur Andersen accountants to comb through the investment agency's books, leading to Prince Jefri's ouster.
Prince Jefri doesn't deny spending some of the BIA's money, but claims in court documents that the Sultan also received billions of dollars in "Special Transfers" from the government agency to his personal bank accounts. Britain's Privy Council, in its ruling last year, put the total at $8 billion.
At one point, Prince Jefri said in an affidavit, the Sultan asked him to set up a bank account under a pseudonym, "so that the monies would not be traced to His Majesty or [appear] to have originated from the BIA." The prince said that $700 million was transferred to the Sultan this way in a single transaction.
Responding to Prince Jefri's allegations about the Sultan's finances, a lawyer acting for the Brunei government said in a 2005 affidavit that they were "irrelevant" and didn't constitute a defense against claims that the prince had purchased assets for his own benefit with state funds.
In May 2000, Prince Jefri agreed to settle the misappropriation charges that Brunei brought against him, avoiding any possibility of criminal prosecution. In return for the prince's agreement to hand over nearly all of his wealth, the government pledged to let Prince Jefri keep an official and a private residence in Brunei, and agreed to set up a $200 million trust fund to cover certain of his liabilities, but not his living expenses.
Both sides accuse the other of breaching the pact. The Brunei government says Prince Jefri has refused to return the most valuable overseas possessions, including the London villa, a sumptuous residence in Paris's Place Vendôme, a Cayman Islands trust fund with more than $100 million in cash, and the two U.S. hotels. In total, the assets likely are worth more than $1.5 billion.
Prince Jefri says he shouldn't have to surrender those assets until he's sure the Brunei government will live up to its end of the bargain. The government currently controls his homes in Brunei, and there is a dispute over which ones it is obliged to return to the prince. He maintains that his official residence is the beachfront palace he built, known as Assana. The Brunei government disagrees, saying a smaller residence is the prince's official one.
In any case, Prince Jefri says regaining the Brunei palaces won't do him much good. In exile since 2004, he says he can't return to his native land and "it's hard to sell that kind of house in Brunei." He'd rather have their value in cash.
Prince Jefri also worries about whether the Brunei government will live up to its promise to pay a big capital-gains tax due from the transfer of the New York Palace Hotel. "I will probably have to go bankrupt" if it doesn't, he says.
Mr. Marr, the London lawyer, says the Brunei government is obliged under the settlement to cover those taxes "and intends to do so." He also says he knows of no reason why Prince Jefri can't return to Brunei.
Prince Jefri's living expenses are considerable. He's married to three women and divorced from two others. His fifth wife, the former Claire Kelly, is a New Zealand native. They have two young boys, who live with their mother in St. John's Lodge, the London villa.
Prince Jefri says he worries about paying for the studies of his many children, some of whom are studying abroad. "Some of the mothers will be able to afford the children, some not." Court records say that his first four wives received a total of $158 million of BIA funds over the years, although the Brunei government may have reclaimed some of that.
Asked how many mothers there are, the prince starts ticking them off: "There's one in Singapore, one in the Philippines, one in England, one in Las Vegas...." He counts seven in all. "I just want some income to move on and look after the children," he says.
On a recent day, Prince Jefri gives a tour of St. John's Lodge, an imposing white villa dating to the early 19th century, situated inside Regent's Park. The prince's polo boots and mallets are laid out on the table in the formal dining room, which could easily seat 40 people. A child's train set has taken over a sitting room, and strollers are pushed to a corner in the magnificent front hall, where a bodyguard hovers. Portraits of the Sultan and the Sultan's wife sit on a side table.
"It's just a matter of time" before the family has to leave, the prince says.
While in Brunei, Prince Jefri says his favorite car to drive was a Ferrari 550, a sleek sports coupe that he would take for a spin late at night when the roads were quiet. Now, he says, "I like the Mini." He drives a black one around London.
No comments:
Post a Comment