23 March 2003 – Sunday Times
AFTER guests were chauffeured up the candle-lit driveway of a magnificent villa in the hilltops above Cannes earlier this month they were treated to an extraordinary display of wealth by one of Britain’s most secretive families.
The brothers Simon and David Reuben were hosting a private cocktail party during an annual property conference in the south of France. The villa entrance was discreetly protected by bouncers. Inside there were sushi canapes and free-flowing champagne.
Many of the guests had one thing in common – they had never met the Reuben brothers and even during that evening only one of them attended. David, the elder brother, was elsewhere. But the decision to invite strangers into one of their homes was no accident.
For years the Reubens have guarded their privacy and hidden the extent of their wealth, but from tomorrow all that is to change. The brothers, who are both in their sixties, are taking the unusual step of going public with the scale of their business interests and wealth. They have decided to set up a website (www.reubenbrothers.com) that will show how they became one of Britain’s wealthiest dynasties, with a fortune founded on aluminium mining in Russia and Afghanistan. The website will also provide clarification of an investigation that German regulators once made into their bank accounts.
As a result of this new information, coupled with audited accounts by BDO Stoy Hayward, the brothers will soar up The Sunday Times Rich List. When it is published next month they will have jumped from No253 to the top five, where they will hit double billionaire status. Their net worth is now estimated at £2.1 billion.
The brothers want to make another fortune by investing in the west and in the past five years they have become big investors in British commercial property. Among the assets they own is London’s Millbank, which once housed the command centre of the Labour party. They are also big investors in the Victoria area, where the government is one of the big occupiers.
In total the Reubens control a portfolio of about 100 buildings worth more than £1 billion and most of this is debt free. Their assets are spread around a myriad of single-purpose investment vehicles and are managed by Motcomb Estates, their advisory business.
In addition to this, they have extensive venture-capital interests and have just set up a British-registered charity called the Reuben Foundation. This has been started with a $100m donation and the income will go to good causes, principally in education and healthcare.
Friends of the Reuben brothers say that behind this decision to disclose the extent of their wealth is a desire to be recognised as serious players in British business.
One associate says: “They have seen friends like the Barclay brothers become accepted members of the business establishment and now they want the same thing. They have watched individuals like Philip Green dominate the headlines in the financial pages and they clearly have the financial muscle to be part of this.”
Since disposing of their aluminium and mining interests at the turn of the millennium, the business interests of the Reubens are now more transparent and a large proportion of their assets are held in cash. Associates say the brothers are keen to do deals and as well as buying property they have looked at a number of the big deals that are in play, such as Safeway and Six Continents.
This is the second time the brothers have attempted to become more open.
The first backfired spectacularly. Three years ago they agreed to be interviewed by Fortune magazine but the article threw up allegations of links with the Russian mafia. The brothers took legal action against the magazine.
This time they are hoping the audience will be more receptive. But detailed questions over their former Russian interests and associates are likely to remain unanswered. The brothers also declined to be interviewed for this article.
To help give them a clean bill of corporate health they appointed Kroll Associates, the investigator, two years ago to carry out an audit of “every part” of their business.
THE rise of the Reuben brothers is an extraordinary story but it is not without controversy. Their parents are Iraqi Jews but they were born in India after their father moved there with the textile company that employed him. When they were teenagers they moved to Britain. David Reuben and his family are still based here. His brother lives in Monaco.
After leaving college, David started a British scrap metal business called Mount Star Metals, which resulted in him traveling to Russia, China and North Korea.
In 1974 he went to America, where he joined Metal Traders and set up a joint venture with Merrill Lynch.
While David was the trader, Simon was the investor and during the early part of their careers their interests took them in different directions.
Simon imported carpets and in 1965 bought J Holdsworth & Co, England’s oldest carpet maker, from the receiver and turned it round. He used the profits to buy property and set up a company called Devereux, which he later sold to Bovis just before the 1970s property crash.
