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February 10, 2011

Hedgehog Issue 19

By Spear's

Supermodels, superclubs, supersuits. It’s Hedgehog.

THE BODY VS THE BANK
As the nights drew in and darkness reached its fullest power, a single candle of good news shone a bright light. And when Elle Macpherson is holding that candle, we’re talking solar.

The good news is that Elle’s clever lawyers at Speechly Bircham have rescued her affairs after a skid over a treacherous icy patch. For Elle was collaterally damaged by the collapse of one of the Iceland banks: she had taken out a mortgage from Kaupthing for a house in London, and had used — as is perfectly regular, her lawyer Charles Gothard says — a nominee company, so her purchase would be anonymous. In return, KSF had asked for security, which she deposited in her own name.

Now, when a bank collapses one person’s deposits are regularly set-off against their borrowings, as a simple way of working out whether they owe the bank or the bank owes them, and Elle believed that this would happen for her. However, because a person was the depositor but a company was the borrower, the liquidators refused to do this.

After a plucky battle in an Isle of Man courtroom, involving the summoning of  18th-century laws as no precedent existed for such a case, the Body was victorious: because she was the beneficiary of the company, it was equivalent to it having been bought in her name.

Charles says that while this might seem recondite, it is now more relevant to HNWs than ever — five years ago, no one dreamed of banks collapsing; now it is de rigueur for any financially embarrassed society, and there will be many more off-putting set-offs to come.

‘Spear’s readers,’ he says, ‘will have property held through nominee companies to protect their privacy and they will have offshore mortgages with deposits. If they have found themselves in a situation with the same difficulty, they can now rely on this case as a precedent.’
 
 
CLUBBABLE
We at Spear’s are good at finding homes-from-home or colonising spaces near our offices; we’re never without a hang-out. Our latest is Lutyens, the new Terence Conran restaurant on Fleet Street, but not just the restaurant, where many fine meals have been had from chef David Burke — the private members’ club.

In the former Reuters and Press Association building, an austere grey-stone manse, slap bang next to St Bride’s (where journalist pray for forgiveness), Lutyens conceals its club in the basement. Low lighting encourages close conversation as City gents (and gentleladies) relax their pinstriped limbs over lunch or dinner, or sink into the sofas for coffee or breakfast. The atmosphere is intimate and uncrowded, and the rules adult: ‘Be civil, decent, jolly and pay your bills.’

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It is also notable — especially for the historically aware or the discerning diarist — that Samuel Pepys was born on the site of Lutyens, and the club is filled with Pepysabilia.

The membership rolls for the Lutyens club are closed, but Spear’s has uttered the magic word and got Lutyens to offer 100 new memberships, discounted from £240 to £180 per year until the membership year ends on 31 August 2011. Members also get special lunch offers, plentiful meeting rooms, free WiFi, designer furniture and discounts at other Conran properties. It has proved the perfect pad in the City.

To apply for a membership, email club@lutyens-restaurant.com
 
 
OVER AND UNDER
Hedgehog has some unwise friends. They threw a party at home for their son’s eighteenth, celebrating their darling’s new ability to vote and fight on the front line in Afghanistan, and provided plentiful booze. I mean, plentiful — their guests could not have worked through all the champagne had Oliver Reed and a cohort of thirsty mates turned up. But they made one small, costly mistake: they left all their prized paintings, all their antique furniture, all their Persian carpets in situ.

When the inevitable happened — eighteen-year-olds not being known for their ability to keep alcohol down — the parents were furious, and some special artefacts had been damaged or even ruined, but at least they had insurance, they thought. It had been a while since they had had these items valued, but the difference wasn’t going to be too great, was it?

Under-insurance is surprisingly common among HNWs. Figures from Synergy, who specialise in private client insurance, show that three in five policies with contents cover over £350,000 were under-insured. One policy covered half a million, and the actual damage was £1.1 million. Several were out by £100-200,000, which is the price of a decent Renoir.

