So you took over the Ivory Coast contracts, which give you access to the finance. My partner and I put up $3.5 million in capitalization to start Armajaro”. I went with the contracts to two banks, Credit Agricole and Natixis, and they agreed to finance it. This was still going when I left Phibro so I took those contracts over, agreeing to pay Phibro back when we got the money. That was 80,000 tonnes a year of cocoa, which was significant at that time and gave us a big part of the market. In the end I negotiated to get back about $0.35 or $0.38 on the dollar, to be paid in cocoa. “The original contract was to pre-finance the Ivory Coast but the cocoa price went down. “Phibro didn’t give me any financing but they had a very big contract with the Ivory Coast to repay the debt left over the cocoa debacle in the 1980s – it was about $200 million, a lot in those days.” Where did you get the financing to start up the business? So I really took over the cocoa part of their business”. I took over Phibros’ staff from cocoa and I also took over their contracts. But it suited me any way after four years I was fed up with them. The act was quite specific about what a bank could and couldn’t do. The Glass–Steagall Act still existed at that time, which meant that Citibank could trade oil but they couldn’t trade food. “Four years later Citibank bought Phibro. It was really crazy but it was a great finishing school.
For cocoa that meant being pretty big time, too big for the market, especially in the 1990s. Andy Hall was my boss there but the way he traded was to just double up the size of the position every cent down on the market,and then to double up on the way up. The financial management of the firm can be an expansive discussion to have, egowise, when its management is comprised of ex-traders. They have overpaid to trade a commodity and at the end, they have lost. Through this episode of 2010, a firm has revealed the speculative character of its operation in commodity trading they have cut the corners, waging a merciless war for the supply control. Traders – Secrets in the Commodity Game Part XI- Armajaro, the Trade who Blown up a $3B Sales Merchant Business.
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