It’s Good to Be King
Apparently, Charles III is quite well off.
Jane Bradley and Euan Ward, two London-based reporters for NYT, seem to be going for an exposé with their page 1 report “King Charles Inherits Untold Riches, and Passes Off His Own Empire.” I found nothing in it terribly shocking.
King Charles III built his own empire long before he inherited his mother’s.
Charles, who formally acceded to the British throne on Saturday, spent half a century turning his royal estate into a billion-dollar portfolio and one of the most lucrative moneymakers in the royal family business.
While his mother, Queen Elizabeth II, largely delegated responsibility for her portfolio, Charles was far more deeply involved in developing the private estate known as the Duchy of Cornwall. Over the past decade, he has assembled a large team of professional managers who increased his portfolio’s value and profits by about 50 percent.
Today, the Duchy of Cornwall owns the landmark cricket ground known as The Oval, lush farmland in the south of England, seaside vacation rentals, office space in London and a suburban supermarket depot. (A duchy is a territory traditionally governed by a duke or duchess.) The 130,000-acre real estate portfolio is nearly the size of Chicago and generates millions of dollars a year in rental income.
The conglomerate’s holdings are valued at roughly $1.4 billion, compared with around $949 million in the late queen’s private portfolio. These two estates represent a small fraction of the royal family’s estimated $28 billion fortune. On top of that, the family has personal wealth that remains a closely guarded secret.
This strikes me as both the historical essence of royalty and a logical modern extension of it. That is, those born into high station in such systems inherit substantial assets, mostly in the form of land, other real estate, artwork, and antiquities. And, in an age where the royal family is essentially a tourist attraction and the public looks askance at funding their highfalutin lifestyle out of tax coffers, they need to be more self-sustaining.
As king, Charles will take over his mother’s portfolio and inherit a share of this untold personal fortune. While British citizens normally pay around 40 percent inheritance tax, King Charles gets this tax free. And he will pass control of his duchy to his elder son, William, to develop further without having to pay corporate taxes.
Historically, high royals were above the law. It surprises me not in the least that the crown does not pay inheritance taxes. Indeed, doing so would soon leave them no longer royals. Even if we started today, the crown would be worth 60 percent less than it was last week. Absent the ability to invest that, Charles would pass 60 percent of that 60 percent to William. To be sure, the Windsors still wouldn’t be paupers. But that’s just not how royalty works.
The growth in the royal family’s coffers and King Charles’s personal wealth over the past decade came at a time when Britain faced deep austerity budget cuts. Poverty levels soared, and the use of food banks almost doubled. His lifestyle of palaces and polo has long fueled accusations that he is out of touch with ordinary people. And he has at times been the unwitting symbol of that disconnect — such as when his limo was mobbed by students protesting rising tuition in 2010 or when he perched atop a golden throne in his royal finery this year to pledge help for struggling families.
Today, he ascends to the throne as the country buckles under a cost-of-living crisis that is expected to see poverty get even worse. A more divisive figure than his mother, King Charles is likely to give fresh energy to those questioning the relevance of a royal family at a time of public hardship.
The mythology of the constitutional monarchy is that it serves as a rallying symbol for the country. The people want their royals to live fabulously as a symbol of the grandeur of the UK. In reality, one imagines a lot of them resent the hell out of it.
More practically, as noted earlier, the House of Windsor is a tourist attraction and a lucrative one. Whether it justifies quite this level of excess is, of course, debatable. It’s an ancient institution that, by design, changes very slowly. That’s part of the charm. But the optics are certainly worse if the King is less than popular.
Laura Clancy, the author of “Running the Family Firm: How the Monarchy Manages Its Image and Our Money,” said King Charles transformed the once-sleepy royal accounts.
“The duchy has been steadily commercializing over the past few decades,” Ms. Clancy said. “It is run like a commercial business with a C.E.O. and over 150 staff.” What used to be thought of as simply a “landed gentry pile of land” now operates like a corporation, she said.
The Duchy of Cornwall was established in the 14th century as a way to generate income for the heir to the throne and has essentially funded Charles’s private and official expenses. One example of its financial might: The $28 million profit he made from it last year dwarfed his official salary as prince, just over $1.1 million.
From my vantage point, the degree to which this is problematic depends entirely on where the money is going. Was Charles spending it on hookers and blow? Or does it simply enlarge the trust that now goes to William and his successors to nurture? And does it mean that the British taxpayer has to contribute less to maintaining the heir’s lifestyle?
Piecing together the royal family’s assets is complicated, but the fortune falls generally into four groups.
First, and most prominent, is the Crown Estate, which oversees the assets of the monarchy through a board of directors. Charles, as king, will serve as its chairman, but he does not have final say over how the business is managed.
The estate, which official accounts value at more than $19 billion, includes shopping malls, busy streets in London’s West End and a growing number of wind farms. The royals are entitled to take only rental income from their official estates and may not profit from any sales, as they do not personally own the assets.
The estate’s profits, valued at about $363 million this year, are turned over to the Treasury, which in return gives the royal household a payment called a sovereign grant based on those profits — which must be topped up by the government if it is lower than the previous year. In 2017, the government increased the family’s payment to 25 percent of the profits to cover the costs of renovating Buckingham Palace.
The latest sovereign grant received by the royals was around $100 million, which the family, including Charles, has used for official royal duties, like visits, payroll and housekeeping. It does not cover the royals’ security costs, which is also paid by the government, but the cost is kept secret.
