October 29, 2009 10:31 pm

Inside Blair Inc

 
Tony Blair

Saudi Arabia’s King Abdullah (right) with Tony Blair during a January meeting. In the Middle East the former prime minister focuses mainly on Palestinian development        Corbis

At the north-east corner of Mayfair’s Grosvenor Square, on the site of the first US  embassy to London, stands a handsome 18th-century townhouse where the many strands of Tony Blair’s political afterlife converge.

Per square foot it ranks as one of the most expensive pieces of office space in the world. Yet the former prime minister is rarely there to enjoy its views or the elegant modern British art on his office wall. For three weeks in every month, he is on the road, criss-crossing the globe in the cause of peace, charity, or simply making money.

“Retired prime minister?” asks one travel-weary aide. “It doesn’t feel like it.”

His office has become the throne room of an empire of business and charitable interests that is vast, complicated and – from the point of view of his ambitions to be the European Union’s first president – awkward. It comprises a web of companies and partnerships whose activities range from managing profit-making ventures to handling charitable grants from the likes of Bill Gates and Lord Sainsbury. Its Byzantine structure means the Blair finances are difficult to understand.

Mr Blair is hardly the first “retired” statesman to attract attention over his pursuit of an eclectic mix of profitable private projects and public good works after leaving office. In the US, from Henry Kissinger to Bill Clinton, it has become almost de rigeur. What gives Mr Blair’s case special bite is the scale and scope of his new network, the speed of its assembly, the premium placed on privacy, and what critics say is an uncomfortable proximity between official duties, fund-raising efforts and his growing commercial interests.

One friend says that if Mr Blair emerged from a meeting with an Arab emir having won a donation to the Palestinians, a donation to the Tony Blair Faith Foundation and a consultancy fee, that would be “a good trip”.

Perhaps the biggest question is whether the new life of the former Labour leader is compatible with his ambitions to become the EU’s first full-time president. EU leaders may not like the idea of nominating a man whose affairs are so complex and, some might say, at times indiscriminating. His post-premiership globetrotting has involved meetings with controversial presidents such as Paul Kagame of Rwanda and Nursultan Nazarbayev of Kazakhstan, as well as doing commercial work in the Libya of Muammer Gaddafi.

The other obstacle is whether he could afford to take the EU job. Mr Blair would have to wind up his businesses; a good chunk of his empire would be dismantled even faster than it was erected. When he became an MP, he took a big financial hit for the sake of his political ambitions, seeing his income cut in half. Although how many millions he earns is not known, this time he clearly has more to lose.

For a man being pitched as a potential leader for Europe, Mr Blair has spent little time in the continent since leaving Downing Street. He pops up in the most disparate of places: posing with an eco-friendly kung fu star in China; addressing star-struck businessmen in a Florida hotel; promoting tourism on the beaches of Sierra Leone; stepping out of a jet to the strut of a Kazakh honour guard.

This year alone, he has touched down in more than 20 countries, from east Asia to central Africa, often more than once. But if there is one region that best reflects his life as a public figure, fundraiser and businessman in the 28 months since leaving office, it is the Middle East. Most prominent has been his work as envoy to the region, representing the quartet of world powers: the US, EU, United Nations and Russia. Mr Blair blocks out about 10 days a month for the task, making appearances on the West Bank and in Tel Aviv. His contribution is often at a gritty level – raising funds, pressing for checkpoints to open – but is valued on the ground.

That is his sole public role. But some of his diplomatic duties have run side by side with his commercial interests in the region. Mr Blair’s main priority while travelling around the Arabian peninsula and as far as central Asia is to raise money for Palestinian development. But when appropriate, he has taken the opportunity to drum up interest in his charities or introduce his new business venture: Tony Blair Associates.

Clients of TBA, a private partnership, can call on both Mr Blair’s long experience in government and a considerable network of international contacts. At his side is Jonathan Powell, his formidable former chief of staff, now at TBA as a senior adviser.

TBA’s main contracts so far have been signed on the consulting side of the business, with the government of Kuwait and with Mubadala, one of oil-rich Abu Dhabi’s most active investment vehicles. Less public is TBA’s work providing introductions. Close associates say this is not a big part of Mr Blair’s income. But he does help to facilitate deals where there is a “common interest”, typically by bringing together a corporate client and a government. Not all business proposals are accepted.

Mr Blair also performs the role of fixer for clients including JPMorgan Chase, the US bank he advises for a seven-figure fee. Mr Blair has never disclosed what deals he has been involved in. But he has travelled to Tripoli on JPMorgan business, meeting figures in a once-shunned regime that as prime minister he helped bring back into the international fold.

Oliver Miles, deputy chairman of the Libyan British Business Council and a former British ambassador to Tripoli, says Mr Blair has visited Libya “a number of times” since leaving office. “He certainly has a relationship with both the leader and the leader’s son [Saif al-Islam],” he says. “Whether it’s a good relationship is difficult to tell.”

