Rain ruins one of Norway’s richest men

Einar Aas bet that the spread between energy prices on the Nordic and German electricity markets would narrow, but heavy rains proceeded to fill the reservoirs of hydroelectric dams across northern Europe. Above, rainfall in the Telemark region of Norway. (Wikimedia Commons)
Updated 14 September 2018
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Rain ruins one of Norway’s richest men

  • Taking aggressive positions, Aas bet that the spread between energy prices on the Nordic and German electricity markets would narrow
  • However, the spread between the two markets grew bigger than ever — up to 17 times the normal position

OSLO: He built his fortune on dizzying forecasts but rain washed it all away: Einar Aas, one of Norway’s richest men, is now teetering on the verge of bankruptcy after betting the wrong way on the energy market.
A media-shy private trader, Aas made headlines on Friday in Norway and beyond, his misfortunes uncannily coinciding with the 10th anniversary of the collapse of US investment bank Lehman Brothers.
The 47-year-old power trader said in a statement late Thursday he was now risking “personal bankruptcy.”
Taking aggressive positions, Aas bet that the spread between energy prices on the Nordic and German electricity markets would narrow.
But, after an unusually dry summer, heavy rains earlier this week filled the reservoirs of hydroelectric dams that provide much of northern Europe’s electricity, sending prices tumbling.
At the same time, a rise in carbon prices pushed up the German cost of electricity, which is largely fossil fuel-based.
As a result, the spread between the two markets grew bigger than ever — up to 17 times the normal spread, according to the Financial Times.
Aas used his last remaining liquidity — 350 million kroner (36 million euros, $42.5 million) — to cover his positions, but still found himself in default of payment.
“I had positions that were too high compared to the liquidity on the market,” he said on Thursday.
It was a brutal fall from grace for the man born on a farm in the southern town of Grimstad and who has several times topped the list of Norway’s highest earners.
The former Agder Energi trader, who left the company to go private in 2005, made a mind-boggling 833 million kroner in taxable income in 2016, according to tax figures, which are public in the Scandinavian country.
This amounted to an hourly income of 95,000 kroner, taking his personal fortune to an estimated 2.17 billion kroner.
Described in the Norwegian media as a brilliant student who developed a passion for poker and race horse betting at secondary school, he now risks having to sell his luxury real estate digs, including a spectacular 350-square-meter (3,750-square-foot) rooftop apartment in central Oslo.
The exact scope of the damage remains to be determined, but the Norwegian media are already calling it “the biggest loss” ever recorded by a private person in Norway.
The Nasdaq stock exchange is also licking its wounds.
The market operator, which closed and liquidated Aas’ portfolio on Wednesday, said it had “fully contained” the risks.
But Nasdaq was nonetheless left 114 million euros in the hole.
Of that, 107 million came from the mutual default fund clearing house members must contribute to — reportedly two-thirds of the entire fund — and seven million from Nasdaq’s own default fund.
“For an experienced trader, who knows the market like the back of his own hand, to accumulate such an enormous position that he is unable to pull out unscathed is shocking,” Norwegian business daily Dagens Naeringsliv wrote in a comment.
“It is also shocking that Nasdaq allows a single actor to take on a risk that de facto wipes out the default fund as well as its own market capital,” it added.


If proven, Smollett allegations could be a ‘career killer’

Updated 22 February 2019
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If proven, Smollett allegations could be a ‘career killer’

  • “This could be a career-killer. We’ve seen this many times. Society has become more intolerant and unforgiving,” according to a PR expert
  • After a three-week investigation, Smollett was charged with staging the attack with help from two brothers he knew and allegedly paid for their services

