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24 Aug 07
A book excerpt [Part I] on ‘Asian Godfathers’, authored by Joe Studwell, Published by Profile Books, London (330 pages)
We present herewith the first of two excerpts from Asian Godfathers, a unique book on the role of monopolies and crony capitalism in East Asia. Much, mostly hagiographic, has been written about the fabulously wealthy group of mostly overseas Chinese whose names are familiar throughout the region and have been widely assumed to have been responsible for its economic growth.
However, there have been few attempts to examine dispassionately the real role of the great tycoons and the origins of their wealth, or to put them into the context of the fast-growing, immediate post-colonial societies in which they prospered.
Joe Studwell, editor of the China Economic Quarterly, has done so and with a flair for writing that is matched by an understanding of the region’s economic and social dynamics. Studwell was previously author of “The China Dream – The elusive Quest For The Greatest Untapped Market on earth.” an incisive look at the myths and realities of the China market for foreigners.
Asian Godfathers shows again that Studwell is a master at separating harsh reality from comfortable myth and, without muck-taking, to put into print important if unpalatable facts which are known in elite and media circles but which the power of the tycoons often keeps out of the media.
The book is currently on sale in all the countries/territories with which it deals – Hong Kong, Malaysia, Indonesia, the Philippines and Singapore – with the sole exception of Singapore.
How to be a Post-war Godfather
“We are so accustomed to disguise ourselves to others that in the end we become disguised to ourselves.” –La Rochefoucauld
The post-Second World War, post-independence environment was one of great turbulence. But the enduring interdependence of separate political and economic élites was not broken. Certainly the era of rising class consciousness and aggressive nationalism in the 1950s and 1960s (and earlier in Thailand) was threatening to the overseas Chinese and Indian communities. But the people who really suffered were shopkeepers, small businessmen and laborers, not the godfather class.
As organized labor and nationalism were reined in by a new group of authoritarian leaders, it was striking how they not only fell back on colonial era modes of interaction with ethnic minority businessmen, but in many instances reinforced them. The challenge to the godfathers therefore came not from any structural shift in society, but in coping with the struggle for power among indigenous political élites once the colonials had exited. In this respect the tycoons’ ability to get into, and change, character was more important than ever.
In Thailand, Field Marshal Sarit Dhanarajata’s 1957–63 regime stabilized relations with Chinese and Indian trading élites based on the military as their passive business partners. Although the country’s post-1932 political history is superficially chaotic – Sarit’s is only one of eighteen coups to have taken place, the most recent being the ouster of Thaksin Shinawatra in 2006 – after 1957 it was rare for incoming juntas and governments to move against incumbent tycoons. Instead, the godfathers became adept at backing all factions.
As Sarasin Viraphol, Dhanin Chearavanont’s top executive at his sprawling chickens-to-telecoms CP group, says, it is a matter of money and good housekeeping: ‘We back everyone … And you would always have a portrait of the military leader on the wall. That was general practice. And of the commander of police, the commissioner for metropolitan Bangkok …Even Chin Sophonpanich, who was so tight with Sarit rivals and heroin traffickers Phao Sriyanonda and Field Marshal Phin Choonhavan that he skipped town to Hong Kong when Sarit took power in 1957, was allowed to continue building Bangkok Bank into Thailand’s largest financial institution from exile. It was, says Sarasin, a ‘gentleman’s game’ of coups.
There was greater godfather discontinuity in Indonesia in the 1960s than there was in Thailand after Sarit put an end to populist nationalism. Following Sukarno’s chaotic nationalisation of foreign business in the 1950s, the repatriation of tens of thousands of Chinese in 1960 and the anti-communist blood bath of 1965, Suharto turned reflexively to the Chinese businessmen he was familiar with after he seized power. This meant a handful of relatively unknown business people being catapulted to the top of the godfather pile.
The most important were long-time associate Mohamad ‘Bob’ Hasan, an ethnic Chinese convert to Islam, and Liem Sioe Liong, also known as Sudono Salim, who rose from petty trader to the nation’s leading businessman in a few years. The precariousness of Suharto’s position – or at least his perception of it – as he shored up his power in the late 1960s made the relationship between him, as the Javanese political insider, and his business cronies, as unthreatening ethnic Chinese outsiders, all the more important. Throughout his reign, Suharto was said by confidantes in Jakarta to complain that pribumi businessmen could not be ‘trusted’; the Chinese could. In time a small number of ethnic Indian and Sri Lankan businessmen also became key dependents. The best-known of these was the Sri Lankan Tamil Marimutu Sinivasan, a long-term conduit for political slush funds for Suharto’s Golkar party.
