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Good Bad Billionaire
John Fredriksen: Tanker king
00:44:21
Norwegian shipping magnate John Fredriksen owned the world’s largest fleet of oil tankers
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- [00:00]
Simon Jack
This BBC podcast is supported by ads outside the uk.
- [00:06]
Zing Singh
Vanity Fair calls Britbox a delicious streamer. Collider says everyone should be watching. Catch Britain's next best series with Britbox. Streamer claim new originals like Code of Silence.
- [00:17]
Simon Jack
You Read lips right?
- [00:18]
Zing Singh
And Lynley, based on the best selling mystery series see?
- [00:22]
Simon Jack
Hi, Lindley. Take it from here.
- [00:23]
Zing Singh
And don't miss the new season of Karen Pirie coming this October.
- [00:27]
Simon Jack
You don't look like. Please.
- [00:28]
Zing Singh
See? I'll take that as a compliment.
- [00:30]
Simon Jack
See it differently when you stream the.
- [00:32]
Zing Singh
Best of British TV with BritBox. Watch with a free trial today.
- [00:36]
Margaret
Hey, Ryan, that was a fast trip. It was like you teleported.
- [00:39]
Ryan Seacrest
Yeah, just got in. I'll get all my expenses logged, I promise.
- [00:42]
Margaret
Oh, no, you're okay. SAP Concur uses advanced AI so your expense report will practically write itself. Quite the breakthrough. It's like we've been teleported into the future. All right, so just curious, would you give us written permission to convert your matter into energy patterns and reassemble you at, say, random travel destinations?
- [00:58]
Ryan Seacrest
Margaret, are you building a teleporter?
- [01:00]
Zing Singh
No. Yes.
- [01:02]
Simon Jack
SAP Concur helps your business move forward faster. Learn more@concur.com.
- [01:08]
Zing Singh
Welcome to Good Bad Billionaire. Episodes are released weekly wherever you get your podcasts. But if you're in the uk, you can listen to the latest episode a week early. First on BBC Sounds.
- [01:19]
Simon Jack
It's 1986 and we're in a Norwegian jail cell. There's nothing decorating the hard grey walls. The 6 square meters contain just a tiny desk, a wooden chair, a single bed, a sink and a toilet. A. And a man, of course. He's 42, he's tall and he's tough, but he's not doing so well. He's lost weight and is graying at a rapid rate. He shouldn't be there. He knows he shouldn't be there. He's rich. He's well connected. How could he be there? His mind races, so he does the only thing he can do to focus on something else. He picks up a ball of wool, two giant needles, and starts to knit.
- [01:58]
Zing Singh
Welcome to Good Bad Billionaire from the BBC World Service. Each episode, we pick a billionaire and we find out how they made their money.
- [02:05]
Simon Jack
We take them from zero to a million, and then from a million onto a billion.
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Zing Singh
My name is Zing Singh and I'm a journalist, author and podcaster.
- [02:12]
Simon Jack
And I'm Simon Jack. I'm the BBC's business editor.
- [02:14]
Zing Singh
That prisoner doing the knitting was John Friedrichson, a man currently worth over $17 billion.
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Simon Jack
He built his fortune shipping crude oil around the world and for many years owned the world's largest fleet of oil tankers.
- [02:27]
Zing Singh
He's been known as Viking King and Big Wolf and has a habit of making high risk deals that his rivals bulk out, including into war zones and controversial regions.
- [02:37]
Simon Jack
The son of a shipyard welder was once notorious for his rowdy drinking binges and was originally seen as an outsider in the fairly elite world of shipping tycoons. But after 50 years in the business, he is an industry icon.
- [02:49]
Zing Singh
An associate called him an old fashioned adventurer and said that what Friedrichson really enjoys is the cut and thrust of the game.
- [02:57]
Simon Jack
And that game is shipping oil, food, other things around the world. The numbers are massive. The fortunes to be made are enormous. The risks are high as well as the rewards.
- [03:08]
Zing Singh
So let's take John Friedrichson from zero to his first million.
- [03:16]
Simon Jack
John Friedrichsen was born in Nazi occupied Norway in May 1944. He grew up in Valerenga, which is a working class area of Oslo. The Norwegian capital city quickly got back on its feet in that period of post war reconstruction. And John's mother Herdis was a canteen manager. His father Gunnar, as we said, worked as a welder in the shipyards.
- [03:36]
Zing Singh
And John was quick to follow his father into the shipping industry. He left school at the age of 16 to start work as a messenger boy at a ship brokers in Oslo's docks. And you know, he did try and continue his education, he attended night school after work. But he very quickly realized that his day job actually offered him a much greater learning opportunity because he started to avidly follow the information passed between shipping companies. Encoded messages on something called a telex mach. I have no idea what this is Simon. What is it?
- [04:05]
Simon Jack
A telex machine was the precursor to a fax machine. It would just basically would send messages down an electronic like phone line. Basically a very, very early version of a kind of WhatsApp.
- [04:16]
Zing Singh
Right. Or a very advanced version of Morse code.
- [04:18]
Simon Jack
In the docs, these telex machines would carry information about when companies were moving freight. And something clicked for John. Seeing that data flow, he could see his fastidious, his hyper organized mind could see the value of this information. He said that he knew that if he had the right information he could do things in words. He could use that data to make decisions and make money.
- [04:38]
Zing Singh
Not a million miles away from the way some of our tech billionaires make their money now. From data.
- [04:42]
Simon Jack
Yeah, for sure.
- [04:43]
Zing Singh
Now for a quick explainer for people who are not all too hot on how the oil shipping industry works. So there are basically three groups of people who make the money. So first of all, they're the oil traders. They buy oil in one place and they sell it elsewhere for a profit. Very simple. Now, they commonly hire tankers from ship owners. The second group, who often own these fleets of really expensive vessels. But between these traders and the ship owners are people called ship brokers. They are the middlemen and they're the ones who use all this data that Frederickson saw to connect the two. And they are paid a commission on top of that. Now, it might sound simple, but ship broking is a secretive, high pressured, highly competitive industry. And ship brokers actually compete against each other to find the right ship leaving the dock at the right time and place at the best price so they can earn that commission from the oil companies. So every single day, every hour, every minute the ship is working, there's potential profit for ship owners and oil traders. So they pay a really high, high price for this essential service.
