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Dame Shirley Porter revels in the glare of publicity. The former leader of Westminster City Council has never strayed far from the public eye, be it for her shopping binges in Nice, or the latest twist in the marathon Westminster ?homes for votes? saga. One member of her family however, prefers to remain well out of the spotlight.
Her son, John Porter, has a mansion in Chester Square, Belgravia, apartments in |London, Bermuda, the Far East and Israel, and houses in Virginia and California. While the Sunday Times Rich List puts Dame Shirley and her husband Sir Leslie Porter?s wealth at ?69 million, it makes no mention of their 47-year-old son John, although he is a multimillionaire in his own right, much richer than his high profile mother.
It was John Porter who was instrumental in keeping Dame Shirley?s fortune out of the hands of John Magill, Westminster?s district auditor, who in May 1996, calculated that Dame Shirley had cost Westminster City Council some ?31 million through her politically inspired policy of ?designated sales? of council properties.
An exclusive Punch investigation can reveal that John Porter?s immense wealth is based on connections with the secretive world of the US defence industry. He also has strong links to the Israeli military establishment. His business career has been marred by bitter lawsuits, allegations of dubious transactions and even an inquiry by the Charities Commission.
In 1997, when the High Court found that Dame Shirley was guilty of ?wilful misconduct?, she was ordered to pay back the estimated ?27 million loss to Westminster Council caused by her policy of gerrymandering through the sale of council homes.
In April 1999, the Appeal Court overturned the decision, ruling that she was not guilty of wilful misconduct and not liable to pay the surcharge. One judge dissented, finding that ?there had been widespread and persistent pretence and that Dame Shirley had lied to the court?. He thought the surcharge should be reduced to a mere ?7 million.
The district auditor, now retired, was granted leave to appeal to the House of Lords and the case will be heard at the end of the year. However the argument over the surcharge was, and is, largely academic. Faced with the prospect of his mother losing part of her personal fortune, John Porter had taken control of the majority of her British assets.
Westminster Council, wary of the enormous cost of tracing Porter?s assets shuffled overseas, and reluctant to pursue the case for political reasons, has more or less given up the chase.
It is but one example of the tightness with which the Porter family, and their long-term investment adviser, Peter Green, operate.
When John Porter was young, he was given ?4 million by his grandfather, Sir Jack Cohen, the founder of Tesco. The gift seems to have made Porter determined to better his grandfather?s achievements through his own business skills. Shrewd investment advice from Green about what to do with the ?4 million helped him along the way.
Porter obtained degrees from Oxford, the Institute d?Etudes Politiques in Paris, and Stanford University?s business, where he is now on the advisory council.
During the early 1990s he became involved with a property development company called Chelverton. The company made a fortune building shopping centres across the country. His mother?s knowledge of the workings of local council planning committees proved to be of immense value.
But a key plank in John Porter?s empire is the fortune he has made out of a mysterious US computer company called Telos, based in Virginia, which has close ties to the Pentagon. Telos was originally called C3, and specialised in the communication systems that formed the backbone of the US army.
Telos is still one of the largest providers of software to the US army. Last year it had sales of ?114 million. John, who is a British citizen, owns 80 per cent of the company.
For such sensitive contracts, the US government demands safe hands. Not surprisingly Telos?s board of directors includes a former US air force colonel, Norman Byers, who served with the Joint Chiefs of Staff and as a military assistant to the assistant secretary of defence, and several stalwarts from the Reagan-Bush administration.
One of them, Fred Ikle, served as Ronald Reagan?s under-secretary of defence for policy. He is a former director of the US Arms Control Agency; is on the board of the US National Commission on Terrorism and has connections to the Israeli government.
Another Telos board member, Stephen Bryen, served as Reagan?s deputy under-secretary for trade security policy. He also set up the US Department of Defence?s defence technology security administration, whose job it is to monitor arms sales.
During the late Seventies, while working for the Senate Foreign Relations Committee, Bryen was suspected of passing Pentagon Secrets to the Israelis and was investigated by the FBI. However he was never indicted.