Emma Bennett, head of underwriting at Synergy, says one of the most common causes of under-insuring is out-of-date valuations for works of art: ‘I had one person with insurance for £200,000 and their massive collection of paintings was worth £8 million.’ People are often too busy to get proper valuations, putting it off like a fearsome chore, or don’t realise what counts as contents: ‘If you turn your house upside down and shake it, everything that comes out is contents.’

And men get the blame, too: ‘It’s very typical of men not to insure to value because they don’t realise how much their wives’ clothes are worth.’ Which just proves that poking around in closets can have some surprising benefits.
 
 
STONKING AT THE SAVOY
You can almost guarantee that the worst thing about any five-star hotel you stay in will be its retail opportunities. Plain glass cases with a variety of spangly watches. A concession with 150 ties. Local tat, from Scottish shortbread to Italian olive oil.

Simon Thompson, the main behind the new retailing concept at the Savoy (on which more in a second), is vociferously of this view: ‘Why do all five-star hotels around the world offer only two-star retail?’ It’s less a rhetorical question, more an anguished cry from a man who has spent the past decade working with luxury retail brands such as Harvey Nichols and Browns.

It is an interesting question, because even as hotels crow about their service, they forget that enabling their guests to buy a stylish tie or even an LBD, rather than forcing them out into the West End, is a valuable plank of service. Retail is, apparently, a four-letter word in the hotel world.

Shop at the Savoy, as you might now be anticipating, has done away with the tartan tins of toffees. In their place is a multi-channel shopping opportunity, where in the hotel, through your TV or at shopatthesavoy.com, you can browse their curated range of luxury items: Dunhill briefcases, Alexander McQueen clutch bags, selected volumes from Daunt Books, Moody & Farrell hats, Spencer Hart ties. You can, in fact, buy a Jaguar via your TV.

Shop have been clever in another respect. The thing that makes one wary in hotel boutiques is the gouging that takes place on the prices; Shop charges the retail price, meaning it is not just more stylish but more honest than most.

There is also a personal shopping option, which a princess recently took advantage of, according to Simon: he says she called up two days before she arrived to meet a VVIP, and when she got there at 2am, they had a suite filled with 30 outfits for her to choose from. For non-flying visits, Shop offers themed days (not only available to the Savoy’s guests), where you will be chauffeured around London to jewellers or vintage stores or the West End.

The brands are not wholly British, but a good chunk are, and the selection largely rejects mass luxury, although Simon recognises that it has its place: ‘If you’re from a Bric country, they tend to be more ostentatious’ and would rather have logo’d brands. ‘It would be wrong to enforce a British idea of luxury on to our audience. [People from Bric countries] may suddenly have a large amount of wealth and they celebrate it.’

The concept will roll out in another London hotel next winter, before flying to Monaco and New York, Simon envisages, over the next five years. The strength of the concept, he says, is not just that it can be scaled but that it can be adapted quite specifically for whichever hotel and market wants it. Judging by the London selection, the market is tasteful, discreet and very, very chic.
 
 
A DIRTY CONCEPT
There are certain artworks that submit to Pledge and a duster (ask your woman-who-does what this means), but once a piece of Minimalist art has been scuffed, you can be certain it’s a little less priceless than it was before. This may sound like a trifling dilemma, but it’s one Matthew Smith of Hockley Smith Fine Art Consulting has bumped up against at auction (so to speak).

‘I spent a long time in the auction world, which is a conveyor belt even at the smartest end,’ he says. ‘You’re buying something that has been owned and installed or hung, and you don’t always know that it’s been looked after properly.’ Besides, for the period it’s on view, there are all kinds of people kicking the tyres. ‘With Minimalist and Conceptual works, the condition might not always be as perfect as you want.’ The number of people who have walked over Carl Andre’s Steel Zinc Plain at Tate Modern make it practically unsaleable…

After ten years at Christie’s, a spell at the Lisson Gallery and voluntary duties at the V&A and the Royal Academy, Smith has moved into art advisory, helping private collectors and public galleries build and ‘rationalise’ their collections. His experience across the primary and secondary sales markets has taught him that motives differ between them: those buying from galleries tend to be much more interested in getting to know the artist and helping their career develop. Contrarily, ‘artists are uncomfortable with their art appearing in the auctions’ because it’s a market, pure and simple. As long as they take their Mr Sheen with, how can they object?
 
