Do You Sincerely Want To Be Rich? (28 page)

    'Bernie organizes the rooms. He says to Jackie, "You room in with me." It is not a request.'

    The quotation encapsulates an attitude. Probably, most of the girls at Studio 22 and Talent Management International did not really understand Cornfeld's sexual philosophy - least of all, how bluntly egocentric it could be. Had they done so, they might have been more reluctant to lend their presence to his caravan. It was not that his patronage automatically included a sexual quid pro quo: indeed, he was capable of imperially unpredictable acts of generosity for which no return was expected. It was just that Bernie himself was so stridently liberated that he made it quite difficult for a woman to go around with him without making some people think she shared his views.

    For all that, some of Cornfeld's women friends were the most loyal. On East 63rd street, in the building that houses Talent Management International, Peggy Nestor runs a boutique. (It was originally set up, with Cornfeld's backing, for the girl called 'Rattlesnake', but she didn't care for the business, and sold out.) The decor includes a large picture of Oleg Cassini in Mexican dress, and several months after the crash it still included a picture of Bernie, fondling an ocelot. By that time, it was hard to find a picture of him on Wall Street. Noticeably, his portrait had vanished from the wall in the office of Arthur Lipper III, the stockbroker who did most of IOS’s business on the New York Stock Exchange.

    Cornfeld's most frequent companion of the latter years was a starlet named Vicky Principal, a slight, dark girl of about his own height. Her devotion remained for a long time unruffled by eccentricities in the emperor's behaviour - certainly it survived the Acapulco diversion. But while the joys of anarchy were no doubt apparent enough to Cornfeld himself, they do not seem to have been quite so plain to all of the girls who found themselves drawn into his orbit.

    One of them described him in dramatic terms as a man who never had any idea of where to settle down - or where to go to; the kind of man who loved every woman he saw, but could not love any one in particular; a man whose elaborate explanations were likely to mystify rather than enlighten. When he appeared to confess everything, he revealed nothing; when he gave, it was only to take away.

    The joys of anarchy, clearly, carried their own special tensions with them

    And indeed, tension and conflict were natural to every level of the IOS court and its empire. Just as the people in Cornfeld's immediate circle could never predict the directions his personal interest might take, so those in lowlier positions were afflicted by the turbulent and mysterious atmosphere of the organization which he ruled.

    In the early years, when IOS was still a freebooting syndicate of more or less hardy spirits, the corporate unorthodoxies were merely amusing. But by the middle Sixties, IOS was a big company, with more than a thousand regular staff, and eight thousand salesmen on the books. Far from there being serious attempts to modify and stabilize the structure of the growing company, its internal competitiveness was reinforced. One of the major aims of the conferences in which managing salesmen were brought to Geneva was to refresh their 'motivation', to show them the glories of life at the top. This was when the parties were given at Bella Vista, with the heaps of caviare 'like
this'.
After Cornfeld bought the Chateau de Pelly, sales conferences always included a visit by the managers' wives to the chateau, where they could be impressed by the advantages of a thirteenth-century dining hall and a twentieth-century swimming pool. Each year, the biggest party of all was the IOS Christmas party: the last one lasted from 8 pm to dawn, consumed 3,000 bottles of Moet et Chandon
brut,
cost $500,000 and occupied senior executives' time for weeks.

    Such celebrations must be viewed in the light of Eli Wallitt's grim, retrospective estimate that 'the majority of the salesmen were marginal', and made 'a miserable living'. Another piece of vital background is suggested by some physical details: at 119 Rue de Lausanne, Cornfeld operated from an office lined with raw silk, and Ed Cowett's was lined in red velvet, with a large telescope aimed across the lake to his villa. No doubt they felt that such quarters were only suitable marks of their corporate eminence. But the hastily erected buildings at Ferney-Voltaire were bleakly utilitarian - and the offices were cheerful compared to the concrete towers, planted in muddy open spaces, where the swelling crowds of office workers lived.

    The official claim, repeated insistently, was that IOS was a happy family. But when Nina Kaplan, a social worker from New York, was hired to examine the condition of the IOS staff, she did not find it so. Miss Kaplan (a graduate, like Cornfeld, of the Columbia School of Social Work) found the basic problem simple enough, in that the company consisted of a small group of people living very well, and a large army of rather poorly-paid juniors living in drab apartments, IOS were sufficiently concerned at her report to try to hire her (with stock options) to ameliorate the problems she had exposed. But Miss Kaplan, no doubt wisely, chose to go back to New York and get married.

