Jim Rogers, Meet Naguib Sawiris

A tale of two US citizens
March 9, 2017 2:30 PM

For whatever reason, Jim Rogers really gets under the skin of my intense-but-not-psycho partner, Professor Haggard. “Bottom feeder” is among the nicer things he has called the elderly investor. I prefer the Elvis Costello approach: “Oh, I used to be disgusted, but now I try to be amused.”

For years, Rogers, who co-founded the Quantum Fund with George Soros, has been flogging North Korea as the next El Dorado. And although he has resided in Singapore for the last ten years, Rogers has apparently not surrendered his US citizenship. The notoriously prickly hedge fund operator got a bit of a rough ride in a recent story in the New York Times by Patrick Boehler and Ryan McMorrow.

The gist of their account is that Rogers was part owner of a Hong Kong-based firm called Unaforte, whose website claimed (before it was taken offline) that it owned an office park and bank in North Korea and had a stake in a gold mine. Rogers’ likeness was widely used in the company’s promotional material. According to Rogers, he made only a token $100 investment in the company, but according to Hong Kong filings he controlled 1 percent of the company, whose value is unknown. These shares were allocated to Rogers in February 2016, a month before US sanctions that would have made the arrangement illegal went into effect. Even the uber-hawkish Josh Stanton is quoted in the story to the effect that Rogers’ actions at the time were legal. According to the Times, Rogers claims that the day after President Obama signed the executive order on sanctions, 17 March 2016, he wrote to Unaforte, asking for his $100 back and transferring back an unknown number of shares in the firm. However, the Times observed that the letter they were shown stamped by Hong Kong tax authorities was dated 29 September 2016, the day after the paper first inquired with Unaforte about the American investor’s relationship with the firm. Rogers attributed this discrepancy to Unaforte’s fiscal year, which ends 30 September.

Some regard a US passport as a “get out of jail free” card.  When it comes to North Korea, it is the opposite.

In addition to his ownership stake, Rogers admitted to the Times that he had done speaking engagements for the company but declined to reveal how much he had been paid.

In short, Rogers appears to have skated up to the line, and if he crossed it, at least didn’t break through the ice. He’s free to collect fees, presumably large, telling the rubes that North Korea is the Sierra Madre. Naguib Sawiris may not be so lucky.

As documented by British financial reporter George Turner, Egyptian-born billionaire Naguib Sawiris has US citizenship. The revelation of this fact made his status as head of Orascom Telecom, which has a joint venture with a North Korean government ministry to provide cellular telephone service and opened a bank in North Korea, highly problematic. The Orascom operation has encountered a variety of problems in North Korea: the North Korean government will only allow them to repatriate profits at the wildly overvalued official rate, effectively expropriating the investment, and the government also established a rival cell phone service (though that might be regarded as pro-competition—though rent-shifting is more likely.)

According to reporting in the Chosun Ilbo, Orabank has been linked to the North Korean Foreign Trade Bank which was sanctioned for involvement in nuclear weapons development. In December, Orascom made the bombshell announcement that they were shutting down the bank, and Sawiris was stepping down as CEO, effective 1 January. One Egyptian press report noted obliquely that the move to shut down the bank was due to “increasingly complex” US sanctions on North Korea. Another close observer was more blunt, communicating privately that as a US citizen, Sawiris was worried about personal liability.

Some folks with a sense of entitlement regard a US passport as a “get out of jail free” card when traveling abroad. When it comes to North Korea, whether you are a drunk college student, an old soldier, or an amateur missionary, it is the opposite. And even membership in the one percent doesn’t change that fact it seems, though in this case, it is the US—not the North Korean—government that one needs to worry about.

 

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