BUSINESS ABROAD: The Jasper Scandal

Britain’s postwar prosperity has spawned a new breed of high-flying financiers: the take-over men. As they took over one company after another, the stocks often soared dizzily, and they raked in fat profits. The British government paid little attention to the raiders until the stocks controlled by one of the biggest, H. Jasper & Co., collapsed, and trading of the shares in 15 Jasper companies was stopped. Last week the British government launched a full-scale investigation into where Jasper got his money and how he built his empire.

Dapper Harry Oscar Jasper, 54, is a Berlin-born refugee who started a foreign-currency business in 1936. After serving as a private in the British Army during World War II. Jasper quickly built up a small investment bank, joined forces with another Berlin refugee, a sharp lawyer named Friedrich Grunwald. Operating H. Jasper & Co., the two began to move fast, using the take-over expert’s favorite tactic: after acquiring the controlling shares of a company, they would sell off its property, lease it back, use the cash acquired to buy more companies. H. Jasper & Co. gathered up blocks of apartment houses, movie theaters, billiard halls and a tannery, raked in high profits from one speculative deal after another.

The Horn of Plenty. In the midst of Britain’s increasing credit squeeze, Jasper’s supply of money seemed endless. It turned out that recently most of the cash came from the State Building Society, a publicly owned savings-and-loan association supported by small depositors and designed to help people buy their own homes. Its motto: The Horn of Plenty. The horn was easily tapped by Jasper & Co. through Grunwald, who was also a lawyer representing State Building; he arranged for the Society to lend to Jasper on mortgages. All told, it lent Jasper $21.2 million of its currently estimated $40 million in assets, some $10.3 million without any security. To get around a law requiring that building societies list separately every mortgage over $14,000, Jasper and the Building Society set up a string of more than 451 phantom companies with such freewheeling names as Snowfleck, Pantic, and Vagid, lent them each something under $14,000.

By last summer Jasper & Co.’s empire numbered 14 companies worth $42 million. It was ready for its biggest deal: the take-over of London’s powerful real-estate firm, Lintang Investments, which owns the biggest block of apartments (1,200) in Britain. Jasper bought 51% of Lintang’s stock from the company, offered to buy all other outstanding, publicly held shares in a $20 million deal. While Lintang was pending, Jasper also offered to buy up the stock, worth about $4,000,000, in Cardiff’s Ely Brewery (259 pubs).

Out of Cash. In mid-September, Jasper & Co. ran out of cash. Shareholders who had accepted the Jasper bids were not being paid off. Within three days the market value of Jasper’s empire fell from $48 million to $33.5 million, and Jasper sadly announced that Grunwald had fled to Israel. Building Society stockholders were offered only one shilling (16¢) payment on their shares a month.

The Laborites made some election propaganda out of the scandal, but much more than politics was involved. Whichever party wins, the case has made it virtually certain that the next Parliament will enact legislation, similar to that in the U.S., to protect Britain’s small investors.