    Tensions were multiplied by the fact that the IOS command structure was largely a sham. Formally, IOS had a Main Board, over which Cornfeld presided, and which included most of the eminent world citizens brought in during the great public relations drive. The IOS Sales Company was supposed to be a subsidiary, under Allen Cantor, of the main board. But one of the things that people like Ambassador Roosevelt, Count Bernadotte and Sir Eric Wyndham White discovered was that in reality the sales company totally outranked the main board. 'The sales company board used to meet first,' said Wyndham White later, 'and they would go on the whole day, maybe two. By the time they were finished there was no time for the main board to do anything except agree.'

    Sooner or later, the imported excellencies made a further discovery, which was that, as in all courts, the true power did not reside in any formal structure, but in what people called 'the chemistry' of the personal relationship between Bernie Cornfeld, Ed Cowett and Allan Cantor. All other relationships had to take account of this 'troika', as it was known. And however much he might be distracted by model schools, boutiques and movies, there was no question that Cornfeld saw himself as the ultimate fount of authority.

    'Ed was running the company,' he told us, reviewing the debacle. ‘I put him in charge.'

    People tended to see the emperor's liking for having his own way in different kinds of light, and it depended a good deal on when they joined up with IOS. Thad Lovett, for instance, was of the first generation, and tells a story which begins with him typing out a scathing resignation letter after a stormy dispute with Cornfeld. While Lovett is composing, Cornfeld comes in and delivers a fresh burst of denunciation.

    Lovett jumps to his feet ('so fast my chair broke the glass in the window') and says: 'Bernie Cornfeld, just you go out of that door and don't come back till you can learn to speak like a gentleman.' Cornfeld rushes out, leaving Lovett to reflect that he needn't finish the letter of resignation, as he is obviously fired.

    Next day, Cornfeld walks in, bearing an exquisite Chinese porcelain lion. 'What in earth is that?' asks Lovett. 'It's a cat,' says Cornfeld.

    'The hell it is,' says Lovett, who has a passion for cats, which he shares with Cornfeld.

    'Well,' says Bernie, 'it's the nearest I can get to an apology.'

    Robert Nagler, who was hired from the Dreyfus Corporation to manage the Fund of Funds' investment policy, figures in a story with a different ending. Late one evening in his office, Nagler got a call from a fund manager in Los Angeles named Doug Fletcher, who suggested that the Fund of Funds put some money into his fund, because Fletcher thought the price was likely to rise. Nagler could not get hold of any other members of the Fund of Funds Investment Committee, so he put in $6 million on his own initiative, a normal enough decision for anyone managing a big fund.

    In the morning, Cornfeld appeared in his office, dangling a copy of the telexed 'buy' order between two fingers. Very quietly, he asked Nagler: What is this?'

    Nagler told him, knowing perfectly well that Cornfeld didn't need to ask.

    'Don't you ever do this again,' said Cornfeld, 'without consulting me.' Nagler said that in that case he couldn't go on managing the fund - and suddenly it was a shouting match, with Cornfeld screaming at the top of his voice. Nagler resigned, or was fired, on the spot, and in this case there was no apology on either side. Nagler, who did not admire Cornfeld's investment theories, whatever he thought of his sales ability, departed abruptly, convinced that he had been submitted to an obedience test of some kind.

    The fact that the emperor liked to dominate his court was plain to anyone, but it was not so easy for an outsider to catch the flavour of the atmosphere behind the arras. Just how unsavoury that could be is well conveyed by some details, from IOS’s own documentation, on the 'Gail Drew Affair'. The file opens with a resume" signed by Gerald L. Berkin, head of the IOS Security Service, and it introduces us again to Richard Gangel, ex-socialist and international banker:

    'On ist November 1967, Dick Gangel contacted Bob King and told him to get the necessary equipment for recording telephone calls down to the Hotel Intercontinental in Geneva. Gangel explained that the above-named (Gail Drew) was trying to extort $200,000 from IOS on the basis of documents in her possession purporting to prove that IOS personnel in Federal Germany had rendered themselves liable before the German tax authorities by failing to declare their true taxable income.'