Sinivasan’s Texmaco Group was able, on Suharto’s authority, to secure US$900 million in hard currency from the central bank at the height of the Asian financial crisis and, after the dictator fell, was said by the Indonesian government to be its biggest delinquent creditor, owing US$2 billion.
In the Philippines another usurper, Ferdinand Marcos, demonstrated a similar response to Suharto’s with respect to the possibilities of godfather relationships. After winning two presidential terms in (distinctly dirty) elections, Marcos circumvented his country’s two-term presidential limit by declaring martial law in 1972. Like Suharto, he also looked beyond the established godfather élite – in the Philippines, traditional Spanish and Chinese mestizo families – to find some of his key business proxies. The archetype was Lucio Tan, a first-generation immigrant and one-time janitor who became, under Marcos’ patronage, the Philippines’ leading tobacco vendor, as well as having interests in everything from banking to real estate.
It is probable that – as with Liem Sioe Liong, who knew Suharto from the latter’s military postings in central Java – Tan and Marcos knew each other from Ilocos, the president’s home region where Tan had his first, small cigarette factory. Both Suharto and Marcos signalled regime change by promoting new, non-indigenous outsiders to godfather roles. Tan was a clear break in the ethnically more mixed and integrated Philippines because he represented the so-called ‘one-syllable Chinese’ – those who had not assimilated and adopted local surnames.
The promotion of new outsiders achieved two useful things for the dictators: it provided ultra-dependent, ultra-loyal sources of future finance for them and their families; and it served as a warning to the established, more integrated economic élite that it was not indispensable.
In the pre-Marcos Philippines, businessmen of every ethnic make-up had been increasingly successful in overrunning and manipulating a weak parliamentary system and thereby obviating the need to make deals with ultimate political power. Ferdy reversed this trend, though it remains a latent tendency in both the Philippines and Thailand whenever central leadership is weakened.
Malaysia’s chronology ran later than those of surrounding nations, but still observed a pattern of rising populist class consciousness and nationalism followed by a return to nested relationships between political and economic élites. Colonial rule did not end until 1957 and its last decade was bound up with a fight against a significant communist insurgency, led by the largely ethnic Chinese (with a few Indians) Communist Party of Malaya (CPM).
The departure of the British gave way to an era of somewhat phoney independence inasmuch as the colonial economic architecture was left almost untouched; this was agreed to by the Malay aristocrats who assumed power. Nationalism eventually arrived with the 1969 riots, leading to the New Economic Policy (NEP).
The promise of pro-bumiputera affirmative action, however, could never disguise the persistence of what came to be known in Malaysia as ‘political business’ at the élite level. Affirmative action in education and employment targeted ordinary Chinese and Indians – the latter were big losers because they were turfed out of the civil service – while financial sector policies benefited upper-class bumiputras. Rural bumpitutras remained poor, while Chinese and Indian godfathers became richer than ever. Racial ghettoisation was sustained, not least because the rising political star of the 1970s, Mahathir Mohamad, saw it as all but inevitable. Mahathir set out his unabashedly race-based views on the roots of economic success in his book The Malay Dilemma, published in 1970 while he was briefly expelled from the ruling United Malays National Organisation (UMNO), and banned in Malaysia. It is indicative of Mahathir’s thinking that one solution he proposed for Malays’ perceived genetic handicap was intermarriage with other races. He himself had an Indian Malayali father from Kerala and a Malay mother, a fact that is never publicly mentioned in Malaysia.
In popular politics, Mahathir’s racial arguments were used to justify affirmative action. But in terms of personal conduct, his own prejudices shone through. After becoming prime minister in 1981, he patronised a small group of ethnic Chinese and Sri Lankan Tamil businessmen whom he deemed the people most likely to carry forward his vision of a thoroughly modernized Malaysia. It was left to his long-time political ally Daim Zainuddin to try to nurture bumiputra winners.
