Jan

16

Here's part of the Economist's review of The Billionaire That Wasn't, the story of entrepreneur/philanthropist Chuck Feeney, which I recently read:

An Irish-American, born in New Jersey in 1931, Mr Feeney made a fortune by co-founding Duty Free Shoppers (DFS) which first sold tax-exempt goods to American soldiers abroad and then tapped into the rise of mass tourism. When DFS was sold in 1997, it had delivered nearly $8 billion to its four main shareholders, of which Mr Feeney was the joint biggest, with 38.75%.

Tax avoidance is the flip side to Mr Feeney's philanthropic coin. He is addicted to it. “Chuck hates taxes. He believes people can do more with money than governments can,” says a friend. In 1964 a young New York lawyer, Harvey Dale, told Mr Feeney that changes in the tax laws threatened his business, which was running risks that could put the founders in jail. On his advice, Mr Feeney and his co-founder, Robert Miller, transferred ownership to their foreign-born wives, from France and Ecuador, respectively.

In 1974, through a deal with the American government, the firm turned the Pacific island of Saipan into a tax haven. Then, in 1978, Mr Feeney grouped his various investments, including his shares of DFS, in a holding company, General Atlantic Group Limited, in tax-free Bermuda. To escape the American taxman, everything was still registered in his wife's name.

Mr Feeney carefully shunned all outward evidence of wealth. But as soon as DFS became reliably profitable, he started the practice of giving 5% of his pre-tax profits to good causes. In 1982 he created a foundation, the Atlantic Philanthropies, based in Bermuda. Two years later he signed over his fortune to the foundation, except for sums set aside for his wife and children. His net worth fell below $5m. When he broke the news to his children, he gave them each a copy of Andrew Carnegie's essay on wealth, written in 1889.


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