Ex-Blackstone VP Elected Cartagena Mayor Plans $1 Billion Fund
(Bloomberg) -- It’s the secret dream of many a Wall Street financier: take the skills and contacts built from years of private asset management and apply them to something poorly run in the public sphere -- a school or a beloved museum.
William Dau is doing it with a city, Cartagena -- a cobblestone gem on the Caribbean coast of Colombia, the birthplace he fled years ago after threats on his life and to which he has now returned with ambitious plans.
A former vice president at Blackstone Group who ran for mayor as an outsider and triumphed, he’s not lacking for challenges. Covid has decimated the tourism industry, corruption is endemic and rising seas threaten the city’s very existence.
That’s where his years in finance come in. Dau, 68, is using international head hunters to recruit advisers and plans to establish a debt fund in the U.S. to raise at least $1 billion to pay for infrastructure. To ward off the sea, he wants to lure international businesses to invest in mitigation projects, such as the work Apple Inc. is doing on islands off the shore to protect mangroves.
“He sees his management style as that of a CEO delegating tasks to his VPs and tracking them on their results,” said Ana Maria Gonzalez, the mayor’s consultant on international cooperation and a former Obama Foundation Scholar.
Dau is clear about what he faces in seeking to revive his city of 900,000: “2020 was the most turbulent waters we had to sail through and not only because of Covid, but because of the rampant corruption, the opposition,” he said in an interview.
But the possibilities are equally great. Framed by a stunning bay, Cartagena is one of the best-preserved colonial cities in South America, a temperate walled World Heritage Site of pastel churches, tiled plazas and outdoor cafes where Nobel-winning author Gabriel Garcia Marquez developed magical realism. As Colombia overcame a reputation for violence, and tourism boomed, Cartagena became a top destination.
Dau’s quest at an age when most people retire was driven in part by unfinished business. As a lawyer in the city in the early 2000s, Dau openly condemned graft, drawing so many death threats that he sought political asylum in the U.S.
After 15 years in New York, Dau returned last year and ran for mayor, winning despite spending just $70,000 on his campaign.
“I told myself that one day I was going to come back to finish the fight,” he said.
To weed out corruption, Dau says he will audit contracts such as those privatizing Cartagena’s port and water systems. If wrongdoing is found, he will claw back the city’s equity and sell it to investment funds to raise money for new public works projects.
His detractors -- he doesn’t have a majority on the city council -- accuse him of showboating. Former Mayor Rodolfo Diaz said Dau focuses on grudges rather than governing. “The mayor’s office is a reality show in which the mayor believes he’s the star and what he does is fight with officials,” he said in an interview posted to Twitter.
Some outsiders say his chances of shifting an entrenched local political culture aren’t high.
“It’s very hard to put in place plans of drastic change in the regions of Colombia in which corrupt practices have been rooted for decades, like Cartagena,” said Gabriel Cifuentes, a law professor in the nearby city of Barranquilla.
Dau’s timing is also a mixed blessing. Weeks after taking office, the country went into lockdown and Cartagena’s tourism industry collapsed. Last year, nearly 3 million foreign and national travelers flew into the city, according to Tourism Ministry statistics. It also drew scores of cruises.
“For Rent” signs proliferated in windows along the colorful streets in the historic center. Unemployment, among the lowest in the country, nearly tripled to 18.1% from 6.6% before the pandemic, according to the mayor’s office.
The situation brought into sharp relief the inequality that has long plagued the city, where well-heeled tourists stay at tasteful boutique hotels and dine at luxury restaurants a short drive from slums. Only 41% of households in the city are eating three meals a day, down from 82% before Covid-19, according to a government survey published in October.
On the other hand, with everything shut, there’s perhaps never been a better time for a reset. Dau says he’s drawing on his years in the legal department at GSO Capital Partners, Blackstone’s global credit business, which has $135 billion in assets under management.
Dau plans to establish the debt fund to rebuild the seafront boulevard, create a water transportation service and, potentially, build a new convention center. The city will reassess its property tax base to raise revenue that will serve as a guarantee against the borrowing.
Plans are underway to expand the airport and add a new one. The goal is to increase not just the number of tourists, but also the class of visitors. If successful, he said more residents will move into the formal economy, and inequality will drop.
“With Covid, we have a new start, a fresh slate,” he said. “I can’t fix Colombia, but I can fix Cartagena.”
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