A company boss who conned banks out of £350 million by pretending to be a metals trader has been jailed for nine-and-a-half years. Virendra Rastogi claimed to have a network of 'client companies' but two turned out to be a cow shed in India and an American launderette, Southwark Crown Court heard. The 39-year-old, who lived in a luxury flat in London's Mayfair, even appeared in The Sunday Times Rich List. (1)
The Sunday Times Rich list was out last week, and already all kinds of comments are being made on it. Not, however, to do with the methodology of how it is compiled, and how accurate it might be. According to the blurb:
The annual list is based on identifiable wealth, including land, property and other items such as art, racehorses or significant shares in publicly quoted companies, but does not include bank accounts.
Which really tells us very little - and a noteworthy omission is that it doesn't mention loans or debts in that blurb. Instead it is taken on trust that it is somehow an accurate touchstone. It may indeed be accurate in the world of fantasy money, because as Private Eye points out, several Irish millionaires have fallen from the list as Ireland's economy nosedived; millionaires in paper shares are millionaires in name only, until that money is realised in a form that is not subject to the fickle variation of the markets.
It is not perhaps surprising that the rich appear richer. This is most likely principally a paper rise based on stock market and commodities recovery from a low point back in March 2011.
But that's not really telling you how rich someone is. Alan Sugar came up with a much more sensible suggestion - the largest sum a rich person could expend without feeling any bite. If you have shares that are not easily turned into cash, it is harder to do that.
Dame Mary Perkins is said to be a billionaire, but she is not about to hang up her spectacles... The Sunday Times rich list suggests she and her family are worth £1.15bn, though Perkins says this is an over-estimate based on the turnover of Specsavers. (2)
And then, of course, there are those whose riches are really bogus, and the Times Rich List falls into the trap of being as duped as the rest of the world. John "Goldfinger" Palmer was billionaire timeshare fraudster, who came 105th on the Sunday Times Rich List in 2001, and was later arrested for timeshare fraud in Tenerife. Virendra Rastogi conned banks out of £350 million and managed to con the compilers of the Rich List as well.
Part of the problem is that this is a subjective list compiled by journalists, assigning value, and also keeping under wraps some of how they make that valuation. Consequently, it really should be treated with far less reverence than appears to be the case. That is the reason why the Rich Lists simply never appear in peer reviewed academic journals. They are not up to academic standards; there are no controls, no double blind testing on the valuations. One of the few that I have uncovered is one on economics, where they are considered briefly. In this paper, Daniel Waldenström, Professor of Economics, Uppsala University, Sweden notes that:
Tax authorities have great problems assessing the wealth of citizens who own large closely held companies. These wealthy households therefore often end up paying very low or no wealth taxes at all. In the absence of objective information on these fortunes, journalists in several countries have created alternative wealth estimates of the wealth of the super rich based on subjective valuations. Examples of such listings are the Forbes 400 in the U.S. and the Sunday Times Rich List for the U.K. Because of their subjectivity in the valuation of the fortunes one must treat these numbers with great caution.
For example, their methods comprise of a subjective and typically undisclosed selection of valuation techniques and comparisons with similar companies for which financial information is more openly disclosed. Journalists collect most of their in-formation from publicly available sources such as newspapers, company reports and financial market prices, but at times also interviews with the rich themselves are used.(4)
So why are we so obsessed with the rich list? Can it be that just as another paper of the Murdoch stable - the Sun - shows naked women for titillation, the Sunday Times provides its readers with a more refined financial form of titillation - but it is pandering to the same kind of voyeuristic tendencies, albeit - as Freud might have said - with wealth as a substitute for libido, the reader is both awed and envious.
Probably the best article on the subject comes in the Spoof, which shows just how much the Rich List really tells us - more about the compilers than those compiled in the List:
Sunday Times Rich List Features Local Tycoons
Written by Ellis Ian Fields
The annual bible of the UK's richest people will feature a group of local media magnates for the first time when it is published tomorrow.
The Sunday Times Rich List logs the ups and downs the country's richest people, listing the annual incomes for fat cats in all walks of life.
This year, the list of the media's richest features for the first time local moguls who have been rocketed into the wealth stratosphere thanks, mainly, to last year's publishing phenomenon The Dorking Review.
Sixth in the media business top 20 is head of the EIF News & Features empire, Ellis Ian Fields, who is said to be worth £47.50, six first-class stamps and £78-worth of Nectar points. Juanita Juan, of the seedy Col Juan News Agency, comes in at ninth with £32.65 and "the fortune I'm sitting on, hun."
Also in the top 20 are Leviticus Skoob, of Skoob Entertainment News and author of the popular series of stories about unfortunate everyman, Martin Shuttlecock.
Rich List expert Phil T Lucre said: "These guys suddenly arrived on the back of that book The Dorking Review - it was a phenomenon: they made a fortune on the film rights and the advances on the next edition are rumoured to be in the hundreds of millions."
Also new to the list this year is Ganymede Yeoman, landlord of legendary Chiswick watering hole The Tabard Inn, famous for being the haunt of EIF and CJ staffers. (3)
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