Jimmy Goldsmith

Sir James Michael Goldsmith (26 February 1933 – 18 July 1997) was a French-British financier, tycoon''Billionaire: The Life and Times of Sir James Goldsmith'' by Ivan Fallon and politician who was a member of the Goldsmith family.

His controversial business and finance career led to ongoing clashes with British media, frequently involving litigation or the threat of litigation.

In 1994 he was elected to represent a French constituency as a Member of the European Parliament. He founded the short-lived Eurosceptic Referendum Party in the United Kingdom, which became an early campaigner for opposition to Britain's membership of the European Union.

Early life

Born in Paris, Goldsmith was the son of luxury hotel tycoon and former Conservative Member of Parliament (MP) Major Frank Goldsmith and his French wife Marcelle Mouiller, and younger brother of environmental campaigner Edward Goldsmith. Frank Goldsmith had previously changed the family name from the German ''Goldschmidt'' to the English ''Goldsmith''. The Goldschmidts, neighbours and rivals of the Rothschild family, were a wealthy, Frankfurt-based, Jewish family that had been influential in international merchant banking since the 16th century. James's great-grandfather was Benedikt Hayum Goldschmidt, founder of the bank and consul to the Grand Duke of Tuscany. James's grandfather was Adolphe Benedict Goldschmidt (1838–1918), a multi-millionaire who moved to London in 1895.

Raised initially in Paris, James Goldsmith had to flee France with his family when Nazi Germany overran the country in 1940, only just managing to escape on the last over-loaded ship from the French port of exit, leaving behind their hotels and much of their property. After that the family relocated to the Bahamas, and Goldsmith was sent to school in Canada, where he founded a business trapping small furry animals such as rabbits, skunk and mink. He also attended Millfield and Eton College, which he left early in 1949 at the age of 16, after winning £8,000 () on a horse racing bet of £10 () for a three-horse accumulator at Lewes. With the money, he decided that he should leave Eton immediately; in a speech at his boarding house, he declared that "a man of my means should not remain a schoolboy!" He then took over a business in Paris from his brother Teddy, which sold a cure for rheumatism and electrical plugs and sockets.

His father and grandfather had lived in great style, but there was little left of the family's previous fortune by the time Goldsmith started out in business.

Goldsmith served as a Gunner in the British Army's Royal Artillery under the National Service requirements, during which time he received a commission as an officer.

Business career

During the 1950s and 60s, Goldsmith's involvement in finance and as an industrialist involved many risks, and brought him close to bankruptcy several times. His successes included winning the British franchise for Alka-Seltzer and introducing low-cost generic drugs to the UK. He was described in the tabloid press as a greenmail corporate raider and asset stripper, a categorisation he denied vigorously. He claimed the re-organizations he undertook streamlined the operations, removed complacent inefficient management, and increased shareholder value.

Having taken on the management of the Paris business handed on by his brother Teddy, Goldsmith organised a publicity stunt involving an arthritic racehorse. Sales escalated in response and, within a couple of years, the staff had been expanded from two to over a hundred. Goldsmith took on the agency for various slimming remedies and branched out into the manufacture of generic prescription drugs. His acquisition of the distributorship for Slimcea and Procea low-calorie breads was the start of the shift of focus towards the food industry. In the early 1960s, in partnership with Selim Zilkha, Goldsmith founded the Mothercare retail chain, but sold out his share to Zilkha who went on to develop it with great success.

With the financial backing of Sir Isaac Wolfson, he acquired diverse food companies quoted on the London Stock Exchange as Cavenham Foods in 1965. Initially, the group had an annual turnover of £27m and negligible profits. He added bakeries and then confectioners to the group, and then took over a number of wholesalers and retailers, including small chains of tobacco, confectioner and newsagent shops. By rationalising the activities, closing inefficient factories, and improving the management practices, he steadily improved productivity. By 1971, the turnover was £35m and profits were up to £2m.

In June 1971, he launched a bid for Bovril, which was a much larger company with a diverse portfolio including several strong brands (including Marmite, Ambrosia, Virol and Jaffajuice), dairies and dairy farms, and cattle ranches in Argentina. It was run by the third generation of the founding family and Goldsmith concluded that they were clueless. The bid was strongly contested and Goldsmith was fiercely attacked by the financial press. The directors tried to induce Beechams and Rowntree Mackintosh to make rival offers but, in the end, they both withdrew.