- [05:40]
Simon Jack
Yeah, classic middlemen in this world. It's like a form of financial trading in a way, but it's much more hands on than most. There are so many external factors. You've got weather, you've got unexpected delays. But Friedrichson's ability to sort of understand the data and what's going on, where the pieces on the chessboard are moving, meant he was ideal for this job. He worked his way up from messenger boy to running fish cargoes from Iceland to Hamburg, and then became a junior ship broker. And he said, you just have to work hard, look at all the information, do deals quickly when there is good value. We are never just sitting back waiting for the phone to ring. So a proper hustler.
- [06:17]
Zing Singh
And he actually did work very hard. In fact, he says he only sleeps three or four hours a night, which can't be good for you. Now, there's another area that made this confident, sociable young Norwegian such a good fit for his industry and that is his ability to make friends. In fact, one ship broker has said it's a personal business. You provide the interface between companies and clients. You're dealing with people's emotions. Ship brokers at the beginning of their career need to network to build up relationships with contacts. So it helps to be self confident and intuitive. All of which John Frederickson was.
- [06:49]
Simon Jack
Yeah. In any business you're in, the brokers are always the hardest partiers. They're the ones who'll be out late at night. You know, whether this is in insurance or financial services, the brokers are the one who have to have that really close relationship with the client because they want to get the first call when someone wants to do something.
- [07:07]
Zing Singh
And presumably you need livers of steel to keep up.
- [07:09]
Simon Jack
You really do. Anyway. John had already begun building up contacts up and down the sort of food chain of the shipping world. So that by the mid-1960s, he was building a successful career. He was traveling the world making deals from Athens to Singapore. And he soon became known for making fast decisions and it turns out, quick profits.
- [07:27]
Zing Singh
And to make those big profits, he was unafraid of taking big risks, even if that meant sending ships into war zones. While working in New York, he arranged to lease boats the US Navy to ship supplies into the Mekong Delta during the Vietnam War. He's actually said, as long as you made money, you were allowed to do what you wanted. A very billionaire mentality.
- [07:48]
Simon Jack
It's a risky business there, as we already said. And you're right at the cusp of geopolitics here, which is one of the reasons why this story is so interesting. Like so often with our podcast, some of the people who are like colossuses in their entire industry, that industry tells us something about what's going on in the world at the time. And that is true right up to the current moment. But going back to Frederickson's early career, he would have been making good money in the 1960s. But he was like our billionaires always are, thirsty to make even more. And to do that, he needed to move out of ship broking into one of the more lucrative parts of the industry. That's oil trading or owning the ships themselves. In fact, for a while, he'd dabble in both of those things.
- [08:27]
Zing Singh
Now, for context, this was a period of opportunity in oil. Demand was growing and so was supply. In fact, oil was no longer just coming from the big US and Soviet companies. There was also now increased oil production from South America and the Middle East. So in the late 1960s, the business was becoming less dominated by this small select group as more and traders entered the field.
- [08:49]
Simon Jack
And he started to learn to trade oil in Beirut using some of his old shipping contacts. And he also began to trade ship fuel. Now this is the fuel that you actually put in the ships to make them go round. And that's known as bunker oil. But he soon set his ambitions on the third sector of the oil trade. This is the most profitable bit of all, owning the ships. Big money was being made by the ship owners in the 1960s. It's still a sector dominated by some Dynastic magnates and Norwegian Sigvald Bergsen, for example. But there were independent owners making hundreds of millions, millions of dollars when there are only a handful of billionaires in the whole world. Some names you may recognize, Stavros Niarchos, and of course, the person who became a byword for rich people in the 1970s, Aristotle Onassis. And of course, he became famous when he married Jackie Kennedy, Jackie O, JFK's widow in 1968. Friedrichson wanted to be as rich as Aristotle Onassis, and he'd eventually end up even richer.
- [09:45]
Zing Singh
That's really not a bad thing to put on your epigraph, you know, richer than Onassis.
- [09:49]
Simon Jack
He was, I mean, as I say, the poster child for rich people before the technology billionaires we've talked about.
- [09:54]
Zing Singh
Well, it's so interesting that this story kind of almost straddles the period of time where, you know, you could make huge amounts of money because tech was just a glimmer in someone's eye.
- [10:03]
Simon Jack
Yeah, no, we hadn't even thought about, I mean, the IBM hadn't invented the personal computer. Bill Gates would have been in short trousers by this point.
- [10:09]
Zing Singh
And Jackie O was selling herself on the deck of a super yacht. Now, one of the reasons ship owners make these huge profits is that they take on a huge amount of risk. You know, it's not an easy business. They invest incredible amounts of their own money on vessels and then they send them off around the world. World where they can be easily damaged, lost altogether sometimes. And ship owners can be held liable for third party damage to property, to other ships, to the cargo, or for accidents resulting in injury or even the death of the crew.
- [10:37]
Simon Jack
Or massive oil spills.
- [10:38]
Zing Singh
Or massive oil spills.
- [10:39]
Simon Jack
Exactly. And if you add to that the financial risks of fluctuations in things like fuel cost, charter rates, even global exchange rates. And then of course, there are geopolitical risks. Ships get sent to dangerous places. We're seeing that at the moment with those Houthi attacks on ships in the Gulf at the moment. And the technological risk that your fleet can become outdated if your fleet is, is aging. And the other thing, I mean, if you look at. I was just, when we were preparing for this, I was looking at tanker rates. Just this year alone, tanker rates have gone from $15,000 a day to $60,000 a day and back down again. It's incredibly volatile. So that's a factor of four. So these, you know, incredible risks here, which is why the rewards can be so high.
- [11:23]
Zing Singh
So you're juggling real Life risks and financial risks at the same time. But if there's one thing that we do know about John Fredrickson, it's that he is not afraid of risk. In fact, seeing how rich his ship owning clients were becoming, he knew that joining them was a risk worth taking.
- [11:37]
Simon Jack
And by the early 70s, he's built up a fair amount of cash, some capital to start taking risks with.
- [11:44]
Zing Singh
In fact, he was probably already a millionaire at this point. But his early ventures in ship owning soon wiped out that early fortune. In 1973, Friedrichson bought his first freighter, investing 700,000 in a ship called the Caricom. But he soon lost the ship and that whole investment after its engine broke down in the Caribbean. So bad luck there.
