Author: Charlotte Gill

Before being head-hunted for a secretive hedge-fund based in Bermuda, Farleigh’s financial success enabled him to retire to Monaco at the enviable young age of just 34. He went on to dabble in further projects and became a household name after starring as an investor in Dragons’ Den, backing Levi Roots and his now famous Reggae Reggae Sauce. Currently a member of the Business Review Weekly ‘Rich 200’ list (the 200 wealthiest Australians), Richard Farleigh talks to Angela West about his business successes, failures, tips and destinations.

From ‘backward child’ to chess champ
At 10, he wanted to be a bushranger, “A kind of Aussie Robin Hood”, at 20 “an academic”, at 30 “a master of the universe hedge fund manager…oh, and at 15, a religious minister!” he recalls. Born in the country town of Kyabram, in the state of Victoria in 1960, Richard Buckland Smith (his middle name a nod to ancestors traced back to the infamous Rum Corps rebellion) was one of 11 siblings. He never knew what it was like to have a proper home with his natural family, who travelled around the countryside in an old truck, the children exposed to the elements except when they made camp and sheltered in a tent.

His father, a shearer/seasonal labourer/opal miner, was a violent alcoholic and Richard’s first memory of him was one of ‘fear’. Before he was born, a baby sister had died after drinking bad water from a river. When he was two, all of the children were taken into care and separated. Shortly afterwards, Richard was fostered by Marjorie and Keith Farleigh from Sydney’s south-western suburbs. They were initially to look after him for a few months until his parents reclaimed him, but Richard succumbed to a bad bout of measles, during which one of his eyes ‘turned’, forcing him to wear a patch. Confined to a darkened room with daily doctor visits, it needed two operations to correct it, by which time he was five years old.

Now at school, Marjorie decided this fragile little boy needed her and would be staying. Richard’s relationship with his foster father, however, was never close and there was a brief, tense reunion with his biological parents when he was four but it wasn’t until adulthood that he made contact with his other siblings. His mother died in the 1990s and he lost track of his father.

His timidity, low self-esteem and unwillingness to speak was misinterpreted as an indication of being ‘backward’, and Richard was placed in the lowest class at kindergarten. At the age of eight, however, he was thrown a lifeline when his primary school teacher spotted his aptitude in mathematics and recognised his potential.

The main turning point came four years later, when his brother Peter taught him to play chess. This new-found skill was to change his life. Unhappy at school, chess made Richard feel better about himself and this new hobby fast turned into a passion.  He took the title of Junior State Champion and travelled the country attending tournaments, making new friends and gaining confidence: “I started to hustle the hustlers in the park!,” he tells me, which is when he realised his natural ability for making money. “I didn’t learn so much about business, but a lot about psychology!” Years later, he represented Bermuda and Monaco in the Chess Olympics.

Trading times
After high school, Richard earned himself a generous scholarship from the Australian central bank to study economics at the University of New South Wales. Graduating with first class honours in economics and econometrics, he accepted a job with Bankers Trust Australia, the leading Australian investment bank at the time: “My best career move was declining a PhD scholarship in economics at Princeton and entering the ‘real’ world of finance.”

Still coy and lacking confidence, the 23 year-old began working in derivatives, where the CEO allegedly expressed doubts as to whether he would prove successful. But as Richard’s confidence grew, so did his risk-taking, reputation and earnings. He became the bank’s biggest single money earner.

Initially, he didn’t think he could out-perform the markets, believing investment and trading to be just gambling. But he gradually learned to predict the market and, within a few years, was running a trading desk dealing with hundreds of millions of dollars.

Cool-headed Richard developed a methodology based on observation and reasoning, as opposed to luck, and many of his assumptions contravened conventional wisdom. His modus operandi was forward-looking and he possessed a knack for having a very clear view of how the market would unfold. He says he was a fundamental, rather than a technical trader, and didn’t like charts, dubbing them ‘hocus-pocus.’

His approach to investment was based on first principals and he developed trading systems, some of which were still being used years after he left the bank. Cool-headed Richard tried to outperform other investors: “You can measure your performance very clearly. I love the markets, the interplay of economics, politics and psychology.” He says he doesn’t get a big buzz out of the taking huge financial risks: “I’m not a gambler. I try to understand and manage risk.”

Richard still uses the same approach today and advises private investors to buy into the big trends: “Treat the first year as a research project. Spend as little as you can as you verify if the idea is sound.”

Bermuda beckons
By his early 30s, Richard was earning a seven-figure sum as the star trader when he was headhunted for a powerful and secretive international hedge-fund on the idyllic island of Bermuda, where he spent three years refining his trading style.