LOS ANGELES: Jussie Smollett is enmeshed in weekly drama on the set of “Empire,” the Fox TV series that gave the actor a breakout role and the fame to advance his social activism.
But a scene that played out on a dark Chicago street in January has left Smollett facing felony charges and raised the possibility that “Empire” could mark the pinnacle of the 38-year-old’s career.
Smollett, who is black and gay, told police he was the victim of a hate crime committed by men who threw liquid in his face, yelled racist, anti-gay slurs and looped a noose around his neck. After a three-week investigation, Smollett was charged Wednesday with staging the attack with help from two brothers he knew and allegedly paid for their services.
Even in an industry in which bad or erratic behavior is expected, insiders and observers are stunned by what authorities allege was fakery intended in part to get Smollett publicity and a raise.
“This is incredible. No one does this,” said Garth Ancier, a veteran network executive and a co-founder of the Fox network. If more money was his goal, that’s what agents and negotiations are for, he said, calling the alleged hoax “beyond the pale.”
“It’s too bad that such a talented guy threw all that away,” Ancier said, adding he didn’t see how he could be kept on “Empire.”
Producers appeared to be doing that for now, with Smollett traveling directly after being released from jail on bond Thursday to the “Empire” set. There are two episodes left to make of the 18 airing this season, the fifth year for the series starring Taraji P. Henson and Terrence Howard as hip-hop moguls Cookie and Lucious Lyon.
Replacing Smollett at this point would be problematic. Writing his character, one of three Lyon sons, out of future seasons would be less so.
Smollett’s legal team released a statement late Thursday calling Chicago police’s version of events “an organized law enforcement spectacle that has no place in the American legal system.
“Mr. Smollett is a young man of impeccable character and integrity who fiercely and solemnly maintains his innocence and feels betrayed by a system that apparently wants to skip due process and proceed directly to sentencing,” the statement said.
After Smollett was charged, TNT’s celebrity battle-rap series “Drop the Mic” pulled an upcoming episode with him “in the interest of not being exploitative of an incredibly sensitive situation,” the network said in a statement.
The Fox studio that makes “Empire” publicly stood behind Smollett when he first reported the attack and as skepticism about it arose. But it declined comment Thursday about what happens next as he fights charges of filing a false police report.
Experts in the field of crisis management were pessimistic. The online mockery Smollett is taking is unlikely to stop, and it could hinder any attempt to re-emerge, said Eric Dezenhall, CEO of the public relations firm Dezenhall Resources.
“The thing it’s really hard to come back from is ridicule,” Dezenhall said. “It can be easier to come back from something just bad. In our culture the whiff of something dangerous has a certain street cred. But here we’re talking about a combination of malevolence and ridiculousness.”
Eden Gillott, president of Gillott Communications, offered a similar take.
“This could be a career-killer. We’ve seen this many times. Society has become more intolerant and unforgiving,” said Gillott, citing instances ranging from Kevin Spacey’s firing from “House of Cards” for alleged sexual misconduct to Megyn Kelly’s “Today” exit after she defended blackface costumes.
What Smollett is alleged to have done isn’t analogous to either one — or to just about anything that’s happened with a celebrity or prominent person in recent memory or in news files.
There have been stunts, such as Joaquin Phoenix’s role in a so-called documentary, “I’m Still Here,” directed by actor Casey Affleck and supposedly about Phoenix’s career as a rapper in decline. The film’s release came with public apologies and lawsuits attached.
Others have exaggerated their exploits, such as TV journalist Brian Williams’ account of being in a helicopter hit by a rocket in the 2003 Iraq invasion or Hillary Clinton’s 2008 account of landing under sniper fire during a 1990s trip as first lady.
But Smollett, instead of creating an image-burnishing fiction, positioned himself as a victim and the deserving centerpiece for outrage directed at his attackers. He said those who questioned him made him feel “victimized.”
The allegation that Smollett did it for money could be seen as both a betrayal and baffling, given what he earns: more than $1.8 million for the current 18-episode season of “Empire,” according to a person familiar with the situation.
Dezenhall said it would be tough for Smollett, who proclaimed himself innocent of the charges through his lawyers, to explain himself publicly.
“All of us have said something stupid, put something in an email we shouldn’t have — we can understand that. But very few of us would say, ‘I would orchestrate something like that to advance my career.’ There’s a difference between a mistake and a scheme,” Dezenhall said. His advice to Smollett: “’Vanish for a few years, take up a cause, devote yourself to doing something good, and revisit it later.’“
Or search out people like Kandi Burruss, the singer-songwriter and reality star.
“I consider him a friend. I love him and regardless of if it’s true or not, I’m still going to be here for him. I hate the situation but I don’t hate the person,” she told The Associated Press Thursday at the Essence Black Women in Hollywood luncheon.