For Friedrich Hayek and his friends at the Institute of Economic Affairs (IEA) it was a vindication of everything they believed about the perils of Communism and the culmination of their efforts in promoting the free market as opposed to planned economies.

For the people of eastern Europe it would prove a pyrrhic victory as mafia capitalism would prove as hostile and vicious as any dictatorship and living standards would actually fall. And for Lord Lawson, having just resigned as chancellor, the newly opened markets were simply a business opportunity.

Nine days after Nigel – now Lord – Lawson resigned as chancellor protesters in East Berlin began tearing down the Berlin Wall, but a Lawson free from political restraints began forging his own doctrine in the newly available markets to the east, in his bid to remain in power and in the company of the world’s industrial leaders.

Lawson, having fallen from grace, hoped to land on his feet. He was inundated with offers. He became a non-executive director of Barclays Bank which the Independent newspaper claimed was “a $400,000 a year, two-days-a-week job on the board”.  

He took another job with Guinness Peat Aviation, an Irish aircraft leasing company, which paid about £50,000 a year to attend four board meetings, provide financial advice and act as chairman of its new financial arm.

Open theft

Public concerns about the revolving door between government and big business were dismissed by Lawson as “sanctimonious humbug,” and “the politics of envy and an awful lot of humbug.”

He said at the time: “I obviously am now earning a substantial amount, but I sacrificed far more financially during those 10 years with the Government”.

Lawson took advantage of the housing price boom he created by selling his house at Newnham Lodge, Newnham, for £1,850,000.

But it was an offer from his old friend Charles Jonscher to become chairman of the Central Europe Trust (CET) that really captured his imagination. The company had been formed while Lawson was brooding about resigning.

This was the great wave of asset stripping, privatisation and sometimes open theft of the industry built under tyranny, sometimes with forced labour. Some would make billions. Millions of families would lose everything.

Ironically, it would land a subsidy from Lawson’s old department “to help Poland with its first privatisation studies”.

“The countries of Central and eastern Europe were suffering the pain and travails of making the transition, never before achieved, from the disasters of communism and the command economy to the complexities of capitalism and the market economy,” Lawson wrote at the time.

“Making a success of this…is the great European challenge of the 1990s.” The former Soviet bloc would needed “the know-how, the training, the management, and marketing skills, and the practical example of capitalism at work, that only Western private investment can provide.”

CET would in the coming years work to help British and European oil, tobacco, weapons and pharmaceutical monopolies ravage the newly opened eastern European markets before new domestic companies had a chance.

Tony Fekete, based in Germany, was hired by Lawson at the CET offices in Piccadilly to help start up the company. “We had to do lobbying – government level lobbying, which usually was the state privatisation of industry,” he told me.

“One of the companies that we were advising was Coca Cola who were desperate to get into eastern Europe.” Lawson was apparently keen to work with cigarette manufacturers.

“They were all interested in buying tobacco plants and all of the farms were bought by the big players, and I think they did come along to one or two lunches,” recalled Fekete. “We definitely had contact with all the tobacco companies.”

Sex line mogul

Patrick Sheehy at British American Tobacco wrote a private letter to Lawson in January 1991 declining an invitation to lunch: “Thank you for your letter of 23rd January inviting me to join one of the lunches you are hosting for businessmen to discuss business and economic conditions and prospects in Central Europe,” he said.

“I would very much like to join you for a lunch of this kind and will ask my secretary to contact your office to try and find a mutually convenient date.” Sheehy at that time was good friends with Lawson’s son, Dominic.

The tobacco boss was director of the Spectator when Dominic was editor. Lawson was wise enough to know the potential fortunes in buying up Russian grown tobacco but also shrewd enough to refuse an invitation to be publicly associated with the deadly industry, and declined the invitation from the Tobacco Alliance.

Fekete also recalls how CET went into business with an Amsterdam-based pornographer who was cashing in on sex lines and horoscopes. Lawson’s firm secured the first “value added” telephone licence in Hungary, the equivalent of the 0898 premium lines.

“We intended to set up horoscope lines as sex services were outlawed in Hungary,” Fekete told me: “It should have earned us a huge amount of money.”

But his business partner suddenly went bust and they were forced to work with a sex lines mogul who “offered sex, and horoscopes and things like that” in the Netherlands.

“People are excited to call the numbers, they weren’t aware of the rates,” he reflected. “That was not something you want to be most proud of – offering a very low value added product with a high price relying on people’s insensitivity to time.”

This Author

Brendan Montague is editor of The Ecologist, founder of Request Initiative and co-author of Impact of Market Forces on Addictive Substances and Behaviours: The web of influence of addictive industries (Oxford University Press). He tweets at @EcoMontague. This article first appeared at Desmog.uk.