Lunch with the FT

April 19, 2013 4:00 pm

Lunch with the FT: Kim Dotcom

Over salad and club sandwiches at his $24m rented mansion in New Zealand, the internet’s most wanted man says his crazy days are behind him
An illustration of Kim Dotcom, by Patrick Morgan©Patrick Morgan

Kim Jong-eun is not the world’s only cartoon villain lobbing verbal hand-grenades at the US from the sanctuary of his hermit kingdom. Kim Dotcom, the internet entrepreneur accused by the US Department of Justice (DoJ) of abetting massive online piracy, fits pretty much the same description. Except his hermit kingdom is Mordor-on-the-Shire, also known as New Zealand. And unlike the North Korean leader, Dotcom is, in the eyes of many, closer to cartoon hero than cartoon baddie.

I have arranged to have lunch with the man variously described as “hacker king” and “gangster clown” at his $24m rented mansion on a 60-acre estate outside Auckland. It’s where the 39-year-old German-born founder of the now-defunct Megaupload, a file-sharing service, has taken refuge since his release on bail last year.

Dotcom is fighting extradition to the US where, along with six associates, he is wanted for making more than $175m in allegedly illegal profits from what the FBI describes as a huge online piracy operation. Indicted for copyright infringement, racketeering and money laundering, he faces up to 50 years in jail.

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At its peak, Megaupload accounted for 4 per cent of all internet traffic, with 50m users a day. Much of it, according to prosecutors, was illegally downloaded movies, music and games. Dotcom’s lawyers insist a service provider cannot be prosecuted for third-party activities.

The case is front and centre of a raging controversy over where to draw the line between internet freedom and protection of intellectual property rights. Online providers, such as YouTube, are protected by “safe harbor” legislation, which means they cannot be held liable for copyright-infringing material so long as they don’t know it’s there and act swiftly to remove it when informed. US legislators tried to close that loophole with the Stop Online Piracy Act but backed down amid furious public opposition.

Dotcom was indicted in the same week the Sopa bill died. He thus finds himself the latest personality to be embroiled in the internet freedom debate, along with the likes of Aaron Swartz, a computer programmer and activist who committed suicide this year, and Julian Assange, the founder of WikiLeaks, who is also facing extradition.

And so, on this pristine April day, I find myself driving 30 minutes north of Auckland through a temperate forest of ferns and palms. I pull up at a quaint stone guardhouse marked “Dotcom Mansion”. A guard appears, dressed in black. He makes a call and pushes a button. The gate swings slowly open. The car follows a gravel path up around a steeply sloping lawn decorated in 8ft-tall letters with the word Mega, Dotcom’s new enterprise. (Megaupload’s activities were frozen in January 2012 and assets, worth around $50m, seized.) A second guard, also dressed in black, greets me warmly at the mansion and shows me inside.

The walls of the interior are white but much of the furniture is black, as are the curtains and a gothic-looking chandelier. There’s a poker table and a 16ft-long fish tank. There’s leather and chrome everywhere. Even the players of the pub-style foosball table are chrome-plated.

. . .

Dotcom strides in, a towering hulk of a man at 6ft 7in and about 165kg. He, too, is all in black: baggy black waistcoat, black shirt, loose-fitting black trousers and black Crocs. “I like things simple, so I have 100 of these cashmere vests, 100 pairs of these pants, and 100 of these shirts,” he explains in his faint German accent. “It’s a good colour and I don’t look too big,” he adds, gesturing to his giant frame. His voice is quiet, gentle even. When amused, he emits an explosive giggle.

Walking by his side, minuscule by comparison, are two of his five children, the eldest of whom is six. His wife, Mona, a former model from the Philippines whom he met at a Manila nightclub in 2007, greets me with a radiant smile. We all walk to the patio, where a long table has been set, the napkins precisely folded. Almost inevitably, they are black.

The children run off to play in a maze somewhere on the vast estate. I ask Dotcom about the infamous police raid on the property in January last year. At 6.47am, a military-style operation began when the first of two police helicopters landed on his lawn. More than 70 special armed police, including members of the elite anti-terror Armed Offenders Squad, conducted an exercise monitored by the FBI over a video link. Even so, for more than 10 minutes, they couldn’t locate the man they had come to apprehend. Dotcom had retreated to a secret attic room hidden behind a closet.