By this time the brothers had started to work more closely and set up a company called Trans-World. It began with $2m of capital and banking facilities of $20m. It specialised in trading aluminium, tin and minor metals out of London and copper and tin out of New York. Within seven years the value of the company had risen to $20m. But in 1985 the tin crisis struck and the business had to be restructured. The American partners were bought out.
The Reubens struck the richest seam of their business careers in the 1990s. They set up an office in Russia and joined forces with Lev Chernoy, a controversial local businessman. It was the days when Russia was regarded as the “wild frontier” and the Reubens were one of the few westerners with the appetite to take on the challenge and the danger.
According to the information that will be posted on their website: “The Russian aluminium smelters were incapacitated by debt and had no capital to buy raw materials or market finished products. Trans-World entered into tolling arrangements with the factories. This meant the group would offer to pay for and deliver raw materials, fund the processing in return for the finished aluminium, which Trans-World would then sell for a profit.”
The financial return was phenomenal. Over five years the company invested $1 billion and by 1995 sales had risen to $7 billion. Trans-World accounted for nearly 5% of the world’s aluminium production.
But by 1997 the run was coming to an end. The Russian mafia was becoming a powerful force and interlopers were being squeezed out of business. On top of this Chernoy was being investigated by Russia’s ministry of the interior.
By 2000 the brothers had sold out and they started to unbundle their empire of nearly 100 Russian subsidiaries. The aluminium interests were sold to Sibneft, the Russian oil group.
According to one source, the company had so much money in bank accounts that it was accused of (and later cleared of) money laundering. The company said at the time: “Trans-World denies allegations of engaging in money-laundering activities. Independent audits by outside auditors have developed no evidence that would support such an accusation.”
IF the Reuben brothers succeed in relaunching themselves, they will become the latest among a handful of entrepreneurs whose private companies are making huge inroads into British business. The Barclay brothers and Green have already been mentioned. But they also include the financier Joseph Lewis, the retail tycoon Tom Hunter and the property magnate the Duke of Westminster.
The Reubens already have an established network in Britain and have acted with a number of partners. They have links with “Black Jack” Dellal and the Tchenguiz brothers, with whom they bought London’s Shell Mex house
In the past decade commercial-property investment has become a sector dominated by the super rich. With the base rate at 3.75%, the lowest level for 55 years, entrepreneurs have been able to buy portfolios almost entirely financed by debt.
Nearly all the big deals have been put across the Reuben brothers’ desks and they are known to have looked closely at the Laurel pub estate as well as the Berkeley Square estate that was put up for sale by BP, the oil giant.
One individual who is as close to the Reuben family as anybody is a lawyer called Charles Filmer. He is the former personal assistant to the late billionaire Sir James Goldsmith and has spent a large part of his career handling the affairs of the super rich. Filmer was a director of Stanhope Administration, which acted for Goldsmith’s business interests in Britain. He was also a director of the tycoon’s Referendum Party and was responsible for signing its cheques. Now he is said to be working closely with the Reuben family.
The decision of the Reuben brothers to raise their public profile is an interesting tactic. The British media are always fascinated with how individuals make their fortune, but often their attempts to uncover the facts are blocked by legal threats. The Barclay brothers, for example, are notoriously protective of their privacy.
The Reubens, with their estimated fortune of £2.1 billion, are almost a corporate entity in their own right. They are not the only businessmen to carry the legacy of how they made a fortune in Russia but, unlike many others, they survived in one of the world’s toughest business environments where the local mafia has a powerful grip.
There is little doubt the Reuben family’s former world is convoluted and secretive. At one stage their assets in Kazakhstan were confiscated but, according to the website, this issue was settled.
It says: “Trans-World also reached a substantial settlement with the Chodiev Group in Kazakhstan. This settlement was accompanied by a letter from the prime minister confirming that Trans-World had no outstanding taxes or liabilities as alleged by the Kazakhs during the litigation which had preceded the settlement.”
But one thing is clear, the family would not have considered it was worth opening these old wounds unless they were determined to become big players. Their record says they should not be under-estimated.