 
SUITS YOU, SIR
‘It was a natural thing to do,’ says Tony Lutwyche, sitting in the basement of the Lodger store on Clifford Street. Something about this scene may strike you as unusual yet oddly congruent: why is the tailor Lutwyche sitting in the shoemaker Lodger?

Lucky for Lutwyche and Lodger, it fits quite well (as you’d expect from bespokers). At the start of October, Tony Lutwyche bought Lodger, created by Nathan Brown, in the sort of happy sartorial merger not seen since tweed jackets met leather patches. Their values — particularly the made-in-England and artisanal principles — were key. Now the shop on Clifford Street has both shoes and suits (ready-to-wear, made-to-measure and bespoke), and gives Lutwyche its first retail outlet. (Or should that be shopping experience?)

Lutwyche rejects ‘season-to-season’ fashion, but does see secular trends in his clients: ‘If bankers were buying big, bold charcoal stripes with red linings’ — which they’re not — ‘the City was on its way up.’ They say hemlines reveal the economic climate, but that’s too gynocentric and lascivious — judge the situation by the suit.
 
 
LINE OF SIGHT
Most people’s time horizons don’t extend past the next meal or the next weekend or the next holiday; if you’re a publicly-held business, then it’s the next quarter that will be obsessing you. Equally, there is a blooming branch of trend predictors and future forecasters trying for the next season or the next year, and BNY Mellon have thrown their forward-tilting hat into the ring.

They’re looking a decade ahead, in fact, with 2020 Vision: The Most Critical Decade, a white paper on ‘terrain that has been fundamentally altered’, from drivers of demand to responses to financial reform. The outlook is hauntingly realistic: ‘Information will be overabundant and rapidly changing.’ Markets will be ‘hyper-sensitised’. Kneejerk investor reaction has to be avoided at all costs. These are all worrying factors that technology and global uncertainty have enabled.

Nevertheless, there are means to avoid a panicky race to the bottom. You can differentiate between knowledge and information, prizing ‘deep market insights and experience’. Instead of jerking their knee, investors should be alert. Interestingly, stress is laid on the next generation, a memento mori for parents of the MySpace generation: ‘Through the recent financial crisis, people have come to realise how easy it is to lose the wealth they have accumulated, giving rise to concern that history could repeat itself in successive generations.

‘The crisis also served to sharpen the recognition among many that the legacy one leaves should be about more than just money. For both of these reasons, the concept of preparing the children for the money, not just the money for the children, has assumed renewed importance in the planning process.’ It sounds like legacies are going to be for the living, too.
 
 
UNDER JERMYN STREET
There is almost nothing that has not happened at Tramp, from a lesbian actress propositioning a certain Hitchcock muse and Monegasque royal to anyone who’s anyone falling asleep on tables, under tables, on top of other guests, underneath other guests.

But there is one thing that has not happened at Tramp since 2007. Not a humidor has been opened, not a cigarette put to the lips. The sweet smell of struck matches lingers only in the memory. That is why Tramp have spent the winter closed during the week, burly workmen hammering and sawing to create a ground-floor lounge bar and installing, off the bar, an outdoor terrace at a cost of £1.5 million (opening in April), which is a lot of cheeseburgers, as Guido will tell you. Soon the Havanas will perfume the night air.

Having dinner at Tramp with Brian Crawford, the club’s affable director, and several luminaries from the worlds of music, photography and the media, Hedgehog noticed that the darkness outside — both nocturnal and economic — was banished by the dream-world that Tramp creates, a cosy conspiracy of the intimacy of the like-minded. Trust, Brian said, was what made Tramp the success it has been: although everyone has heard stories of what has happened at Tramp, its spirit has not yet been violated.
 
 
INTO THE LOOKING GLASS
Greatest hits collections can often go very wrong: a box of chocolates invariably contains a few strawberry creams; a career retrospective, that eight-minute prog-rock epic guitar solo. Happily, The Future of Money, a sampler of opinions from financial luminaries such as Muhammad Yunus, Jim O’Neill, Will Hutton and George Magnus, is a powerful anthology of thoughts on the financial crisis past, present and future. Edited by Oliver Chittenden, the book is now out in paperback.

