Markus Schreiber/AP Photo
World Economic Forum founder Klaus Schwab speaks at the Annual Meeting of the WEF in Davos, Switzerland, January 21, 2025.
When I was a young reporter working in Washington, the party you wanted to be invited to was hosted by a guy named Steve Martindale. He was nobody in particular, but he masterminded a familiar American con. Get a few VIPs to come to your parties, pretty soon they are the hottest ticket in town, and then everybody wants to come.
In Martindale’s case, he had worked as an aide on Capitol Hill. In that capacity, he helped a few celebrities sort out visa or tax problems, most notably John Lennon and Yoko Ono. They were having trouble staying in the U.S. because of an old marijuana conviction. Martindale offered to throw a party to introduce them to several influential people. That was hardly difficult; this was John and Yoko.
They got their visas, and Martindale was launched. He threw parties for other VIPs, which of course attracted still other VIPs. His salons became a place to see and be seen, and he became the most in-demand Washington party-giver since Perle Mesta.
Martindale just happened to be in the public relations business. He was all of 28. His parties, the contacts they provided, and his PR enterprise cross-fertilized each other. He didn’t do anything illegal. He was merely a classic P.T. Barnum type.
In 1974, The Washington Post’s Sally Quinn skewered Martindale in a wicked profile that exposed his modus operandi. Martindale stayed in the PR game, but his soirees never quite recovered.
I thought of Martindale last week, when the financial press carried a story that Klaus Schwab, the entrepreneur behind the annual Davos conferences of the World Economic Forum, has been accused of multiple scams and was forced to resign.
The only notable difference between Martindale and Schwab was scale, audacity, and grandiosity. Martindale was merely a social climber and cross-fertilizer. Schwab was a high-concept scammer, with all the world’s elite as his props.
Schwab founded the organization in 1971 as the European Management Forum, and changed its name to the tonier World Economic Forum in 1987. Today, the WEF is funded by some 1,000 member corporations, typically global enterprises each with more than $5 billion in turnover. WEF’s own budget is a third of a billion.
I was invited twice to Davos in the late 1990s, at the World Economic Forum’s expense, and of course I went. It was right after my most influential book, Everything for Sale, was published in 1996. Schwab must have concluded, however briefly, that I was Somebody.
After a day or so in Davos, I figured out the game. The World Economic Forum salts the mine with political and intellectual celebrities, as draws. These people get a first-class ski vacation in an Alpine resort at Schwab’s expense. But everyone else who attends is a paying guest. It costs a minimum of $40,000 to attend. For a corporate sponsor, the total cost of a week in Davos can be as high as $250,000. Attendance is by invitation only, which increases the allure.
In the heyday of Davos, all of the world’s political and economic leaders showed up, because everyone else showed up. Walking down a secluded corridor, I actually bumped into Nelson Mandela.
And if you are a financial journalist, you are nobody if you don’t get to Davos. Typically, at least 300 come. Then you have to justify the trip by writing lots of stories about it, which adds to the event’s luster.
I even wrote a screenplay, never produced, called “Terror at Davos.” The premise is that gunmen from an unnamed Third World country capture several masters of the universe and hold them hostage for debt relief. George Soros mediates. Not only was the premise hopelessly wonky, but a few years later 9/11 happened, so my premise was also in bad taste.
What got Schwab into trouble was not taking markups on Davos resort hotel charges. It was other alleged conflicts of interest. According to allegations from a whistleblower, which led to an emergency board meeting on Easter Sunday and his resignation, Schwab has long mixed family business with Forum finances and charged personal expenses to the Forum.
The Forum is a nonprofit with a prestigious board, but accounting has been fast and loose. The anonymous whistleblower letter also claimed that Schwab manipulated its “global competitiveness report,” in order to curry favor with certain national leaders.
Schwab, now 87, denies all of the charges. But at his board’s request, he has stepped down from all roles connected with the World Economic Forum. In the aftermath of Schwab’s downfall, Davos, like Steve Martindale’s parties, may not be such a hot ticket.
But variations on the game continue, and we should hardly be shocked that capitalism runs on the blurring of roles and the profiting from conflicts of interest.
Michael Milken, for instance, went Schwab one better. Schwab has not been convicted of criminal wrongdoing. But Milken, reborn as a philanthropist visionary, began convening must-attend annual events after having been convicted as a crook and doing prison time.
Milken turned leveraged buyouts using high-risk junk bonds into a major business. He became a billionaire on concealed insider trading. On April 24, 1990, Milken pleaded guilty to six counts of securities and tax violations, and eventually served 22 months in prison. He then founded the Milken Institute.
Literally next week, the Milken Institute holds its 28th Global Conference in L.A. at the tony Beverly Hilton, focusing on topics such as geopolitical tensions, climate change, and AI. Notable speakers include Elon Musk, Rupert Murdoch, Education Secretary Linda McMahon, Treasury Secretary Scott Bessent, former Treasury Secretaries Steve Mnuchin and Robert Rubin, World Bank President Ajay Banga, former Google CEO Eric Schmidt, Pershing Square’s Bill Ackman, private equity tycoons Henry Kravis of KKR, Jonathan Gray of Blackstone, Marc Rowan of Apollo, and David Rubenstein of The Carlyle Group, and 142 people with the word “President” in their title.
So it goes.