- [12:03]
Simon Jack
He also set up a cargo company that went bankrupt soon after it started. Meanwhile, his bunker oil, that's the oil that goes in the actual engine of the ship. That business had been doing well until he invested all the profits into shipping stocks and promptly saw his gains wiped out by a stock market crash in the early 1970s, which was associated with the oil crisis at that time.
- [12:24]
Zing Singh
And this could have been the end of his story. But Fredrikson was not about to give up. So for the next few years, he continued earning money shipbroking. He waited for his opportunity, and he soon found one that would set a pattern for the high risk deals he'd go on to make throughout his career.
- [12:38]
Simon Jack
That's interesting. He's sort of ticking over earning money shipbroking because whether the rates are high or low, you're still making commission on being the middleman, whatever the deal is. Like many of our billionaires, Frederickson found opportunity in a crisis. And that crisis was geopolitical, a world al, the repercussions of which are still with us. The 1973 Arab Israeli conflict, the Yom Kippur War, as it's known, resulted in Arab countries in opec, that is the Organization of Petroleum Exporting Countries, embargoing oil shipments to the US Due to the then President Nixon's support of Israel, demand for oil tanker transport collapsed. Charter rates fell to historic lows. So the industry kind of on its knees at the moment.
- [13:18]
Zing Singh
So John Friedrichson spotted a bargain. He found as many contracts to buy up as he could and began leasing ships on the cheap. And as the embargo drag dragged on, who was then able to buy these ships outright for a fraction of their actual value? Now this was a high risk strategy because the Arab oil embargo officially ended in 1974. But charter rates stayed low for the next few years. And many Norwegian shipping companies actually closed in this period. So he still had to wait out.
- [13:44]
Simon Jack
One of the last people standing. Reminds me of the Forrest Gump bit when he's the last shrimp fisher after the hurricane in one of the it.
- [13:52]
Zing Singh
Pays to stick it out.
- [13:53]
Simon Jack
It pays to stick it out. Being the last person standing, he held his nerve in 78. This paid off big time. Charter rates for tankers rose. He was able to start leasing out the ships on what they call a spot market where deals for these short term contracts for one type shipments are made. He was leasing out his ships at rates that dwarfed what he'd actually paid for them. So this is a really high risk version value investment. Something we talked about in our episodes on people like Warren Buffett, Henty Green. This famous thing of buying something when no one wants it, selling it when everyone's going crazy for it. Buy low, sell high. High. And that netted him $40 million in five years, according to the Washington Post.
- [14:29]
Zing Singh
So in 1978, we can safely say for certain that John Friedrichson was a multi millionaire and his fortune was growing by the day.
- [14:48]
Ryan Seacrest
Hey, everyone. Ed Helms here. And hi, I'm Cal Penn and we're.
- [14:53]
Simon Jack
The hosts of Earsy, The Audible and iHeart Audiobook Club.
- [14:58]
Ryan Seacrest
This week on the podcast, I am sitting down with Jenny Garth, host of the iHeart podcast. I choose me to discuss the new Audible adaptation of the timeless Jane Austen classic Pride and Prejudice. This is not a trick question. There's no wrong answer. What role would I play?
- [15:18]
Simon Jack
You know what? I can see you as Mr. Darcy.
- [15:22]
Zing Singh
You got a little Colin Firth.
- [15:24]
Ryan Seacrest
Okay, that's really sweet. I appreciate that. But are you sure I'm not the dad? I'm not Mr. Bennett here. Listen to Earsay, the Audible and iHeart Audiobook Club on the iHeartradio app or wherever you get your podcasts.
- [15:44]
Margaret
Hey, let's talk about your expense report.
- [15:46]
Ryan Seacrest
I didn't submit an expense report.
- [15:48]
Margaret
You will. Custom saddles and dog training services are not within policy. What are you talk SAP Concur uses advanced AI to audit and automatically detect out of policy expenses. It's the breakthrough I needed to focus more on our future.
- [16:01]
Ryan Seacrest
These are my future expenses.
- [16:03]
Margaret
Yes, and self defense classes are out of policy.
- [16:05]
Simon Jack
I'll need self defense classes.
- [16:07]
Margaret
You will?
- [16:08]
Simon Jack
For what?
- [16:08]
Zing Singh
It's a big dog.
- [16:09]
Simon Jack
SAP Concur helps your business move forward faster. Learn more@concur.com.
- [16:14]
Ryan Seacrest
Hey, it's Ryan Seacrest for Albertsons and Safeway. Now through November 4, shop the annual beauty event and save $5 when you spend $25 on select beauty products. Products shop in store or online for items like Dove Body Wash Native Body Wash, Cetaphil gentle skin cleanser, Dr. Squatch body wash, Neutrogena Hydro Boost Water Gel, Dial Liquid Hand Soap and Olay Body wash. And say $5 when you spend $25 or more. Offer ends November 4th. Restrictions apply. Offers may vary. Visit albertsons or safeway.com for more details. I love ravioli. Since when do you speak Italian?
- [16:49]
Margaret
Since we partnered with SAP Concur their integrated travel and expense platform and breakthrough solutions with AI G Time back to dive into our financial future. We expand into Europe in 2027, so I'm getting ready.
- [17:00]
Ryan Seacrest
Well, you can predict the future.
- [17:01]
Margaret
I can predict you'll like that message.
- [17:03]
Simon Jack
What message?
- [17:04]
Ryan Seacrest
Oh, hey, we all got bonuses.
- [17:05]
Margaret
You can save for college now.
- [17:07]
Ryan Seacrest
I don't have kids.
- [17:08]
Simon Jack
You don't say SAP Concur helps your business move forward faster. Learn more@concur.com so he's a millionaire. Let us now take him from a million to a billion. At the start of the 1980s, things are looking pretty good for him. Not only was he rich, he was happily married. In 1973, he'd met Inge Astrup, a dentist from a well to do Norwegian family. They soon tied the knot. In 1983 they had twin daughters, Catherine and Cecily, born in London.
- [17:41]
Zing Singh
But soon his harmonious home life began to contrast with the problems his business was having. Once again, war was having a volatile effect on the international oil trade. This time it was the Iran Iraq War, which raged from 1980 to 1988. And this conflict, conflict between the countries with the world's third and fifth largest crude oil reserves, made freight rates unstable. It had severe implications for Friedrichsen, who was struggling to charter those oil tankers.
