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Tonga Is Not Amused

The island kingdom appointed a California investment advisor as court jester. But nobody is laughing over the loss of a multimillion-dollar trust fund.


Some might say that as official court jester to the island kingdom of Tonga, Jesse Bogdonoff isn't very funny.

Instead of cracking them up in the South Pacific nation, the Sonoma County resident has performed just one notable trick so far: He made $24 million belonging to the Tongans disappear, according to a lawsuit filed by the kingdom last month in San Francisco.

The loss has thrown the impoverished kingdom into uproar. Bogdonoff, who also was Tonga's financial advisor, has been fired. Government ministers have resigned. And in a nation ruled by a king and 33 noble families, commoners in Parliament are using the scandal as evidence that the time has come for more inclusive government.

But Bogdonoff, 47, is still very merry. Though his financial career is in ruins, he is confident that the debacle ultimately offers lessons both for him and the Tongan people.

The events that led Bogdonoff to become first jester, then financial advisor and then persona non grata in a nation he had barely heard of a decade ago began in Bank of America's San Francisco office.

Bogdonoff was an investment advisor, working on commission and charged with persuading bank customers to make better use of their money by investing in securities.

One day in 1994, he stumbled upon the Tonga Trust Fund. It was no ordinary checking account: more than $20 million was just sitting there.

The money had been earned in an unusual fashion too.

Tonga's economy is based mostly on exports of baby squash and cash sent back by Tongans living abroad. But for a while in the mid-1980s, the Tongan government had begun selling passports, mostly to Hong Kong residents who feared their travel would be restricted when the former colony was handed back to China. In 1988, the money was deposited in the Bank of America. Bogdonoff said his colleagues at the bank told him not to worry about the account, that the Tongan people were out in the middle of the Pacific and best left alone.

"But being the sales professional that I am," Bogdonoff said, he began making long-distance phone calls. He quickly learned that they did business a little differently in Tonga.

The ministers he needed to speak with were always out of the country or unavailable, he said. So he decided to pay a personal visit.

In November 1994, he boarded a plane in San Francisco, and nearly 24 hours later found himself standing alone by a dusty landing strip outside the capital city of Nuku'alofa.

He was stunned by the signs of poverty: the dirt roads, the absence of streetlights, pigs roaming free.

"I'm thinking, $21 million in a checking account," he said. "You'd think they might put a few more lights out here."

But the bright blue ocean and skies and the palm trees swaying in the warm, tropical wind captivated him, as did the friendly, relaxed people. On his third day in the islands, Bogdonoff met King Taufa'ahau Tupou IV. The introduction was arranged by a businessman both men knew. The king's ancestors had unified the Polynesian tribes living on 171 islands and helped them resist the European colonialism that swept the South Pacific. Ever since, the royal family has made most of the decisions in Tonga, as Bogdonoff soon learned.

Bogdonoff was shown through the back door of the royal residence, a Victorian house near the sea. The king greeted him in a muumuu in his book-lined office, outfitted with a weightlifting machine, a treadmill and a big-screen television, Bogdonoff said.

They hit it off immediately, Bogdonoff said. The king and the investment advisor launched into a passionate two-hour conversation on subjects ranging from literature to the O.J. Simpson murder trial. O.J. didn't do it, the king told Bogdonoff.

He also met with government ministers in charge of the trust account. He says he explained the concept of stocks and bonds and promised them a much higher rate of return than they were getting from the checking account. Soon, Bogdonoff said, he was sitting in a government office, furiously stamping bank papers with the royal Tongan seal and preparing to fax them across the ocean to close the deal.

Stamping the papers with the seal was his idea, Bogdonoff said, "to make this thing real."

From then on, he claims, he carefully managed the Tongan account, and its fortunes rose with the bullish market of the late 1990s, making $11.8 million over five years.

In 1999, Bogdonoff decided to leave Bank of America. He said the reason was personal: He feared for his health because of an increasing workload and was disillusioned with changes at the company. Bank of America officials would not comment.

There was just one problem: Bogdonoff faced a lawsuit from the bank if he took the Tongan account with him--unless he somehow became an employee of the kingdom.

He flew to Tonga and explained the situation to fund managers.

It was during those talks that Bogdonoff, who happened to have been born on April 1, had an idea. He told the king: "I'm a natural-born fool, and you're a king, and I'd like to become your jester."

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