After the successful bid, Goldsmith sold the dairies and farms to Max Joseph's Express Dairies group for £5.3m, and found buyers in South America for the ranches. Sales of other parts of the company recouped almost all of the £13m that the acquisition had cost him. Some years later, he sold the brand names to Beecham for £36m. Later, he took over Allied Distributors, who owned a miscellaneous portfolio of grocery stores and small chains, including the Lipton shops. He set Jim Wood (who had been responsible for imposing systems and business discipline on the sweetshops) to work on rationalising the operations of these shops, and disposing of those that did not fit into the overall business logic. As journalists began to question his techniques of dealing with the funds and assets of publicly quoted companies, Goldsmith began dealing through private companies registered in the UK and abroad. These included the French company Générale Occidentale and Hong Kong and then Cayman-registered General Oriental Investments.

In early 1973, Goldsmith travelled to New York to assess US business opportunities, followed by a tour round Central and South America. He took the view that the UK economy was due for a downturn and began aggressively liquidating many of his assets. In December that year, in the midst of financial chaos, he announced that he had acquired a 51% controlling stake in Grand Union, one of the oldest retailing conglomerates in the US. He set Jim Wood – who had revitalised his British retail operations – to work on rationalising the operations of the chain, but he ran into continuous obstruction from both unions and management.

During the 1960s and '70s, Goldsmith received financing from the banking arm of the conglomerate Slater Walker, of which he succeeded founder Jim Slater as Chairman following the company's collapse and rescue by the Bank of England in the secondary banking crisis of 1973–75.

Goldsmith was knighted in the 1976 resignation honours – the so-called "Lavender List" – of Prime Minister Harold Wilson. In early 1980, he formed a partnership with longtime friend and merchant banker, Sir Roland Franklin. Franklin managed Goldsmith's business in the Americas. From 1983 until 1988, Goldsmith, via takeovers in America, built a private holding company, Cavenham Forest Industries, which became one of the largest private owners of timberland and one of the top-five timber-holding companies of any type in America. Goldsmith and Franklin identified a quirk in American accounting whereby companies with substantial timberland holdings would often carry them on their balance sheets at a nominal valuation (as the result of years of depreciation).

Goldsmith, a reader of financial statements, realised that in the case of Crown Zellerbach the underlying value of the timberland assets alone, carried at only $12.5m on the balance sheet, was worth more than the target company's total market capitalisation of around $900m.
With this insight, Goldsmith began raids that left him with a holding company owning huge tracts of timberland acquired at virtually no net cost. The majority of the pulp and paper assets were sold to James River Corporation in 1986, which in turn became a part of Georgia-Pacific in 2000. (The brown paper container division became Gaylord Container).

Additionally, in 1986, Goldsmith's companies reportedly made $90 million from an attempted hostile takeover of the Goodyear Tire and Rubber Company, although he regarded this profit as an inadequate consolation for the failure to carry the bid through to a successful conclusion. The management of the company coordinated a virulent campaign against Goldsmith, involving unions, the press and politicians at state and federal level.

Goldsmith retired to Mexico in 1987, having anticipated the market crash that year and liquidated his assets. However, he continued corporate raiding, including an attempt on British-American Tobacco in 1989 (for which he joined Kerry Packer and Jacob Rothschild). He also swapped his American timber assets for a 49.9 percent stake in Newmont Mining and remained on the board of Newmont until he liquidated his stake through open-market trades in 1993. He had been precluded by the original purchase of Newmont from acquiring a controlling shareholding in the company. In 1990, Goldsmith also began a lower-profile, but also profitable, global "private equity style" investment operation. By 1994, executives working in his employ in Hong Kong had built a substantial position in the intermediation of global strategic raw-material flows.

Studies of public filings have found signs of the same Goldsmith-backed Hong Kong-based team taking stakes in operations as diverse as Soviet strategic ports in Vladivostok and Vostochny, and in Zee TV, India's dominant private television broadcaster later sold to Rupert Murdoch.

