Margareta Pagano: The age of greed embodied by Madoff's victims

When I met Bernie Madoff on one of his rare visits to London some years ago, he was utterly charming. At the time, we shot the breeze about his London market-making operation in US stocks for European investors, which he was hoping to expand. He was fun and entertaining as we chatted in his rather poky, airless offices in London Wall about the markets generally.

Would I have given him my "millions" to invest? No, most definitely not. Yes, he knew his stuff about the markets but not in any intuitive or analytical way. He did not strike me then as either a schmoozer or a great brain – more a pretty ordinary guy. That's why discovering that hundreds of the world's richest – and some of the brightest – celebrities and financiers gave him money to invest in what is turning out to be the greatest financial scam in history is so very extraordinary.

Stephen Raven, the head of Madoff Securities International in London, is even more stunned; shell-shocked would be nearer the mark. He has known Madoff for more than 30 years and first heard about the $50bn (£33bn) Ponzi scandal when watching Bloomberg TV last Thursday evening. It was through Raven, a former director of SG Warburg and a London Stock Exchange director for decades, that I met Madoff.

I haven't seen Raven – known as "The housewife's choice" for his matinee idol looks – for a few years but you could hear the disbelief and shock in his voice when we spoke last week. While he has known Madoff for years, he's been duped as deeply as everyone else. He hasn't heard a peep from Madoff's New York office, nor from his sons, wife or brother, who were the non-executives of the London office. He last saw Madoff in June, when he was as friendly as ever.

London was separate, a proprietary trading operation dealing in European equities and gilts which was capitalised at £105m last year and only shifted to looking after Madoff family money seven years ago. Ironically, it was hugely successful. Now the assets, said to be worth about £80m, have been frozen and Raven is working on winding up the business.

I can sort of understand how Raven could have been so deceived, because he was not involved in the investment business. But I don't understand how the brains at some of the world's biggest banks were taken in. Just what were the asset managers at Royal Bank of Scotland, Santander, HSBC and Nicola Horlick's Bramdean thinking? Or hedge fund star Arpad Busson or Ezra Merkin, chairman of General Motors' financing arm, for goodness sake? Did they ask to see the risk models? Did they question how Madoff and his investment team made 9 per cent a year?

One can only assume they didn't. It's a staggering admission of negligence. And, as with so many of the other terrible scams now emerging from the past decade, there were warnings. In 2001, an American journalist, Michael Ocrant, wrote a piece questioning Madoff's claims to greatness, but the bankers and investors chose to ignore the critics. Sadly, there are only three explanations – incompetence or greed, or both. The usual suspects these days.

PPF to buy Eldorado – and put a fridge into every Russian household

Tomas Spurny is the most cheerful banker I have met for at least a year. He's cheerful because PPF, the Czech financial conglomerate that he runs, is one of the few banking groups doing fantastic business across what he calls the "new Europe" – eastern Europe and Russia – or indeed anywhere in the world. In Russia, PPF has had great success with its Home Credit consumer finance and banking network, now the country's second-biggest with 15 million customers, 200 branches and 30,000 outlets through other shops across 1,200 cities.

Spurny is in Moscow, where we met for breakfast last week. He has finally reached agreement to buy Eldorado, Russia's biggest electrical retail chain – the Dixons of Russia that Dixons itself tried to buy when it still had money. Surprisingly, the US-educated, McKinsey-trained, Czech financier is just as optimistic about retail, despite the economic downturn. But then, Spurny is convinced of Russia's huge potential, as so many of its 145 million people still need to buy fridges and half of them don't have bank accounts. He reckons that by putting Home Credit's consumer financing with Eldorado's white goods he'll get the alchemy right.

So far, PPF has avoided the pitfalls of its peers by building a war chest of long-term funding, tight risk management and capital adequacy ratios of over 15 per cent. But it's not all plain sailing. PPF, owned by the Czech billionaire Petr Kellner, has a joint venture with Italy's Generali and together they own 38 per cent of Ingosstrach, the insurer controlled by Oleg Deripaska, the Russian oligarch. The two are now suing each other over claims that Deripaska, under pressure to refinance his businesses, diluted the Ingosstrach stake. Spurny admits it's a tricky issue, but one he hopes the Russian courts will sort out.

His optimism is shared by other businessmen I spoke to in Moscow, who believe the crash will persuade Russia to open up more to foreign investors. That's why Spurny says he can't understand why Britain's bankers aren't beating down the door to get into Russia. It's a contrary view, but then Moscow is full of amazing contradictions.