Do You Sincerely Want To Be Rich? (54 page)

    They suggested rather brutally that the company needed to get rid of both Cornfeld and Cowett in order to save itself - but this suggestion was too much for the IOS men. John Templeton, one of the big shareholders invited to the meeting as an observer, declared that the company needed the creativity, the imagination that Bernie and Ed brought to its affairs.

    But the alliance between the imaginative pair was beginning, after ten years, to crack up. Cornfeld was careful to point out to the underwriters that the tax deals had been set up by Ed Cowett, and that Cowett was the only man who knew that company money was used in them.

    Although the IOS facade remained intact, there was now nothing behind it but a shifting pattern of factions, struggling with each other for control and secretly canvassing sources of outside help. The organizing principle of the company, Cornfeld's personal authority, had lost its true potency at the moment that the company ceased to be IOS Ltd (sa): in the new public company, he no longer controlled the price of the shares and he could no longer pretend to control the process of cashing-in. All his manipulative skills could not replace that blunt power: it was now only a matter of the time and the issue, before someone would face him down.

    By hints, allusions, and discreet allegations, Cornfeld tried to divert the emotional weight of the crisis on to Cowett. He pretended ignorance of the immediate process that had brought IOS to the edge of ruin: although if anything in IOS escaped his knowledge, it did so only because he did not wish to know. Both in business convention, and in terms of his long complicity with Cowett, Cornfeld's responsibility was inseparable from Cowett's; but it is a measure of Cornfeld's emotional adroitness that he did succeed in shifting some measure of responsibility away from himself. That did not, however, rescue him from the new and uncomfortable status of being only one exceptionally powerful member of a gallery of rivals.

    IOS was like many other empires, in that the arrival at the gate of the armies of disaster was the signal for a savage power struggle to begin among the courtiers. The determining consideration over all the rescue attempts which were mounted, or half-mounted, for IOS, was that the man, or alliance of men, who could bring rescuers in on acceptable terms could expect power and survival in return. There were, naturally, rival groups with different candidates for the role of rescuer, and with the hierarchy of the company shattered, it was not easy to be sure how acceptance was to be ratified.

    The passions generated by the struggle came to their climax during an extraordinary meeting of the IOS Board, which began at 10 am on Sunday May 3 and did not break up until nearly pm on the following Saturday. The meeting and the sub-meetings, cabals and personal confrontations which accompanied it, were by turns bitter and furious, or inexplicably euphoric. During the week, emissaries and plenipotentiaries came and went incessantly, with offers of rescue or requests for information. Cornfeld, Cowett and John King all addressed the meeting with explanations and suggestions. In between times, long periods of sullen, ashen bickering supervened.

    The Villa Bella Vista made a suitably theatrical setting. Long before IOS bought it, the villa was the Swiss home of the Colgate family. It is a building of great, rough hewn grey stones, with heavy roof beams of dark wood: sprawling beside the lake, it conveys at night a sense of Gothic melodrama. While the directors inside were lectured by members of their own company, or by visiting speakers as various as Mr Meshulam Riklis of the Rapid-American Corporation, and Mr George Ball, late of the State Department, now an international banker, IOS employees and newspaper reporters milled around outside.

    The tang of panic was in the air. In New York, the Dow-Jones index was down to 700, and nobody dared to guess where it might stop. 'Years of speculation are coming home,' said Sidney Lurie of Josephthals, summing up the general Wall Street feeling that a jealous god was wreaking some overdue retribution. There was a very genuine fear that Investors Overseas Services might simply disintegrate, and dump some two billion dollars of holdings onto the American markets. Already, the firing of Alger and the hasty dumping of his account was being blamed as one of the triggers that set off the break in March. The effect of IOS and its funds upon the market was not so simple and direct as that. But this was one of those times when the precise facts matter much less than the sudden terrors of the market. The irony was that although IOS itself was going broke, the frightened men gathered by the lakeside still had enough investments under their hands to initiate a devastating chain reaction of selling, which could turn the market break into a genuine crash. And they were answerable to no one and to nothing, except their own collective fears, ambitions and desires.