    The affair had begun a few days earlier, when a man called Eckhart Trenkle phoned Eli Wallitt, boss of the German operation. Trenkle, a former IOS salesman, warned Wallitt that 'some people' had got hold of documents showing that Wallitt, and some other managers for Germany, received income under several code-names and numbers. Unless money was paid over, these would be sent to the German tax authorities, and to
Der Spiegel:
fairly rapidly, Trenkle admitted that 'some people' really meant himself and Gail Drew, a 41-year-old American woman working for IOS in Geneva.

    Perhaps to Trenkle's surprise, Wallitt reacted calmly. Wallitt admits he was paid under different code-names - and that Gail Drew had the right ones. But as an American resident in Geneva, he did not consider himself liable for any German tax. As for the other managers, he didn't know whether they paid their tax or not, and didn't consider it his business. The reason he used phoney names himself, he told us, had nothing to do with the German tax-men. It was to stop his own salesmen finding out how much he was making in override commissions on their sales. 'It might have caused resentment', he said.
¹
Nevertheless, Wallitt informed Allen Cantor, the overall sales boss, and Cantor called in Gangel.

    They reacted like men thrown into acute panic at the idea that IOS security might be breached - and it scarcely matters whether they were more worried about tax inspectors, or their own salesmen. Significantly, one response which does not seem to have occurred to anyone was to prove to the German authorities that everyone concerned was declaring their full income.

    No-one, of course, can justify blackmail. But Gail Drew was a lonely, rather eccentric woman, and in the beginning she seems to have been making a pathetic bid for attention as much as a serious attempt at extortion. Bernie Cornfeld was in New York when the affair began, but Cantor and Gangel kept him in touch by telephone. The matter was treated as a major corporate crisis, occupying the time of several senior executives, plus a Greek chorus of lawyers and security men.

    Gangel's demand for recording equipment, with which the file opens, is made because Trenkle has agreed to betray his accomplice. Gangel's plan is to have Trenkle telephone her, and lure her into confessing her intentions on tape. This will be evidence that she is guilty of offences under Swiss law (which takes industrial espionage very seriously).

    Gangel, Trenkle, and a Security Service man, take a room at the Intercontinental, from which the man telephones Gail

    
¹
See Chapter 14:
Germany, the Super-Super-Supermen.

    Drew. The transcript of the conversation makes depressing reading. It is clear that Miss Drew regarded the ex-salesman as a friend, and shows no sign of suspicion while he probes for evidence of her motives and the strength of her information.

    She can't understand what's happening to the company, she has only been given a hundred shares, when others have more… she has been moved without explanation from Thad Lovett's department to Allen Cantor's. She doesn't have any work to do, and is afraid of being fired. ‘I am tired of life,' she says, 'of going to the office every day, of coming back to the house and playing solitaire.' In response to specific questioning, she makes it clear that she used to regard Cornfeld as her 'protector' but feels that this is no longer the case.

    Armed with this recording, Gangel, Cantor and the security men feel that they can make Miss Drew sign papers giving them the right to search her apartment and her bank vaults - whichever necessary - to recover the override documents. They plan to confront her in Ed Cowett's office, which is to be bugged for the occasion. Meanwhile, at Cantor's demand, surveillance is mounted over her apartment. The IOS Security Service seems to take a three-day surveillance in its professional stride: operatives Miller, Baud, Huguenin, Kunferman, Kiger and Coeur are assigned.

    At 10 am on November 6, Miss Drew is lured into the bugged office on a pretext about her work permit, and she is interrogated by Gangel, Berkin and Miller. They play her extracts from the taped phone call, but she denies any crime, and refuses to sign anything. At 11 am, Berkin is sent to fetch the police; he comes back at 11.30 with two inspectors. The cops, possibly rather puzzled, say they will come back after lunch. At noon, Bernie comes on the phone from New York, and Gangel and Cantor report that the woman refuses to sign anything. Cornfeld has another idea, and after a break for sandwiches the woman is persuaded to fly to New York and hand the IOS documents back to him personally. But at this point, the police come back, and even though they are told that IOS withdraws the complaint, and that the woman has agreed to have medical treatment, they insist on taking her off to the Hotel de Police.