Ivar Kreuger was an industrial and financial genius who sought complete control over the operations of his global match conglomerate. At the height of his power, Kreuger ran a monopoly that controlled 75% of all global match sales. Kreuger succeeded, in part, by introducing innovations in finance that are still being used today, but which have also been used by companies such as Enron and others to deceive investors. His insatiable desire for complete control and the promises Kreuger made that couldn’t be kept led to the collapse of his company in 1932 and billions of dollars in losses to investors.
Miracle Man
Ivar Kreuger got his start in the construction business, introducing new engineering techniques in Sweden that enabled him to win contracts to build the Stockholm Olympic Stadium (1912) and Stockholm City Hall (1913). He succeeded not only because he used the latest construction technology, but because Kreuger was able to complete these buildings on time and on budget. Unlike other construction companies, Kreuger promised to pay a penalty if buildings were not completed by the contract date. He also asked that he receive a bonus if the projects were completed early, which they often were. Kreuger was a wheeler and dealer from the beginning. He knew how to incentivize his clients to both win contracts and to profit from them.
This post was published at Wolf Street on September 28, 2014.
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