- [18:07]
Simon Jack
But typically, he made a very risky move. He agreed to take his ships right into the heart of the war zone.
- [18:15]
Zing Singh
He made a deal to ship Iranian crude oil to a refinery in Syria, one of Iran's very few allies. But his ships weren't just entering a war zone. They were seen as legitimate targets in that war. In fact, they became embroiled in what was dubbed the Tanker War, a series of military attacks on oil tankers made by both sides in the wider conflict between 81 and 88, Iraq made 283 attacks on ships, while Iran attacked 168. So a dangerous business.
- [18:42]
Simon Jack
But Frederikssen had his eyes wide open. He knew what he was getting into. The attacks had started two years before he made his deal. But he said there was no other business at that time. But, you know, he's taking risks with other people's lives here as well, right?
- [18:55]
Zing Singh
Yeah. I mean, if your tanker gets attacked by. By a military, that is your tanker at the bottom of the ocean. So for the next few years, every two months, Friedrichson's ships would move 700,000 metric tons of oil from Iran's Kharg island terminal out of the Persian Gulf, down the Arabian Sea, then into the Gulf of Aden, up the Red Sea, through Egypt's Suez Canal and up to Syria's Mediterranean coast. This was an arduous journey, but it was the first part in the Persian Gulf near Iraq that was most dangerous. Friedrichsen says his ships were subject to a direct hit there three times, including. Including in 1986 when Iraqi pilots targeted one of his boats with Exocet missiles and killed two crew members. Yeah, this is high stakes business.
- [19:39]
Simon Jack
Yeah. One wonders how much, say, the crew had of the risks they were taking.
- [19:42]
Zing Singh
Yeah. There's not a billionaires that we've talked about who directly wade into geopolitical conflicts, risking the lives of the people who work for them as a result.
- [19:50]
Simon Jack
No. I can think of our drug runner, El Chapo, our arms dealer, Victor Boy Boot. Probably those are very high risk scenarios because they are not only just war zones, they're actually arming either side on the caves.
- [20:02]
Zing Singh
And Victor Boot.
- [20:04]
Simon Jack
But it's very interesting. Oil is still the most valuable commodity in the world.
- [20:09]
Zing Singh
Not even compared to gold.
- [20:10]
Simon Jack
Oh, no. I mean, we can live without gold. You can't eat gold. You can't put gold. You can't put gold in your petrol tank.
- [20:18]
Zing Singh
I love liquidity powered by gold.
- [20:20]
Simon Jack
You can't make lipstick out of the byproducts of gold.
- [20:23]
Zing Singh
True.
- [20:24]
Simon Jack
And not only that, but it is that. It's kind of like the lifeblood of the entire world economy to this day. I mean, a lot of people would like to see that end, of course, but the stakes of getting it from A to B are so incredibly high, economically, politically, geopolitically, that the risks people are prepared to run to make that happen and the money people are prepared to pay to do that is almost without limit. And so I think that, you know, this is the high register of risky.
- [20:51]
Zing Singh
Businesses is the epitome of what you call a dirty business.
- [20:54]
Simon Jack
Yeah, it sure is dirty. Dirty and essential for the world economy to this day. But let's get back to Fredriksen and what he's up to for a while. At least this deal between Fredriksen and Iran was mutually beneficial. One unauthorized biography even described Friedrichsen as the lifeline to the Ayatollah Ayatoll Khamenei member who took over from the Shah in 1979. In that revolution, his ships enabled the export of Iranian oil, bringing in money vital to fund the regime's war. And for his part, Frederickson was paid handsomely. That's the other thing that we've got to remember, that oil for some states is definitely part of what fuels the war machine.
- [21:28]
Zing Singh
Russia being a case in point, it is a lifeline. But this relationship between Friedrichsen and Iran soon soured as the war stretched the country's resources. They held back payment of a $10 million lease fee that Friedrichsen was owed.
- [21:41]
Simon Jack
So Friedrichson took some pretty drastic action. He moved his fleet out of Iranian waters. Some of his ships were already loaded with Iranian oil. And Frederickson refused to move his ships until he got paid.
- [21:52]
Zing Singh
Iran was quick to escalate. They sent a gunboat out to attack Friedrichson's ships. Now, luckily for him, US war warships, which were already in the region to escort Kuwaiti tankers through the Persian Gulf, intervened. So they sailed between Friedrichson's fleet and the Iranian gunboat to quiet the feud. And eventually it was settled when Friedrichson agreed to sell his ships outright to the Iranian National Tanker Company. Now, again, this is a high stakes gamble. You are gambling with the lives of the people on your boat.
- [22:20]
Simon Jack
Well, I think this is where most people say he made his really serious fortune during this period. And what's quite interesting, he said, right, I've had enough of this. You buy the ships off me, I'm out in a way. So in a way, he's sort of cashing in his chips, right? Or cashing in his ships, as it turns out.
- [22:34]
Zing Singh
There you go. Sorry.
- [22:36]
Simon Jack
Now, up to this point, Frederickson had kept a pretty low profile. In fact, it wasn't until 1986 that he publicly admitted that he was a ship owner. Previously, he'd presented himself as someone acting on behalf of a group of unnamed investors.
- [22:50]
Zing Singh
And that was probably because of how controversial some of those deals were. Now, it wasn't just Iran. Fredrickson secretly broke embargoes to trade with South Africa during the apartheid. He later told the Wall Street Journal he more secretive in those days, but claimed all Norwegian shipping firms trade with South Africa. Of course, this is the embargo to not trade with the apartheid regime that countries were meant to be following.
- [23:13]
Simon Jack
And that famously robust defense. Everyone was at it yeah, exactly.
- [23:18]
Zing Singh
As you'll find in many defensive people doing things that they shouldn't.
- [23:21]
Simon Jack
But he was about to run out of luck in a pretty public way, because in 1986 his offices in Oslo were raided by the Norwegian Tax Authority.
- [23:29]
Zing Singh
He was outspoken in his criticisms of Norway's tax rules. He's even recently moved to Cyprus, which was a country that doesn't tax dividend based income, where he would eventually naturalize as a citizen. But he's still a Norwegian. In 1986 and the authorities were accusing him and his senior executives of fraud.
