Destination Munkistan: A look at Peter Munk’s new Adriatic playground for the super-rich
The latest project of the gold magnate Peter Munk is a seaside resort and tax haven for fellow billionaires in the post-Soviet backwater of Tivat, Montenegro. A delirious tour of a world of champagne-drenched parties, supersize yachts and the recession-proof Ultra-High Net Worth Individual
There are birthday parties, and then there was Nathaniel Rothschild’s party this past July. The financier, scion of the prominent banking family and future baron was turning 40 and spent £1 million on the weekend-long extravaganza. The venue: Porto Montenegro, a newly developed luxury resort and marina in the Montenegrin coastal town of Tivat, on the southeast side of the Adriatic Sea. It was the sort of gathering that marks the end of an era or the birth of an empire—and in a way, for Europe’s youngest and smallest democracy, it was both.
Four hundred guests arrived at the village airport on private jets or stepped off the fleet of super-yachts that washed ashore from the world’s most glamorous tax havens—the Grenadines, Gibraltar, Grand Cayman. The attendees were described in the Guardian society pages as “200 ugly rich people and their poorer but more attractive partners,” or, as one guest more generously put it, “plutocrats and the women who love them.” A number of the partiers were so fantastically rich they could bankroll whole armies (which the birthday boy’s family, in its heyday, once did): Russian oligarch Oleg Deripaska (who arrived on his £70-million yacht, the Queen K); the wealthy Egyptian Sawiris family (who have embarked on their own Montenegrin development nearby); King Leruo Molotlegi, ruler of a tiny, platinum-rich part of South Africa, who hit the dance floor in a fabulous dashiki; British politician Lord Peter Mandelson; Jimmy Choo honcho Tamara Mellon; the historian Niall Ferguson and his Dutch-Somali partner, Ayaan Hirsi Ali, a feminist critic of Islam. There was a healthy smattering of European royalty, as well as members of the Guinness and Goldsmith clans.
Munk bought the Port of Tivat for €155 million. His co-investors include two Rothschilds and the Russian billionaire Oleg Deripaska
While the guests swallowed gallons of Taittinger around Porto Montenegro’s 215-foot-long infinity pool (decorated with floating disco balls imported specially from London), the actress-turned-DJ Michelle Rodriguez presided over the turntables. The dancing continued until the early morning hours.
Surveying the scene with a paternal pride was Peter Munk, the billionaire octogenarian, Holocaust escapee, philanthropist and chairman of the world’s largest gold mining company. Munk is the leader of a small but significant exodus of Torontonians to the rapidly expanding Porto Montenegro. This tribe, who have affectionately dubbed themselves Munkistanis, either went there to work for Porto Montenegro or have started side businesses (restaurants, interior design, wine distribution, banks) to cater to the growing numbers of yacht tourists that Porto Montenegro is drawing. The resort is Munk’s vision, and he’s the main investor. A slice of Yorkville on the Adriatic.
To be a proper member of the ultra-rich you need to own a super-yacht. Super-yachts are personal, multi-storey luxury boats over 25 metres in length, with some stretching up to 160 metres. Munk’s own super-yacht, the Golden Eagle, is 40 metres long and requires a year-round staff of five. When the boat isn’t cruising the Côte d’Azur or the Dalmatian Coast with the extended Munk family on board, it’s docked at Porto Montenegro. Munk’s floating neighbours there include billionaires from China, Norway and Russia. Berths aren’t cheap. Annual leasing fees rise to €26,110 for larger crafts.
The unremarkable town of Tivat is situated in a remarkable place: the Bay of Kotor, a UNESCO-protected world heritage site of rugged mountains plunging into pristine turquoise waters, and the deepest natural harbour on the Adriatic coast. The conditions are ideal for docking a big boat. Two serpentine bays conjoin to make up Europe’s southernmost natural fjord. Byron once declared the region the world’s “most beautiful encounter between the land and the sea.”
However, when Munk arrived in 2006, the town was far from beautiful. A one-time Soviet navy base, Tivat has a population of 14,000. There were no Western-style hotels or restaurants, no quaint bakery-cafés. Four enormous concrete piers stretched out several hundred metres from shore. The piers, which Munk bought from the Montenegrin government, are the commercial backbone of his proposition. They are bomb-proof and up to 20 metres deep. Constructed 120 years ago by the Austro-Hungarian military, they were later used to dock Warsaw Pact–era submarines.
