SEEING 'RED' ON GREENSPAN VOTE
By BETH PISKORA, JESSICA SOMMAR, and ERICA COPULSKY
FUND managers rarely ever quote Lenin in their annual reports - especially in the same breath as the revered Alan Greenspan. But the First Eagle SoGen Funds are doing just that: They say Greenspan is acting like a disciple of the communist leader.
Managers of the fund are on the warpath in the federal courts in Washington and in the International Tribunal at the Hague in an uphill battle to revise one of Greenspan's more low-profile financial acts.
Few know it, but Greenspan and his Fed sidekick William McDonough (president of the New York Federal Reserve Bank) sit on perhaps the world's most powerful board. It's not the Fed, it's the International Bank of Settlements in Basel, Switzerland.
The BIS, which serves as the main bank for the world's central bankers, plots strategies for global economies and makes tons of money using assets on deposit from 40 of the world's central banks. Although the U.S. isn't a member, Greenspan has held his BIS board seat for seven years, for obvious political reasons.
Most investors here admire Greenspan's latest vote to lower our rates, but his recent vote on the BIS board is making 130,000 investors hopping mad.
Greenspan and McDonough voted unanimously with the BIS board to yank back the only remaining shares of BIS from the public's hands - held by the relatively small $1.7 billion SoGen Funds. Each BIS share, according to a BIS annual report, is valued at $19,000.
The problem? Greenspan and the others voted to pay SoGen just 50 cents on the dollar for their nearly 9,400 shares, a squeeze-out that's beating SoGen fund members out of about $90 million, managers say.
"It was a clear violation of U.S. and international law, and BIS may be powerful enough to get away with it," said fund manager Jean-Marie Eveillard.
"This is a Lenin-style taking of private property and Mr. Greenspan is part of it," he asserted. Angry letters citing the Lenin remark appear in the fund's annual report, and missives to several U.S. senators are demanding to know whether Greenspan needed congressional approval to sit on the BIS board.
Greenspan's office had no comment on the legal dispute.
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