- [23:46]
Simon Jack
Specifically, they claimed Frederickson's crews had been ordered to steal some of the Iranian crude oil they'd been transporting and use it to power their own ships. He was also accused of defrauding his ship's insurance company and endangering the lives of his crew. And that's because using crude oil as marine fuel is actually incredibly dangerous. Crude oil can blow up a ship's engine or release hazardous fumes.
- [24:09]
Zing Singh
The authorities believe the crude oil was being siphoned off due to the discrepancy between the weight of the fuel at loading and unloading. So the fuel weighed a certain amount and then it mysteriously seemed to lose weight as it was unloaded. But Frederickson's side argued this could be easily explained. So under usual circumstances, crude oil is left to sit before shipping, allowing sand and sediment to settle and then be removed. Removed. But during the Iran Iraq War this step was skipped out on because Iraq had destroyed Iran's shore tanks on Kharg Island. So Fredriksen's crew had to load unfiltered crude oil straight onto the ships. And the sand and sediments only settled during the journey. So that resulted in a lower oil weight on delivery.
- [24:48]
Simon Jack
I'm afraid I'm not an expert enough on the sand and sediment in a crude oil container to comment on whether this is a very good excuse or not. But even so, Fredriksen was forced to turn himself in to authorities. They refused him bail. He spent the next four months in a pre trial jail in Norway. This is where we started this story. He was placed in that six meter cell. He lost weight with the stress and fearful the case wouldn't go his way, he directed his colleagues to sell his fleet, even though valuations were going up at the time. A decision that would ultimately cost him $300 million.
- [25:19]
Zing Singh
He said the whole experience was terrible. But he was lucky that he was able to pursue the one pastime that kept him sane. Knitting. While in jail, he made sweaters for his wife Inga, and His two infant daughters. A very Scandinavian way to spend time in jail.
- [25:33]
Simon Jack
I can almost picture these jumpers. Something like Sarah Lund from the Killing.
- [25:37]
Zing Singh
Yeah, exactly. Very sort of very twee, very kitsch. And actually, two decades later, all three of the women said that they'd kept their hand knitted sweaters from Dear or Dad.
- [25:46]
Simon Jack
Okay. After four months, Fredrickson was released. The main charges were dropped, the less one settled. Frederickson paid a quarter of a million dollar fine, but admitted no guilt, so he never even went to court. Fredrickson, though, claimed the whole case was motivated by jealousy. It is great wealth. Presumably he felt he came out of it stronger. The whole affair, he said, helped me a lot. Later I would show my ab abilities to come back.
- [26:08]
Zing Singh
But before this comeback, of course, there had to be a party. So, out of jail, Friedrichsen became a regular at Oslo's fashionable restaurant Theater Caffeine. And there he became known for his lavish spending. He'd buy drinks for the whole bar. He'd give tips of a hundred dollars. He even had his own private table, which locals nicknamed Cog island, which was a nod, of course, to his work in the Iran Iraq War.
- [26:31]
Simon Jack
This is pretty typical ex broker behavior, in a way. Work hard, play hard. That ethic of his became legendary. A Swedish fellowship owner said that when he was traveling, Frederickson needed three brokers with him. One recovering from the night before, one on duty now, and the other preparing for the next day.
- [26:47]
Zing Singh
And there are a lot of stories of his antics in this period. A former banker who worked with him tells the tale of a night out in the 90s when Friedrichson ordered champagne for an entire club, but disappeared at 2:00am, leaving his bankers to foot the $15,000 bill. Now, Friedrichson denies the incident ever took place, but the banker didn't seem to mind that much anyway. He was clearly making them so much money, it was just a write off.
- [27:11]
Simon Jack
Just let it go. He's one of our best clients. He's what they call in the business a whale. He's like so valuable to them. But the partying came to a stop on 15 February 1996, when one of Frederickson's ships, an oil tanker called Sea Empress, ran aground off the coast of Wales. It spilled 72,000 tons of oil across 120 miles of coastline. It was one of Britain's biggest oil spills at the time. Talking about the event later, Fredriksen said, my hair turned white. I started smoking again.
- [27:39]
Zing Singh
But he'd proved before that he knows how to act in a crisis, and he did so once again, and now this is really where his comeback begins. And he really shifts the public's perception of him. He did something quite unusual, which is he decided to talk publicly about the disaster. Now, most ship owners hide from the limelight when a spill happens because understandably they want nothing to do with it. But he got out in front of the media and he was really open with them. He said the Sea Empress bill was tragic. He suggested it might even force him to quit the industry as a result. And this dis brought him a kind of newfound respect in Norway. In fact, there were national newspapers praising him for this responsible handling of the tragedy.
- [28:18]
Simon Jack
But guess what? He didn't quit the industry. Instead, he doubled down and invested yet more money in new ships. He'd actually been rejuvenating his fleet since the end of the 1990s, building it up again, having sold off a significant chunk of his boats, if you remember, to Iran. He bought supertankers and smaller ships and got rid of all his oldest ships. And in fact, some have noted that one of the secrets to Friedrichson's success have been that he doesn't seem to love his ships in the way other shipping magnates do. And I've actually weirdly met a couple of shipping magnates and they are very attached to their boats, their ships, children, whatever, children. And if you go into a tanker owning office and I've been to a few, you'll find in glass cases they will have models of all the tankers in their fleet. Lovingly reconstructed. Must be quite expensive. I don't know who makes these things because they have very detailed models of their tankers. But he wasn't like that. He was solely focused on the profit margins. And one employee said that actually Friedrichsen has probably only been on a few of them and that he'll sell them as soon as he needs to.
- [29:19]
Zing Singh
It's so funny because you can imagine other shipping magnates looking at this and thinking, oh well, he can't make that much money because he doesn't love it in the same way that I do. But maybe not loving something is the key to making money from it.
- [29:29]
Simon Jack
More ruthless. Maybe.
- [29:31]
Zing Singh
Now, after the Sea Empress disaster, Fredriksen made a really big and expensive call. He would now now invest solely in a new breed of highly priced, spill resistant, double hulled vessels. And he would lead the way in these safer, spell free fleets. Now this decision was applauded and his reputation shifted from being known as this partying war profiteer who'd been accused of fraud to that of a responsible Industry leader, leading the way forward, leading the.