Five years and hundreds of millions of euros later (at least €650 million will be spent before it’s done), the port is well positioned as the newest hot spot on the Mediterranean coast. The Porto Montenegro hype has begun. The development has recently been featured in Elle, Condé Nast Traveler and Monocle. Last year, Vanity Fair declared Porto “the archetype for the heights to which the country aspires: high-end appurtenances to give high-rollers high times.” There are plans for Montenegro’s first golf course and, eventually, a small boutique hotel and casino. Three condo developments on the marina have been constructed and sold, and two more phases are currently under construction. Units are not cheap: prices start at €155,000 for studios and soar up to several million for a four-bedroom penthouse with a private rooftop pool. Buyers often lease berths in the marina.
When I visited early last summer, the first stage of Porto Montenegro was close to completion, with heavy equipment and teams of construction workers labouring around the clock. The main pier, known as Jetty One, is the harbour’s grand promenade. It is a 200-metre-long boulevard of whitewashed concrete and stone, with two rows of mature palms imported from Uruguay. Dozens of yachts were docked in the port’s 185 berths, ranging from modest sailboats to floating palaces. (Another 465 berths are planned.) The high-end splendour stands in contrast to the untamed scenery. For now, but not for long, these magnificent hills are free of palatial villas and chi-chi nightclubs. At the end of Jetty One sits an enormous military crane—it’s an eyesore, a remnant of the port’s industrial past and a reminder that even the most gorgeous visions can have ugly beginnings.
Peter Munk was born in 1927 in Budapest to a well-to-do Jewish family. They managed to escape the Holocaust on the famous Kasztner train, which delivered some 1,600 Jews to freedom after Hitler invaded Hungary. Munk’s mother, Katharina, did not flee with the rest of the family, having divorced his father some time before. She survived Auschwitz and later reunited with her son in Canada, where she died in 1988. Munk likes to tell the story of a letter she wrote to him after being liberated by the Americans at the end of the war. “Go to North America to be a free man,” she wrote. “Get a decent, nice job and earn a lot of money.”
Munk was 20 when he arrived in Toronto. Coming here, he has said, was “like terra incognita, like going to Mars.” But he learned English, integrated quickly and gained acceptance into the University of Toronto, where he obtained a degree in electrical engineering. After graduating, he co-founded Clairtone, a high-end stereo and TV manufacturing company that became a household name but eventually floundered.
He married his first wife, Linda Gutterson, daughter of an American pharmaceutical entrepreneur, in 1956. They had three children: Anthony, who is a managing director at Onex and on the board of Barrick; Marc-David, who is an emergency room physician in New Mexico; and Nina, a writer for Vanity Fair. Peter and Linda divorced in 1970, and three years later he married his current wife, British-born Melanie Bosanquet, with whom he had two more children, Natalie and Cheyne (an artist and a full-time mother, respectively).
After the demise of Clairtone, Munk founded the Southern Pacific Hotel Corporation, which became the largest hotel and resort chain in Australasia, an experience he has drawn on at Porto Montenegro. In 1983, he founded Barrick Resources, which went public on the TSE. Munk gradually began to focus on gold, first acquiring a mine near Wawa, Ontario, and later expanding into Quebec and the United States. Today, Barrick is the world’s largest gold miner, with operations in Australia, Africa, North America and South America, and mining and exploration projects in such far-flung countries as Papua New Guinea, the Dominican Republic, Peru, Chile, Colombia, Pakistan and Tanzania.
Gold mining can be as controversial as it is lucrative, and Barrick has been accused of creating unsafe environmental conditions, contaminating water supplies and steamrolling over the concerns of indigenous communities in undeveloped countries. In Tanzania and Papua New Guinea, members of Barrick’s security staff were arrested for sexual assault. The company responded with an internal investigation and a round of firings. Earlier this year, Munk was criticized for referring to the offences as “a cultural habit.” (Student protesters at U of T hung a banner with the offending quote over the front door of his eponymous Institute for Global Affairs.) Barrick, meanwhile, posted record profits—and earnings of $10 million a day—as precious metal prices continued to soar. The company struck gold again at two new Nevada sites this fall.