They used the same number of helicopters and a few less people in the Osama bin Laden raid

Last June, a New Zealand High Court judge ruled that the warrants for the raid were illegal, and in December found that New Zealand’s spy agency had been unlawfully bugging Dotcom. “They used the same number of helicopters and a few less people in the Osama bin Laden raid,” he snorts. “The whole thing was a big show to present me as some kind of criminal mastermind overlord.”

A maid emerges and sets a glass of milk before Dotcom. She pours out two tiny plastic bottles of Samoa Water.

Dotcom says his lifestyle made him an easy target for US authorities. The internet is full of images of him with guns, fast cars and half-naked women. Property impounded by police during the raid included 15 Mercedes, several motorbikes, a Rolls-Royce Phantom Drophead Coupé and a 1959 Pink Cadillac. “I’m a character that’s easy to sell as a villain,” he says. “Because of my flamboyance.”

Mona and the maid reappear with our first course. “I made it,” Mona blushes, indicating a lettuce and carrot salad with thin strips of marinated beef. Is it from the Philippines, I ask? “No. I looked it up on Google just now,” she replies.

. . .

Growing up in Kiel, northern Germany, Dotcom – christened Kim Schmitz – discovered gaming at the age of 11 and hacking not long after that. (He changed his name to Dotcom in 2005.) His Finnish-born mother had left his father, a violent alcoholic, when he was six. “My mum had to work three jobs. She was cleaning and cooking just to get food on the table and pay rent,” he says. I ask him later if his father is still alive. “I don’t care,” he replies.

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As a teenager, he became adept at slipping past the firewalls of such organisations as Citibank, Nasa and the Pentagon. “Back in the day there was no security. It was like a palace with unlocked doors,” he says, misty-eyed. “You could just walk in there, look inside all the cabinets, sleep in the queen’s bed.”

He worked out a scam to rack up fake calls to a pay-by-the-minute chatline, earning DM75,000 by the time he was rumbled by German police in 1994. He was given a suspended sentence. In 2002, he was arrested again, this time for insider trading, a crime that was new on the German statute books. He had sought to avoid prosecution by fleeing to Thailand but when the Thai authorities, working in conjunction with Germany, threw him in jail, he opted to return home and enter a plea bargain. He got a 20-month suspended sentence but now says his capitulation was a terrible mistake, since it allowed his enemies to brand him “a career criminal”.

“You know I have never uploaded and shared a movie in my life,” he says. “I have always bought all my content. I’ve spent over $20,000 in the past five years on iTunes. I’m not a pirate.” That’s not how the DoJ sees it, or the “Department of Clowns”, as Dotcom refers to them on Twitter. Among reams of evidence, it cites emails showing what it says is wilful complicity in copyright infringement, including one from Megaupload’s chief technical officer saying, “We’re not pirates, we’re just providing shipping services to pirates :).” Dotcom says the DoJ lacks a sense of humour.

It is all part, he says, of a battle being waged by Hollywood against Silicon Valley. Suddenly he breaks off. “Is that a chicken in my house?” Sure enough, a large white chicken is strutting through the living room towards us. “That’s a first. You can mention that the chicken came out when we started talking about Chris Dodd,” he says, referring to the chief executive of the Motion Picture Association of America, the Hollywood lobby group that Dotcom regards as one of the driving forces behind his prosecution.

The interruption over, I ask how businesses are supposed to make money if they can’t charge for content. Isn’t copyright infringement theft? “No, it’s not theft,” he says soothingly, as though all reasonable people can agree on that basic point. “Society has a desire to exchange information and share with people what they love.”

But how are content providers to survive? “I agree with you, especially in publishing, the internet is a challenge. But this is quite a new thing. Of course monetisation models will eventually be developed. There will be solutions for this.”

Dotcom is still picking at his salad, which I find tangy and delicious. The maid returns with toasted club sandwiches, served with luridly orange crinkly French fries. It’s rather modest fare for such opulent surroundings. I remember, though, that Dotcom, his assets seized, has had to cut his staff from 50 to eight.

