Psychiatrist with a
head for business By Michael
Rank
From psychiatrist to international
banker and gambling tycoon is an unusual career
path, but Hong Kong-born Dr Johnny
Hon says it makes quite a lot of sense. "Wealthy
clients need a psychiatrist more than they need a
banker," he quipped. "Training in psychiatry makes
you understand clients better. Most of them are
elderly. They are concerned about their health and
how to plan for passing their wealth down to their
children."
Hon, 34, was awarded a PhD in
psychiatry from Cambridge University in 1998, but
left medicine for finance after being recruited by
the Dutch bank ABN AMRO as a private banker in
Hong
Kong. He didn't stay with the Amsterdam-based bank
long, however, and now has his own business
empire, Global Group (Europe) plc, stretching from
a joint venture bank in North Korea to a stake in
a lottery in China, not to mention another bank in
the Comoro Islands off Madagascar and an online
gambling company in London.
Hon's business
ventures tend towards the exotic, but in an
interview at his headquarters in London's
Docklands financial district he came across as
measured and affable - even if I never did quite
understand how he switched from a dissertation on
the association between Down's Sydrome and
Alzheimer's disease to international finance.
This has been a big year for Hon, who in
June opened the Koryo Global Credit Bank in
Pyongyang and in July announced the signing of a
contract to co-manage the state sports lottery in
the southwestern Chinese province of Guizhou.
Under
the deal with Guizhou, Hon's UK company, Betex,
became the first non-Chinese company to become
involved in gambling operations in mainland China
(although numerous overseas gaming firms are
involved in the Macau SAR). Gambling is
illegal in China, with the big and fast-growing
exception of state-sponsored lotteries, currently
worth US$4.8 billion a year, although illegal
gaming expenditures are estimated at 10 to 15
times as much, according to a recent Deutsche Bank
report.
The Chinese government is aiming
to cash in on the huge illegal gaming market
through a vast network of video lottery terminals,
and Deutsche Bank says "these measures will help
lottery capture 40-50% of the illegal gambling
market over the next three years". Hon said his
company had invested about 1.75 million British
pounds ($3.05 million) in Guizhou, where there
were currently 780 lottery sales points. These
will be upgraded to give results in real time
rather than be downloaded twice a day.
"So
far we are involved only in Guizhou," one of
China's poorest provinces, he said. "But we will
hopefully speak to more provinces. Gaming in China
has a lot of potential." Underlining this
potential, Deutsche Bank has cited the Peking
University Center for Lottery Research as valuing
illegal gambling activities in China - including
underground casinos, slot machines, black market
sports betting, and illicit lotteries - at around
$75 billion. State lotteries are supposed to hand
a proportion of their profits to charity and to
sports development bodies, but corruption is said
to be rife.
Hon said he was "taking a
cautious approach" with his bank in North Korea,
in which Global Group has a 70% stake and
state-owned Koryo Bank has 30%. Stalinist North
Korea is notoriously closed and secretive, but Hon
said up to 200 foreign business people lived in
Pyongyang and the country was gradually developing
a market economy. He said he was "very bullish"
about the future of North-South Korean economic
cooperation, and stressed the potential of the
Kaesong industrial zone, where a large number of
South Korean companies have opened factories.
Hon noted that China's economic reforms
had been greatly boosted by overseas Chinese
entrepreneurs from Hong Kong and Taiwan, who have
cultural, linguistic and family ties with the
mainland, and South Koreans and overseas Koreans
could make a similar contribution to North Korea's
economic development.
"I keep telling my
North Korean friends to make use of the huge
resources and capital from South Korea," Hon said.
"Labor costs are even cheaper than China ...
People are well educated and have good discipline.
They need the right economic policies." Regarding
North Korea's relations with the West, Hon said:
"There have been a lot of misunderstandings on
both sides ... There is a big gap in how they read
the West and how we read them."
Hon noted
that Macau billionaire, Stanley Ho, had a casino
in Pyongyang, and said that "maybe I will talk to
him a bit about banking arrangements". But he
denied that he had any involvement with North
Korea's reported online lottery venture, which is
aimed mainly at South Koreans. North Korea is
highly puritanical and its citizens are barred
from the Pyongyang casino, whose main customers
are Chinese entrepreneurs and tourists.
Hon said he was motivated not simply by
money, but also wanted to "make positive
contributions" to impoverished Third World
countries. "I came to the conclusion that you can
do more good to help more people by making money
first," he added.
This was part of the
reason why he founded a bank on the tiny,
impoverished island of Anjouan in the Comoros in
2002. The Comoros, in which Anjouan has autonomous
status, have endured 19 coups or attempted coups
since gaining independence from France in 1975,
and Hon wryly admitted that "at the moment the
bank has caused me more problems than it is
worth". He founded the bank after he was "asked to
help" by the president of Anjouan to assist in
drafting new financial laws and setting up an
offshore banking industry on the Indian Ocean
island.
Global says it is the only company
authorized by the government of Anjouan to market
financial and banking licenses. But the company
says some websites allege that this is not the
case and that Global is challenging this in the
courts.
Hon, a British citizen, was
educated in Britain from the age of 13 and says on
his website that in just six years he "has built
up a mini conglomerate, with interests in banking,
property development, gaming, finance and leisure
and from which the combined turnover in 2005 is
expected to reach well in excess of 1 billion
British pounds. Even more remarkable is that
whilst building the Global Group of Companies from
scratch, he has managed to pursue so many other
interests both charitable and political."
On the charitable side, Hon was part of a
team that provided North Korea with 120
wheelchairs after a large explosion on a railway
line last year in which 169 people died. There was
speculation, strongly denied by the North Korean
government, that the explosion was a failed
assassination attempt against the country's
all-powerful leader, Kim Jong-il.
On the
political side, Hon is a business supporter of
Britain's governing Labour Party, and a signed
photograph of Prime Minister Tony Blair "to Johnny
and all at Global" is on prominent display in the
company's boardroom. In Britain, his gaming
company, Betex, is seeking a listing on the
Alternative Investment Market, which has a more
flexible regime than the main stock exchange,
while Hon is also actively seeking business
partners for tourism ventures in the Caribbean.
Hon said he employs 115 people worldwide, mainly
in Britain but including about 10 in China and
seven in North Korea.
His other interests
include helping Chinese companies get a stock
market listing in London. These companies span a
wide range of sectors, from biotechnology to
education and tourism. On his website he lists
some 30 companies of which he is founder or
director, and states that Global Group "is growing
at a rapid rate, employing more and more staff and
operating in more diverse areas than ever before.
Under Johnny's chairmanship the group is certain
to go onwards and upwards."
Hon definitely
seems like a man to watch, and you never know in
which exotic corner of the world he is going to
turn up next.
Michael Rank is a
former Reuters journalist who was based in Beijing
in the 1980s. Now living in London, he works as a
translator and writer on Chinese and North Korean
affairs.
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Psychiatrist with a
head for business
