Indecent Exposure (19 page)
- Lang explained that the company would have to conduct a full investigation of Begelman's administration of the studio's finances and of his personal finances. "We have to do it, an
d we have to do it thoroughly,
David," Lang said. "If we don't, the SEC will do it for us. I'm sure you can understand that." - "I understand completely,"
Begelman
replied, "and you shall have my complete cooperation. My only option at this point is to plead for your mercy. It may not mean much, but you have my solemn word that you will find nothing else that is improper. You have my word that if you can find it in your hearts to forgive mc, you will not regret it. I will do everything in my power to prove to you that your confidence in me and your loyalty to me have not been misplaced." - Although
Begelman
had managed to inject a bit of poignance into the proceedings, nothing he said changed Hirschfield's and Fischer's conviction that his embezzlements almost certainly exceeded what had been discovered thus far. But they kept their suspicions to themselves as the discussion wore on. There was extended talk of what to tell the SEC, of when the investigation would begin, of investigative procedure, and of a press release. The meeting did not end until the sun was setting behind the mid-Manhattan skyline. - After the meeting at the Carlyle, Begelman took a taxi to the Dorchester on Fifty-seventh Street, where Ray and Fran Stark had maintained an apartment for many years. David and Ray decided to walk. They strolled over to Park, d
own Park to Fifty-sixth, across
Fifty-sixth to Lexington, up Lexington to Fifty-seventh, back across Fifty-seventh to Park, back down Park to Fifty-sixth, around the block again and again—seven or eight times in all. Though the conversation rambled, most of it boiled down to a repetition of two questions and two answers. - "David, how could you do this?"
"I swear I don't remember doing it." - "There's no other check or anything else is there?"
"On my honor, there is nothing. This is it. Period." - FOURTEEN
- In the nine days since Detective
Silvey
's telephone call, the Begelman problem had been handled informally by a gradually expanding but still small number of key people (primarily Hirschfield, Fischer, Allen, Lang, and Rudin), who acted individually more than they acted as a group. To call them a group, in fact, would imply cohesion that did not exist. Confronted by a problem that none of them had ever encountered before, and guided by little more than instinct and common sense at that early stage, they functioned loosely, without structure, and essentially without leadership. The logical leader,
Hirschfield
, although he was deeply upset, made little effort to impose a strong unity of purpose on the actions and deliberations of the five. Herbert Allen, a possible alternative leader, took one or two mild initiatives, but did not try to usurp
Hirschfield
's role as the chief executive. - It is axiomatic that whenever a major problem arises in a large institution and is not solved quickly and informally, the institution eventually finds it necessary to confront the problem in a formal manner. If the institution has a problem-solving apparatus appropriate to the task, it is activated. If
it doesn't, one is created. In e
ither case, a large measure of control over the problem-solving process inevitably passes out of the hands of those who discovered the problem and into the hands of the apparatus. More people become involved, and formal procedures are marshaled. Although such steps can be desirable and wise, depending upon the nature of the problem, they invariably
are
accompanied by certain ancillary effects: Much of the flexibility and freedom of maneuver that existed prior to the activation of the formal process are lost after it is activated. The amount of time that must be devoted to the problem is increased; delay becomes likely. And issues that have little or no relationship to the substance of the problem have an opportunity to enter the process and affect the outcome. - On Friday, September 23, the David Begelman problem was institutionalized by Columbia Pictures Industries. At the time, the move came as a relief to Alan
Hirschfield
, whose considerable skills as a corporate executive had never included a strong facility for facing down acute crises involving other human beings. Eventually, however, he came to regret that Friday deeply and would continue to regret it for the rest of his life. For it was on that day that his company decided—formally and after lengthy deliberation—that two separate and distinct acts of major embezzlement were insufficient grounds for summarily firing David
Begelman
. - The nine men who gathered in Hirschfield's office at 11:30 that morning did not leave for six and a half hours, except to use
Hirschfield
's private bathroom. Lunch was brought in. The nine, comprising a quorum of the board of directors of Columbia Pictures Industries, included four people who previously had not been part of the continuing deliberations on the
Begelman
problem. They were Matty Rose
nhaus, the bombastic Gcritol magnate and Columbia's largest shareholder, who had been briefed over lunch two days earl
ier; Leo Jaffe
, the shy Columbia board chairman who had been told nothing since Hirschfield informed him of the problem the previous Friday; Irwin Kramer, who was Charlie Allen's son-in-law, a member of the Columbia board, chairman of its audit committee, and executive vice president of Allen & Company*; - *Irwin Kramer was a curious figure at
Allen & Company. Behind his gruff, cynical exterior he
was a somewhat insecure man who
had graduated from modest wealth to great wealth when he married Charlie Allen's daughter. Terry, an assertive woman whom many considered the brightest and in some ways the ablest member of her generation of the Allen family. Although Irwin was given the title of executive vice president al Allen & Company, he wielded less influence than others with the same or lesser titles and occa
sionally felt the frustration of
being surrounded by people whom he perceived to be cither smarter or richer than he was. - and Robert Werbe
l, an amiable and very able thirty-nine-year-old attorney for Allen & Company who had been asked to attend the meeting by Irwin Kramer and Herbert Allen. - Todd Lang, Joe Fischer, and Columbia lawyer Victor Kaufman also attended, as well as Hirschfield and Allen. Not invited were Ray Stark, who was still in town, and Mickey Rudin, who had returned to Los Angeles on Tuesday evening.t
- In a thickening cloud of cigar smoke, the group reviewed every aspect of the
Begelman
matter, knowing that this meeting was different from previous ones. This meeting would not end until the board of directors of Columbia Pictures Industries had adopted a formal course of action—action that would be etched in the archives of the corporation forever and that soon would be subject to second-guessing by law-enforcement authorities, the Wall Street and Hollywood communities, and the public at large. - What should be done with David Begelman?