Dubbing this tax haven period ‘trader’s heaven’, Richard did well enough to to retire to Monaco with his then wife Sharon and baby son Thomas: “I got lucky as the world of finance took off in the 1980’s just as I graduated with a degree in economics/maths. Now, it’s a fashionable degree…back then it wasn’t. My worst career move was maybe leaving the hedge fund world in 1995. Otherwise, I’d probably be a billionaire!”

So how’s his French? “I speak a bit after living in Monaco for 12 years, but it should be better,” he admits.  “I live in London now, but I loved the sunshine, the water and nearby mountains, the short distances, the safety and the glamour! You’re always bumping into somebody (famous)…”

Richard’s ‘boys’ toys’ in Monaco included Ferraris and a yacht bought from Michael and Ralf Schumacher, but he has no plans to replace them: “I’ve become more spiritual, I guess, and now think of the ‘poverty of possessions’. They tie you down.”

Home house & other projects
Whilst in Bermuda, Richard befriended chess grand master, David Norwood, with whom he later collaborated on technology spinouts. They formed IndexIT to fund the ventures, selling it a year later to Beeson Gregory for £20m.

Richard became one of the most successful and prolific private equity investors in high technology start-ups. Another unique opportunity arose in the form of a renovation project, a rundown Georgian mansion on the world’s 100 endangered buildings list, which had once housed the French Embassy. Richard turned it into a successful private members’ club and Home House became London’s most sought-after venue, with a celebrity membership list including Madonna and Brad Pitt, along with dotcom millionaires.

Richard also once bought a diamond mine in Sierra Leone: “It was partly a charitable venture and I paid the workers double the normal. But I lost it in the civil war there and two of my workers were killed.”

In addition, he invested in the world’s largest collection of uncut sapphires, 600,000 of the gems, which were a ‘bad investment’: “They’re in a bank vault in Michigan. One of these days I’ll get around to doing something with them!”

Enter the dragon!
In 2006, Richard featured as an investor on TV show Dragons’ Den, looking to discover ‘the next big thing’. He became the popular ‘dragon’, coming across as the calmest and nicest, offering constructive criticism, rather than the unforgiving disapproval some of the others are known for and making the most offers: “I try to leave a trail of happiness behind me. A lot of people helped me in life, and I remember that.”

He says most of his efforts go into assessing the person, rather than the product: “There are a lot more interesting product ideas than people who can successfully get them to market.”

The phenomenal rise of Rastafarian musician, Levi Roots, following his appearance on the show is one of the most heart-warming business success stories to date. Richard and Peter Jones backed his Reggae Reggae Sauce, which became Sainsbury’s fastest-ever selling product. Richard sold his stake in the business for around a ten-times return a year later. Richard continues to back small companies and this year appeared on TV again, this time showing off his culinary skills on Celebrity Masterchef.

Business travels
Richard’s favourite travel gadget is his iPad and he never gets on a plane without music and newspapers. His top business travel tip: “Get to the airport early. It’s not worth the stress to fine-time it.”

Does he believe business communication will ever evolve so as to make business travel redundant? “I lived a long time in Monte Carlo but came here all the time for meetings. Even though video calling’s improving, you need to see more than the face…things like body language, the state of the offices and how happy the secretaries are.”

He’s a big fan of Italy: “They’ve got history, fashion and charm without the attitude of some of their neighbours, you might say. Although I’d never go back to Sicily, which seems to lack charm and the food’s terrible! But I do love the rest of Italy.”

His business travels include whistlestop visits: “I flew from Moscow back to London (to avoid Aeroflot) then to Sydney and on to the surf coast. It took about 40 hours and the temperature went from -20 to +30!,” along with A-list business travel tales: “I sat next to Posh and Becks on BA not long after they famously lost their luggage. You’d have thought the flight attendants were personably responsible.”

Taming the lion
For those looking to improve their investment performance, Richard’s written an insightful book bursting with practical tips, divulging his experiences and the underlying principles guiding his investment strategies. Taming the Lion, 100 Secret Strategies for Investing’s earned numerous favourable industry reviews and reveals Richard’s unique understanding of market psychology.

He says the best thing about being an entrepreneur is “the people you meet and the bizarre and beautiful ideas you come across,” and he’s inspired and motivated more by experiences than money or positions: “I’m lucky…I’ve been an economist, investment banker and business angel, played in the Chess Olympics, written a book and been on the telly!”

Unscathed by conflict or political instability, Cape Verde has quietly become a middle-income nation and looks set to be one of few in Africa to meet any of the Millennium Development Goals set for measuring progress in improving livelihoods. Yet it has loftier ambitions.