This seems completely above board and reasonably modern. The royal family are essentially employees of the state and “their” family assets are theirs in name only; it’s something akin to our National Park Service and Smithsonian Institution rolled into one.
The next major pot of money is the Duchy of Lancaster. This $949 million portfolio is owned by whomever sits on the throne.
That’s not much to go on but my strong guess—and I emphasize it’s only that—is that the monarch doesn’t actually manage this and is likely not all that free to do with it as they wish. In which case, it’s essentially also actually owned by the state, not the individual wearing the crown and serving as its symbolic head.
But the value of that trust is dwarfed by the Duchy of Cornwall, the third significant home of royal money, which Charles has long presided over as prince. Generating tens of millions of dollars a year, the duchy has funded his private and official spending, and has bankrolled William, the heir to the throne, and Kate, William’s wife.
It has done so without paying corporation taxes like most businesses in Britain are obliged to, and without publishing details about where the estate invests its money.
I’ve already addressed this. It strikes me as not at all unusual that it doesn’t pay taxes. And the fact that it’s being used to fund not only the heir to the throne but the entire line under him means that it’s essentially subsidizing the state’s largest enterprise. Which just reinforces that “public” and “private” are incredibly intertwined when we’re talking about the highest levels of the British royalty.
“When Charles took over at age 21, the duchy was not in a good financial state,” Marlene Koenig, a royal expert and writer, said, citing poor management and a lack of diversification. Charles took a more active role in the portfolio in the 1980s and began hiring experienced managers.
“It was at this time that the duchy became financially aggressive,” she said.
In 2017, leaked financial documents known as the Paradise Papers revealed that Charles’s duchy estate had invested millions in offshore companies, including a Bermuda-registered business run by one of his best friends.
Oh, the scandal! The fund that pays for most of the royal family’s activities was in the doldrums so the heir hired professional managers who, over the course of more than half a century, built it into something self-sustaining? That seems like a good thing, no? To be sure, it’s a lot easier to do that if you don’t have to pay taxes. But it’s essentially a sovereign wealth fund (pun unintentional but the double entendre is useful here).
The final pool of money, and the most secretive, is the family’s private fortune. According to the Rich List, the annual catalog of British wealth published in The Sunday Times, the queen had a net worth of about $430 million. That includes her personal assets, such as Balmoral Castle and Sandringham Estate, which she inherited from her father. Much of her personal wealth has been kept private.
I’m guessing that it’s only “private” in the sense that it’s kept secret from the general public. That is, I’d be shocked if the Government didn’t have very strict accounting of these assets. Further, I’d be willing to be a lot of money that Charles does not have the authority to sell them; he’s simply entitled to use them while he’s King but obligated to preserve them to be handed off to his successors in perpetuity. Again, “public” and “private” just don’t mean the same thing for the British royals as it does ordinary folks.
King Charles has also made financial headlines unrelated to his wealth but tied to the charitable foundation that he chairs and operates in his name. His stewardship of the foundation has been marred by controversy, most recently this spring, when The Sunday Times reported that Charles had accepted 3 million euros in cash — including money stuffed in shopping bags and a suitcase — from a former Qatari prime minister, Sheikh Hamad bin Jassim bin Jaber al-Thani.
The money was for his foundation, which finances philanthropic causes around the world. Charles does not benefit financially from such contributions.
“He’s willing to take money from anybody, really, without questioning whether it’s the wise thing to do,” said Norman Baker, a former government minister and author of the book ” … And What Do You Do? What the Royal Family Don’t Want You to Know.”
I wrote about this (or a related incident; it’s difficult to tell) a few months back. It doesn’t strike me as all that scandalous. Charities take money from dubious Middle Eastern characters all the time. And, frankly, I don’t see why not—they’re going to put it to better use than said dubious characters.
Mr. Baker described Charles as the most progressive, caring member of the royal family. But he said he had also filed a police complaint accusing him of improperly selling honorary titles.
“That’s no way to behave for a royal,” he said, referring to an ongoing scandal over whether Charles had granted knighthood and citizenship to a Saudi businessman in exchange for donations to one of Charles’s charitable ventures.
Charles denied knowing about this, one of his top aides who was implicated stepped down, and the authorities began investigating. The king’s representatives did not respond to a message seeking comment.
At this point, it seems we’re down to throwing spaghetti against the wall to see what sticks.
Charles has also courted controversy with his outspoken views and campaigning. He has lobbied senior government ministers, including Tony Blair, through dozens of letters on issues from the Iraq war to alternative therapies. Though English law does not require it, royal protocol calls for political neutrality.
In his inaugural address on Saturday, the king indicated that he planned to step back from his outside endeavors. “It will no longer be possible for me to give so much of my time and energies to the charities and issues for which I care so deeply,” he said.
Ms. Clancy, the author, said the new king, in theory, would be expected to drop his lobbying and business ventures entirely.
“Whether that will pan out is a different question,” she said.
Indeed it is.
As an ideal matter, the heir would keep out of politics. But, given that he’d been waiting for dear old mama to pass for 73 years, it’s really hard to begrudge the man from using his celebrity to advance causes he cares about. One suspects that, as sovereign, he’ll conform to expectations. But, again, it has nothing to do with the ostensible issues surrounding his finances.