Word: arabism
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Dates: during 1990-1999
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...Investcorp managed to raise billions of dollars when its track record is so uneven? Its sales force is based in Bahrain, about an hour's flight from most of the bank's clients. Scores of Arabic-speaking marketers travel throughout the region, offering deals and updates on past transactions. It's a level of "expensive, personalized service," says Kirdar, that Investcorp's competitors can't match. Investcorp's success in the Middle East may also be due to its marketing documents, which are not overseen by Western regulatory agencies. The contrast is striking between an Investcorp private-placement memorandum...
Cultural factors also help explain Investcorp's marketing success. When the bank got started in the early 1980s, many of its Arab clients were unschooled in Western business practices. Kirdar was their bridge to the West. He spoke their language, sprang from their culture, yet was Western educated (he has an M.B.A. from New York's Fordham University) and had trained in a big U.S. bank. Kirdar understood his clients' taste in brand names. One reason Investcorp bought Gucci, says an Arab banker, is that "the Arabs wear the shoes." Many were happy to hand millions of dollars to Kirdar...
...younger generation of wealthy Arabs tends to be more sophisticated--and less willing to let Investcorp managers stuff their portfolios with shares of uncertain value. An adviser to an Arab family with a net worth between $500 million and $1 billion told Time his clients have become disenchanted. "If you hit on one of their big deals like Tiffany, the rewards can be spectacular. But a whole string of others have been very disappointing, and all they do is send you fancy reports with Investcorp's latest solution for a turnaround and very little numerical analysis. You have no recourse...
Another little-noticed case involves even more serious charges. The complaint, filed in Manhattan federal court, accuses Investcorp and five of its board members, as well as other defendants, of fraud and extortion. According to the complaint, the defendants tried to loot the Saudi European Bank, an Arab-owned institution in Paris. The lawsuit was filed by the bank's former parent company, headed by Syrian-born banker Jamal Radwan. The complaint charges that several defendants concocted a scheme for Investcorp to take over Saudi European Bank. In addition, Kirdar allegedly threatened to persuade other banks to stop doing business...
...part of the world to people--in my case, what makes financial institutions tick," says Gurwin, a new member of TIME's investigative unit. That dedication is amply displayed in this week's report by Gurwin and Washington correspondent Adam Zagorin on Investcorp, the high-flying and secretive Arab investment boutique that bought Tiffany and Saks Fifth Avenue and engineered the stunning turnaround of Gucci. "Although Gucci is a triumph, many deals have been duds--something few people realize," says Gurwin, who is based in Brussels. "We wanted to take a close look at how Investcorp does business...