Southeast Asia’s four major post-war autocrats – Mahathir, Lee Kuan Yew, Suharto and Marcos – all had a fundamentally racist view of life, and this was good news for godfathers.
When Lee Kuan Yew became prime minister of Singapore in 1959, local godfathers did have one problem: that he did not much like private businessmen. Lee had no personal experience of business; he was a political organizer brought up in an anglicised environment and influenced by both the radical statist schools of the 1930s – communism and fascism. As the Singaporean state expanded its economic reach, opportunities to acquire private shares in cartels or monopolies were reduced; they went to the government. On the other hand, Lee – a super-élitist – was not about to let the boorish proletariat upset his or the godfathers’ lifestyle. He suppressed dissent, tamed unions and started to construct the world’s leading nanny state.
Some incumbent tycoons – usually ones, like Lee, who were more ‘sophisticated’ and formerly closer to the colonial establishment, such as bankers Lee Kong Chian and Wee Cho Yaw – got on okay with the new leader. Others, like the rougher-at-the-edges smuggler and speculator Kwek Hong Png, were less palatable. But Kwek also owned a lot of assets, especially real estate, in Singapore, and Lee Kuan Yew was not in the business of forcible expropriation. There was room enough for the odd Kwek type to prosper in tandem with a dirigiste city state.
In Hong Kong, there were particularly vociferous calls after the Second World War for the cancellation of knighthoods, for investigations and even for trials of tycoons who were perceived to have cooperated all too willingly with the Japanese. But the British had no replacement for the anglicized Chinese and mixed-race Eurasian élite who facilitated their rule, and they were swiftly restored. Local newspaper editors were told to leave stories about collaboration with the enemy alone.
In the aftermath of the war, the tycoon group, along with its British peers in the form of the leaders of the major colonial conglomerates, or hongs, was instrumental in blocking tentative British plans for democracy; that was the end of the local class threat for half a century. Instead came the expanded, but largely impotent, Legislative Council (Legco). Big business played out its political role through its members and lobbyists appointed to the Legco. This pseudo-oligarchical system was preserved by the British for the Chinese in 1985 – when the Joint Declaration on resumption of Chinese sovereignty in 1997 was agreed – by the creation of ‘functional’ constituencies, which allowed godfather interests in banking, real estate, insurance and the like to place more lobbyists inside the Legco.
Separately, the Chinese set up their own ‘advisory committee’ on the colony’s return, whose membership was dominated by tycoons. The main point, however, is a simple one: whether Hong Kong has been ruled by British colonialism, Japanese imperialism or Chinese communism, it has always been managed through the same group of people.
Despite Hong Kong’s claim to be a city of free trade, there has long been plenty to play for in terms of tycoons’ political activities. Information is always valuable, as seen in 1946 when several establishment godfathers made millions from speculation in Hong Kong dollars issued by the Japanese that were redeemed by the returning British. A connection to political power was also essential to the tycoons’ ability to present themselves as community leaders who ‘understood’ the best interests of the population at large.
But more than anything in the post-war era, political influence was about maintaining a heavily cartelized domestic economy which provided generous economic rents to a small number of businessmen. Chinese tycoons, as we shall see, already had a solid position in what was a closely rigged real estate market. From the 1970s, local godfathers began to wrest control of large parts of other cartels from the British-controlled conglomerates that had developed them. It would have been most unedifying if, in the transition of ownership, there had been politically inspired moves to introduce more competition into the local economy.
Political activity remained extremely important to the aspirant Hong Kong tycoon. He served his own interests and those of the colonial government simultaneously, and called his work ‘community leadership’. During widespread strikes in the 1920s, then senior godfather Sir Robert Ho Tung had mediated a seamen’s dispute. Robert Kotewall and Shouson Chow, two other leading figures who went on to receive knighthoods, helped organise street orators to harangue Chinese laborers against joining strikes and ran a force of heavies to protect those staying on their jobs from pro-strike agitators.
When the proles raised their heads again in the late 1960s, in response to China’s cultural revolution, the tycoons were on hand to lend the government support and urge the population to resist overtures from the Communist Party of China. As Leo Goodstadt, a former chief policy adviser to the Hong Kong government, puts it: ‘The political violence of 1967 in particular appeared to make the survival of British rule more dependent than ever on the élite. The British Foreign Office and the godfathers saw off the lower classes, and the former’s Hong Kong governors were grateful enough to prove highly resistant to liberal political and social ideas emanating from London in the 1960s and 1970s.
