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Clarke loses hedge fund job as credit crunch hits politicians

Date: Thursday, February 12, 2009
Author: Elena Moya, The Guardian

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The shadow business secretary, Kenneth Clarke, has become the latest victim of the credit crunch after losing his job on the board of a hedge fund, the Guardian has learned.

Clarke, who was parachuted back on to the Tory frontbench to beef up the party's handling of the financial crisis, has been axed from the board of Centaurus Capital as the sector faces its worst crisis in decades.

The hedge fund, which like other investment companies faces huge withdrawals of cash from clients anxious about plunging stock markets, has scrapped its advisory board, which also included José María Aznar, the former Spanish prime minister.

Clarke, who was chancellor from 1993 to 1997 in John Major's government, was appointed to the well-paid advisory role in July 2007 to help the fund shape its investment strategy across Europe. Clarke has always supplemented his MP's salary with directorships, most notably and controversially as deputy chairman of BAT, the tobacco giant. Although he has now stood down from that role, he was also on the board of Alliance UniChem, the pharmaceutical company, and Foreign and Colonial, the investment trust.

Centaurus, which managed about $4.5bn (£3.1bn) before markets started to collapse in 2007, is known as an activist investor - buying into companies and then using the stakes to influence boardroom strategy. In recent years it has targeted Atos Origin, a French information technology firm, and Stork, a Dutch engineering group.

Clarke and Aznar were hired to provide international experience, rather than as door-openers to facilitate business contacts. Tony Blair also signed for a lucrative advisory role with JP Morgan, a US investment bank, after quitting as prime minister.

The former statesmen are now facing the same effects of the credit crunch as the thousands of citizens who are losing their jobs, as hedge funds and investment banks cut costs, staff and perks.

Clarke, 68, has recently returned to the political frontline as David Cameron prepares his response to the protracted recession and mulls over his economic strategy for the next election. He was not available for comment last night.

Since losing power Aznar has been a regular visitor to London, where his daughter lives with her husband, Alejandro Agag, a business partner of Formula One supremo Flavio Briatore and an investor in Queens Park Rangers football club.

The former Spanish leader has always enjoyed a close relationship with Britain, having supported Blair and George Bush during the Iraq war.

Founded in 2000, Centaurus is suffering from the global financial crisis, which has helped shrink the industry's assets under management from about $2tn to about $1.7tn at the end of last year, according to the Chicago-based tracking firm Hedge Fund Research.

Centaurus declined to comment.