- "We've got to figure out a way to help him," Matty Rosenhaus insisted.
"He ought to be fired and thrown in jail," said Irwin Kramer, a blunt, assertive, paunchy man of fifty-six, who rarely deliberated long before forming and stating opinions. - What would motivate David to steal?
- "David has always lived on the financial edge," someone said. "There's no way he can meet Lew Rudin's standard of wealth." (David's wife, Gl
adyce
, formerly had been married to Lewis Rudin—no relation to Mickey—a very rich New York real-estate tycoon.) - The discussion of what action to take against
Begelman
was protracted, but by the end, much of the spirit had ebbed from the argument that he had to be fired immediately. The majority of the group was persuaded by the notion that they did not yet have - *
Also absent from the meeting were three ot
her members of Columbia Pictures
eight-man hoard of directors: David Begelman; Samuel Ted
low.
a
business associate of Matty R
os
enhaus's: and James Wilmot, a friend of Herbert Allen and
like Herbert,
a
major fundr
aiser for Democratic politicians. Wilmot was the chairman of Page Airways
Incorporated, a Rochester. N.Y.
concern, which was the wor
ldwide sales agent for Gulfstream II jets
. Wilmot was then under inves
tigation by the Securities and Exchange Commission for paying millions of dollars in bribes
overseas to obtain business for his compan
y. One of the alleged bribes was
a Cadillac g
iven to Ugandan dictator Idi Am
in. - Generally, the Columbia b
oard was not particularly distinguished, containing run a single
Independent lawyer, banker, o
r other voice staunchly independent of th
e corporation's vested interests as
represented by He
rbert Allen. Matty Rosenhaus,
and the others who tended to be loyal to them. - sufficient information, even about the Cliff Robertson and Peter Choate embezzlements, on which to base definitive action. Thus, they chose to postpone a decision on Begelman's ultimate fate until after the investigation, and instead carve out an interim status for him. He was to resign from the board of directors of the corporation and from his corporate title of senior executive vice president. But he would remain in his most visible position as president of the studio. And he would continue to draw his full $4,500-a-week salary plus benefits.
- Implicit in this decision was a judgment that if the Robertson and Choate thefts were the only ones found,
Begelman
could and should be treated differently from the way he would be treated if more thefts were found. That is, there was nothing inherent in the Robertson and Choate embezzlements themselves that required harsh and irrevocable action. - There was little disagreement about the need for a thorough investigation. The group decided that the inquiry appropriately fell under the aegis of Irwin Kramer as chairman of the board's audit committee, and should be conducted by Todd Lang's law firm, Weil, Gotshal & Manges, wit
h assistance by Price Waterhouse
& Co., the big CPA firm which handled Columbia's regular annual audits. Irwin Kramer, feeling very insecure because of his inexperience with such things,
insisted that attorney Robert We
rbel be permitted to advise him on his responsibilities and monitor the investigation as it proceeded. In effect, that meant Werbel would be second-guessing Todd Lang, a prospect that did not please Lang but about which he said nothing that afternoon. - Lang was to fly to Washington the following Tuesday to brief the SEC privately, and sometime after that a carefully worded press release would be issued.
- David Begelman remained in New York to await the results of the board meeting. He sat alone down the hall from Hirschfield's suite in an office designated for his use when visiting New York. Having been warned repeatedly that the company was about to launch an investigation at the studio,
Begelman
decided it would be foolish to postpone a
ny longer a ruse he had devised
for concealing another embezzlement which the company did not yet know about but which a thorough investigation almost certainly would discover. It was an embezzlement that surely would
ruin him for good, even if the
Robertson and
Choate
thefts did not.
Begelman
managed to compose his voice to affect nonchalance and dialed the home number in Bel-Air of his close friend, Sy Weintraub. Weintraub had become a multimillionaire in the sixties by developing new Tarzan movies and owning Panavision, the optical process by which most motion pictures ar
e made. In more recent years, We
intraub had lived quietly next door to Ray Stark, speculating in the silver market, buying race horses, and collecting ancient coins. He had accumulate
d one of the most valuable ancie
nt-coin collections in th
e world, and had advised Gladyce
Begelman
on coin investments. - "Sy, I'm in New York. I need a favor," Begelman said.
"Of course, David." - "I wonder if you could accommodate me by letting me have the use of twenty-five thousand dollars."
- "Of course. When do you need it? Will Monday morning be soon enough?"
- "Monday morning would be fine. I
would appreciate it if it could be drawn as a cashier's check, payable to Columbia Pictures." "I'll take care of it." "Thank you very much, Sy." "Not at all. When are you coming back?" "I'll be back tonight."
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