Despite his age—he’s now 83—Munk remains active in his businesses. He also makes frequent, splashy donations. His foundation gave $135 million to various Canadian institutions, mostly in the fields of medicine and education. He handed an unprecedented $35-million gift to the University of Toronto last year, the most recent in a series of multi-million-dollar donations. A program of public debates now bears his name and has attracted such international figures as Tony Blair, George Monbiot and Niall Ferguson. The donation proved controversial—critics of Barrick’s business practices have campaigned to get Munk’s money out of U of T, to no avail. The lefty business journalist Linda McQuaig alleges that his cash comes with strings attached and that Munk exercises influence over university policy. U of T’s officials deny this is the case.
Munk, for all his public generosity, remains a mysterious figure. You won’t find his name on any Canadian rich list because he doesn’t actually own much equity in Barrick, despite being its founder and chairman. He is thought to have vast investments in foreign property and was the chair and CEO of the real estate investment trust company Trizec. When we spoke, in a series of phone interviews, he was buoyant, gregarious and charming—and occasionally irascible. He described how he first visited the Bay of Kotor almost a decade ago while cruising the Mediterranean one summer with his family. “I have five children, and the only way I can keep those bastards together is by locking them up on a boat,” he said, chuckling.
A seasoned super-yachter, Munk had grown weary of Monaco, Antibes, Saint-Tropez, Portofino and Capri. The boats got bigger, he noticed, while the ports stayed the same size. The crowds were becoming unbearable, the harbours unswimmable. Munk decided it was time to forge further afield. He became entranced by the Adriatic coast, and he scouted by helicopter for investment opportunities in Montenegro.
Munk was weary of the crowds in Monaco, Saint-Tropez and Capri. He’d build his own port for super-yachts in Tivat
The tiny country, a bit smaller than the state of New Jersey and with a population of just 625,000, had voted to split from Serbia and adopt the euro (it was granted official EU candidate status last December), and Munk believed it could be the next Monaco. But the process of going independent has been slow, in part because of Montenegro’s well-documented history of government corruption. Norway’s CHR Michelsen Institute, a research group that monitors corruption, reported widespread bribery and a lack of transparency among Montenegrin officials. The government insists it is cracking down on money laundering, smuggling and other organized crime.
When Munk spotted Tivat, the harbour was a wasteland of scrap metal and toxic detritus, home to 40 enormous Russian submarines and boats equipped with missile launchers. Where most people would see desolation, the hangover of years of Soviet repression and Balkans conflict, Munk saw a development opportunity. “I met with the prime minister myself,” he told me. “I didn’t send an ambassador.” He bought the entire port from the government for €155 million in 2007 and is now the majority owner of the Porto development, with a 54 per cent stake. His team of co-investors consists of Lord Rothschild and his son Nathanial; Bernard Arnault, the chairman of the luxury conglomerate LVMH; Oleg Deripaska; the eastern European property developer Sandro Demijan; and Munk’s son Anthony. (The Montenegrin government removed the boats as well as most of the subs. Munk kept two for the development’s planned marine museum.)
Despite the decay, the naval base, then called Arsenal, was the biggest employer in the area, providing jobs for 480 Montenegrins. The employees weren’t happy when Munk announced he was closing the base down. Some 3,500 people protested in the streets of Tivat. Munk recounts one on-site meeting during which he feared for his safety after the mayor of Tivat left him in a boardroom with six hulking Arsenal naval workers. “It was like a gang of Cypriots from the last century,” he recalls. “They said to me, ‘Mr. Munk, we feel you’re stealing our heritage, you don’t belong here, please go away. People come from overseas and make up lovely stories, they buy our land and we never see them again.’ ” Munk’s attempt at a sales pitch wasn’t well-received. “Try to describe Portofino or Saint-Tropez to a steel worker in Tivat. They’ve never seen a yacht before. They’re just worried I’m bamboozling them and stealing their pensions. But the fact was guys were getting IOUs from the government; no one paid them.”
