Microkhan by Brendan I. Koerner

The Curtain Drops

March 8th, 2011 · 3 Comments

Though I frequent Broadway shows about as often as I indulge in White Castle—that is, once in a blue moon—I’ll admit to taking undue pleasures in the travails of Spider-Man: Turn Off the Dark. Not in the various serious injuries that the production has incurred, mind you, but rather in seeing what happens when unchecked egos are permitted access to endless gobs of money. There is something to be said for the usefulness of limits.

Yet I find myself disagreeing with pundits who’ve already declared Spider-Man the greatest flop in the history of musical theater. Assuming that things don’t pan out for the show, that contention might hold water in terms of the sheer amount of money lost. But as I understand it, the only folks who stand to suffer from Spider-Man‘s demise are people who won’t exactly be relegated to eating Top Ramen as a result. The same cannot be said for the money behind the 1993 mega-flop Leonardo da Vinci: A Portrait of Love, which washed off the London stage in a matter of weeks. That doomed production was backed by a shady operator named Duke Minks, who obtained his $4 million-plus investment from the Nauru Phosphate Royalties Trust, one of the first sovereign wealth funds in the world. The trust was charged with investing the hundreds of millions of dollars that Nauru earned from the harvesting of its bird guano; unfortunately for the island republic’s 10,000 or residents, those at the controls did an incredibly lousy job of picking projects to bet on:

Unscrupulous foreigners have played a large part in Nauru’s post-independence catastrophe. A series of shysters and con-artists persuaded Nauruans to fritter away their money. One Australian financial adviser persuaded Nauru to shell out £2m for a musical he had written about the life of Leonardo da Vinci, which folded after four weeks on the London stage. Another conned the government into spending $60m on “prime banknotes”, a sort of derivative that turned out to be just as dodgy as it sounds. Much of the money was eventually recovered, but only after lengthy court cases spanning several continents.

Nauruans, too, wasted their fair share. Many investments were made for reasons other than economic merit. The island, whose remoteness in the middle of the Pacific is impossible to exaggerate, makes an improbable air-travel hub. Yet the government backed Air Nauru, which for a while boasted a fleet of five 737s. (It is now down to one.) It did not help that former presidents used to commandeer the airline’s planes for holidays, leaving paying customers stranded on the tarmac. Similarly, a cruise ship based in Nauru did more for the people who worked on it than for the country’s bottom line. Prime pieces of property have languished, undeveloped, for decades. The government of Fiji recently repossessed a hotel in its capital that Nauru had bought years ago and then left to rot. Another hotel, in the Marshall Islands, has been under construction for more than 20 years. Over A$50m (US$36.6m) was spent on a site in Melbourne that Nauru later sold for less than A$20m.

By the time Nauru was on the financial brink, it was too late—the island’s phosphorous production had dropped to all-time lows (see above), with little chance of meaningful recovery over the long term. What should have been the most prosperous nation in the South Pacific has since been reduced to hosting an Australian detention center in order to make ends meet.

The Leonardo musical obviously played a relatively tiny part in the Nauru’s financial woes. But alarm bells should have sounded when that investment went sour. At the very least, it betrayed terrible judgment on the part of those accountable for doling out the trust’s funds. But when you have something on the order of $800 million in the bank account, seven-figure mistakes are too easy to ignore.


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3 Comments so far ↓

  • Gramsci

    You’re on your way to a book project, it seems to me, with these last few posts. (“Children of Quixote”?) The best part about the book will be that if it flops you can claim to be engaged in a Marina Abramovic performance-art demonstration of the book’s point, triggering a second-wave of publicity.

  • Brendan I. Koerner

    @Gramsci: My greatest aspiration is for all of my failures to be considered noble and ambitious, and therefore grounds for giving me another bite at the apple.

  • Gordon Roque

    I’ve been to Nauru two times in my life since I used to live in the South Pacific and often stayed there en route to the Philippines. It’s actually a very beautiful place. It takes about 20 minutes to drive completely around the island, maybe 15–I can’t remember exactly. Nonetheless, it’s a small island that holds an impossible amount of charm, and it’s too bad that it’s riches were unwisely squandered away. I hope they can still find a way to thrive in spite of these dire circumstances.

    Maybe I’ll go back for a visit someday . . .