When HARLIE Was One (24 page)

“Huh?”

“Uh—” She hesitated, then made a decision. “I guess it wouldn't hurt to tell you. The company has two sets of books, you know.”

“Huh?” Now he was even more confused.

“Oh, it's nothing illegal,” she hastened to explain. “One set is for accuracy. The other is for cosmetic purposes.”

“That sounds illegal to me.”

She made a face. “It is and it isn't. There's no criminal intention here. Let's just say the second set of books is more, um—
tactful
. The facts are the same. They just look prettier. The figures haven't been falsified; they've simply been—rearranged. Like for instance, HARLIE.”

“HARLIE?”

“Yes, HARLIE. You know and I know that he's a research operation—but some of the directors think his cost is too large a sum to be listed entirely under research. Don't look at me like that, David—I don't make policy and I don't know why this policy was made in the first place. Apparently they feel it wouldn't look good to the stockholders or the creditors to see such large sums of money being plowed back into the business all at once—”

“Elzer. Carl Elzer,” said Auberson.

“And others,” Annie conceded.

Aubie's mind was working. “I know what it is,” he said. “They're looters.”

“Huh?”

“You remember how they took over the company?”

“Wasn't it some kind of stock finagle? I remember there was a lot of talk about it, but I was working in one of the other divisions at the time, so I didn't pay that much attention.”

“Neither did I, dammit.” He searched his memory. “I know there were a lot of hard feelings about it. A lot of people quit; a lot more were fired. Supposedly, Elzer and Dorne and some of the other new directors are part of a—a financial syndicate that specializes in taking over growing companies. The story I heard is that they loot the companies for their cash assets and use that money to buy other companies. I could believe it about Elzer. I'm not so sure about Dorne. Dorne seems too interested in the work here.”

“Mm,” she said. “I might know more about that than you. When the hyperstate patents were granted, Stellar American Technology and Research was broken into four divisions, each one set up to develop and market a different application of the new technology; the four divisions were consumer electronics, military electronics, industrial computers, and experimental computer technology. Stellar American owns fifty-one percent of each—the rest is public; but Stellar American is owned by a holding company itself. Get control of that holding company and you've got five companies in your pocket—six, counting the holding. If somebody wanted to loot this company, they could do it, but it would take time and it wouldn't be easy, because Stellar American is not a fat company right now. The hyperstate process cost a lot more to develop than originally projected, and the earn-out is going to take a lot longer because the electronics market is saturated. That's why the company split itself into four new divisions—to bring in needed operating capital. If you were going to loot Stellar American, one of your first targets would probably be to cut back on all research—that means
us
—because if you're a looter, you don't care about research anyway. You're only after the short-term gain, and then you sell out.”

Auberson shook his head. “You have the advantage on me, Annie. I know zilch about this kind of thing. How could Stellar American lose control over its own majority?”

“I can think of a couple ways. Look, we know they had to go heavily into debt. About a year ago, they were looking for a white knight. What if they found a black knight instead?”

“Huh? White knight? Black knight?”

“Sorry. Buzzwords. Now you know how I feel when you start talking about floating RAM and multichannel laser-gates. Let me try it again in English. This is all guesswork on my part, but suppose the company was pushed to the point where they were willing to put up shares of stock as collateral for a new loan. If Dorne and Elzer made the loan—that is, one of their companies—they could take over the stock when the debtor found itself unable to make its payments. Or, maybe they simply took over the voting rights of the stock and allowed ownership to remain in the company's hands until the loan is amortized. There are other ways too. But it all works out to Elzer on the board and Dorne in the driver's seat.”

“Yes, but—no company is going to risk a controlling amount of its stock.”

“Yes and no,” she agreed. “They might risk it if they were sure that none of the other major stockholders would double-cross them.”

“You think that happened?”

