In 2000 George Soros, through his Quantum Industrial Partners Fund, his Open Society Institute and his own personal holdings invested in Jet Blue Airways. Almost five years later he gradually sold some of his stake at an average price of $24 per share. To date he controls directly or indirectly about 11 million shares or about 7% of the total issued and outstanding.
When Jet Blue went public in 2002, the principal business address of Quantum Industrial Partners LDC ("QIP") was Kaya Flamboyan 9, Willemsted, Curacao, Netherlands Antilles. Prior to the public offering Soros Fund Groups owned 18% of the voting stock of Jet Blue Airways.
QIH Management Investor, L.P. ("QIHMI") was the managing member of QIP and QIH Management, Inc. ("QIH Management") was the sole general partner of QIHMI.
QIHMI, by reason of its investment discretion over the shares owned by QIP, and QIH Management, was the sole general partner of QIHMI, and were each deemed the beneficial owners of the shares held for the account of QIP.
George Soros, the sole owner of QIH Management had then agreed to cause it to act at the direction of Soros Fund Management LLC ("SFM"), of which he is Chairman.
Accordingly, each of SFM and Mr. Soros has the ability to direct investment decisions concerning shares held for the account of QIP, and as such each of them may also be deemed to be the beneficial owner of such shares.
As you can see from the above not uncommon corporate structure used by most well healed international investors, there are five layers of corporate entities which are strewn around the world in various tax havens to protect Soros from any type of legal entanglements. The cost of maintaining such legal structures could exceed $100,000 annually making many lawyers very happy with George Soros and his movement of funds around the planet.
More recently Soros has been involved in the Asian markets with Hainan Airlines which recently chose Logan International Airport for its first direct U.S. flights. Soros Funds own 14% of Hainan which has recently committed to buying $350 million of new aircraft from Boeing which won't be delivered until at least 2008. Hainan is the fourth largest airline in China and continues to negotiate the purchase of a 60% stake in regional carrier CR Airways.
There has been some speculation that Soros might seek to marry Hainan and Jet Blue at some distant point in the future, creating a new global carrier with direct ties to China, but Soros has not been the hostile takeover or merger specialist type of investor, so such speculations are purely hubris according to one analyst.
Soros of late has been flying from country to country on a recent tour in Eastern Europe and most recently a visit to Indonesia.
Soros, as Chairman of Soros Fund Management, has repeatedly denied allegations that he was behind the Asian economic crisis in 1998 which caused the fall of former President Soeharto in Indonesia.
"That accusation is totally groundless. I have no right or authority to use my money for political purposes," he said at a meeting with chief media editors in Jakarta during a press conference at his first ever visit to Indonesia
That statement would contradict his recent investments in political organizations in the United States where he invested millions of dollars in attempts to defeat George Bush, but on the whole acted more as a giant publicity campaign for both Bush and Soros. That apparent conflict generated a tremendous amount of global press coverage, better than spending a billion dollars on marketing and advertising.
"My purpose is already clear, namely promoting the creation of an open society and democracy. In Indonesia, I do it through Tifa foundation," Soros has said.
As a capitalist, Soros said his main purpose was to make money which he uses to support an open society and democratization. He has formed a global network of foundations to help him achieve his goals. Some of those Foundations and NGO's also invest alongside his industrial investment companies in such stocks as Jet Blue.
Having experienced life under the Nazi and communist regimes as a child, Soros had come to the conclusion it was necessary to develop the values of an open society such as have become the foundations of the American people and democratic system, but America today is increasingly less open and its government has become more and more secretive during the development of the war on terrorism.
"Mahathir was my publicity machine. He had made a big blunder, but his accusation has actually made me popular," he said at the meeting attended by top journalists, politicians and businessmen in Jakarta. Perhaps it was this same reverse psychology which Soros used to get George Bush inadvertently reelected in the 2004 election.
He said those who control the financial system are the country's monetary authority while he was just a market player. The power to control a country's financial affairs is in the hands of the central bankers while he could only watch and take action on the basis of market developments.
But it was one of his own mentors, Karl Popper who pointed out the fallacies of false reflexive perceptions, and it was Rothschild, who said, "Give me the power to issue a nations currency and I care not who makes the laws." Soros and his organizations are very well connected to intelligence from Central Bankers and have been for decades.
Soros has put some of his massive fortune into press groups like Investigative Reporters & Editors (IRE), the Fund for Investigative Journalism and the Center for Investigative Reporting according to some people who follow Soros around the world watching his every move.
As his more recent investments in Asia point out, Soros is still betting that the Asian markets are better growth areas than the United States and Europe, although he maintains fingers in every pie across international lines through his thousands of investment vehicles, partnerships , capital and investment funds.
In the past George Soros sought to play the macro imbalances, as he rode through a bad bet against the yen, lost billions in Russia under market reforms there, and most recently bet heavily on the tech sector in the United States.
What makes Soros a controversial financier and thinker is his independence which many high brow organizations disdain. He is said to have coined the term "market fundamentalism" to criticize the assumption that an unfettered Adam Smith's hand rules global capitalism for the better.
His thinking favors mechanisms for introducing stability to mitigate the free flow of funds, as something that should not rely overly on the state system. But these statements which may not have come from Soros himself, but rather his own critics contradict the open society philosophy and may as well be reflexive, portraying the truth that no government has a monopoly on the truth itself.
Soros takes the view that global markets require international institutions capable of sustaining them. The reform of economic institutions such as the WTO the IMF, the World Bank, and other monetary based unions involved in centralized banking operations therefore are needed. Tied to this, governments need to cooperate to deliver "global public goods", such as the preservation of peace, the alleviation of poverty and protection of the environment and human rights.
In Asia, governments that have tried to command the market have collapsed, only to be replaced by more coercive governments, and others which tried to ignore it have found themselves in a financial morass requiring international institutions to bail them out. Many have also limited interstate cooperation for fear of compromising their sovereignty but in this day and age, international investing requires the sage philosophy of understanding that this world is totally interconnected and what is done in one market certainly can impact others around the globe.
We cannot easily predict what lies ahead in 2006. But open societies with more responsive and accountable governments, as well as better structured, inclusive and open markets, will prove more resilient and capable in dealing with whatever comes as the progressive party line goes, but one thing is certain, if Asia sneezes, the United States will certainly catch a feverish cold spell.
Soros will be in Singapore where the Institute of International Affairs is hosting a talk by Mr George Soros on Monday at the Singapore Stock Exchange.
Alex S. Gabor is a journalist and film maker working on his most recent pet project "Soros and Me", a documentary about his own delusions about wealth and grandeur and their relationship to George Soros.