- [29:56]
Simon Jack
Way into safer ships. Make sure I've learned from my mistakes. I'm going to buy ships where that is much less likely to ever happen. But guess what? His early adoption of double hulled vessels proved to be a very good business decision too. He'd already realised a lot of ships built in the 70s were wearing a bit thin. And after a series of big spills throughout the 1990s, oil companies became willing to only charter the safer tankers which Friedrichsen's fleet now boasted. So his investment quickly paid off in higher profits.
- [30:24]
Zing Singh
And in the 1990s, he was further expanding by buying up publicly listed companies companies. In 1996, Friedrichsen invested $55 million to take over a shipping company called Frontline. In 97, he purchased a tanker company, London Overseas and freighters, for 132 million. A shipping analyst said Fredriksen's past is no longer an issue. People are interested in how he runs his companies and how he makes money, both of which he appears to do with some panache.
- [30:51]
Simon Jack
But he really flexed his muscles with his next acquisition. Swedish firm ICB Shipping didn't want to be bought. Its chairman desperately fought off a Fredriksen take takeover. But he ran a tough campaign. For the next two years, he would take out full page adverts in newspapers. He wrote angry letters to board members, he put pressure on shareholders. And these hostile takeover tricks were quite common in the us. But the chairman noted no one had seen these sorts of tactics before in Sweden. And he said Fredriksen could be quite brutal, were his words. But also he knows the shipping business. And sure enough, Fredrickson finally won the battle and took over the company in 1990.
- [31:27]
Zing Singh
All of these purchases were bringing John Friedrichson to the brink of becoming a billionaire. Absorbing ICB Shipping's fleet added 37 tankers to Frontline's already impressive roster. That made it one of the world's biggest tanker groups. And indeed, within five years of his purchase of Frontline, for? 55 million, it had a fleet of 80 ships valued at a total of $4.6 billion.
- [31:49]
Simon Jack
And the timing of this expansion, being a big player now was Perfect. In the mid-1990s was we saw the very rapid emergence of China on the world economic stage. And their accelerating demand for oil coincided with a shortage of the ships to carry it. Tank charter rates rose from an average of $11,000 per day in 97 to $100,000 a day by 2004. So a factor of 10 almost. And during that time, Frontline shares the Companies just bought exploded. They returned an average 70% every year from 1999 to 2007. That's astonishing.
- [32:26]
Zing Singh
Yeah, if you're kind of business and you're looking at a 70% return every year, you've got dollar signs in your eyes. Now it seems fair to say John Friedrichson was a billionaire at some point in the year 2000, if not before, because of all of this. That year, Frontline's revenues almost doubled to $697 million. And he continued to acquire even more companies.
- [32:47]
Simon Jack
Yeah, he had a big fight with a Greek shipping company over the junk bonds. These are the sort of risky IOUs issued by a bankrupt Vancouver based shipping company. Golden Ocean bought 17 cents for every dollar of their face value. So a $65 million equity investment, that's putting in money that doesn't need to be paid back. That gave him control of another 17 tankers worth a billion dollars. So by the end of 2000, after another takeover, added another six vessels to his fleet. He became the world's richest ship owner.
- [33:17]
Zing Singh
See you later on, asses. And in 2001, Forbes magazine added him to their billionaire list for the very first time. They estimated his wealth to be 1.2 billion. Billion. Probably a very serious underestimate, but he has definitely made it. John Fredrickson is a billionaire.
- [33:38]
Simon Jack
So let's take him beyond a billion and bring it up to the present day. It's now nearly a quarter of a century since he became a billionaire. Back then, in the early 2000s, his fleet of ships and his wealth had already surpassed Aristotle and Nas's. At his peak, Friedrichsen had moved to London from Cyprus to become one of Britain's richest people. He bought a 3,000 meter square house with 2 acres, acres of garden in Chelsea upmarket area for $57 million, one of the highest prices ever paid for a London home. At that time, I didn't even know.
- [34:08]
Zing Singh
You could get a garden that was two acres wide in London.
- [34:11]
Simon Jack
What, in Chelsea? No.
- [34:12]
Zing Singh
Wow.
- [34:12]
Simon Jack
You can only see these things by helicopter. I think the mere pedestrian doesn't get.
- [34:17]
Zing Singh
To see these places hidden behind lock and key. So that house actually proved to be another very SharesHD investment. In 2006, it was reported he turned down an offer of 200 million for that house from another one of our billionaires, Roman Abramich.
- [34:31]
Simon Jack
But in the intervening years, he's made some much more significant investments than in the housing market. In the 1990s, he started buying oil rigs and selling them on for a profit. Then in the 2000s. He made another bold play by setting up a company called seadrill, buying two semi submersible oil rigs on spec. And now these mobile rigs are used for very deep sea drilling. They were a huge investment. They cost him nearly a billion dollars. Buying them with no contracts at all from the oil companies that might be using them was unheard of. Heard of. Frontline Vice chairman Tor Olav Trom said, Everyone was laughing at us at the beginning.
- [35:05]
Zing Singh
But it didn't take long for that to change. Over the next few years, demand for the rigs skyrocketed as it became clear they produced huge amounts of oil. By 2008, there were just 39 deep sea rigs worldwide and Fredrickson owned four of them. Now that is a significant chunk of a major market. So by 2012, Seadrill was worth $18 billion in total. Troem, Fredrickson's top deputy, said, John hates the offshore business. He doesn't think it's fun, but he's very good at it.
- [35:33]
Simon Jack
Yeah. But not all of investments were winners, though. He made an unsuccessful move into travel. He became the biggest shareholder in the German cruise company tui. But after disagreeing with management, he failed in an attempt to install himself as the chairman and his deputy Troim on the board. So he sold up in 2014, saying it was his worst deal ever.
- [35:52]
Zing Singh
And Frontline was in trouble in 2000 2011, when low freight rates and high levels of debt led to shares dropping 80% in value. The company lost $530 million. He had to put in half a billion of his own money and restructure the company. But he did manage to save it.
- [36:08]
Simon Jack
And also the accoutrement of that every billionaire needs. He bought a third of a football club, Valarenga. But that was an investment he never expected to make money. The club comes from the same area of Oslo he grew up in. And he cleared all of the football club club's debts.
- [36:21]
Zing Singh
Number one supporter there.
- [36:22]
Simon Jack
Yeah.
