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Book Reviews: ‘Pushing the Boundaries’ and ‘Brazillionaires’

Peter York on a strangely compelling memoir by a Master of the Universe, and Christopher Silvester on the decidedly murky world of Brazil’s super-rich.

Pushing the Boundaries: Recollections of a Mckinsey Consultant by Herbert Henzler

How fascinating Herbert Henzler’s memoir Pushing the Boundaries could be… if you were German, a management consultant, and of  a certain war-baby generation.  (I have my closet management consultant side, so it is a bit fascinating for me, sarkiness aside.) How little we know about Germans and how comical we still find them — the industrial powerhouse of modern Europe and the intellectual powerhouse of 19th-century Europe. Lift practically any paragraph from this book — I can’t account for the effects of translation — and you’re in for a burst of unintended hilarity, rather like that funny old ‘Is that a ruler in your pocket?’ VW ad (the answer of course is always ‘Ja!’).

Try this: ‘To this day, I enjoy studying correlation analysis, non-parametric tests, or new statistical theorems.’

Henzler is the former director (ie CEO) of McKinsey Germany and, later, chairman of the consultancy’s whole European operation, and he’s very German. His writing has a limpid stodginess that’s somehow rather appealing. He doesn’t hard-sell his ‘journey’ or his ideas, he doesn’t have catchy chapter titles, and he’s not shy of detail. The book is full of vanished German worthies from business and politics and accounts of meetings of acronymed organisations.

His chapters start in marvellously literal ways as in: ‘One Saturday in October 1983, Gerhard Prinz died on his exercise bike and Daimler-Benz had to look for a new CEO… traditionally this task fell to the chairman of the supervisory board, who hailed from Deutsche Bank...’ On we go to ‘We were hard at work on the first project optimising overheads in the Düsseldorf transporter plant…’

After a while you get used to this and expect to plough through each chapter to find the modest meat — for instance a common-sense thought about the ‘busy fool’ vanity of celebrity businessmen — towards the end.

So chapter 16 makes you really sit up. It starts with more loveable literal stodginess: ‘The phone rang. It was a dark night. Sleepily I looked at my alarm clock, it was 1.30am.’ You’re expecting to hear that someone very important in German manufacturing is calling from another time zone to ask him to join a national committee to promote the development of better MIS (management information systems). But instead it’s a polite and formal man from ‘Action Directe’, the left-wing terror group, saying they’re going to kill him. And, because this is Germany, giving the date they’d scheduled for it. We’re talking 1985 and Henzler knows that a famously forgotten German industrialist had been executed in front of his wife at home just a few months before. So the caller means business. We’re talking Cold War Europe, and the Red Army Faction is the aftershock of the Baader-Meinhof Gang. The whole thing is high drama if you know where to look, but wrapped in the prose of a factory inspector.

Henzler is a modest meritocrat, a product of wartime Germany — he remembers being stuck in the basement washing trough wherever there was an air raid. He’s a provincial farmer’s boy.

A Swabian farmer’s boy in a country where land isn’t grand and a small Swabian peasant farming background cuts no ice with middle-class girls in the early-Sixties big-city German dating game.

But he gets those meritocratic postwar breaks because, as he shyly reveals, he’s a straight-arrow, straight-A student at every point. And reconstructed Germany, booming away, needed lots of them to run things. It’s like the rise of a Butler Education Act postwar grammar-school boy who goes through the system and ends up running a FTSE 100 stalwart of the old British industrial world — or being Edward Heath.

Henzler starts as a sales apprentice at Shell, working out fuel allocations for local clients, but somehow the great educational escalator intervenes, starting rather locally with statistics — at Saarland and Ludwig-Maximillian universities — then escalating to a PhD in economics at Berkeley in the late Sixties. Other students — not Herbert — are doing drugs and protesting about Vietnam. And in 1970 McKinsey — high priests of the new religion of clever, socially smart, ‘Ivy League’ Big Idea global management consultancy — makes him an offer. The offer comes from America, but he works in the fledgeling German office in Düsseldorf.

By now he’s married his first wife, Rosemarie, living in civilised Munich, and is speaking what his old acquaintances in Neckarhausen call ‘Hochdeutsch’, the equivalent of RP. He’s good to go, into the world of global business and business-friendly politicians and super-committees, the world of Davos. He’s a trainee Master of the Universe.

But there’s a problem. Not only is Germany about to be swimming in crazed home-grown terrorists, but also the pre-war people who run its biggest businesses are, in the early Seventies, allergic to McKinsey: ‘Germany was a difficult place for management consultants… big companies were led by boards who considered themselves responsible for the German economic miracle, and many of those saw no need for consulting.’

Swabian as he might be, Henzler will have been talking about some pretty fancy conceits by then and peddling some pretty expensive nostrums. Half the job in management consultancy is inventing the compelling new language for the Challenge of the Age of… whatever. The Experience Economy, the Information Age or — the favourite now — the Age of Disruption. So thank God for early global clients such as Shell, which had got with the programme, talked the talk, and, later, started publishing its own proprietary Global Scenarios. It would take a while — and a change of generations — for the most Germanly German of giant corporations to join up.

