Bloomberg News

Wall Street $100 Million Man Makes Vermont Downton Abbey

March 12, 2013

Oil Trader Hall Selling Soap to Sausage After $98 Million Payday

Andrew J. Hall's Newhall farm, which sells lavender soap and grass-fed Angus beef, in Reading, Vermont. Photographer: Max Abelson/Bloomberg

Andrew J. Hall, the former Citigroup Inc. (C:US) oil trader whose pay package of about $100 million ensnared him in the fight over compensation at bailed-out banks in 2009, is selling handmade lavender soap and grass-fed Angus beef from a farm in Reading, Vermont.

Hall, now chief executive officer of Occidental Petroleum Corp. (OXY)’s commodity-trading unit Phibro, has bought more than 2,400 acres in Reading, according to local real estate records. He has torn down at least half a dozen homes in the 666-person central Vermont town and opened an appointment-only art museum there last year. His holdings, including Newhall Farm, are valued at more than $13.8 million, the records show.

“Look at the rest of the world, it’s going to hell in a wheelbarrow, and he’s trying to keep a little section of Vermont the way it was,” said John Mitchell, a former town auditor.

Hall’s impact on the 251-year-old town, a four-and-a-half-hour drive from New York City, shows what Wall Street pay that attracts Washington’s attention can buy. While Mitchell called Hall’s work in Reading “wonderful,” more than a dozen other residents said they were less sure, citing razed homes, the lower tax rate Hall pays on some of his land and a dispute with a next-door neighbor over power lines.

Skyrocketing Oil

A Briton who graduated from Oxford University in 1973 with a degree in chemistry, Hall has worked at Phibro for more than 30 years. He wagered on skyrocketing oil prices last decade and is referred to as “God” by competitors, according to Tom Bower’s “Oil.” The 2010 book credits Hall with “perfecting the ‘squeeze,’ causing the oil market to change, and forcing other traders to buy from him at a premium.”

Citigroup (C), which acquired Phibro in 1998, awarded Hall about $100 million for his work in 2008, according to a person at the bank with knowledge of his compensation who asked not to be identified because the information isn’t public. That was the year Citigroup received a $45 billion taxpayer bailout.

His pay was criticized in 2009 by Kenneth Feinberg, who oversaw compensation at rescued banks for the U.S. Treasury Department, and Vikram Pandit, Citigroup’s then-CEO. The lender agreed to sell Phibro to Occidental that year, saying 2009 pay for some executives would be deferred and reinvested.

Hall, also CEO of hedge fund Astenbeck Capital Management LLC, which managed $4.8 billion according to December filings, declined to comment about his pay. He wrote in an e-mail that his 18th-century farmhouse and three guest homes are “modest in scale” compared with “other ‘high-end’ dwellings in Vermont.”

Breakfast Sausages

Hall, 62, has been buying property in Reading since the 1980s, town records show. Land he owns valued at $6 million is enrolled in a state program called current use, which lowers taxes on farms and forests to encourage agriculture and curb commercial development.

His farm makes wood-fired maple syrup, which it sells for $65 a gallon, as well as botanical soaps, ice cider, wildflower honey, eggs and Berkshire-pig breakfast sausages, its website shows. The products are available in Vermont and Connecticut stores and online.

Newhall is “preserving Vermont’s heritage for our farm and your future,” according to the website, which lists “heritage breed Berkshire pigs,” “heritage breed chickens,” and “Randall Cattle, Vermont’s only declared Heritage Breed.” There’s also a reference to “old-fashioned heritage” in the maple syrup section.

“It’s kind of an enlightened Downton Abbey,” said Laird Bradley, principal broker at Woodstock, Vermont-based Williamson Group Sotheby’s International Realty, referring to the TV drama about an English estate. “You can come up to a place like this, you can acquire some land, you can exercise vision, you can do some things that really have an impact.”

‘Ecological Wound’

Hall isn’t the only wealthy person who transformed the landscape. His farm is about 15 miles from Laurance Rockefeller’s Woodstock estate, now a national historical park that also displays the Standard Oil heir’s art. Industrialist William Koch is building a private Wild West town with saloon and jail in Colorado, while last year Oracle Corp. (ORCL:US) CEO Larry Ellison agreed to buy 98 percent of Lanai, the Hawaiian island.

