Do You Sincerely Want To Be Rich? (62 page)

    The crisis left him, in everyday terms, still a rich man. True, by September 1970 his liabilities at the Overseas Development Bank were greater than his assets deposited with the bank -but that was a matter of how you did the sums. The only thing that put him in the red was his bag i-ii airliner, which had been purchased partly for tax avoidance reasons, and partly to rival Hugh Hefner's Douglas D09, the Big Bunny.

    The aeroplane was bought on credit guaranteed by the Overseas Development Bank, and putting all the costs on it together, Cornfeld's liability to the bank came to some $4,470,067 on the deal. Together with guarantees he had given to various friends and business associates in bolder days, he had total liabilities at the bank of around $5.2 million. But if he could somehow dispose of these, he would have a comfortable $1.25 million at the odb, not counting the residual value of his IOS shares, which could run to $6-7 million. In other words, there was every prospect that he could restore his personal finances to a distinctly cosy level: the only problems were that the market for leaseable airliners was suddenly very constricted and that selling off his shares would, while restoring his finances, complete the destruction of the power and influence which he had so recently enjoyed.

    Cornfeld seemed to find it hard to believe that he had lost the ability to command the chieftains of IOS - men, who in his own eyes, were as much his own creation as the company itself. The swinging, sexually-emancipated image normally obscured the authoritarian side of the Emperor's nature: now, in exile, it emerged more clearly, especially in his personal comments on unruly followers. Cowett, he declared, was 'a man with a pretty strange view of stock markets'. That was the man he had put in command. Henry Buhl he called a 'boob'. Anyone who has heard Mr Buhl describing his own 'weakness' and 'mistakes' in investment policy might see something in the point: but Cornfeld had placed Buhl in formal charge of all IOS investment policy. Melvin Lechner, Cornfeld informed us, was 'a pathetic little man': in view of the courage Lechner had displayed, the charge was unfair; but in any case, Lechner was Cornfeld's Treasurer. Other ex-colleagues were described as liars, 'Kickback experts', and incompetents. His anger was expressed to us, in our interviews with him, in controlled, almost philosophical terms. But to some circumstances, the tantrums to which he had always been prone became more formidable. In October, after his clash with Wyndham White, he arrived uninvited and unexpected at a board meeting of the Overseas Development Bank. He shoved his way past the security men, and stormed and shouted at the unhappy directors for the best part of an hour. In November, his girl friend Vicki Principal went to court in London and asked successfully for an order to restrain Cornfeld from seeing her. He had, she said, attacked her more than once, kicking her and half-throttling her on one occasion. Some weeks later, there was a reconciliation - but clearly, the Emperor was finding exile a strain.

    Sometime around the end of the year, he came to terms at last with the circumstances of his diminished power, and decided that the game was up. There were still people who believed in IOS, and there was a large body of customers who had to go on believing. But Cornfeld himself decided that it was time to cash in what remained of his chips, and get out.

    The deal was set up by Robert Vesco, IOS's hardbitten young saviour. Vesco had only consented to Bernie's reappearance on the board unwillingly, and had always been determined to get rid of the founder if possible. He also determined, at the end of 1970, to take the direction of IOS's affairs into his own hands - having regarded himself before then, he says, merely as a lender to the company. In December, he declared that IOS had defaulted on the loans from International Controls Corporation - partly, he said, by restoring Cornfeld to certain subsidiary posts without permission. Vesco then forced IOS to deposit $5.5 million cash at International Controls Corporation's bank, namely Butler's Bank of the Bahamas. This cash was to be deposited as security for the loans: it was actually more than Vesco's company had lent to IOS. Further, he decided to reorganize the whole capital of the company in order to break the power of the old shareholders. It was a scheme they could not easily resist, because Vesco, if he wished to do so, could put the company into liquidation.

    It was a case, he told us, of 'getting the beast by the tail, so that we could bang its head against the wall'. When it was suggested that the operation would leave nothing but a dead cat, Vesco smiled. 'It could have some nice little kittens', he said.

    But before the plan could go through, Cornfeld's huge holding had to be neutralized. Vesco found purchasers for Cornfeld's shares at eighty cents each - at the time of writing, these investors refuse to reveal themselves. The price was just twenty cents a share less that Cornfeld had refused, with contempt, sixteen months earlier. But in addition, Vesco arranged to have Cornfeld's bank guarantees taken over.

    Up to the last moment, Cornfeld declared that he was going to fight back - that he would retake the company, that he would give up the last of his fortune to protect the fundholders. Serious negotiations began in Geneva on Monday, January 12, and lasted into past midnight until Friday, when Cornfeld, Vesco and some twenty lawyers and advisers decamped to London to continue the business. Just before 1.00 am on Saturday, January 16, Cornfeld signed up at last. On Saturday afternoon, a brief statement went out from IOS headquarters in Geneva, saying that Bernard Cornfeld had severed all his connections with the company. The company expressed its thanks for the many services that Cornfeld had rendered. That had been one of the conditions Cornfeld insisted upon.