So Herbert Henzler’s a modest Moderniser, a globaliser, bringing new ideas and a new critique to German business. The older and grander he gets, the more he’s on committees to promote entrepreneurialism and looking at the cultural analysis of organisations. He’s talking about relationships rather than just his own beloved statistics.

Now retired from McKinsey he’s internationally boarded-up, garlanded with honours and grandchildren. And he talks a lot of sense too, about business and the wider world, if you’re interested in that stuff... and you can bear to wade through all the sauerkraut.

Brazillionaires: The Godfathers of Modern Brazil by Alex Cuadros

Unlike Russian oligarchs, Brazil’s super-rich have been around for several decades. Alex Cuadros quotes a line from Balzac about the super-rich of post-Napoleonic Paris: ‘The secret of great fortunes without apparent cause is a crime forgotten, for it was properly done.’ But he adds that most Brazilians omit the phrase ‘without apparent cause’ because they assume all wealth is tainted.

Brazil’s super-rich made their fortunes from supermarkets, construction, agribusiness, media, mining, and, more recently, from oil and natural gas. They connived at the military dictatorship that ruled Brazil from 1964 to 1985, supported the disastrous presidency of Fernando Collor de Melho, whose daft policies plunged Brazil into its worst ever recession; and found an accommodation with Workers Party presidents Lula da Silva and Dilma Roussef (until recently), who were more interested in introducing a minimum wage and thereby enabling ordinary Brazilians to afford cars and consumer durables than in full-blooded socialism.

Now based in New York, Cuadros spent six years living in São Paulo from April 2010, working for Bloomberg News on a newly created billionaires’ beat. São Paulo is a traffic-choked city in which the super-rich commute by helicopter. ‘Five hundred helicopters swarmed around São Paulo, more than in any other city in the world,’ he writes. He repeats an analogy he once heard: ‘São Paulo is what would happen if New York threw up on LA.’

By the time Cuadros was living in Brazil, the super-rich were in the habit of decamping to the nearest overseas playground, Miami, where they could get around easily, shop at a fraction of the price, and party openly with less risk of being robbed or kidnapped.

Despite the furore over the recent Petrobras corruption scandal involving former president Lula, known as Lava-Jato (Carwash) ‘because some of the money was laundered through a Brasilia gas station’, corruption is seen as normal. A typical Brazilian saying is ‘rouba mas faz’ (he steals but he gets things done). A Brazilian billionaire is typically a cordial man who operates within a system of patrimonialism. ‘Brazil’s love of megaprojects,’ writes Cuadros, ‘reflects the influence of money — and the lure of power — as much as any objective logic of development.’ Cheaper and more efficient methods of harnessing energy exist, but the ‘revenues would be diffuse, with less value as patronage’. Lula and Rousseff made a devil’s bargain ‘with corrupt politicians and dubious companies, believing it was for the good of the country’.

In a series of chapters in part one, Cuadros interweaves his personal journey of discovering the inner workings of Brazilian society with profiles of some of the key billionaires who have profited from it. There is Paulo Maluf, the mayor of São Paulo for many years, responsible for its frenzy of construction, which enriched himself and the contractors who built the bridges, tunnels, and freeways — such as Sebastião Camargo, who resembled a pipe-smoking professor but whose widow died in 2013 worth $11.5 billion.

There is Blairo Maggi, the soy baron of the Matto Grosso (and Greenpeace’s arch-enemy); the dam-builder Marcelo Odebrecht; the media tycoon Roberto Marinho, whose networks broadcast Brazil’s favourite telenovelas; and, most bizarre of all, the Pentecostalist pastor Edir Macedo, who preaches what he calls the prosperity gospel.

Part two is taken up with the thrilling tale of Eike Batista, who was the eighth-richest man in the world in 2012, having made his fortune from natural resources, but had lost his entire $34 billion fortune a year later. He once vowed to overtake Mexico’s Carlos Slim as the richest man in the world by 2015. He relied on a series of IPOs and on state help to build his mining, oil and gas empire on the back of a global commodities boom, and since his downfall he has declared that he should have relied on private equity instead. That way he might not have fallen so far, but equally he wouldn’t have risen so quickly.

Batista is awaiting trial on various charges but has vowed to repay every penny to creditors. When this national icon of wealth collapsed, people began telling ‘Eike’s so poor that…’ jokes. Born middle-class, he was back to being merely middle-class again. His Twitter account, once confidently engaging with largely fawning followers, fell silent.

This is Cuadros’s first book, but he has an assured authorial voice, wryly humorous in places, and buckets of storytelling skill. The political history, the financial shenanigans, the social observations, and the melodrama are deftly underpinned by a moral consideration.

‘The symbiotic ideal of billionaires benefiting society in general justifies a system geared towards the interests of our wealthiest citizens,’ Cuadros argues. ‘It’s an ideal that grows from the heroic stories that billionaires tell us and themselves — stories that often stray from the truth.’

As Batista ‘leveraged other people’s money, his quest to be number one became a liability for the rest of us. In backing his ambitions, the government put the entire country on the hook for Eike’s bets.’ Yet, at Cuadros’s final sighting of him in the courtroom, Batista was smiling, poised to bounce back — at least in his dreams.