“I don't know. Wait a minute—” She scribbled a note to herself. “Let me check on this. I think only thirty-six percent of Stellar American stock ever reached the open market. Some of the shares went to the original creator of the hyperstate layering technology and some of the shares went to the design team. As I understand it, the patent does not belong to the company; it belongs to the owners of the original research lab. The company funded them in return for an exclusive twenty-year license.”

“Are you talking about Krofft? Dr. Stanley Krofft?”

“I don't know—if that's his name, then he's the one. Anyway, I know for a fact that the inventor owns something like twenty-four percent of Stellar American voting stock. He's a company all by himself. Stellar American had to trade a lot of stock for the rights.”

Auberson whistled. “Krofft must be the key.” He began thinking out loud. “Let's see, the holding company owns fifty-one percent of Stellar American. If they were desperate enough, they could take out a loan on a twenty-four-percent piece of the pie. But they would have had to have had some kind of agreement with Krofft before they would even consider such a step—”

“Obviously, Krofft didn't keep his word.”

“I've met him,” Auberson said. “He must have had a good reason—”

“I wonder what Dorne and Elzer promised him,” said Annie.

“Whatever he was promised,” said Auberson, “it would have had to have been big. With so much at stake, it'd have to be.”

Annie frowned. “I don't respect a man who doesn't stay bought.”

“Well, whatever his price, I don't think we can beat it. We might as well consider that he's securely in their pocket.” Auberson sighed. “But that's probably what happened. I'll bet they took the company from the inside. Dorne and Elzer were probably just waiting for the right opportunity. Krofft's share of the stock, plus the overextended condition of the holding company, probably gave it to them. I'd guess that the holding company has been left with a minority share of Stellar American Technology and Research”.

They paused then while the waitress set out their food. As soon as she was gone. Auberson said, “Okay, Dorne and Elzer have got the holding company—what happens now?”

“Whatever they want. They've got one company and four independent divisions. Or maybe they've just got one of the divisions—or maybe, they're going to be subtle and gut the corporation one division at a time. I don't know. If you liquidate the assets and mortgage a company to the hilt, you can generate quite a bit of cash. You can use the cash to take over the next domino. It's a great way for an individual to get rich, but not too healthy for the affected companies.”

“I don't like it,” Auberson said. “It's ugly.”

“Oh, not always. Sometimes a person who takes over an ailing company through a shrewd stock maneuver is also smart enough to know how to trim away its fat and put it back on its feet.”

“You're not defending them, are you?”

She shook her head. “Uh-uh—I think Carl Elzer is a vampire. He doesn't understand the difference between saving a company for future potential and milking it of its resources now. To him, exploitation is exploitation, pure and simple. Unless he's careful, sooner or later fate will catch up with him. It's a very slippery paper empire they've built, and it could collapse very easily. All they need is a serious reversal. Unfortunately, Elzer wouldn't be hurt half as badly as the affected companies—and the people who work for them.”

“You're in a position to know, Annie—are they milking this company?”

“Not yet. But . . . then again, they may want to justify themselves by putting on a big show of trying to make the whole thing work before they pull the plug. I know Elzer's been doing a lot of homework lately—and a lot of it has been about HARLIE.”

“HARLIE? Why?”

“I don't know—he hasn't said anything to me about it. But I can guess. They can profit three different ways by shutting HARLIE down. One, write him off as a tax loss—oh, yes, what a beauty that would be. That would be like pulling the money right out of thin air. Two, they could sell his components to junk dealers—computer company jackals. There's a big market for used chips—even defectives ones; because even if they're worthless, you can still melt them down and retrieve the copper and silver and gold and Lord knows what else. And three, once they've cut him off, they can pocket his maintenance costs—and his appropriated budget for the next three years. There are other ways to milk a company too—skip a few dividend payments to the stockholders and funnel the money into your own pocket. That's a particularly nasty one.”

“How do you do that without people getting suspicious?”