Hong Kong’s government and tycoons boasted instead to the world that they had created a great laissez faire society; no one seemed to notice that this was simply not the case in the domestic service sector and construction parts of the economy occupied by the godfathers.
On the Couch, Please
When the dust settled on post-colonial Southeast Asia, the godfathers were back where they had always been – managing shifting political relationships in order to profit from particularistic favors and government-induced economic distortions.
So what kind of people, up close, are the post-war godfathers?
Only one really compelling piece of empirical research has been completed about the social and cultural backgrounds of Southeast Asian tycoons in the past half century. It limited itself to the ethnic Chinese godfathers of Thailand, but nonetheless contains results that resonate for other immigrant groups and other societies. In the mid 1950s, an American scholar, G. William Skinner, achieved an extraordinary level of access to Thailand’s tycoon fraternity.
He enlisted the help of two Chinese bank compradors and other well-informed sources to identify the 135 most powerful ethnic Chinese businessmen in Thailand and he succeeded in interviewing 130 of them. He was equipped with fluency in both Thai and Mandarin Chinese, and knowledge of southern Chinese dialects, as well as astonishing tenacity. No academic or journalist has produced a survey of such quality since.
The results pointed unequivocally to a group of men stuck in a cultural middle ground between a Chinese immigrant population they sought to represent as community leaders and a Thai political élite to which they acculturated as a means of gaining concessions and advancement in business. A major finding was that most of the businessmen were less ‘Chinese’ – in terms of language, customs, education – than was expected. With respect to the relationship of the tycoons to the core Chinese community, Skinner proposed a concept of ‘leadership from the periphery’ to capture the fact that the godfathers were leading their communities by dint of wealth and influence, despite being culturally distant from them.
‘One of the major theses of the present study,’ he wrote, ‘[is] that a significant number of the most influential Chinese leaders are, almost inevitably, leaders from the periphery of Chinese society and culture – men whose ethnic orientation and loyalties are mixed.’
Skinner’s research highlighted all kinds of complexities in the identities of his godfather subjects that are brushed over by normal stereotypes of the ‘Chinese tycoon’. There emerged a broad correlation that the more wealthy and influential a ‘Chinese’ tycoon was, the less demonstrably Chinese he turned out to be. Skinner developed tables that plotted wealth and prestige (as assessed by peers) against the degree of assimilation to Thai culture among his subjects. There was no doubt that success was to do with moving away from ‘Chinese-ness’ and towards the culturally Thai identity of political power.
At the same time, there was a requisite amount of Chinese-ness for remaining a leader of the ethnic Chinese community that also supplied the key personnel in tycoons’ businesses.
Herein, possibly, lie the contradictory forces that have informed the identities of godfathers around the region. Without an empirical study like Skinner’s across different states, such a thesis cannot be demonstrated scientifically. But the anecdotal evidence gathered for this book supports the proposition that godfather personalities are stretched and confused.
A relative of Henry Fok – a man who early in his career was close to the British establishment in Hong Kong before becoming close enough to the communist establishment in Beijing to be appointed vice chairman of the Chinese People’s Political Consultative Conference – says tycoon behavior should be viewed through the prism of Eric Berne’s 1960s bestseller The Games People Play, adding: ‘They all want a shrink … to get it off their chest.’
Berne developed a branch of psychotherapy called Transactional Analysis, which highlights the malleability of identity. Henry Fok, who died in a Beijing hospital in October 2006, knew all about multiple identities. He underwent anglicization on a British government scholarship to an élite school in Hong Kong, becoming an accomplished tennis and soccer player, and continued his family’s acculturation by sending his sons to the English public school Millfield.
But as parts of the British establishment spurned him because of his huge smuggling operations in the Korean War, and Beijing rewarded him with monopoly trading concessions for the same activity, he was reborn as a rabid Chinese nationalist. Forbes magazine tried for years to set up an interview with Fok, who only cared to speak with mainland Chinese journalists he knew would publish official encomia.