Some contributors are talking their book. Magnus, for example, UBS’s chief economist and the author of the recent Uprising, about how emerging markets may not be the strong bet most assume they are, talks about ‘too big to fail’ and says it is politically and financially unwelcome, but concludes: ‘The status-quo structure of banking organisations is compatible with this objective [better capitalisation and regulation].’

A salty rejoinder to all the western navel-gazing is provided by Nobel laureate Yunus, who was awarded the prize for his work in microfinance and setting up Grameen Bank. While Grameen Bank has ‘no legal instruments between lender and borrower, no guarantees, no collateral’ yet still has its loans repaid, ‘the prestigious banks all over the world are going down with all their intelligent paperwork, all their collateral, all the lawyers and legal systems to back up their lending.’

Vince Cable gives the introduction to the book, although it’s not clear quite how far he should be believed on the future of money when he couldn’t predict that he’d end up on the front page of the Telegraph.
 
 
PROP TRADING I
A property man since John Major was minoring in government, Charles McDowell set up McDowell Properties eight years ago. The business has found a niche for its finding and vending activities — prime London residential properties for a clientele of European and American bankers. He says the thrill of the deal is what attracted him: ‘I guess the adrenaline goes, it’s the art of the deal, getting a deal together.’

Happily, 2011 has already proved that there is still life in the London market, with Charles reporting two examples that have reached his ears of gazumping in the £5 million-plus market already this year. This risks becoming less common if any kind of legislation on bankers’ bonuses or non-doms is passed, says Charles, because all that money will flow away, which would be disastrous for London property.

‘It’s free money — these people don’t have to spend their money in the UK, they choose to. Because it’s become so politicised, the real meaning has become lost.’

Before Charles set up McDowell Properties, he worked for Russell Simpson, and before that for Peter de Savary, who ‘wasn’t the best manager of businesses, but he was a risk-taker. It’s the fear of failure you’ve got to overcome when you’re an entrepreneur. That’s what made him a real entrepreneur — he didn’t have a fear of failure at all.’
 
 
DOWN ON THE RANGE
Polo has not yet managed to reach a wide audience in the UK; after all, the only time most people see it is when Prince William has fallen off his pony and the newspapers have something to report with glee. That’s about to change, as the sport of kings comes to the O2, the arena more associated with Take That than ten-goal.

The Gaucho International Polo in February 2011 will feature top players such as Nacho Figueras in a day of matches — including the Varsity polo and England vs Argentina. Pommery are cracking open the champagne.

Martin Williams, marketing and operations director of the Gaucho restaurant chain, which is sponsoring the event, said polo has none of its exclusive connotations in Argentina, where — thanks to the profusion of ponies — anyone can jump up and play. ‘We’re trying to capture the essence of Argentina in polo and bring it to London in a more traditional form.’
 
 
PROP TRADING II
Nick Crayson has set his mind on transforming the business of property selling in Notting Hill. He’s started with that first sign of sale: the sign. Instead of those awful bland boards that don’t scream ‘sell’ to anyone except the terminally unexcitable, Crayson’s are mini-masterpieces, painted (painted!) with bold colours like Howard Hodgkin would have done if he’d been employed by an estate agent.

Then there’s the literature, the Crayson Journal, a newspaper bold in its self-assertion: ‘Is it unreasonable to demand that the people selling your house know the area better than the back of their hands? Is it unreasonable to want to see your house up there in lights in newspapers and magazines? Is it unreasonable to request daily updates on the progress of your house sale?’ Why, the love child of Socrates and George Carman QC would have a hard time refuting those suppositions.

The jargon is going, too: no more ‘attractive period features’ and ‘close to amenities’ and ‘wonderful south-facing terraces’. Crayson will be bringing it to you straight, with actually helpful terms so you can appreciate the place you want to spend your next years in.

The revolution won’t be televised, but it will be appearing in a front garden near you.

Cartoon by George Leigh

Hedgehog is sponsored by B Capital
 

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