Do You Sincerely Want To Be Rich? (53 page)

the IOS board met at the Villa Bella Vista. Saturday had been spent in splinter groups, discussing Friday's revelations: now, they were to be examined before a wider group. Not all the board were there, but although Mende from Germany and Bernadotte from Sweden were missing, Martin Brooke of Guinness Mahon had arrived from London, and Wilson Watkins Wyatt from Louisville, Kentucky. Lechner went through all the figures again, speaking for something like ten hours, with a break for a buffet lunch. Strangely enough, the mood of the meeting, although shocked, appears to have been essentially restrained. 'The feeling was that Bernie and Ed were facing up to the situation,' Lechner recalled.

    Their 'facing up' took a remarkable form. Now that vast injections of the company's own money had failed to keep the IOS shares alive, IOS tried the effects of a thunderously orchestrated propaganda campaign. Propaganda, after all, was what they had always done best. By the weekend after that first, traumatic meeting, Ed Cowett's line about the 30,000 shares dumped on the market had been elaborated into a wicked plot against IOS. After a careful examination of the evidence, Cowett informed the Frankfurter Allgemeine Zeitung, it was possible to say definitely that the market had been manipulated!

    Speculators, he said, were trying to force down the IOS price by systematic selling. Trumpeting shrilly, Cornfeld rushed into battle with wilder allegations yet. He convinced the London Observer that IOS was victim of 'the biggest concentrated bear raid that Europe has seen in a generation'. It was, he said, (producing no shred of evidence) the jealous German banking Establishment, getting together to sell IOS short. But they would fail.

    'At present market prices,' he said (and he must have taken figures from the air), 'we have enough cash in hand to buy back all the existing stock fourteen times.' For one of the present authors, he produced the claim that he had enough money in his personal bank account to buy back all the shares. That, in the light of later knowledge, was a remarkable statement, because until he objected in January, his account at the odb had indeed been used to buy almost a million IOS shares.

    Yet the tale was told with such matchless assurance that it was hard to disbelieve it. Henchmen pitched in to help, and in the mel6e taste and accuracy were early casualties. ‘I feel,' said Ambassador Roosevelt, 'like I did in 1933, when my father and I had meetings to sort out the problems of the United States. Then, we all pulled together, and none of the terrible things happened.' Allen Cantor stated that a mighty consortium of banks stood ready to buy IOS shares, force up the price, and crush the speculators. Cantor spoke glowingly of this consortium, which existed only in his own mind. 'When we give the word,' he said, 'they are all prepared to pile in and buy the stock.' Harvey Felberbaum said that people in the know were already 'piling in to buy the shares.' It was, he said, 'a real battle of the giants,' adding compassionately: 'The tragedy is that it is the little man who will get murdered.'

    Any little man who took that professional investment advice would have halved his money inside a month. Bernard Cornfeld, however, was not such a one. Privately, on April 20 - in the same week that he was suggesting he might personally buy back all the shares - Cornfeld sold a block of 450,000 IOS shares. Of this total, he sold 60,000 on Cowett's behalf. They got $4 each for their shares, which made a total $1.8 million, and it was a very good price for such a huge block of shares on April 20, when the price had opened at about $5.

    Cornfeld did have one inspiration about purchasers for IOS shares. Why shouldn't the customers of the IOS funds be lumbered with them? He went to Jo Melse, and told him to use IIT money to buy IOS Ltd shares.

    When Melse refused to buy IOS with fund money, Cornfeld lost his temper. Whether it was contrived or genuine rage is difficult to say. 'Mr Cornfeld,' said C. Henry Buhl, who supported Melse, 'was not feeling himself just at that time.'

    Perhaps not, but he was still selling concepts as diligently as ever. Both he and Cowett had another, and subtler, line to back up the 'bear raid' story. Off the record, they were prepared to make frank, manly admissions that a few things had perhaps gone wrong at IOS. Profits, perhaps, were not going to be quite what had been expected. Cornfeld spoke of IOS executives flying economy class, and suggested that lights would have to be switched off when people left their offices. With a convincing appearance of humility, he admitted that perhaps success had gone somewhat to IOS's head. 'We felt very rich last year,' he said disarmingly.

    Meanwhile, the IOS publicity machine churned out declarations to the effect that only irresponsible conspirators could possibly allege that IOS might be short of cash. Thus on April 22:

    'One of the most persistent misstatements which have been bandied about in the past two weeks is that our Company (is) short of cash…