27 March 2009

HE who has the pepper may season as he lists,” wrote the English poet George Herbert. If that is the case then Forbes magazine sprinkles spice by the ton while its readership should always have a few shovels of salt handy.

Its editors and journalists are self-appointed assessors of the planet’s richest, powerful women, best companies, top models, best and worse paying jobs, world’s dirtiest cities, best colleges, top 100 celebrities and even top-earning dead celebrities. Let us just say, if it exists Forbes will list it.

Let us be honest. Most people love lists. Indeed, Time magazine once published a list of “reasons why we love lists.” Heading the top-ten spot was “Because if you put numbers on it, people will read anything, however trite, trivial and insipid from beginning to end.”

Forbes has done well feeding into this natural human desire for order and there is nothing wrong with that as long as its readers understand its largely subjective listings for what they really are — amusing after-dinner talking points.

Forbes gives people what they want: Purported personal insights into the lives of the rich and famous laced with rumor and title tattle. The problem is the publication sells itself as heavyweight and serious.

The magazine’s “World Billionaires” rankings attract enormous media interest each year. Substantial dailies appear to accept it as gospel, headlining stories derived from the list with “The world’s billionaires: A dime a dozen” and “Bonfire of the billionaires.” As far as I can deduce, not a single paper seeks to challenge the way it is put together. The Oracle at Delphi, has spoken, so that is that.

On its website, Forbes boasts that its reporters “have visited Dennis Washington on his yacht in Vancouver Harbor and had tea with Kazakh billionaires in Courcheval in the French Alps.” Yet only one out of five billionaires, it says, agrees to accept its calls.

It says certain countries are secretive. But this scarcity of information concerning wealthy individuals’ personal affairs does not deter Forbes for ranking their billionaires based on so-called informed guesstimates. It seems that when in doubt Forbes makes it up.

Who is not on the list is even more telling.

Can you believe that there is not a single Rothschild and only one Rockefeller — the family patriarch David? He ranks at No. 305 with $2.2 billion, yet the Rockefeller family fortune has been estimated up to $100 billion. What has happened to the rest of them? Perhaps they should sack their financial advisers.

Can you believe there are only seven GCC nationals featured and only five Saudis in the Top 100? Moreover, the wealth of those from this region whose names do appear is grossly underestimated. UAE businessman Abdullah Al-Futtaim ranks at No. 397 with a supposed wealth of $1.8 billion. Setting aside his substantial automotive and retail franchises, his real estate projects that include the $15 billion Dubai Festival City, are worth substantially more than that.

Similarly ridiculous is the No. 647 ($1.1 billion) ranking of Dubai’s Khalaf Al-Habtoor, chairman of the Al-Habtoor Group, which is involved in the hotel, automotive, construction, real estate, education, insurance and publishing sectors. The value of his shareholding in Habtoor Leighton alone is worth more than $1.1 billion. What about his numerous hotels, automobile agencies and real estate interests?

Prior to the list’s publication, a Forbes spokesperson admitted this ranking involved “some estimation and assumptions” while attributing the low ranking to “the global recession.” Doesn’t sound very scientific to me! Shouldn’t the media investigate the methodology behind the Billionaires list before running with it? Take this example. In 2004, Forbes “reported” that Cuba’s former leader Fidel Castro was among the world’s richest with a net worth of $900 million, ranking 7th among the wealthiest heads of state. Forbes admitted this was an assumption based on the Cuban president being a probable recipient of profits from state-owned companies. Castro took this as a slur on his socialist credentials accusing Forbes of “lies and slander.”

Cuban author and journalist Luis Sexto maintains that the magazine’s publisher Steve Forbes, a staunch Republican with an eye on the White House, “is a voice and a gesture in the US secret and public war for a transition of the Caribbean island ‘toward the American way of democracy.’”

This year, according to Forbes, the number of billionaires worldwide has shrunk from 1,125 to just 793 eliciting a measure of glee in sections of the press. But the list is patently flawed with Joaquin “El Chapo” Guzman, a notorious Mexican drug lord, coming in at No. 71 as a new billionaire worth $1 billion. Yet on Forbes’ own website is an article quoting an analyst with the global intelligence firm Stratfor, who pegs Guzman’s net worth at $12 billion.

How can anyone know the material worth of a cocaine trafficker? For all we know he may have warehouses packed with gold, safes stuffed with diamonds or a complex web of seemingly legit offshore companies? Perhaps they sent an undercover reporter to sidle up to “El Chapo” in his local watering hole and inject him with a truth serum!

Unless Forbes employs an army of investigators and accountants it can’t possibly know the real worth of anyone apart from the likes of Bill Gates who has two lifetime partners: His wife Melinda and the IRS. Moreover, it can have little real insight into people’s fiduciary deposits, over-leverage, debts, stakes in private companies, or personal investments — especially those in countries such as Russia, China, South America and the Middle East.

And how does Forbes account for the high-ranking billionaire newcomers, who have sprung out of nowhere? Their fortunes must have descended overnight like manna from heaven unless, of course, they were inherited.

The Billionaire list is glaringly unreliable yet it is accepted as gospel. Old money billionaires generally consider it a yawn. Russian oligarchs find it embarrassing. Members of the nouveau riche are honored to be on it in the same way that Hollywood movie stars aspire to the Oscars’ red carpet. For most of us the only thing it should be good for is a laugh.