THE MATCH KING
Also by Frank Partnoy F.I.A.S.C.O. Infectious Greed
THE MATCH
KING IVAR KREUGER, THE FINANCIAL GENIUS BEHIND A CENTURY OF WALL STREET SCANDALS
FRANK PARTNOY
PublicAffairs New York
For Dad Copyright © 2009 by Frank Partnoy Published in the United States by PublicAffairs™, a member of the Perseus Books Group. Published in Great Britain in 2009 by Profile Books Ltd. All rights reserved. Printed in the United States of America. No part of this book may be reproduced in any manner whatsoever without written permission except in the case of brief quotations embodied in critical articles and reviews. For information, address PublicAffairs, 250 West 57th Street, Suite 1321, New York, NY 10107. PublicAffairs books are available at special discounts for bulk purchases in the U.S. by corporations, institutions, and other organizations. For more information, please contact the Special Markets Department at the Perseus Books Group, 2300 Chestnut Street, Suite 200, Philadelphia, PA 19103, call (800) 810-4145, ext. 5000, or e-mail
[email protected] Designed by MacGuru Ltd. Text set in Sabon MT Pro A CIP Catalog record for this book is available from the Library of Congress ISBN: 978-1-58648-743-0 First Edition 10 9 8 7 6 5 4 3 2 1
CONTENTS
Preface 1 2 3 4 5 6 7 8 9 10 11 12 13 14
ix
Coming to America Getting to Lee Higg The Speech Trouble at Home The Green Eye Shade Poland First Le Boom The Match Palace A Weekend in Germany One Last Chance Coming Back to America Death in the Air Greatness? Coda
1 15 29 46 59 70 91 112 135 156 179 193 201 218
A Note on Sources and Acknowledgements Bibliography Notes Index
227 230 236 263
This page intentionally left blank
“He must surely have been the best-liked crook that ever lived” Frederic Whyte “Boiler-room operators, peddlers of stocks in the imaginary Canadian mines, mutual-fund managers whose genius and imagination are unconstrained by integrity, as well as less exotic larcenists, should read about Kreuger. He was the Leonardo of their craft” John Kenneth Galbraith “Everything in life is founded on confidence” Ivar Kreuger
This page intentionally left blank
PREFACE
B
y Thursday, October 24, every market in the world was in freefall: mortgages, stocks, bonds, and even derivatives that were supposed to act as insurance against losses. For most investors, it had been the worst week of the worst month of the worst year in financial history. Housing prices plunged. Lenders froze. Foreign markets crashed. By the time the closing bell rang at the New York Stock Exchange, many nest eggs