When he finally agreed to a meeting in Zhuhai, he got out of his car long enough to make the following statement: ‘Once old countries go down – like India, Egypt, even Britain – they never come up again. But China will come up again.’ He then jumped back into his car and sped off, leaving Forbes very short of copy.
The role-playing that is part and parcel of the godfathers’ lives may explain the insecurity that appears to afflict them. One facet of this is an obsession with status. Asian godfathers collect and display gongs – honorary titles, doctorates, and so on – with a hunger that puts Western billionaires to shame.
Stanley Ho, for instance, insists that underlings refer to him at all times as ‘Dr Ho’; Henry Fok used to insist on ‘Dr Fok’. This is incongruous for gambling tycoons; as one of Stanley’s assistants announces on the telephone, in English, ‘Dr Ho’s office’, one can frequently hear Cantonese yelling and the sound of his tribe of bodyguards in the background.
In Malaysia, the senior billionaires combine the various titles that federal and state authorities give them with those from academia, and style themselves with triple honorifics. As an example, Khoo Kay Peng of Malayan United Industries (MUI) is ‘Tan Sri Dato Dr Khoo Kay Peng’. Observing the same tendency in Thailand, where outsider tycoons have long craved titles bestowed by the royal family, Skinner highlighted research into social psychology. Work on minority group situations, he noted, shows that people who undergo a high degree of assimilation are particularly driven to acquire the full set of prerogatives available to the group to which they have assimilated. ‘The most influential Chinese leaders, in point of fact,’ wrote Skinner, ‘are more susceptible than other Chinese to pressures toward further assimilation.’ The symbols of recognition that constitute official titles therefore become terribly important.
But the godfather crisis of identity goes beyond honorifics (and a weakness for outsize penthouse offices – they like to be literally on top). One controversial theme is the frequency with which the tycoons are attracted to evangelical Christianity. Thomas and Raymond Kwok of Sun Hung Kai and Ronnie Chan of the Hang Lung group in Hong Kong, Khoo Kay Peng of MUI and the Yeoh family of the YTL group in Malaysia, the Riadys of the Lippo group and the Soeryadjayas who controlled Astra in Indonesia are just some of the region’s many born-again Christian billionaires.
Among the most aggressively proselytising is Khoo Kay Peng, a friend and business partner of US televangelist Pat Robertson, who bought a disused Kuala Lumpur theatre to serve as a chapel and started a Businessmen for Christ group. The Riadys built a private chapel in Hong Kong’s Lippo Centre office tower, to which they have invited potential converts; a long-time family friend says he lives in fear of being hauled in there. Some of those who know the Christian tycoons are cynical about their religious beliefs, but this does not answer the question as to why a substantial section of the tycoon fraternity is drawn to evangelical religion.
YTL’s Francis Yeoh himself says that Christianity counters the excessive individualism inherent in Chinese culture; the Chinese, he complains, are like, ‘amoeba’. Indonesia Edwin Soeryadjaya, eldest son of family patriarch William, says of Christianity’s attraction: ‘One reason could be there is no certainty in this country. So who do you put your faith in?’ What no godfather believer suggests, but what may also be true, is that evangelical Christianity allows them to have a strongly held belief where their daily lives are all about expressing no belief at all unless given a cue by political power.
It is also possible to believe in religion without upsetting Asian politicians, whereas to have independent political or social views is disastrous. One more thing that appears to be an expression of insecurity among Chinese godfathers is an obsession with demonstrated ‘Chinese-ness’ and with eugenics; this has only become more apparent recently as China has re-emerged as a regional power.
The best-known case study is Lee Kuan Yew, a tycoon of sorts by virtue of the fact that he nationalized and ran much of Singapore’s economy after 1959. Lee had an English education, attending the élite Raffles Institution and Raffles College in Singapore as well as Cambridge University (institutions that educated various Malaysian and Singaporean tycoons-to-be, including Robert Kuok and Quek Leng Chan). Back then he was called Harry Lee. In 1967 he told an audience in the United States: ‘I am no more a Chinese than President Kennedy was an Irishman.’