In return for special deals on economic and political cooperation with Europe, it increasingly plays a trouble-fixing role on the more unruly mainland some 400km away. It hopes to turn its location to its advantage by becoming a springboard for business in West Africa. And it thinks tourist numbers could soon match the country’s population.

“The fact that we don’t have resources has made us be creative,” Fatima Fialho, Cape Verde’s minister for tourism, industry and energy, says. “We are an economy in transformation – moving from one of aid to one of production,” she added, detailing plans for a service-based economy focusing on shipping and fisheries, providing a hub for technology, finance and tourism.

Economic growth for 2010 will be five-six percent, she says. The country is not without its challenges. The lack of rain still means over three quarters of its food is imported. Cape Verde’s response to the financial crisis has been to accelerate its public investment programme, known locally as the nation’s “air bag”. This has delivered an impressive upgrade of infrastructure, but also rising debt levels.

Fitch ratings said in May a fiscal deficit of 12 percent of GDP in 2010 and 2011, and central government debt at 78 percent of GDP by the end of next year, should ensure long-term growth but will increase pressure for sound management.

Poor, but successful
After other African nations with similarly small populations but far higher revenues, mainly from oil, failed to use vast sums of money to benefit the country outside a tight-knit elite, the nation is being heralded as a non-resource success story. In April, the African Development Bank (AfDB) called Cape Verde the first African case of “policy induced graduation”.

“Here is evidence that no matter how bad the initial conditions, with good governance, solid institutions, and a peaceful political and social climate, take-off is possible,” Donald Kaberuka, AfDB group president, said during a visit.

Ahead of elections next year, Jorge Santos, deputy head of the MpD opposition party, is quick to express confidence in the political system, saying there is no comparison in the region. Donor aid has played a key role in its success. But so too have payments from its diaspora – believed to be double the 500,000 Cape Verdeans living at home. Many left the country due to hardship there and, spread out across the globe, send millions to families back home every month.
Even after taking a hit from the global crisis, remittances amounted to $172m in 2009, having averaged 12.3 percent of GDP between 1999-2008, according to the AfDB. But Fialho said that tourism has just overtaken remittances as the biggest contributor to the economy at around 20 percent of GDP. Ever since Italian dictator Benito Mussolini built the first airport on the island of Sal, Italians have dominated tourism there. Charter flights from around Europe jet in to a number of gleaming new airports, ferrying most of the 330,000 tourists in 2009 to all-inclusive hotels on sun-blessed beaches.

Some in the industry grumble that vast hotels, like a 4,500-bed all inclusive resort being built for Spanish firm Riu on Boa Vista, are wrecking the charm of the islands. “This is not very good for local communities – they only stay in the hotels. They don’t learn about our cultures… we must not move too fast,” said Lindorfo Olivio Marques Ortet, who owns a hotel for walkers in mist-shrouded hills above Praia. But Fialho argues that mass tourism was essential to get the country on the map, and the focus is now on improving services to meet a target of 500,000 visitors a year by 2012.

Link to the region
Uninhabited until it was discovered by Portuguese mariners in the 1450s, the country’s population is a mix of settlers and former slaves, a combination that means tribalism is not an issue. Yet many speak of Africa as a separate continent and have far more links with Europe or the Americas. The national airline, for example, flies directly to Brazil, the United States and a number of airports across Europe, but just one in Africa.

The islands, however, are becoming an increasingly important strategic partner for the African mainland but also for outsiders looking to strengthen their African links. “What Cape Verde can bring to the region is a bridge,” according to Foreign Minister Jose Brito.

A visit by Brazil’s President Luiz Inacio Lula da Silva in July highlighted the role Cape Verde could play as a springboard into West Africa. But Europeans and the United States also see the country as a barrier against the flow of drugs and people. Cape Verde was the first West African nation used to transit cocaine headed to Europe, and has since been widely praised for cracking down on corruption and improving law enforcement.

In July, it helped the United States by receiving a Syrian prisoner from Guantanamo Bay. The country is also increasingly active in seeking to resolve African conflicts, such as in Guinea-Bissau. In return, Praia has secured a special partnership with Europe and is the first country to be made eligible for a second round of funding from the US Millennium Challenge Corporation.

Brito said it was in Europe’s interests to have a special relationship with Cape Verde, especially in having a real partner in fighting crime, and the country would seek to meet EU standards, but was not looking to join the institution. “We are an African country…Cape Verde cannot be alone, separate from what is happening in (the region).”