Munk’s standard response to critics is that international development—whether it’s a gold mine in Papua New Guinea or a super-yacht marina in Montenegro—brings opportunity to otherwise impoverished and stagnant economies. Sure there was initial resistance in Tivat, he says. But now that the big boats are starting to arrive and jobs are materializing, the townspeople have come around. “They understand; they look and see how the businesses and shops have been created because people come and spend money there. Their whole lives have been broadened forever.”
Despite Montenegro’s reputation for corruption, the country attracts foreign investors. Tourists don’t pay tax on yacht fuel or provisions, and residents pay only nine per cent personal income tax. Igor Lukši´c, the prime minister, told me that Montenegro’s aim is to improve the economic environment by getting foreign investors in, cutting red tape and easing the pain of paying taxes. These incentives proved understandably seductive to Munk.
Munk’s gold may have paved the way to Porto Montenegro, but the full transformation of Tivat couldn’t have happened without the effort of a small band of young entrepreneurs. If the mercurial Canadian billionaire is the emperor of Munkistan, then the project director Oliver Corlette—an affable Australian with a crinkly smile and a Harvard MBA—is Munkistan’s popular president. He began his business career in New York, working for another Canadian billionaire, Gerry Schwartz of Onex, and joined Porto at the beginning. (It took some persuading, he admits, to convince his wife, a New Yorker, to join him.) Like most of the Porto employees, he talks about the evolution of the place with unbridled capitalist enthusiasm. “It’s an extraordinary opportunity as an investor to be able to sit down with the prime minister and say, ‘Let’s work out the tax and labour law for your country.’ ”
The social centre of Porto is One, a restaurant and bar at the foot of Jetty One. It’s co-owned by the Torontonian Michael Shore. Back in 2004, Shore managed Toronto’s first London-style members’ club, the Spoke, which he opened with his partner and school friend Galen Weston Jr. Early members of the Spoke (myself included) will remember that under Shore’s tenure, the place enjoyed a brief moment when it seemed like the centre of the city. For the first couple of summers after it opened, the Spoke’s rooftop patio was the place to be. Shore, a theatre producer by trade and a lawyer by training, brought in a hand-selected mix of members from all over the city’s social strata and Kinsey scale. After he left, most founding members agree, the club was never quite the same.
In 2007, Munk invited Shore to a meeting at his Toronto office. Shore had prior connections to the family. Munk’s daughter Natalie was a friend from undergrad at Brown University, and Munk had also been an early investor in Spoke Productions, the theatre production company Shore and Weston had founded before opening the club. “He was super-excited about the Porto Montenegro project, hugely enthusiastic, and obviously he’s a great salesman,” Shore says.
A few weeks later, Shore was in London, doing some research for the club, and he took a side trip to Tivat to tour Munk’s site (military security passes were still required to enter the port). Shore was impressed with the area’s physical beauty, and also with its raw business potential and the opportunity to get in early. Munk offered him a three-year contract to head up Porto Montenegro’s branding. He had two weeks to pack up his life in Toronto. Immediately he was sent off on an all-expense-paid tour of Europe’s most fashionable harbours. “When I first told people I was moving here, they were like, ‘Where?’ ” Shore says. “But the opportunities are extraordinary. In Toronto you can bang your head against the wall trying to figure out your next move.”
“The only way I can keep my five children together is by locking them up on a boat,” Munk says
Shore is now a permanent resident of Montenegro. He worked for Munk for three and a half years before deciding to go out on his own last year. Shortly after opening One, he launched a second venture, Berba, a wine distribution business. The idea came from monitoring the unfulfilled thirst of the super-yachties. “They’d be due to roll in, and a staff member would phone up Porto and say, ‘We’d like 25 cases of Dom on arrival please.’ And we’d have to say, ‘Um, sorry, this is Montenegro, that’s not possible.’ ” Shore built a climate-controlled wine storage warehouse and brings in 14,000 bottles a year, driven in from Western Europe. He is currently the only game in town.
One doubles as party HQ and the all-day marina clubhouse. There is a near-constant influx of boat crew members and yacht owners (one of Porto’s real estate agents confided in me about a torrid affair she’d been having with a transient Italian crewman). On a typical day, the patio at One is filled with the sounds of Russian, French, Italian, German and English chatter over the clink of cocktail glasses and silverware.