But as Singapore became prosperous and China began to open up in the 1980s, Lee became ever more exercised in explaining his city state’s success in terms of Confucian culture and ‘Asian’ values. He had learned Mandarin and Hokkien Chinese in the late 1950s and early 1960s as he framed his popular political persona, and the identity of Harry Lee was buried. In its place came the Lee Kuan Yew who warned Singaporean students in 1986 that they must never lose ‘their Confucian tendencies to coalesce around the middle ground, that day we become just another Third World society’.
As the historian of the overseas Chinese Lynn Pan has written: ‘The remaking of Singapore in the Confucian image is in some ways a larger embodiment of a personal enracinement.’ Lee’s identity odyssey has seen him become increasingly enamored of the kind of racist eugenic theories that were popular in Edwardian England.
He set up a state matchmaking agency in Singapore, the Social Development Unit, to help pair off mates of similar intelligence, and argued for a return to the upper-class polygamy of traditional Chinese society.
Lynn Pan refers to journalist T. J. S. George’s observation that ‘he detected in Lee the insecurity of a man alienated from his Chinese moorings, a man who, because he does not quite belong anywhere, has had to remake Singapore in his own image to compensate for his own alienation’.
It is not difficult to understand the psychological pressure that goes with being caught between different cultures. The typical godfather needs to be a polyglot who can play out more than one cultural identity to succeed: a big-time Chinese tycoon will speak two or three regional Chinese languages – Cantonese, plus a couple more – as well as Mandarin Chinese, English, a native Southeast Asian language like Thai or Bahasa Indonesia, and probably some Japanese picked up in the war. There is a perpetual stress that goes with this, related to what one’s ‘real’ identity is. Lee is still hung up on the fact that his Chinese is not as good as his English.
This is a condition that affects many Chinese educated in the British system. David Li of Hong Kong’s Bank of East Asia, who was sent away to an English public school, is sensitive about the fact that his grasp of written Chinese is far from complete. Budi Hartono, ethnic Chinese CEO of the Djarum tobacco empire and one of the richest tycoons in Indonesia, was schooled by Dutch colonists and still reads and writes Dutch better than he does Bahasa Indonesia; he speaks no Chinese. Conversely Dhanin Chearavanont, the ethnic Chinese patriarch of Thailand’s CP group, is perpetually embarrassed that his Thai is still heavily accented with Chinese even though his family has been operating in Thailand since the 1920s.
On top of this discomfort is the racial prejudice that men of the senior godfathers’ generation suffered in the colonial era. The patronising attitude of the British colonial administration in Singapore cannot have been easy to endure for a man of Lee Kuan Yew’s ego. Robert Kuok, who has become well known to associates for his genetic theories and strident racial views, was sent to a convent school as a child where nuns told him his family’s visits to Buddhist shrines were a form of devil worship.
Both Kuok’s élite British education – English College in Malaysia’s Johor Baru and Raffles College in Singapore – and his emergence as a ‘born-again Chinese’ in the independence era, mirror the trajectory of Lee Kuan Yew. Kuok became a major sponsor of overseas Chinese ‘conferences’ in the 1990s; he signalled the purity of his second marriage (the first was to a Eurasian woman) by giving their children only Chinese names; and he became ever more forthright in proposing the genetic basis of the economic success of the overseas Chinese.
Where cold analysis of the success of men like Lee Yuan Kew, Robert Kuok and Henry Fok finds its roots in their cosmopolitan-ness – their ability to work in different languages and cultures – they themselves have sought a monocultural explanation. This can be uncomfortable for godfather children, many of whom – befitting the cross-cultural environments they grew up in – are married to non-Chinese. An in-law of Robert Kuok describes him as the ‘biggest racial bigot I’ve ever met’.
The larger point, however, is that the godfathers are engaging in a double self-deception. The first is to pretend that the Southeast Asian economic development story is a Chinese one where it is an immigrant one. The second is to avoid the fact that they – the tycoons – usually had the kind of practical advantages among their immigrant peer group that assist success the world over.
Returning to Skinner’s work on Thai tycoons, it is obvious what those advantages are. Skinner’s subjects were better-educated than popularly believed: ‘With regard to educational attainment, the leaders unquestionably form a privileged group within Bangkok Chinese society,’ he writes. And only a fifth of them could be described as ‘self-made from scratch’. The fact of such widespread advantage of birth is the context of the godfathers’ most striking dissemblance – their determination to demonstrate a rags-to-riches genesis.