    Shortly afterwards, Mr Cornfeld went to London Airport and boarded a plane for Acapulco.

    

    Ackermann, Dr Peter, 423

    Adler, Alfred, 34-5, 37, 67

    Aghayan, Dr Chahin, 178

    Alazraki, Roberto, 246

    Albert de Bary, Bank H., 86, 88, 106, 265

    Albou, Pierre, 194

    Alger, Fred, no, 116, 271-81, 294,

    

    394, 400, 446

    

    Allen, Charlie, 283, 289

    ambac International, 289

    American Stock Exchange, 273

    Anderson, Arthur, & Co., 352, 357

    Annis, Dr Edward, 341-2

    Anton, Dr Nicholas, 299-300

    Anthonioz, Marcel, 171

    Athold, S. A., 166

    Azine, Hal, 341

    Balzan Foundation, 251-2

    Bangor Punta, 286-7

    Bank of America, 428

    Bank of England, 219

    Bank of New York, 368, 370

    Banque International de Luxembourg, 88

    Banque Privee, 159-60, 165-6

    Banque Rothschild, 242, 259, 291, 294-5, 320. 322-3, 331, 401-2, 419

    Barish, Keith, 302, 307-10, 454

    Beecher, Willard, 33-6, 48

    Belgium, IOS in, 264

    Belman, Murray, 186

    Beltraminelli, Stelio, 254

    Benedick, Ruth, 38, 40, 68, 82

    Benedick, Walter, 38, 39, 50-1, 68, 82, 149, 452

    Berkin, Gerald L., 199-201

    Bernadotte, Count Carl Johann, 185, 197. 267, 394, 401

    Berrier, Alain, 261-3

    Beta Foundation Equipment Associates, 363, 367-8

    Blue Sky Law, 54

    Bluhdorn, Charles, 191, 285, 402

    Bolivia, IOS in, 136-7

    Borlin, Fred, 128, 130, 132-3, 136, 286

    Borman, Frank, 342

    Brazil, IOS in, 127-36, 144, 146, 227

    Brentford, Lord, 305-6, 455

    Brooke, Martin, 323, 394, 401, 412

    Brown, Edmund G. 'Pat', 184, 290

    Brown, Holmes, 304, 306

    Brubaker, Joseph 'Bru', 227

    Buchenrode, Baron von, 127

    Buhl, Henry C, 101-2,no 160, 271. 273. 334. 361-2, 375, 388, 396, 402-3, 406, 408, 410, 427, 442, 455-6, 458

    Campos, Luis Claudio Albuquerque,

    

    133

    Canadian Venture Fund, 446-7

    Cancio, Judge Hiram R., 152

    Cantor, Allen, 57-8, 61, 123, 140, 179, 186, 197-8, 201-2, 224, 249, 258, 262-4, 361-2, 367, 370, 374, 376, 380-2, 384-5, 388, 395, 400-1, 403, 410-13, 420, 433-6, 456

    Cantor, Berton, 55, 61, 63, 65, 67, 73, 249

    Carli, Professor Guido, 243

    Carnegie, Henry, 186

    Carr, Fred, 276, 278

    Casals, Pablo, 183-4

    Cassini, Oleg, 140, 195, 203, 300

    Chiomenti, Dr Pasquale, 243-4, 248-

    

    249, 401, 403

    

    Clapp, Gloria Martica, 21, 153-4

    Clapp, Sam, 153, 271-3, 282

    Cohen, Manuel F., 147, 161

    Cohen, Seymour, 47, 49

    Coleman, Delbert W., 274-5, 293, 398

    Colombia, IOS in, 126-7

    Colorado Corporation, 341, 366, 408,

    

    415. 442

    

    Colorado nopi, 365-7

    Commonwealth United Corporation, 291-8, 33°. 368, 442

    Conwill, Allan, 162, 398, 401, 431

    Cornfeld, Bernard: his rise and fall, 13-25; malpractices, 15-16; attacks sec, 20-1, 148, 385; family background, and education, 26-37; cured of stammering, 33-4; interest in applied psychology, 34; introduced to mutual fund idea, 40, 45; salesman for ipc, 47, 50-1, 55; works for B'nai B'rith, 47-9; obtain's master's degree in group study, 47-8; in Paris, and recruits salesmen, 56, 58-61; Dreyfus Fund salesman, 59-60; moves to Geneva, and formalizes sales training, 65-72; and the Stock Option Plan, 80;