“Oh, that's easy. Invest it in a company that you own a hundred percent of.” She shrugged. “Let that company declare the dividends, and you collect it all.”

He frowned. “Is there any way we could prove this?”

She shook her head. “They're awfully secretive. I haven't seen any evidence of anything. Not yet, anyway.”

“That's good . . . I guess.” Auberson toyed with his food. “Actually, it just makes me wonder what they're
really
up to. I don't know.” He put his fork down. “This whole conversation is very depressing.”

“I'm sorry,” said Annie. “If it's any consolation, it depresses me too.”

“I must be a real jerk. I've been so tightly focused on HARLIE that I've completely missed . . . the real problem. I thought the problem was just Carl Elzer and his shortsightedness. I didn't realize. . . . I thought Dorne was seriously interested in running this company.”

“Maybe he is, David. The man does seem seriously interested in HARLIE's potential.”

“Maybe. But he and Elzer are both in the same group of looters.”

“Um, yes and no. I think it's a marriage of convenience.”

“Convenient or not. it's still a marriage. And that means that HARLIE can't be anything more to him than a bone for the jackals when they start yapping too loud.”

There was nothing to say to that. They ate in silence for a while.

Abruptly, Auberson looked at her. “The annual report—how have they doctored it? What do they say about HARLIE?”

“Not much—”

“How's he listed?”

“That's just it—he isn't. He should be considered part of the research budget, but he doesn't show up there. He doesn't show up anywhere.”

“
Part
of the research budget? He
is
the research budget. A big piece of it, anyway.”

“I know—but he isn't listed that way. His cost has been spread out. Almost hidden. Listed under vague-sounding sub-projects and the like.”

“Now, why the hell—?”

“I think it's Carl Elzer again. If they say they're spending that much on a single project, then they're going to have to show some results for it. And admitting HARLIE's existence is the last thing they'd want to do—once they admit he exists, they can't erase him as casually as they'd like. People will ask embarrassing questions.”

“They're covering their tracks before they even make them,” said Auberson. “I'm not surprised. It's one more piece of the puzzle. The whole picture is starting to make a lot more sense now—” He stopped, allowed himself an embarrassed smile. “I'm sorry. We keep coming back to my problem. And this was supposed to be about yours. What is it anyway? You said the wrong figures keep coming out?”

“No—it's the
right
figures that do. We set up the final drafts of the report ten days ago.”

“And all the figures were from the second set of books? The phony ones?”

She nodded. “But the report printed out with all its figures corrected—taken from the real books. At first we thought we had made the mistake of accessing the wrong files, that it was some kind of proofreading or programming error, but all the access instructions are correct. It's not a text error. It's something in the Big Beast. All we want is a single set of printing masters, but the pages keep coming out of the printers with the wrong set of information. Or the right set, depending on how you look at it. Elzer is going crazy. He keeps calling it sabotage. He's got three programmers looking for a worm in the Big Beast.”

Something went
twang.
“A worm in the Big Beast?”

“Yes. Elzer thinks it's a time bomb. He thinks it was planted by one of the people they laid off when they took over. But that doesn't make sense. If you're going to plant a time bomb, why not plant one that crashes everything. Why plant one so trivial?”

“Good point.”

“Not to Elzer. He's ready to pull the whole thing down. I say let's just send the report out and have it manually set and let the programmers do a step-trace. Nothing else seems to be affected. But I don't think Elzer understands the technology. He's got us paralyzed. He won't let us do a thing until this is found and fixed.”

“Um,” said Auberson, forcing himself to seem casual. “How
different
are the two versions of the report?”

“The differences aren't all obvious. Most of them are quite subtle—like grammatical changes, or shifts in emphasis. The one that's driving Elzer crazy, though, is the section on research. HARLIE is listed right at the top. In boldface. There's even a paragraph explaining his goals and objectives—and nobody knows where that came from; maybe it's left over from the first draft. I thought Elzer would have a fit when he saw it.”