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Presiding over what was once the largest independent investment bank in Asia, Peregrine Investments Holdings chairman Philip Tose was a proud leader, a swashbuckling entrepreneur with clear and oft-repeated views about how to get things done in the region. As arrogant as he was aggressive, Tose was the public face of Peregrine.
But last month, when Peregrine was declared insolvent in a storm of bad debts, Tose refused to take responsibility for the demise of the firm he helped create a decade ago. Instead, at a packed press conference, he coolly blamed Peregrine's fall on the sudden collapse of the Indonesian rupiah. To discuss lax credit controls "would be missing the point," Tose said. "What happened was a complete meltdown of the Indonesian currency."
Francis Leung Pak To, Peregrine's co-founder and corporate finance chief, reminded reporters that his division actually made money. Leung, who made his way from the slums of Hong Kong to the corridors of power in Beijing, held back tears as he vowed to protect the jobs of his corporate finance staffers.
Andre Lee, the brash Korean-American bond salesman who had crammed Peregrine's portfolios with Indonesian junk bonds, took the simplest approach: He skipped the press conference.
In its prime, Peregrine made money the old-fashioned way: by taking enormous risks. The investment bank became a leading underwriter of stocks in Hong Kong, the backer of the wildest kinds of joint ventures in Myanmar, North Korea and Vietnam. But it was in Asian corporate bonds that Peregrine made its biggest profits of late - and sealed its fate. And though the firm leveraged its capital only three- or fourfold (versus a tenfold average for many U.S. firms), those numbers masked the diciness of many of its loans.
Peregrine's most devastating exposure was a $265 million bridge loan to Steady Safe Transportation, an Indonesian taxicab company listed on the Jakarta Stock Exchange. The company had limited revenues and profits, but it also had connections to a daughter of Suharto, the...