    Inside the meeting, the scenes were played by a distinguished cast. Together with special effects and noises off, there were contributions from nearly all the important protagonists in our saga, with styles and accents as varied as the history of the company itself. There was a group of sales bosses, sharing the sleekly youthful air which is apparently conferred by selling international mutual funds: Ira Weinstein of Canada, Malcolm Fox, the ex-Davis Cup player from Hong Kong, Roy Kirkdorffer from London, Ossie Nedoluha, and Robert Sutner. There was Allen Cantor himself, sucking his pipe. Two impressive presences were George Landau, rangy and elegant, like a Russian poet dressed by Brooks Brothers, and Eli Wallitt, with his long prophetic face and halo of white hair. There was Ambassador Roosevelt, towering and booming; Count Bernadotte; Martin Brooke, the English banker; Pasquale Chiomenti, the Italian lawyer; Wilson Wyatt, the Kentucky politician; and Professor von Peterffy, bulking even bigger, physically, than Roosevelt. Erich Mende, bouncy and red-faced, came in with a pr man to translate his German into English. Including Cornfeld and Cowett, 22 IOS directors were present when the meeting opened.

    Arthur Lipper III, the IOS broker, was there by invitation, and so were Allan Conwill, and Mel Lechner, the treasurer. Harold Kaplan, the new head of public relations, attended: no doubt finding it quite a change from his previous assignment, which was handling the Vietnam peace talks for the State Department.

    Proceedings opened with Cornfeld in the chair, executing some delicate manoeuvres. He was aware that Cowett was trying to promote a takeover of IOS by John King: this he was determined to resist, to the point of a personal break with Cowett. He reasoned, correctly, that the arrival of King would be the end of his own power. Cornfeld gave the meeting a resume of the condition of the IOS shares, whose price was then wavering around $4 and said redemptions were up sharply. He acknowledged that IOS was suffering from a liquidity problem, and then went on to discuss in some detail the loans which had been made to the King and Cowett family trusts. What Cornfeld did not acknowledge was the idea that IOS needed rescuing or taking over. In his opinion all the company needed was some interim finance.

    Was it possible that the six banks who had underwritten the offer might be a source of help? Ed Cowett reported on the abortive, and acrimonious meeting with them: little was to be expected from that direction.

    It was then Allen Cantor's turn. While Cowett had been talking to his friend John King, Cantor had been to Paris and talked to Paul Vincent at the Banque Rothschild. Cantor had discovered that if they could team up with the London Rothschilds,

    Banque Rothschild might be interested in a rescue bid. He was now able to report that Rothschild's were prepared to meet a deputation in Paris next day. However, he said, they would require the resignations of Bernie and Ed. Neither were they prepared to cooperate with John King.

    C. Henry Buhl weighed in with 'expressions of interest' from the Banca Commerciale Italiana, Lehman Brothers, and Warburgs. Mention of so many important banks excited Cornfeld's incontinent optimism. Perhaps he said, this was IOS's chance, at last, to join the Establishment?

    Mel Lechner then reported that IOS would probably lose $7-13 million in the first half of 1970.

    There was an unhappy speech by Dr Mende, about unrest among salesmen and investors in Germany. It was decided that Mende and Roosevelt should go to Germany, and the meeting got down to discussing John King and his plans in some detail.

    Cowett had flown on a secret mission on April 20. He was looking for help: in New York he saw Charlie Bluhdorn of Gulf and Western Industries and canvassed the possibilities of Bluhdorn's taking up some of the Commonwealth United strain. Ultimately that
on. If King just gave that back, Hammerman pointed out, IOS's immediate problems would be solved, and it would no longer be necessary to rush into King's arms. Malcolm Fox and C. Henry Buhl now came out against the King deal. Hammerman continued with some details of the Colorado nopi deal, which moved Wilson Wyatt to suggest that in future any deals between IOS directors and IOS companies should be discussed by the board. This was presented as a new thought.