Going for a Gong? British PM’s Tycoon Backer May Not Be As Rich As He Seems

Embattled British Prime Minister, Boris Johnson, is spending his last few weeks in power contemplating his resignation honours list. The prospect of who perennially cash-strapped Johnson may award already has both Buckingham Palace and civil servants in a sweat. There is concern about who and how many may be offered ‘gongs’ – as honours in the UK are fondly known – from Lordships and knighthoods, through to ‘Commanders of the British Empire’.

Much of the controversy so far has focused on which political chums will be rewarded: but what of Boris’s extensive network of donors? There’s one who shares Boris Johnson’s personal traits of high living, beautiful women and ‘boosterish optimism’, mixed with a little chancing.

David Ross is the colourful, playboy tory donor who has been rewarded with top arts posts in the UK. Prime Minister Johnson reappointed Ross to the prestigious Chairmanship of the UK’s National Portrait Gallery, while he was also appointed Chairman of the trustees of the Royal Opera House.

That last appointment, however, only lasted a few months before Ross had to resign in controversy over a mysterious art sale. After the COVID pandemic the cash-strapped opera house was forced to sell an iconic David Hockney painting it owned. Initially it was said opera house Chairman Ross had stepped in to buy the $15 million picture, in a sale organised by Christie’s, which the opera house originally hoped would raise over $20 million, promising to lend it back to the opera house.

Quickly, however, Ross’s position as chairman became untenable after it was sensationally revealed that he had bought the picture secretly, without telling his fellow board members, and, once he had agreed to buy the painting, he asked Christie’s to allow him to pay for it in instalments – to Christie’s horror as the sale was strictly ‘full amount on purchase’. Ross was perilously close to chairing a trustee meeting, about the botched art sale, without the other trustees knowing he was the secret buyer trying to haggle the terms of the deal.

David Ross most recently became immersed in Boris controversy when it was revealed he had paid for Boris Johnson’s near $20,000 winter holiday on the exclusive Caribbean island of Mustique. The disclosure gave rise to a parliamentary enquiry. A long-time donor to Britain’s ruling Conservative Party, the Daily Telegraph has reported he has donated around $850,000 to them (£700,000).

Ross is known for his love of country sports, glamorous women and as a big man on the UK culture scene, with a huge art collection and even his own opera company.  Ross even paid over $7 million to build his own opera house in the gardens of his English stately home. At his peak, Ross was likely worth a billion dollars. But now, however, people are asking if Ross is anywhere near as rich as Boris Johnson might have believed.

Ross is no stranger to controversy about his financial dealings: he shocked the City of London when forced out of Carphone Warehouse – the cell phone empire he co-founded – after it was disclosed he had pledged his shares in the listed company in exchange for millions of pounds of loans, in breach of disclosure rules. Now financial analysts are wondering if this story of highly leveraged assets and a cash crunch is coming round again.

Ross recently sold 60 pieces from his art collection at Sotheby’s, even as the Daily Telegraph said he was worth over $750 million (citing the 2020 Sunday Times Rich List). In the 2022 Rich List, Ross doesn’t even appear in the top 250.

So just how rich is Ross and does he have any cash? Analysts have noted that his own investment fund, Mountain Berg, appears to be highly in debt, with assets pledged to Credit Suisse and Secure Trust Bank, amongst others, according to the firm’s regulatory filings, as well as Ross having to personally guarantee the firm’s bank borrowings with his own private assets. 

Those private assets are also mortgaged, with at least one large loan from Barclays Bank having charges over property worth more than $22 million. Shares Ross owned in the publicly traded firms, TalkTalk (thought to have been sold in March 2021) and troubled electrical retailer Curry’s, collapsed 55% in value in the last five years.

Ross’s real wealth depends heavily on the financial success of Mountain Berg. In 2018, auditors qualified their opinion on the Mountain Berg annual financial statement, because, they said, they could not verify the value of inventories in a clothing empire, including Jigsaw (a brand favoured by the Duchess of Cambridge), Mountain Berg owns. In total, the auditors said they were “unable to satisfy ourselves concerning the inventory quantities of £10,473, 870.00”.

The value of Mountain Berg’s assets is also subject to analyst scepticism. The latest accounts on file state that “investments in Limited Partnerships”, at around $162 million, comprise “approximately 53% of total assets”. How are these assets valued? They have “been estimated by the investment fund’s management in the absence of readily determinable fair values” [emphasis added; from accounts for the year 2020, p.9].

In the accounts, Mountain Berg had current liabilities of £220 million [the accounts are in UK Pounds], including £8 million owed to the UK tax authorities; even after delaying repaying a Credit Suisse loan from December 2021 to June 2023.

Moreover, deeper into the accounts – which show flat revenues at the firm – it reveals assets have been revalued upwards from £187 million to £219 million, including big upward revaluations in ‘unlisted investments’ and ‘limited partnerships’. The fact that Mountain Berg depends so heavily on its own valuations of its unlisted businesses is likely why banks require Ross personally to guarantee his firm’s debt. This is a typical move by banks worried at the realisable value of pledged assets in case of a ‘fire sale’.

The auditors that signed off the last filed accounts are hardly a household name. Ross’s firm, and virtually all his business ventures and charitable foundations, use the same auditors. The small UK outfit of Duncan and Toplis, that operates “across the East Midlands” (a small region in England), acts as his ‘independent auditors’. Some might question the strength of that independence. The 2020 senior auditor, Mark Hindmarch, was previously employed as a director at two Ross entities between 2013 and 2021.

So while outgoing Prime Minister, Boris Johnson, is apparently desperately looking for a home, he might find – calling on past generous donors like Ross – a distinct lack of ready cash to borrow.

For David Ross, he must brace himself for scepticism from financiers about the true state of his wealth. Ross must hope that he will be lucky enough to get an honour from Britain’s Queen Elizabeth, on Boris’s recommendation, while he is still widely believed to enjoy enormous personal net wealth.