Dealmaking cameo may prove lucrative for fixer Blair

LONDON Mon Sep 10, 2012 3:39pm EDT

Britain's former prime minister Tony Blair speaks during a news conference before the 10th edition of the International Competitive Brazil at the convention center Brasilia Brazil XXI in Brasilia August 28, 2012. REUTERS/Ueslei Marcelino

Britain's former prime minister Tony Blair speaks during a news conference before the 10th edition of the International Competitive Brazil at the convention center Brasilia Brazil XXI in Brasilia August 28, 2012.

Credit: Reuters/Ueslei Marcelino

LONDON (Reuters) - If Tony Blair's cameo proves to be a deciding factor in winning support from Qatar for a Swiss commodity trader's $36 billion bid for a giant mining firm, the former British prime minister could become a sought-after fixer in global finance.

Blair's surprise involvement in a last-minute breakthrough between Glencore (GLEN.L) and the government of Qatar, which is a shareholder in Glencore's target Xstrata XTA.L, shows that Blair's Middle East connections are paying off.

Those links are likely to prove ever more valuable as Gulf states look to invest their oil and gas riches overseas to diversify their wealth.

While his intervention last week has gained plenty of attention, it has not been well received by the bankers and other advisors who have spent months trying to get a deal done in order to ensure they receive millions of pounds in fees.

It has also exposed the former prime minister to blistering criticism at home for using his global Rolodex to cash in.

"I wasn't surprised, because he has obviously decided to use his post-parliamentary career to utilize his contacts among the extremely wealthy in order to fix up deals or make arrangements, contacts, networks for which he's making huge amounts of money," said Michael Meacher, a lawmaker from Blair's own Labour party.

"I find that extraordinary in a so-called Labour ex-prime minister. I would have expected a Labour ex-prime minister to behave more like President Carter did in the United States when he devoted his time to international peace keeping and concern for those who are disadvantaged or in need of help."

GAMBIT

Blair was introduced into the Glencore equation by Michael Klein, a former Citigroup banker advising both sides in the merger, several sources familiar with the negotiations said. Klein's gambit appears to have paid off.

Within hours of Thursday's late night Blair-facilitated meeting between Glencore's management and Qatar's sovereign wealth fund, the second-largest investor in Xstrata, a revised offer was on the table and talks were back on.

Glencore and Qatar had not spoken since the early summer, when the Gulf emirate publicly opposed the commodity trader's original share offer for Xstrata.

While advisers were surprised by how quickly Blair's intervention had taken effect, they were also divided on how critical a role he played.

"He only took part in one meeting," said one source close to the deal. "He was a mediator, that is it."

In a deal that involves some of the investment banking sector's most consummate dealmakers and, at last count, ten investment banks, for a former politician to succeed where they had failed at a time when their sizeable fees are under scrutiny could prove embarrassing.

"He's not a banker, he doesn't know about M&A or mining. In fact, he has no relevant experience whatsoever," griped one source familiar with the deal.

MANY ROLES

Since leaving office in 2007 after a decade in power and three election victories, Blair has boasted a string of advisory and charity roles. Notably, he serves as envoy for the "Quartet" - the United States, Russia, the United Nations and European Union - seeking peace between Israelis and Palestinians, a role in which he has made little headway.

His public involvement in business dealmaking has until now been limited, but with big money at stake, that could change.

British newspapers seized on the size of the former prime minister's paycheck for the Glencore deal. The Sunday Times reported he made $1 million for helping pave the way for the decisive meeting involving Glencore Chief Executive Ivan Glasenberg at London's five-star Claridge's hotel. Several sources told Reuters his fee was much smaller.

Whatever he was paid, within hours of that meeting the apparently lifeless bid was back on the table, just hours before shareholders had been expected to vote it down.

At least one source said the meeting had already been planned, and the late hour was due to the packed schedule of Qatari Prime Minister Sheikh Hamad bin Jassim al-Thani.

"Any bringing together of the parties had nothing to do with him. No one was waiting for Tony Blair to make this happen," a source involved in the deal said.

But another said that while improbable, Blair's access to the Qataris could have been a deciding factor.

"It feels highly unlikely that two very sophisticated parties, Glasenberg and Qatar, would need Tony Blair. Having said that, the Middle East is a funny place. The ruler's decision is final and few people have access to him," the second source said.

HONEST BROKER

Among Blair's many business interests, he works for the U.S. bank JP Morgan, which is an adviser to Xstrata. Blair has been reported to receive an annual salary of 2.5 million pounds for his role with the bank, which rolls him out at events such as the annual Davos economic forum.

If he helps the Glencore deal go forward, he will have earned his pay: JP Morgan should get a big slice of a total banking pay pie for the deal worth up to $130 million.

Nevertheless, several sources said Blair was not acting for the bank - he is not involved with its Xstrata team - and had instead been brought in separately by the Glencore side. JP Morgan declined to comment.

Qatar was an ally when Blair served as prime minister: it invited U.S. and British forces to base their headquarters there when Blair and President George W. Bush invaded Iraq in 2003.

The Glencore-Xstrata deal is not the first time Blair has been called in to help seal a deal with Qatar. Blair was involved in a failed bid by an Irish property developer seeking Qatari help to buy out other owners of a group that controlled some of London's most famous hotels, including Claridge's.

In a court case that followed, Blair was described as an "honest broker" brought in to help smooth over a possible deal.

"It would appear that it was only Tony Blair's personal approach to Sheikh Hamad during a meeting in Qatar in February 2012 that brought the two together," the court judgment said.

Nevertheless, the 59-year-old ex-prime minister's public image among his countrymen in Britain will probably not be enhanced by helping a Gulf monarchy make a giant deal for a Swiss-based company to take over a London-based firm.

His dealings with Gulf oil states are a reminder of Blair's unpopular invasion of Iraq. Last week, South African Nobel peace laureate Desmond Tutu refused to attend an event in Johannesburg with Blair, saying he should be tried for crimes in The Hague.

Many of his former political allies find his globetrotting hunt for personal wealth to be an embarrassment.

"My only comment is that I hope he's paying British taxes on what he's earned," lawmaker John Mann, from Blair's Labour Party, told Reuters on Monday.

(Additional reporting by Sophie Sassard and Kate Holton; Writing by Alexander Smith; Editing by Peter Graff)

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