Dragonboating originated more than 2000 years ago in China as a ceremony for worshipping deities of the sea.

Associated with the Tuen Ng Festival, celebrated in late spring when flood waters and disease once ran rampant, dragonboating was a way to dispel fog and corrupted air and please the gods. Traditionally considered to be rulers of the river and seas, the dragon plays the most venerated role in Chinese culture and tradition.

Rowers of dragonboats would beat drums to signify the heart of the beast, often fighting pitched battles with bamboo canes and stones in a bid to oust other teams from the competition. Anyone who fell into the water was provided with no assistance and those who drowned were considered sacrifices to the prevailing will of the dragon spirits. Most Chinese when asked about the history of dragonboating will however refer to the story of Qu Yuan, a loyal statesman who drowned himself in the year 278 BC upon learning of the downfall of his beloved kingdom. Worried that his soul would go hungry, locals threw rice dumplings into the water, now a festive delicacy, and races have traditionally been held on the fifth day of the fifth month of the lunar calendar to commemorate him. These days however, the races are becoming an increasingly popular and frequent sport around the world.

Modern development
A new era of dragonboat races was heralded in 1976, when Hong Kong held the international dragonboat race event.
Over the coming decades the popularity of the race grew to incorporate Japan, Malaysia and Singapore, later spreading as far afield as Australia and Canada and the US. Three dragonboats from Hong Kong even made their debut on the river Thames in 1980. Today around 400 teams compete in over 20 races throughout the year in Hong Kong, which has successfully managed to incubate the heritage of the sport. Despite a boom in popularity, Hong Kong is still considered one of the best places to sample the passion and cultural fervour that exported this audacious past time to the rest of the world.

Heritage and the sport today
Around 90 percent of boats in the Hong Kong race are still crafted from traditional wood, but modern fibreglass designs are becoming more common further afield. Perhaps one of the most enchanting aspects of dragon boating is just how little the design of the craft has changed over the centuries. Long and slim with a beautifully ornate dragon’s head protruding from the bow and a tail affixed to rear, the elegance of the boat is juxtaposed by two rows of frantic paddlers and a drummer placed either at the front or middle. It’s a display that transcends the clinical feel that often afflicts modern sports and exudes the primordial passion that makes dragonboating an exhilarating experience for both participant and spectator.

Women, especially when pregnant or menstruating, were traditionally forbidden from touching a dragon; regarded as a symbol of male vigour. Since 1985 however, races in Hong Kong have included women’s and mixed teams and the sport has conformed to an international competition structure, with races ranging from 200m to 2000m and adhering to the formal Rules of Racing. Vessels come in three sizes with the smallest holding 12-crew, moving up to 22-crew for international races and ‘big dragons’, which carry up to 50 men who keep the machismo aspect of the sport alive; exclusively tending to their boats and guarding them with jealousy.

More information about dragonboating can be obtained from the International Dragonboat Federation at www.idbf.org

Eat and drink
Aqua, 1 Peking Road, Tsimshatsui, Tel: 852 3427 2288
Ever popular with visitors and locals alike, this chic bar and restaurant is definitely one of Hong Kong’s best places to be seen. Breathtaking views over the city’s skyline make Aqua Spirit are an attraction in itself, so it’s well worth stopping by for one of their award winning cocktails or Asian-European fusion cuisine.
Dinner around £50.

Spring Moon, The Pensula Hong Kong, Salisbury Road, Kowloon, Tel: 852 2920 2888
Famed for its Peking duck and dim sum and situated in the pristine surroundings of The Peninsula Hotel, guests rave about Spring Moon’s authentic Cantonese cuisine. The 1920s décor adds to the hugely civilised surroundings of this beautiful hotel.
Dinner around £100.

Opus Grill, Seventh floor, LKF Tower, 33 Wyndham Street. Tel: 852 2526 2366
Another high rise affair, steak houses have been popping up all over Hong Kong of late. Opus boasts exclusive sourcing from boutique US producer Bryan Flannery and one of Hong Kong’s largest wine selections. Widely regarded as offering some of the best steak in region, diners also delight the at foi gras and truffles on offer.
Dinner around £90.

Dong Lai Shun, B2, The Royal Garden, 69 Mody Road, Tsim Sha Tsui. Tel: 852 2733 2020
A fresh and contemporary take on imperial northern Chinese décor allows the food to take centre stage in this well turned out venue. Those feeling adventurous can sample some of the more obscure dishes available in Hong Kong, such as Huaniyang cuisine from Shanghai and the highly recommended tea-smoked yellow snapper.
Dinner around £90.