- [36:22]
Zing Singh
So Friedrichsen's greatest holding now is actually in a fish farming company called Moe. In 2003 he bought a stake in it and increased his share until he controlled it. And in 2009 he took the company public and acquired its competitors to make MOE the world's largest producer of farm raised salmon.
- [36:40]
Simon Jack
Okay, so from oil to fish. But there was some sadness along the way. Friedrichson's wife died in 2006. They were together to the end. His partying days seemed to be behind him. In 2014, said, I've quit drinking. Drinking spirits I only take wine and beer these days and I've quit smoking, although that is boring.
- [36:59]
Zing Singh
At 81, though, he is still very active in his business and has said, I've been doing this for 50 years. If I stopped, I would probably drop dead. He does own a private jet. You know, the classic billionaire flex. But when asked if he owned a yacht, he replied, a yacht? No, I never have time. I prefer to stay ashore. Quite ironic for a ship owner.
- [37:19]
Simon Jack
Ship owner, say yacht. Are you crazy? No, I'm not going to sea anyway. Time now to judge him. This is where we look at a few categories and we mark them 0 out of 10. So we start with wealth. He's richer now than he's ever been. Forbes estimates his wealth at over 17 billion. That puts him just outside the top hundred in the world.world. in 2012, though, he surprisingly said, I owe nothing to J. To Norwegian journalists and Interview despite them being wrecked, to the 75th richest person in the world.
- [38:00]
Zing Singh
Now, there's a good reason for this, though, because it's thought that a lot of his businesses are being controlled through trusts, which he's placed them in in order to minimize inheritance tax when they are passed on to his daughters when he dies. Remember, he is 81.
- [38:12]
Simon Jack
Yeah. He's always been very keen to hold on to his wealth. He's very critical of Norway's tax rules. Norway has got quite some of the highest taxes in Europe, if not the world. And he threatened in 2024 to move more of his business to Cyprus, where you get charged much lower tax. And later that year he moved businesses out of the UK due to the new Labour government's axing tax breaks for foreign nationals, a process started actually under the Conservatives, but accelerated by Labor.
- [38:40]
Zing Singh
Well, in terms of absolute wealth, he is pretty wealthy.
- [38:43]
Simon Jack
Yeah. Given he wanted to eclipse Onassis. And Onassis back in the 70s was. Was the poster child for rich people. I think that even though he's nowhere near a kind of Musk or Bezos, it's a solid six for me.
- [38:59]
Zing Singh
I think that because he's in the business of buying these enormous tankers and I did look up pictures of them, I mean, they're the size of entire skyscrapers.
- [39:07]
Simon Jack
It looks like.
- [39:08]
Zing Singh
Sometimes I feel like he's a seven for me. There's just something that is so kind of classic rich person. Billionaire, ship owner. Yeah, exactly. It's almost like this is old school money in a way that a tech billionaire just kind of still feels a little bit like a nouveau riche.
- [39:24]
Simon Jack
Yes, I agree with The Norwegian and the Greek shipping magnates got kind of, I'm seeing it through slightly sort of 70s tone glasses. Do you know what I mean?
- [39:33]
Zing Singh
Big sunglasses, gold chains, slightly shuts out. And buttons, like, ever so slightly too low.
- [39:39]
Simon Jack
One button too low. Yeah, yeah, exactly. All of that. Okay, seven for you, six for me. Controversy, plenty of this.
- [39:46]
Zing Singh
Oh, yes. There's one thing that we need to mention, which is in 2008, he found himself involved in one of the biggest oil manipulation cases. In 2011, US regulators tried to sue him and other traders for allegedly making 50 million by squeezing markets in 2008. Now, at the time, he said, this is Obama having a go in revenge for the BP oil spill. It was settled in 2016 for 16 and a half million dollars. But, you know, he finds himself in the. These kind of geopolitical scrapes and controversies all the time.
- [40:16]
Simon Jack
Yeah. Frederickson also attracted criticism for helping Russia with the opening up of oil reserves in the Arctic's Kara Sea, for which he was awarded the Russian Order of Friendship by Vladimir Putin in 2015. I bet he's not wearing that in public these days.
- [40:29]
Zing Singh
No, it's probably tucked away in a discreet drawer at home somewhere.
- [40:32]
Simon Jack
Also, his involvement in South Africa, he admits that he was trading oil with an apartheid South Africa. He was heavily involved in the Iran. Iran stuff. I mean, in a way it goes with the territory, but it doesn't make it that less controversial.
- [40:45]
Zing Singh
Yeah. Especially given that, you know, some people did actually lose their lives.
- [40:49]
Simon Jack
I think sending your ships, knowing the risks, with people on board into war zones when. And some of them actually died, one hopes it weighs heavy on one's conscious.
- [40:58]
Zing Singh
Playing devil's advocate, you could argue that people know what they're doing, getting into the business and getting onto that ship.
- [41:03]
Simon Jack
So on controversy, I think controversy is an 8 for me. I mean, it does go with the territory somewhat, but so what?
- [41:10]
Zing Singh
Yeah, I think it's an 8 out of 10 for me. When people's lives are being lost, I think that nudges you up on the scale.
- [41:16]
Simon Jack
Okay. On the other end of it, philanthropy, giving back. We don't know exactly how much money Fredriksen has donated, but it's been reported to be several hundreds of millions to hospitals in Norway. And then there's. His wife plays a part in this as well.
- [41:30]
Zing Singh
Yes. So his main focus for philanthropy has been cancer research because his wife Inga died of cancer in 2006, and he's donated generously to medical research. So I feel like for philanthropy, he's scoring better than some of Our billionaires who do absolutely nothing.
- [41:46]
Simon Jack
Still, I don't know. I'm not that impressed with several hundred million. I mean, sometimes you just don't know. And you can. It's hard to be critical for all we know is given billions. Right. So we just don't know. So I think I'm going to give him a. I'm going to give him a 4.
- [42:02]
Zing Singh
Right.
- [42:02]
Simon Jack
An ignorant, ignorant 4.
- [42:05]
Zing Singh
I'm gonna go slightly lower and give him a 3 out of 10. I feel like it makes sense. You donate to Norway if you're, you know, Norwegian, but it's not exactly a country that is in desperate need of cash.
- [42:15]
Simon Jack
We all. We all. Yes, exactly. They've got their own sovereign. They've used their incredible oil wealth to put into a kitty, which is their sovereign wealth fund. So philanthropy. What did you say?