A large Hong Kong-linked and Goldsmith-funded stake in one of the world's largest nickel operations, INCO Indonesia, was also disclosed in the 1990s, showing Goldsmith's ability to position capital before a trend became obvious to others. The group was also a major backer of the Hong Kong-based and Singapore listed major raw material player Noble Group, with low-profile long-time Goldsmith protégé Tobias Brown serving for many years as the company's non-executive chairman. Although little is known about the somewhat enigmatic Brown, he is widely credited with orchestrating the Goldsmith investments in the Far East, which have created more than a third of the family's wealth.

Environmental campaigning

Goldsmith became an active campaigner on environmental issues during his later years. He published a book entitled ''The Trap'' in 1994 outlining what he believed were some key challenges facing humanity, with a focus particularly on the fields of modern intensive farming and the use of nuclear power. This area had been a lifelong passion of his brother, Edward, but Goldsmith himself had shown little interest publicly in the topic during his business career. The book received criticism of its content from a variety of sources, including the European Commission, the British Tory politician Chris Patten, Brian Hindley of the Neo-Liberal Centre for Policy Studies, John Kay and Norman Macrae. Goldsmith published detailed rejoinders in another publication entitled ''The Response'', published in 1995.

Posthumously, Goldsmith's estate provided funding for an organisation entitled the 'J.M.G. Foundation', which supports a range of activism opposed to the commercial advance of Genetically Modified Organisms in farm production.

Goldsmith and the press

Goldsmith attracted little attention until he became embroiled in a damaging dispute with anti-establishment satirical magazine ''Private Eye''. In 1976 ''Private Eye'' accused Goldsmith of being part of what amounted to a conspiracy to obstruct the course of justice in relation to the fugitive Lord Lucan, who was wanted for murder of his children's nanny. The article falsely stated that Goldsmith had participated in a meeting supposedly called by John Aspinall to help Lucan. Goldsmith was a regular at his close friend Aspinall's gambling club, the Clermont, where Lucan was one of the house players having their losses written off, rather than a true member. In addition to pursuing a large number of civil lawsuits against the editor of the magazine and a journalist who was also a TV researcher and regarding them as dangerous subversives, Goldsmith sought to bring a criminal libel prosecution, though there had not been one for half a century. Through his actions Goldsmith formed an unlikely friendship with the Labour Party's then Prime Minister Harold Wilson who loathed ''Private Eye''. The access to Wilson aided Goldsmith when, to the horror of Bank of England officials, he became head of the troubled Slater Walker, and this is said to have been the reason for his knighthood. The costly libel suits were eventually settled by Goldsmith, but he was subsequently dogged by disparaging commentary from a wide range of British media.

In November 1977, there were two editions of ''The Money Programme'' on BBC; the first gave a critical account of Goldsmith's business history and methods. In the second programme a combative Goldsmith appeared in person and countered the implication of asset stripping by pointing to an investment of over a hundred million pounds his company was making to upgrade their going concerns.

In 1977 Goldsmith bought the French weekly ''L'Express'' and between 1979 and 1981 published the UK news magazine '' NOW!'' which failed to survive.

In 1999 an episode of ''The Mayfair Set'', a BBC television documentary series by filmmaker Adam Curtis, portrayed the by then deceased Goldsmith as a playboy, speculator and deluded victim of the success as a corporate raider that made him one of the world's richest men.

Into politics

Goldsmith had become increasingly concerned throughout the 1980s about the nature of the European Economic Community, and harboured a deepening suspicion that at its core lay a desire for the domination of the European continent by Germany, a suspicion which was for him confirmed further when in 1992, via the passage of the Maastricht Treaty, the E.E.C. re-titled itself as the European Union, with dramatically centralising governmental powers being enacted over its constituent member nations.

In March 1993 Goldsmith gave a televised lecture publicly declaring opposition to the European Union, which was transmitted across the United Kingdom on Channel 4 Television as part of its ''Opinions'' political commentary series, the text of which was published in ''The Times'' the following day under the title ''Creating a Superstate is the way to destroy Europe''. In the mid-1990s he financially supported a Eurosceptic think tank entitled the European Foundation.

In 1994 he published ''The Trap'', a book detailing his broader political philosophical thoughts, giving a critique of the dominance of Neo-Liberalism in the governments of the First World. In its text he criticised their ideological dogmatic pursuance of Free Trade, and the facilitation of the American Melting Pot societal model being copied by the rest of the First World's governments through mass foreign migration, driven by a pursuance of short term economic advantage, which he posited was fatally flawe