In another legal victory, a New Zealand court in August ruled that he could have access to $4.8m of his funds but the money can’t be used to retain lawyers outside New Zealand. At one point, Dotcom says, he told the DoJ he would voluntarily face charges in the US if he were guaranteed bail and access to his money.

It’s the need for a fighting fund, he adds, that led him to launch new venture Mega. When he was bailed, he promised not to restart Megaupload. He insists Mega, a cloud storage site that automatically encrypts data, is entirely different. Encryption not only provides privacy to Mega’s already more than 3m users but also a potentially stronger defence against prosecution. How can Dotcom be liable for content even he cannot read?

. . .

At Mega’s launch party in January, held on the surrounding lawns and replete with mini-skirted “security guards” and a mock police raid, Dotcom spoke with apparent passion about privacy. Humans had a basic need for “refuge”, to hide things from one’s community, even one’s own family. “In simple terms, we are not running around naked,” he tells me. “We close the door to the bathroom when we take a s**t. This is privacy. There are certain things you just want to keep to yourself.”

He is positioning Mega as a bulwark against state encroachment. “My ambition, my mission, is to encrypt half the internet. I will come out with an email service that will be fully encrypted, and an encrypted Skype service.” Won’t that just make it easier for terrorists and paedophiles to go about their business? Such people already encrypt everything anyway, he says.

“The government expects every individual to be in the open. But when it comes to their own secrets, they arrest people and indict them – like Julian Assange. I have to fight the Epic Enemy – the US – you know,” he adds, as though referring to a video game. “Since 9/11, the US has become a big danger for world peace. They can torture people, they can have secret prisons, they can spy on everybody.”

Am I really to believe he has political motives? Doesn’t his lifestyle suggest more frivolous interests? “I’ve never been drunk in my life. And I haven’t been a wild boy since I met Mona. The craziness has gone. Now I am a family man – and I totally love it. I’m like the world’s most boring guy.”

I had three sports cars with the plates Good, And, Evil – awesome

Of his wilder years, he says: “I have a big child inside me. The reason I have so many cars is because I like vanity plates. I had three sports cars and one of them had the plate GOOD, and one AND, and one EVIL. We’d take them out on a racetrack. If you see these three cars together – GOOD AND EVIL – it’s awesome.”

I notice he’s barely touched his sandwiches. We switch to the topic of his weight-related health issues, including bad knees and a chronically painful back. “I have medication to control my blood pressure and my sugar. I have kids. I want to be around and see them grow up.” He has lost 20kg in the year since his arrest but says he has a long way to go. “I’m a lazy person. I don’t like exercising. If I would do more, I think I wouldn’t have these issues.”

Couldn’t he just walk around this lovely landscape? “But it’s so boring. It may be fun for two times,” he says dismissively. “For me, I prefer sitting in my Xbox room and playing a game or working on my computer. I get bored quickly. And just walking for no reason? Whenever I want to smell the air, I just get on my golf buggy.”

He takes a couple more bites and we set off on a golf-cart tour of the grounds, driving up and down the grass, past ponds and fountains, even a vineyard. It’s early afternoon and the hills are flooded with glorious light. We are back to the subject of the raid. The room in which the police found him contained a sawn-off shotgun but the weapon, he says, was locked in a safe and registered to his bodyguard. “I have no violent bone in my body. They were coming to the house of this gentle giant with machine guns and attack dogs.”

With Mega up and running and his lawyers confident he can prevail, he is in good spirits. “Now I am born again. I am strong and the outlook is really positive,” he says, zooming down an embankment. “My lawyers believe at the end of the road there’ll be significant damages. Not just against the DoJ, but the Motion Picture Association of America.”

Dotcom can already taste revenge. He’ll clear his name, sue his enemies and reposition himself. He’ll no longer be a pirate buffoon but a warrior for personal privacy. He’ll also be rich again, free to live his life as he sees fit. It could turn out to be a fantasy, though in his mind, he’s living it already. “It may be miles down the road,” he says. “But that is what I expect. That is what I am looking forward to.”

David Pilling is the FT’s Asia editor

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Dotcom Mansion

Coatesville, Albany, New Zealand

Lettuce, carrot and beef salad x2

Club sandwiches with crinkly French fries x2

Samoa Water x4

Glass of milk

Total Free

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