Blair African charity run by banker linked to US toxic loan fraud
A charity established by Tony Blair to aid the African poor is being run by a banker who helped to mastermind toxic mortgage investments at the centre of an alleged multi-million-pound fraud. (Photo: Controversy-Tony Blair on a visit to Sierra Leone)
Paolo Pellegrini, an Italian-born financier, quietly became president last year of the US arm of the Tony Blair Africa Governance Initiative, set up to foster economic development on the continent.
The 53-year-old banker is a controversial figure in New York because of his role in devising a scheme to bet on the collapse of the US housing market, which earned his company an estimated £645 million while other investors lost the same amount.Â
US regulators have charged a London-based broker who marketed the products, Fabrice ‘Fabulous Fab’ Tourre, and the merchant bank that employed him, Goldman Sachs, with fraud.
Mr Pellegrini has not been accused of wrong-doing. But his role in the scandal has been widely publicised, and Wall Street insiders were surprised to learn of his relationship with Mr Blair’s foundation, which lists a rental apartment where the financier once lived as its contact address.
‘Paolo Pellegrini isn’t the kind of guy you’d expect to have a big interest in Third World poverty,’ said a Wall Street specialist in investments in the developing world.
‘He’s basically a hedge fund tycoon and I thought his global interests were to do with commodity prices.’ According to reports and the fraud writ, filed in April by the US Securities and Exchange Commission, Mr Pellegrini owes a substantial portion of his riches to the job he landed in 2004 at a hedge fund managed by speculator John Paulson.
US financier Paolo Pellegrini
In 2006 he advised Mr Paulson that the housing market was on the brink of collapse. The pair came up with the idea of asking Wall Street firms to create bonds backed by subprime mortgages.
They then bought insurance contracts designed to make them a fortune if – as they expected – the bonds fell in value.
The SEC alleges investors weren’t told the hedge fund expected to make a fortune when the products nosedived in value.
Mr Pelligrini did not disclose his total earnings from the 2007 deal but his bonus was £117 million that year.
He used part of it to start his own hedge fund and has said its global investment interests are providing useful information for Mr Blair’s charity.
He did not explain how he came to be appointed and his name does not appear on the website on which Mr Blair posts announcements for the charity.
Mr Pelligrini’s spokesman said: ‘He has no comment at this time.’ Mr Blair’s spokesman did not respond to a request for a comment.
Sharon Churcher, Daily Mail, UK
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