Especially the JESTER part.....
since the Veep is not the jester....but the KING....
and here's a clear case of what Jesters can do....strikingly similar to the current economic action here......
Tonga Is Not Amused
The island kingdom appointed a California investment advisor as court jester. But
nobody is laughing over the loss of a multimillion-dollar trust fund.
By JESSICA GARRISON, TIMES STAFF WRITER
Some might say that as official court jester to the
island kingdom of Tonga, Jesse Bogdonoff isn't
very funny.
Instead of cracking them up in the South Pacific
nation, the Sonoma County resident has performed
just one notable trick so far: He made $24 million
belonging to the Tongans disappear, according to a
lawsuit filed by the kingdom last month in San
Francisco.
The loss has thrown the impoverished kingdom into
uproar. Bogdonoff, who also was Tonga's financial
advisor, has been fired. Government ministers have resigned. And in a nation
ruled by a king and 33 noble families, commoners in Parliament are using the
scandal as evidence that the time has come for more inclusive government. But
Bogdonoff, 47, is still very merry. Though his financial career is in ruins, he is
confident that the debacle ultimately offers lessons both for him and the Tongan
people.
The events that led Bogdonoff to become first jester, then financial advisor and
then persona non grata in a nation he had barely heard of a decade ago began
in Bank of America's San Francisco office.
Bogdonoff was an investment advisor, working on commission and charged
with persuading bank customers to make better use of their money by investing
in securities.
One day in 1994, he stumbled upon the Tonga Trust Fund. It was no ordinary
checking account: more than $20 million was just sitting there.
The money had been earned in an unusual fashion too.
Tonga's economy is based mostly on exports of baby squash and cash sent
back by Tongans living abroad. But for a while in the mid-1980s, the Tongan
government had begun selling passports, mostly to Hong Kong residents who
feared their travel would be restricted when the former colony was handed
back to China. In 1988, the money was deposited in the Bank of America.
Bogdonoff said his colleagues at the bank told him not to worry about the
account, that the Tongan people were out in the middle of the Pacific and best
left alone.
"But being the sales professional that I am," Bogdonoff said, he began making
long-distance phone calls. He quickly learned that they did business a little
differently in Tonga.
The ministers he needed to speak with were always out of the country or
unavailable, he said. So he decided to pay a personal visit.
In November 1994, he boarded a plane in San Francisco, and nearly 24 hours
later found himself standing alone by a dusty landing strip outside the capital
city of Nuku'alofa.
He was stunned by the signs of poverty: the dirt roads, the absence of
streetlights, pigs roaming free.
"I'm thinking, $21 million in a checking account," he said. "You'd think they
might put a few more lights out here."
But the bright blue ocean and skies and the palm trees swaying in the warm,
tropical wind captivated him, as did the friendly, relaxed people. On his third
day in the islands, Bogdonoff met King Taufa'ahau Tupou IV. The introduction
was arranged by a businessman both men knew. The king's ancestors had
unified the Polynesian tribes living on 171 islands and helped them resist the
European colonialism that swept the South Pacific. Ever since, the royal family
has made most of the decisions in Tonga, as Bogdonoff soon learned.
Bogdonoff was shown through the back door of the royal residence, a
Victorian house near the sea. The king greeted him in a muumuu in his
book-lined office, outfitted with a weightlifting machine, a treadmill and a
big-screen television, Bogdonoff said.
They hit it off immediately, Bogdonoff said. The king and the investment
advisor launched into a passionate two-hour conversation on subjects ranging
from literature to the O.J. Simpson murder trial. O.J. didn't do it, the king told
Bogdonoff.
He also met with government ministers in charge of the trust account. He says
he explained the concept of stocks and bonds and promised them a much
higher rate of return than they were getting from the checking account. Soon,
Bogdonoff said, he was sitting in a government office, furiously stamping bank
papers with the royal Tongan seal and preparing to fax them across the ocean
to close the deal.
Stamping the papers with the seal was his idea, Bogdonoff said, "to make this
thing real."
From then on, he claims, he carefully managed the Tongan account, and its
fortunes rose with the bullish market of the late 1990s, making $11.8 million
over five years.
In 1999, Bogdonoff decided to leave Bank of America. He said the reason
was personal: He feared for his health because of an increasing workload and
was disillusioned with changes at the company. Bank of America officials
would not comment.
There was just one problem: Bogdonoff faced a lawsuit from the bank if he
took the Tongan account with him--unless he somehow became an employee
of the kingdom.