This work as a high-level facilitator has attracted criticism. Daniel Kawczynski, the Conservative MP who chairs the House of Commons’ all-party group on Libya, says the Libyan work was “highly inappropriate” given his “unique position as a former prime minister and the fact that we don’t know what that business is”.

The second track of Mr Blair’s new life – his unpaid philanthropic endeavours – is also coming under scrutiny that is likely to increase if he returns to public office. His many charities are not required to disclose their donors and few sources of funding are known. So it is impossible to tell whether their activities overlap with his other work around the world.

One example of this difficulty relates to Mr Blair’s pro bono work in Africa. His Governance Initiative is a well-regarded project that helps the presidents of Sierra Leone and Rwanda deliver policy and attract foreign investment. Yet in the UK it has applied for – but is still awaiting – charitable status, even though the process can take as little as two weeks and the project started in mid-2008.

In an unusual move for a budding charity, up to now the initiative has funded the support it provides in those countries via Windrush Ventures No 3, a profit-making partnership owned by Mr Blair that publishes no accounts.

Windrush No 3 has received a $2.4m grant from the Bill and Melinda Gates Foundation, intended for Sierra Leone, and about £1.5m for Rwanda from the Gatsby Charitable Foundation set up by Lord Sainsbury, the Labour donor and former minister. Through accounts filed by Mr Blair’s other Windrush ventures, it is possible to tell that by April, Windrush No 3 had generated turnover of at least £6.4m and a £350,000 profit.

A spokesman for Mr Blair says the Governance Initiative is “entirely not for profit”, adding: “The projects were administered in accordance with the terms set out by the funders, which included a separate bank account, regular stakeholder reporting and financial management.” Asked whether it was normal to send such a large grant into such a private organisation, the Gates Foundation says it “conducted careful due diligence” on Windrush before making the award.

Mr Blair’s spokesman says the Windrush structure was established simply to “sensibly administer different projects”. Accounts filed for the three other Windrush entities show that funds from No 3 went into Windrush Ventures No 2, allowing it to book £350,000 profit while paying a £6.4m management fee to Windrush Ventures Ltd, which pays the rent on the Mayfair office. Accountants say that as a structure it is neither tax-efficient nor managerially useful.

Mr Blair did not regard it as necessary to inform the committee that vets the business appointments of UK former ministers about Windrush. His spokesman says he “adhered completely and at all times to the guidelines”. He has previously declared his commercial income from speeches, where he can ask $100,000 a time, as well as from advising JPMorgan and Zurich Financial and from TBA.

Still, the workings of the Blair empire could create practical complications in relation to the EU job. The only guide to the rules that will bind the new president, a post created by the bloc’s Lisbon treaty that on Thursday came ever nearer ratification, is the code of conduct that applies to commissioners. Mr Blair knew he would have to make sacrifices if he wanted to return to frontline public service. But until his staff looked up this document, he did not appreciate how much that would amount to.

Office holders are required to forego any “paid or unpaid work”. Paid speeches – one of Mr Blair’s most lucrative sidelines – are banned. Honorary posts at charities are permitted, so long as the holder “has no decision-making power in the management of the body”. Regular fund-raising would be out of the question. In the words of one EU diplomat: “Tony can keep the faith, but not much else.”

It could be crippling for Blair Inc. All the commercial enterprises – TBA, the advisory work for JPMorgan and for Zurich Financial – would have to be shut or transformed beyond recognition. The Windrushes would lie dormant. Mr Blair might also have to return some of his sign-on fee from Washington Speakers Bureau, thought to be $1m, if he became unavailable for paid events.

After winding up his business empire, a President Blair would have to submit a declaration of financial interests, listing all his business activity since leaving Downing Street. This would have to include any work with clients that could potentially lead to a conflict of interest.

Then there is the book. Mr Blair received an advance of about £4.6m from Random House for his memoirs, on which he is making progress, using a trusty fountain pen. Publication is expected soon – or at least when Gordon Brown, his political rival and partner turned successor, has vacated No 10. There is nothing to stop this in the EU rules, if Mr Blair is appointed president, so long as it is not “in connection with his duties”. But friends fear it will delay the launch: he would be unable to do a book tour.

Mr Blair’s charities would not only have to be restructured to remove any of the powers he has over their management – they would also lose their best fundraiser and would have to bear the entire burden of the Mayfair office lease – a payment mainly covered by Mr Blair’s commercial ventures. Plans to sublet are being considered. But any escape route is costly: Mr Blair signed his lease at the top of the rental market, since when rents have almost halved. There are eight years to run on the lease – a rental obligation of about £4.4m.

Many of these calculations are only just being made in Grosvenor Square. Friends of Mr Blair say he is still not “mentally set” to take on the presidency, should he be asked. With so much of his new life at stake, it is no surprise he is thinking very hard before making the jump.

“He likes money as much as the rest of us but that’s not what gets him going,” says a close associate. “What really motivates him is public service – power, I suppose.”

REPORTING TEAM Cynthia O’Murchu with Vita Bekker, Paul J. Davies, Andrew England, Alexandra Stevenson

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