At a dinner party I attended there, the guests were composed of roughly half Canadian Porto staffers, half internationals. We were joined by Viia Beaumanis and Ashton Westwood, both expat Torontonians who relocated to Porto Montenegro to help Shore set up the two businesses. (Westwood is an investor in Shore’s businesses.) Beaumanis, a tall, gregarious brunette with a fondness for cigarettes and wicked asides, worked as a features editor at Fashion magazine before setting off to travel the world. Westwood, her long-time paramour, opted to join her a bit later, after a five-year stint as a film rights agent at his father’s Toronto literary agency.
The dining room filled up with a youthful crowd. Westwood turned up the Radiohead remix on the sound system and replenished champagne. Dancing broke out sporadically, and the village gossip (the intrigue of who’s sleeping or fighting with whom) frothed and fizzed around the room. Perhaps the most remarkable thing about the scene, similar versions of which are no doubt going on in tourist towns the world over, was that everyone in Porto seemed genuinely thrilled to be there, in one of the planet’s few growth markets. While the rest of Europe staggers under the sovereign debt crisis and America flounders, Montenegro is filled with a buoyant sense of life on the upswing.
A few weeks later, at a dinner party in London, I was seated beside a Canadian named Andrew Williams, who plans to make a fortune in Porto Montenegro. He’s a partner with the London-based boutique financial services firm Shadbolt, and he first discovered Tivat while visiting Shore, an old school friend from Upper Canada College, on a weekend vacation. Williams examined Munk’s progress and saw an opportunity for expansion. He and his business partner Rob Hain (the former CEO of AIM Trimark and another Toronto native) formed plans for a private bank. They aim to capitalize on Montenegro’s growing number of visiting super-yachties who will, he reckons, soon move their assets to the country.
Williams passed me a folder full of pitch sheets for Shadbolt’s Montenegrin arm. The cover sheet featured a photo of the glorious Bay of Kotor and text that read, “Montenegro’s great strengths are its incredible beauty, its close economic and social relationships with Europe, Canada and the United States, and its enviable stability in the region.”
As he explained to me, the conditions—a combination of location, a welcoming residency and citizenship program, incredibly low taxation and a fast-growing number of tourists pouring in—are ideal for a private bank specializing in investment management for individuals, family offices, trusts and foundations, i.e., people with loads of cash.
He enthused about Munk’s marina (“It’s small, it’s chic, it’s glam—you wouldn’t want to take your super-yacht to a tourist trap like Dubrovnik”) with the authority of someone who winters in St. Barts and has seen many of the same boats docked in both ports. What excites someone like Williams is the chance to gain access to the higher echelon of moneyed people known in investment circles as “ultra-high net worth individuals,” a.k.a. UHNWIs. While this group lost 24 per cent of its wealth in 2008, it also saw a rebound of 21.5 per cent the following year. And unlike the rest of us, the UHNWI population has effectively bounced back to its pre-crisis rates of growth.
Needless to say, this is good news for Porto Montenegro. “The Porto development is targeting a few higher-net-worth people, not the masses,” Williams explains. He believes it’s a safe strategy in a volatile market.
For all the rosy economic news, Porto Montenegro has had some setbacks. The Four Seasons group was originally part of the development plans but pulled out after 2008, leaving Porto Montenegro without a major hotelier partner. Munk maintains that the split with the Four Seasons was his decision alone. “I brought them in and I sent them away,” he says. “After the crash we just didn’t feel that we could economically sustain a hotel.”
Corlette, the Porto Montenegro project director, echoes Munk, saying 2008 was a blessing in disguise. “The timing was actually lucky for us,” he says. “We hadn’t started major construction yet, so we had a chance to adjust.” When I ask him if there was any chance of the whole thing going up in smoke, he laughs. “The super-rich may have lost some of their wealth,” he admits, “but don’t forget, they’re still the super-rich. In the long run, it has very little impact on their lifestyle.”
The wealth of one particular person matters most in Porto Montenegro. Although Munk presides over the world’s largest pot of gold, his heart is in the Bay of Kotor, at the helm of the Golden Eagle. In Tivat, Munk’s paradise for billionaires, he’s the undisputed emperor. A super-yacht in a very small pond.