"Partnoy (F.I.A.S.C.O) delivers a thrilling account of the grandfather of all Ponzi and Madoff schemes — Ivar Kreuger (1880 — 1932), who made his fortune in the 1920s by raising money from American investors to lend to European governments in exchange for match monopolies. Kreuger was creating more than matches, it turned out; the 'master of investor psychology' created 'the forerunners of today's derivatives' and techniques that are still used by hedge funds and investment banks. Shortly after his suicide in 1932, his schemes finally unraveled. The 'Kreuger crash' bankrupted millions and led to the securities laws of 1933 and 1934 — a 'political reaction to a single event and to one man.' Partnoy achieves a nuanced portrait of the charismatic and corrupt financial genius whose advice was sought by Herbert Hoover and other heads of state. A fascinating depiction of a man and his era (Greta Garbo makes memorable cameos), this book is a snapshot of a time all too familiar now: a speculative real estate bubble, unbridled consumer spending, investors buying derivatives based on sketchy information and a Wall Street operating by its own rules." Publishers Weekly (Starred Review) (Copyright Reed Business Information, Inc.)

Human nature being what it is, at any given moment there is always a certain amount of embezzlement going on in a country's banks and businesses. Though the volume of all this larceny increases in good times, only during a financial crisis does its full magnitude come to light.

Every period of economic turmoil throws up its signature crook. It may be too early to select today's... Washington Post Book Review (read the entire Washington Post review) emblematic fraudster, but I suspect that, when the votes are finally in, Bernie Madoff will walk away with the prize. During the stock market crash of 2000-01, the name to reckon with turned out not to be that of an individual but a whole company, Enron. And the man who more than anyone else came to epitomize the global crisis that began in 1929 and culminated in the Great Depression was Ivar Kreuger.

"The Match King," by Frank Partnoy, is the story of Kreuger. Starting out in the match business in Sweden, he emerged on the European financial scene in the early 1920s when he decided to branch out into international banking. After World War I, most countries had a hard time borrowing in international capital markets. Kreuger decided to exploit his position as a leading European businessman by acting as a go-between, raising capital in New York and lending it to countries desperate for dollars. In return, he required from each borrowing nation a monopoly over the manufacture of matches. Among the governments with which he struck such deals were those of Ecuador, Peru, Poland, Greece, Hungary, Yugoslavia, Romania and even France and Germany. By 1929 he had reputedly become the third-richest man in the world.

Even when the Great Crash hit, he seemed to weather the storm reasonably well, successfully completing a $125-million deal with Germany at the end of 1929. But as the stock market kept going down, Kreuger found it more and more difficult to raise capital. Rumors spread that his accounts were riddled with inconsistencies and that he was being investigated by Swedish authorities. He was able to stave off bankruptcy only when $100 million in Italian government bonds miraculously appeared in his safe. On March 12, 1932, the public woke up to the news that he had shot himself through the heart in Paris. A few weeks later the Italian bonds were revealed to be forgeries.

All of which makes for a fascinating story. Partnoy, a former investment banker, now a professor of law at the University of San Diego, does a yeoman's job of leading us through the various financial machinations that kept the Kreuger empire afloat. Along the way, much is made of how Kreuger manipulated his auditor, a hapless, almost comical New Yorker by the name of Albert D. Berning, whom Kreuger alternately charmed, bullied and bribed not to ask too many questions.

But what goes on between a man and his accountant is poor raw material for drama. When it comes to financial crimes, the general reader is interested less in the complex mechanics of how they are committed than in the personality of the criminal. The fascination of someone like Madoff, for example, lies not in how he fabricated his transactions but in trying to get behind that sphinx-like smile to unmask the man who was able to sustain so vast a lie for so long.

Kreuger was no less interesting. He had six or seven residences, a hotel suite in London, apartments in Berlin, New York and Paris, through which he supposedly rotated a string of mistresses. From his office he would try to impress visitors by apparently fielding calls from Mussolini and Stalin — all of them, it turned out, bogus. In an interview with the Saturday Evening Post, he declared that he owed his success to three things: "One is silence; the second is more silence; while the third is still more silence."

While Partnoy takes us through a maze of accounting shenanigans — off-balance sheet debts, nonvoting shares, the network of offshore companies through which all the money was funneled around the world — for most of this book Kreuger remains a lifeless figure, an unfortunate victim of the author's clunky and cliche-ridden prose, which sometimes reads like a Harlequin romance. Here, for example, is Kreuger's first meeting with his accountant: "Ivar met A.D. Berning and the men looked into each other's eyes. Ivar couldn't have been more pleased." Only in the last couple of chapters, as Kreuger spends days on end locked in his private suite, muttering and nerving himself to suicide, does Partnoy finally seem to find his voice and partially succeed in bringing this infamous swindler to life.

Liaquat Ahamed is the author of "Lords of Finance: The Bankers Who Broke the World."

Reviewed by Liaquat Ahamed, Washington Post Book World (Copyright 2006 Washington Post Book World Service/Washington Post Writers Group)
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