Frederick Forsyth: 'I lost £2.2m in a share fraud'
Frederick Forsyth lost his fortune through a share fraud and divorce.
By Mark Anstead
Published: 3:37PM BST 01 Oct 2009
Frederick Forsyth: 'Returns are minimal at the moment but I don't run around tearing my hair out' Photo: IAN JONES Have you learnt any difficult lessons about money through mistakes?
I've lost money twice, first in the mid-Seventies under Edward Heath when we were looking at inflation of 22pc or 23pc per annum. After Margaret Thatcher we all forgot what hyperinflation was, but at 23pc everybody's assets were disappearing down the plug hole.
My financial advisers told me to hedge against inflation by buying either gold or diamonds and I bought gem diamonds because their carat rating can be certified. It was a gross mistake – I invested about £200,000 and got back just £133,000 three years later.
My second mistake was trusting Roger Levitt. I saw him as a personal friend, but he turned out to be a con man. He wasn't like Bernard Madoff – Levitt never promised ridiculous levels of return.
His talent was to recommend a portfolio of about 20 shares and then suggest that, since there was a lot of paperwork and you would have to sign 20 cheques, why not let him do it for you? You just gave him one cheque payable to the Levitt Group and he promised to do all the hard work, but in fact I never saw the money again.
How much did you lose with Levitt?
At last count in 1988 my portfolio was worth around £2.2m. I know that because I parted with my wife that year and, because we didn't want to quarrel, I gave her my properties while I took the shares. Then a few years later Levitt was arrested and my portfolio turned out to be worthless – so I went from having been worth £4.6m before my divorce to zero. I had to start all over again and I worked my butt off writing five books in five years to make my second fortune.
Do you still invest much?
Yes. I still have a portfolio of shares, but now I do everything directly and I tell my broker I don't mind if he asks me for 50 cheques – I want to see them going into the different companies. The chances of being ripped off by all of them are then very slight.
Has the fall in market values dramatically affected you?
I'm philosophical about it. I recognise that return on investment is minimal at the moment, but the values of shares are now coming back, so I don't run around tearing my hair out. You hear about people who were worth £100m and their net worth fell to £3m, but £100m is a hell of a lot and probably a large part of that was either borrowed or highly speculative. I am only invested in very solid blue-chip companies or funds operated by known investors who always appear in the top quartile in terms of performance.
How did your childhood experience influence your attitude to money?
There is an old Jesuit saying, "Give me the boy until the age of seven and I will give you the man." The attitude my parents took to money is stamped into my psyche and has never left me.
As middle-class English shopkeepers in the small town of Ashford in Kent, they felt you had to earn money by hard work alone. The idea that anyone could win money, marry it or inherit it was out of the question for them, and cheating, lying, stealing or embezzling was beyond taboo. So I grew up knowing I needed to be very industrious.
I was raised in a fairly substantial semi-detached five-bedroom Edwardian house, and as an only child I had the top floor to myself – a bedroom and a nursery. My father told me that whatever I wanted to do he would support me, and when I left school early to go into the Royal Air Force, he was thoroughly approving.
Are you cautious with money or liberal? Where does that tendency come from?
I'm illogical. I will save and reuse envelopes, telling myself that I'm saving trees, but all I'm really trying to do is save money. On the other hand I'll give money to good causes and then laugh to myself that I save envelopes. I'll turn the lights off in empty rooms because it offends me to see money wasted and I resent people who fritter money away in casinos when it could have been used by someone who needs it.
Now that you are better off, are you happier?
Yes, I think so, but I had it drilled into me as a boy never to worship money. I was in my late thirties before financial success came to me and by then I had travelled the world and had a lot of experience.
Financial freedom is what I value most – I don't have to get up in the morning and go into an office and bow to the boss. And there is comfort in knowing that if I want something, I can usually have it, within reason. I wouldn't think it reasonable to own a private yacht or jet.
How do you separate responsibility for finance with Sandy?
I don't give her an allowance – she just shares a credit card with me and whatever the house needs in terms of food and other consumables is charged to that card. Sandy also has her own bank account and some of her own assets. She has shrewdly invested in a portfolio of shares that generates enough income for her own clothes, but I pay for everything else.
How do you prefer to pay for things, cash, card or cheque?
I'm still very old-fashioned – I like to pay most of my bills by cheque. I am constantly being asked to pay by direct debit, but I keep seeing a high level of inaccuracy in my bills and I often query them because a figure is wrong. So I much prefer to stare at a bill first and then hand over a cheque.
But I also pay by credit card and, thankfully, I've never experienced credit card fraud. But I'm very dubious about it because when you pay over the phone they always ask you for all the details from the card, including the security card number on the back. What's the point of having a security number if you have to tell everybody what it is?
How do you tip? Are you an easy tipper or do they have to work hard with you?
I like to tip in the upper to mid range. I first check to see if it is already included on the bill and if it is I will usually leave a little extra, but if it's down to customer discretion I leave between 12.5pc and 15pc.
What's been your greatest extravagance?
I have indulged in classic sports cars over the years – I've got a Jaguar XKSS and an Austin Healey 3000 – and I love diving or snorkelling twice a year in the tropics.
What kind of a home do you live in?
It's a farm. When I grew up in Ashford it was all agricultural and I was often visiting friends on their farms. I thought one day I would like to have one of my own with all the animals and constant activity. Then in 1988 I bought my Queen Anne Grade II listed farmhouse near Hertford with 175 acres for £350,000 and I love it here – they'll have to carry me out in a box.
Do you invest in individual savings accounts (ISAs)?
Yes, because my accountant thinks they are worthwhile. I never really need the money I put into them so it just sits there and grows tax-free.
Do you use high-interest savings accounts?
I have a deposit account with one small private bank and I simply transfer money from that account into my Barclays current account as I have need. I haven't spread my money around because my bank is run by very frugal people and I don't think it was ever at risk. I ask virtually nothing of Barclays for my current account – I've been with them for 40 years and I just keep it running at just above zero.
Do you bank online?
No, because I'm not computer-literate. And anyway, I'm suspicious of it – I read about people having their accounts penetrated and identities stolen through computer hacking. Every day I sit at my little Japanese typewriter and I tell people it's impossible to hack into a typewriter.
Is there a reduced demand for your services because of the current squeeze?
Thankfully, I negotiated the contract on my new book before the recession started. I only get paid royalties when the advance has been topped out, but my excellent agent usually manages to secure such a ludicrously large advance that it takes several years before that ever happens.
Do you think pensions are a good idea? If not, why not?
When I was a young man I could never envisage being old. I started saving into a pension fund when I was about 40, but I haven't touched the money yet so it's just accruing. I'll either be a rich old b------ in a wheelchair or a rich old corpse.
Frederick Forsyth's next novel, 'Cobra', to be published next year, has already raised £990 for Leonard Cheshire Disability last month after a charity auction to name a character in the thriller
http://www.telegraph.co.uk/finance/personalfinance/fameandfortune/6249853/Frederick-Forsyth-I-lost-2.2m-in-a-share-fraud.html