    and formation of IOS Ltd, 80-8; helps Cowett, 100, 103; promotes the Fund of Funds, 104, 107, 112, 114; propaganda for IOS, 118-21; and Brazil, 135; in Israel, 139-40; and 'hot money', 140; and Ramer Industries, 158-61; and the sec inquiry, 160-3; and Switzerland, 164-5, 7-73; and James Roosevelt, 175-7; and Iran, 179; secures public figures to boost IOS, 183-6; his 'court' in Geneva, 191-207; sexual reputation and philosophy, 192-6; his parties, 196-7; loyalty of his old friends, 198-207; generosity, 204; lavish expenditure, 204-205; and Germany, 224-5, 233-4, 240; and Italy, 243-4; and France, 262; and the Communist countries, 268; and eon, 300; and Gramco, 313, 3I5_I6; and need of new capital, 331; and the Arctic holdings, 351-3, 356-7, 359-6o; and Colorado nopi, 367; and the public issue, 370-1; and the sale of shares, 374-81, 396; relinquishes Presidency, 385; and the collapse of the share price, 390-1, 393-4; propaganda campaign, 395-6; loss of personal authority in IOS, 398-9; and the extraordinary Board meeting, 401, 403-4, 406-7; forced to resign chairmanship, 410-15; removed from the Board, 421-6; brings lawsuit, 429; devises comeback through show business, 430; returns to the Board, 431-2; speaks at the 'Millionaries Conference', 435; and the customers' yachts, 448-9; interest in backgammon, 451; suit filed against, 457; personal wealth, 458-60; sells his shares, 461

    Cornfeld, Hubert (nephew), 28, 48, 193, 205

    Cornfeld, Sophie (mother), 27-9, 193, 244, 386

    Coughlin, Ed, 123, 125-8, 258, 262, 388, 413, 426

    Cowett, Edward Morton, 14, 16, 23-4, 53-4, 80, 90-105, 107, 140, 151-2, 154-5, 158-9, 161, 188-9, 212, 219, 241, 244, 286, 299, 301, 316-17, 323-4, 326, 330-3, 342-3, 351-2, 356-7. 360-5, 368-70, 374-86, 391-399, 401-9, 422, 434, 438, 445-6, 449-50, 443, 457-8

    Cowett, Wilbur, 100, 117

    Craven, Kenneth, 364-5

    Crawley-Boevy, David (Ernest Richard Garnett-Smith), 230-1

    Credit Suisse, 64, 85-6, 106, 167, 254

    Curran, John, 61, 69, 373, 430, 433

    Cutler, Richard, 45-6

    Davidson, Bret, 138, 266-7

    Deonna, Raymond, 164-5, 168

    Denver Corporation, 341 Deutsche Bank, 240-r

    Dinstein, Dr, 140

    Doubre, Phil, 386 Dover Plan, 212-21, 447

    Dressman, Howie, 72, 77

    Drew, Gail, 200-3

    Drexel Harriman Ripley Inc, 322,

    

    324-5, 327, 330, 372

    Dreyfus, Jack J., Jr., 52-6, 59, 84,

    

    112, 276

    

    Dreyfus Fund, 52, 55-6, 59, 74, 82-4,

    

    95, 106, 121-2, 152

    

    Duke, Angier Biddle, 307

    Ellenport, Lou, 72-9, 138, 264

    eon Corporation, 299-300 Erhard, Ludwig, 184, 233

    Famous Players, 286

    Felberbaum, Harvey, 76, 186, 226, 244-6, 248-50, 255, 257, 364-5, 367, 373-4, 395, 420, 423, 426, 433, 436, 454

    Feld, Hyman, 150, 374

    Feldman, Al, 95, 99-100

    Fideuram, 243, 248

    Fiduciary Trust, 154-5, 273

    Finter Bank, 246, 249-58

    Fleet, Kenneth, 186

    Fleming, Robert, 40

    Fletcher, Doug, 198, 278

    Fonditalia, 180, 242-8, 255-8, 447

    Foundation Equipment Associates, 361-2

    Fox, James, 29, 140

    Fox, Malcolm, 385, 400, 405, 412-13

    France, IOS in, 259-63

    Freedman, Bobby, 363

    Freeman, Charlie, 246

    Freetown, Jochem, 227

    Freyre, Gilberto, 133

    Fuller Corporation, 294

    Fund of Funds, 15, 103-16, 145, 149, 151, 156-61, 210-11, 235, 255, 265-266, 276, 278, 281, 284-5, 294, 299, 314, 318, 345, 350, 353, 357-9, 407, 427, 431, 437, 443-6, 448, 456

    Fund of Funds Sterling, 219-21, 448

    Fund of the Seven Seas (foss), 305