He quietly left the Senate Committee and set up as a lobbyist, founding, along with his wife, the Jewish Institute for National Security Affairs ? a hard-line lobbying group which allegedly has ties to Israel?s arms industry. Bryen?s assessment of the strategic dangers facing America was sought by George Bush in the run-up to Reagan?s 1980 presidential election, and in return he was rewarded with a top Pentagon job.
That Porter should be hobnobbing with such well-connected people is curious, as the elite and highly lucrative world of the US defence establishment rarely accepts outsiders. One factor, which may have helped smooth his way in, was his parent?s close friendship with the Thatchers. The defence contracts of Mark Thatcher, who left the US in the mid-Nineties and is now living in South Africa, could not fail to have helped Porter.
The US government does not usually allow foreign nationals to have direct control over such strategically important companies. It is questionable whether the US government would take too kindly to someone who helped his mother hide her assets (albeit perfectly lawfully) in order to avoid potential liability in a government sponsored court action.
All of Telos?s directors need security clearance from the US government. But Telos appears to have got around the problem by officially calling Porter a ?consultant?. According to the company, he provides ?marketing, product development and strategic planning and finance advice?, for which he nets ?125,000 a year. He works out of the company?s London offices in a nondescript building in London?s West End.
Just as Dame Shirley has ruthlessly cut down her political rivals, so John was ruthless in business. But things have not always gone smoothly. One deal in particular backfired spectacularly and led to a flurry of litigation.
In 1994 he became embroiled in a complex legal battle over the value of shares in an Israeli company called Sapiens, which held a contract with Telos. At the time, Porter was a director and major shareholder of Sapiens, which had contracts with the Israeli air force.
Shareholders and investors in the company launched several court actions against Telos, Sapiens and Porter. Few will talk openly about the affair; but Punch has pieced together the story from official filings at the US Securities and Exchange Commission in Washington DC, and court documents.
It was claimed that Porter was the ?controlling influence? of several companies (Telos being one), which had entered into ?sham? transactions with Sapiens. As a result of these transactions, Porter had allegedly issued false financial statements for 1992 and 1993 and for the first two quarters of 1994. These had the effect of increasing the value of Sapiens.
One ?18 million lawsuit was ruled out of jurisdiction. Others were settled out of court, and Sapiens set up a special ?5.3 million securities litigation settlement fund to compensate shareholders who had lost money.
The case left a lot of bad blood on Wall Street, but it has not stopped Porter from developing a whole raft of other business interests in the US. He is also on the board of the Bionomics Institute, a US non-profit-making foundation, which teaches that the economy is a ?self-organising, chaotic information ecosystem?. While traditional economics sees organisations as mere production machines, bionomics sees them as ?intelligent social organisms?.
Porter?s other interests around the world include Exide, the battery company, and its manufacturing partner in Indonesia, the Gemala group, which grew out of a foundation set up to manage businesses on behalf of the Indonesian army?s strategic command.
In the UK, Porter is a director of a small investment company, Sabrelance Ltd, along with David Shaw, the former Tory MP for Dover. Shaw?s main claim to fame is that he organised the House of Commons pass for the notorious high-class prostitute Pamella Bordes. He is also director of a company called Redbus Interhouse, which has plans to become a major routing point for internet traffic from this country to overseas. In Israel, Porter is involved with an industrial laser company called MLI Lasers.
Porter also controls a charitable trust called the John Robert Porter Charitable Trust. The trust attracted the attention of the Charities Commission in 1992, when it was found that the charity had invested ?3.3 million of the ?3.6 million investments in quoted investments in the family business ? namely Tesco shares. After the Trust pointed out how well the shares had performed, the commission pronounced itself satisfied, but said it would keep the investment under review.
The Porter family has shuffled millions of pounds in charitable donations in the direction of Tel Aviv University. The investment has bought them social prestige in Israel. And the university?s representative in London? One John Robert Porter.
Meanwhile his mother, Dame Shirley, is gingerly dipping her toes back into politics. She recently got herself elected to the residents? committee of the luxury apartment block in Tel Aviv where she lives with Sir Leslie. Naturally enough, she has been given special responsibility for rules and regulations.
NC |
| 2000-06-28 |
First published in 'Punch' magazine, June 2000. |
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The defence contracts of Mark Thatcher could not fail to have helped John Porter. |
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