A new addition to Hall’s domain is the Hall Art Foundation, which displays works from the commodity trader’s private collection in a renovated dairy farm. Children are “welcome at our discretion,” according to the gallery’s website.

The inaugural exhibition features paintings by Georg Baselitz, whose castle in Germany was bought by Hall, and Edward Burtynsky’s large-format photographs of an abandoned Vermont quarry and waste from nickel production. The work shows mining’s “environmental impact as an ecological wound,” according to the foundation’s website.

Nude Portrait

In 2011, Hall’s Westport, Connecticut-based Astenbeck owned a stake exceeding $1 million in Brazil’s Vale SA, one of the world’s largest nickel producers, a regulatory filing shows. Besides oil, Phibro trades precious and base metals, according to the company’s website. Its parent is the biggest oil producer in Texas and operates in Iraq, Bahrain and Colombia.

Hall and his wife, Christine, who also own works by Anselm Kiefer and Eric Fischl, were included in a list of 200 top collectors (MLCOL) last year by ARTnews.

A Fischl portrait of Hall and his wife nude on a beach was shown at Mary Boone Gallery in New York in February 2012. Hall removed an 82-foot-long Kiefer sculpture from the lawn of his home in Southport, Connecticut, in 2007 after a fight with the town’s Historic District Commission went to court.

Pancakes, Pledge

In Reading, where the general store is decorated with deer heads and a recent town meeting featured a pancake breakfast, the U.S. Pledge of Allegiance and a presentation by fifth-graders on goats, Hall draws mixed reviews.

William Hunt, whose family has grown timber in Vermont for half a century, said the homes Hall bought and razed could have housed less-affluent locals.

“The fact that he’s buying up land and tearing houses down, I’m against that,” said Hunt, 61. “I think the people who grew up here should be able to live here.”

Mitchell, the former auditor, said he raised the issue with Hall and that the trader said the houses were uninhabitable.

“And he’s right,” Mitchell said.

Hall has improved the area by contributing money and land and by buying dilapidated property, according to his e-mail.

“The ‘houses’ that we razed were in general shacks, camps or trailer homes,” he wrote. “The sellers were happy to sell to us at prices that were MORE than fair.”

Carol Boerner, who runs a clinic north of Reading offering face-wrinkle reduction, said she was happy with the changes.

“I’m a yuppie,” she said. “I like pretty.”

‘See Nothing’

Paul Mendoza, 46, a retired firefighter, sold Hall his father’s 2,000-square-foot, four-bedroom house across the road from Newhall for about $250,000, he said. Hall took it down.

“He has so much money that he’s just decided that he’d rather not see something there when he can see nothing,” Mendoza said.

Hall has been involved in a dispute with Newhall neighbor Carl Stariknok over a proposed power-line route through Hall’s property to electrify Stariknok’s house and hunting camp. The State of Vermont Public Service Board investigated last year.

“I should have gotten power with no questions asked, without a war,” Stariknok, 62, said this month, smoking a Pall Mall and driving past Hall’s farm toward the camp, decorated with hornets nests, turkey feathers and raccoon tails.

While Vermont law requires utilities to provide service, customers have to pay to secure rights-of-way, according to a report on the dispute. It recommended closing the investigation, citing Stariknok’s concerns about expense and court time.

‘Chichi Boutiques’

Hall wrote in his e-mail that he would have granted an easement if the power lines were buried, “for aesthetic reasons,” and offered to pay half the burial cost.

“You can’t fight big money,” said Stariknok, who has instead installed solar panels.

A Newhall sign greets drivers on the road to the Hall and Stariknok properties. The Burlington, Vermont-based ad agency Shark Communications updated Newhall’s logo “from one of ‘farm’ to something closer to ‘estate’ quality,” according to a 2010 Shark blog post. Branding changes would help Newhall sell new products “in upscale locales” and “chichi boutiques everywhere,” the agency wrote.

“He keeps everything in a Vermont style, the way Vermont should look,” said neighbor Sally Barngrove. “He’s a Brit. I suspect this part of Vermont is maybe a little reminiscent.”

Editors: Robert Friedman, Peter Eichenbaum

To contacts the reporter on this story: Max Abelson in New York at +1-212-617-6027 or mabelson@bloomberg.net

To contact the reporter on this story: Max Abelson in New York at mabelson@bloomberg.net

To contact the editor responsible for this story: David Scheer at dscheer@bloomberg.net


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