The Corfu Set: Honour among Billionaires, Banksters, Oligarchs – and the New Labour and new Tory new rich

Dandelion Salad

by Michael Faulkner
November 02, 2008

In the midst of a global financial crisis the likes of which we have never seen before, a story concerning the proposal to donate £50.000 to a British political party seems of too little  importance or interest to warrant any comment. With banks collapsing or taken into public ownership, and £billions of taxpayers money thrown into an emergency relief operation to shore up the financial system, £50.000 seems no more than a penny or dime thrown to a beggar or dropped in the street. Nevertheless, the story has dominated the headlines during the past few days and it has exposed something of the close connections and secretive social networking of those who wield power and influence in U.K. party politics and international high finance.

The controversy about the proposed donation is only part of a bigger story involving the close association between leading U.K. politicians of both main parties, a Russian tycoon and a Rothschild heir. The revelations about their association have the potential to seriously damage the Tory party, one of whose leaders is at the centre of the donations controversy. But they also involve a leading New Labour politician, only recently restored to high office in Britain. The events concerned took place a few months ago on the Greek island of Corfu. These are the dramatis personae:

George Osborne. Leading Tory politician, he is the Shadow Chancellor of the Exchequer – the office to which he will be appointed if the Tories win the next election. Like the leader of his party and close friend, David Cameron, he is a graduate of Oxford University, where, as a student he belonged to the notorious, right wing Bullingdon Club, membership of which is generally restricted to students from aristocratic backgrounds and the super rich. David Cameron was also a club member. Osborne’s father is Sir Peter Osborne, 17th Baronet.

Peter Mandelson. He started his political career as a Labour Party left-winger. One of the architects of New Labour, Mandelson was forced twice to resign from Blair’s cabinet. The first resignation, in 1998 was because of a loan that he had failed to declare. The second concerned a charge of impropriety for which he was later exonerated. He was then appointed to the office of Britain’s European Trade Commissioner in Brussels, where he served for four years before being recalled by Gordon Brown last month to assume the office of Secretary of State for Business and Regulatory Reform. In order to qualify for this office he was elevated to the House of Lords, becoming “Lord Mandelson.”  In the early years of the Blair government he made his views clear when he declared that New Labour had no objection to people “becoming filthy rich.”  On leaving his EU post it is believed he obtained a severance package amounting to £1 million. He is a close friend of Tory supporter Nathaniel Rothschild and enjoys the company of Russian oligarch Deripaska. A friend has said of him “Peter does have a weakness for extremely rich friends.”

Nathaniel Rothschild. Youngest son of fourth baron Rothschild has a fortune calculated by the Sunday Times Rich List at £1.4bn. A reformed playboy, he is also an Oxford graduate and former member of the Bullingdon Club where he became close friends with David Cameron. He has a partnership in Atticus Capital, a $14bn hedge fund, and in Ukrainian and East European private equity investments. He has homes in Corfu, Moscow , Paris and London. He is a strong supporter of the Tory Party and a close friend of Peter Mandelson.

Andrew Feldman. Another friend of David Cameron’s from Oxford days, Feldman was recently appointed chief executive of the Tory Party and is its leading fund raiser.

Oleg Deripaska. Reputed to be Russia’s richest tycoon, with a fortune estimated at $28.6bn. He is now the number one oligarch, sitting at the top of the pile of Russia’s kleptocracy. He owns UC Rusal, the world’s largest producer of aluminium, having acquired his fabulous wealth and power during the 1990s in the violent, crime-ridden feuds accompanying the privatisation (some would say theft) of previously state-owned Soviet industries. His U.S. visa was revoked in 2006 due to his suspected links to organised crime. Like many of his wealthy compatriots he is a passionate anglophile, demonstrating his love for this country through his property and business interests here. He has a £20m house in London and owns Leyland Daf, a British based vehicle firm. Amongst his minor assets is an £80m yacht, the Queen K.

The Story

The basic elements of the story may be simply told. Members of this jet and yacht set, including, those listed above and other well-known representatives of the great and the good such as Rupert and Elisabeth Murdoch and Roman Abramovich, to name just a few, customarily get together on their yachts or in their palatial villas, on the Greek island of Corfu. On one such occasion in August, Peter Mandelson, then still in office as Britain’s European Trade Commissioner, and George Osborne were guests at the villa of Nat Rothschild. Over dinner, it seems, Mandelson expressed some very negative views about Gordon Brown. According to Osborne he “dripped pure poison” about the prime minister.

Mandelson’s opinion of Brown is not surprising. It is well known that he shares Tony Blair’s views of his colleague. The revelation caused a stir because Osborne chose to go public immediately after Brown recalled Mandelson from Brussels to appoint him to his new government post. This was clearly intended to cause maximum embarrassment to both men, to the advantage of the Tories. However, it soon became clear that the tactic had backfired. Perhaps due to his novice status in the ranks of the Corfu Set, Osborne had breached their unspoken code of honour – namely, that you do not reveal what has been said in private conversations. This is particularly true when you are the guest of Nathaniel Rothschild, who takes the code of honour very seriously and does not allow friendship to stand in his way if his hospitality has been abused.

Rothschild chose to defend Mandelson and abandon Osborne. Whether or not Mandelson played any part in what followed is not clear, but Rothschild took his revenge by revealing the details of the an attempt by Osborne, brokered by Andrew Feldman, to persuade Russian Oligarch Deripaska to make a £50.000 donation to the Tory Party. It is illegal in Britain for foreign nationals without voting rights in the country, to make donations to political parties. It seems to have been suggested that such a donation might be considered legal if channelled through Leyland Daf, a British company owned by the oligarch. Apparently the negotiations to secure the donation took place aboard Deripaska’s yacht. Osborne’s attempt to deny that any request was ever made has been met with a furious response from Rothschild. In effect, he has warned his erstwhile friend not to cross him again. Should Osborne attempt to deny his account of what happened, Rothschild has hinted that he could destroy him. There the matter rests.

The episode has done more harm to the Tories than to the government and it is possible that Osborne may have to step down as shadow chancellor. But this is really the least important aspect of the story. More important is what it reveals about the debased state of British politics. At a time when the country is entering a recession the length and severity of which no-one can accurately predict; when unemployment is likely to top 2 million by the end of the year and home repossessions are at an all-time high, we are given a glimpse of a world which is light years removed from the experience of most people. It is a private world of ostentatious luxury in which dazzled politicians, eager to achieve the wealth and status of those they most admire, socialise with billionaire press barons, bankers and crime-tainted Russian oligarchs. The king-maker, Murdoch inhabits the same private world as the kleptokrat Deripaska. The likes of Cameron, Osborne, Blair and Mandelson are happy for people to become “filthy rich” without for a moment questioning the source of the wealth which so dazzles them.

With such wealth goes power, and one suspects that it is the power which dazzles as much as the wealth. It is power that seems beyond the reach of the democratic process but that doesn’t seem to worry people like Blair, Mandelson Osborne and Cameron. It should concern the rest of us. If democracy is to prevail over the press barons, the oligarchs, the banksters and the compromised and corrupt politicians who have connived with them, then the building of a democratic opposition must start now.


The Economy Sucks and or Collapse

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