He flew to Tonga and explained the situation to fund managers.
It was during those talks that Bogdonoff, who happened to have been born on
April 1, had an idea. He told the king: "I'm a natural-born fool, and you're a
king, and I'd like to become your jester."
The king at first was cool to the request, Bogdonoff said, protesting that he had
no use for a jester. But Bogdonoff persisted, promising that he would make it
part of his duties to be a Tonga booster, encouraging tourists to visit the
islands.
In April 1999, according to a royal decree Bogdonoff asked the king to draw
up, he became "King of Jesters and Jester to the King to fulfill his royal duty
sharing mirthful wisdom and joy as a special goodwill ambassador to the
world."
Two months later, the Tonga Trust Fund appointed Bogdonoff as its advisor at
an annual salary of $250,000, allowing him to leave Bank of America with the
account.
According to the lawsuit, Bogdonoff promised to charge Tonga lower
management fees than those proposed by Merrill Lynch or Wells Fargo, two
companies competing for the account.
At that point, the fund was worth $26.5 million, according to the lawsuit.
Bogdonoff then recommended that Tonga invest $20 million in a company that
purchased life insurance polices from senior citizens. He also arranged for the
trust to invest $6.5 million in other companies.
The kingdom lost almost all of it.
The life insurance company, Millennium Asset Management, was to pay
Tongan officials $26 million by June 2001, a return of $6 million. According to
the lawsuit, the company has not paid. The company could not be reached for
comment.
A second investment was in a company whose stock, according to the suit, is
now worthless. Another investment involved a high-tech start-up that has since
filed for bankruptcy.
The lawsuit also alleges that Millennium and another company paid Bogdonoff
secret commissions for the Tongan investments. Bogdonoff does not deny
receiving commissions, but claims Tongan officials knew about them.
As for the fact that all his recommendations failed, he said: "I was trying to
help.... I thought I was thinking innovatively."
But he also accuses the royal family, specifically the king's children, of making it
impossible for him to recover the money once the investments began to go
sour.
Bogdonoff said he went to Tonga twice last year with a plan to salvage the
investments, the second time bringing a media advisor to help manage press
inquiries about the lost money.
But he was greeted with rage, bureaucratic paralysis and a "go shoot the jester"
mentality, he said. Eventually, he said, the government posted a condemnation
against him and Millennium on the Internet. The effect of that, he said, was to
scare away any buyers who could have rescued the investment.
He called the lawsuit against him frivolous and an "expression of incredible
incompetence and political intrigue of the children of the royal family. It's
typically Tongan."
Tongan government officials said in a statement that the Tongan attorney
general will go to San Francisco to consult on the court case against
Bogdonoff.
"Everyone in Tonga is upset about what happened," said Sangster Saulala,
editor of the Tonga Star newspaper.
Advocates of democracy in Tonga contend that a more open system of
government could have prevented the fiasco.
Fred Sevele, a prominent businessman and economist and member of
Parliament, said the king was taken in by Bogdonoff because he didn't seek the
advice of anyone outside his small circle of advisors.
"A lot of the ministers haven't got a clue about running a public organization for
the people," he said.
Mateni Tapueleulu, editor of the newspaper Tonga Times, said he was upset to
read Internet accounts in which Bogdonoff did not seem to realize the impact of
the loss for the Tongan people.
His comments "are too light to account for the serious loss we're facing," he
said.
The one silver lining, Tapueleulu said, is that the experience "has given the
democracy movement some credibility."
Bogdonoff said he did take the loss of Tonga's money seriously, and that he
has only recently recovered his cheerful disposition.
"I was and remain deeply saddened by this unnecessary loss," he said. "It didn't
have to happen this way."
He said the saga taught him many lessons, among them that "money isn't the
only thing in the universe." He said he hopes the experience will teach Tongans
to question their leaders more closely.
Bogdonoff said he is trying to move on. In fact, with the support of his wife and
children, he said he has decided to pursue a new career in music. He has his
own sound, which he describes as "a funky, jazzy fusion." He is considering
calling his music company the Jester's Heart.
"I'm gonna keep the identity," he said. "There's a certain amount of notoriety"
that may help sales. And after all, he points out, the royal decree said his term
as jester "was forevermore."
"The decree was that I would be a goodwill ambassador to tell the world how
wonderful Tonga is," he said. "Unfortunately, right now it's not being
reciprocated."
Times staff writer Richard C. Paddock contributed to this report.
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