- [42:25]
Zing Singh
I said three.
- [42:26]
Simon Jack
I said four. Okay. And then power and legacy, obviously, clearly a very powerful person within the shipping industry. What do you make of that? This?
- [42:34]
Zing Singh
Well, it's kind of interesting because I feel like if, if you weren't in the ship in the oil business, you probably wouldn't have no idea who this man is. Yeah. And I kind of feel like he almost likes it that way. Even though he has surpassed Aristotle and asses wealth, he's never quite become synonymous with wealth in same way that Aristotle and asses have.
- [42:53]
Simon Jack
No, he hasn't. He doesn't have that profile. I mean, that's because I think, you know, technology billionaires have eclipsed all these. These old industry billionaires in many ways.
- [43:01]
Zing Singh
Also, he did not marry a famous political widow.
- [43:04]
Simon Jack
That's true. But. But let's go back to people calling him lifeline to the Ayatollah. I mean, basically, during the Iran Iraq War, Fredrickson, you could argue, was probably one of the most important players in that conflict.
- [43:18]
Zing Singh
I mean, if you look at it from one perspective, maybe he was even propping up the regime.
- [43:22]
Simon Jack
Yeah.
- [43:23]
Zing Singh
Because he was clearly, you know, helping the them kind of fund everything through the sale of oil.
- [43:28]
Simon Jack
Yeah. In all these things, you can always say, well, if he hadn't done it, would somebody else have done? But he was a consumant or the arch risk taker, so maybe he was unique in that respect.
- [43:37]
Zing Singh
Maybe other people wouldn't have taken on the same risk to sail into a war zone.
- [43:42]
Simon Jack
I think that I'm going to give him a six for power and legacy. Listen, could he pick up the phone and speak to the current ayatollah? He probably could.
- [43:53]
Zing Singh
Yeah, that's true. And you know he did receive a medal from Putin, so he could probably pick up the phone for Putin too.
- [43:58]
Simon Jack
Yeah. Okay, I'm gonna upgrade mine to eight.
- [44:01]
Zing Singh
I'm gonna go with. Ooh, yeah, I think I'm gonna go with an eight.
- [44:07]
Simon Jack
Okay, eight from both of us. I mean, the thing about some of our billionaires is that they find themselves at the heart of international events, and that is certainly true here. Frederickson is right at the center of what I would call the lifeblood of the world economy, which is the transport of oil around the world. So if you're going to be the in that which he is now, then you occupy an incredibly interesting place in global commerce and geopolitics.
- [44:33]
Zing Singh
And yet he's strangely a very apolitical figure. You know, he'll do deals with anybody, he'll sail into any war zone, he'll trade with any country as long as it makes him money.
- [44:43]
Simon Jack
Yeah.
- [44:43]
Zing Singh
Having said that, however, he was at the forefront of making what is a dirty business quite a bit safer with those double hold ships. You know, he actively invested in those to make sure that a spell never happened again on his. So, you know, there's good as well as the bad.
- [44:58]
Simon Jack
Yeah. I mean, a fascinating character. He is political in one sense. He doesn't like Norwegian taxes.
- [45:03]
Zing Singh
Well, yes, but then I think that's just classic billionaire politics, isn't it?
- [45:07]
Simon Jack
Yeah. So we're going to ask you, is he good, bad, or just another billionaire? Get in touch to tell us what you think.
- [45:14]
Zing Singh
Lots of you have been in touch to give your judgment. On our very first episode of this new series, Arnold Schwarzenegger listener Eva thinks he's just another billionaire. She goes on to say, I'd say he's just another billionaire, but in a very specific way. I don't mean that as dismissive because I think Barnard is incredibly unique. I think we can all agree with that. It's just that to me, a billionaire is somewhere primarily driven by money. And based on what I learned from your episode, that's not him. He seemed curious about money and smart about it. Having Warren Buffett as a mentor says a lot. I agree with that. But wealth wasn't his purpose and I think that is true. You know, your driving purpose in life being wealth is one of those billionaire traits. And Arnie seemed to have a little bit more of a relaxed attitude towards it.
- [45:57]
Simon Jack
Yeah, fair enough. Harsha from India thinks he's a good, good billionaire. You both are doing an amazing job with the podcast. Thank you very much. I listen to every day while traveling to the Office. We appreciate that. I really enjoyed the episode on Arnold Schwarzenegger. Harsha writes, he's not like other billionaires who only focus on business. He's a true all rounder. Despite his personal life issues. I think he's an inspiring and diversified billionaire. I also really appreciate the way Simon explains financial concepts like mutual funds to Zing. It makes the podcast both fun and educational. You're welcome.
- [46:28]
Zing Singh
Oh thanks so much. In one ear and out the other, I'm afraid. No, I do remember it. Just do not ask me to explain mutual funds. That is something I would have to think about for a fair bit of time. Well, Mark from Saskatchewan, Canada goes even further. Love the show. Arnold should be classified as a great billionaire even if he was penniless simply because he's so large at life. I mean he is also physically large so that does make sense.
- [46:50]
Simon Jack
Yeah, we love hearing your thoughts. So please do continue to get in touch and thanks for those we've got today. You can email us at goodbad billionaire, all1wordbc.com or drop us a text or a WhatsApp to 001917, 6861176.
- [47:08]
Zing Singh
That's goodbadbillionairebc.com or 001917686, 1176 so who.
- [47:16]
Simon Jack
Do we have next?
- [47:17]
Zing Singh
We have someone whose name you might not know, but she is actually the richest self made woman in America and.
- [47:25]
Simon Jack
I think the second richest self made woman on the entire planet. And like you I'd never heard of Diane Hendricks. And she made money a pretty old fashioned way.
- [47:35]
Zing Singh
That's right. She made money through nuts and bolts. Well more specifically through roofing. Through putting a roof on people's heads.
- [47:41]
Simon Jack
Yep, that's Diane Hendricks. Next on Good Bad Billionaire. Good Bad Billionaire is a BBC World Series Service podcast. It's produced by Mark Ward with additional production by Tamsin Curry. Paul Smith is the editor and it's a BBC Studios audio production for the BBC Ward Service.
- [47:57]
Zing Singh
The commissioning editor is John Manell.
- [48:06]
Ryan Seacrest
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