The Billionaire Who Wasn't (38 page)

“Everybody says it was pure genius on my part to have done this transaction at the price we did at the time we did,” said Feeney over lunch one day in P. J. Clarke's crowded back room. “No genius! We would have done it sooner, and probably for less money.” And he insisted that it was “dumb luck” that he made so much money in the first place, rather than anything that made him different. He often wondered “whether Bob's position didn't help us in the end to get the best price.” He reckoned that Miller really regretted not selling. In 2005, DFS was estimated to be worth around $1 billion, making Miller's stake worth $400 million, one-fourth of the price he could have gotten without taking into account added value over the years.

Tony Pilaro maintained that he provided the competition that forced Arnault to pay such a high price, and he would say to Chuck, “Don't underestimate the fact that there was competition, and competition has a tendency to preserve value.”

The profitable side business the four owners had, that of distributing Camus cognac and armagnac worldwide through their company, Camus Overseas Ltd. (COL), also came to a fractious end. During the sale negotiations, Jean-Paul Camus sent a handwritten letter to the DFS owners asking what would happen to the special deal he had with them if they sold. Camus was still getting most-favored-cognac treatment: In the previous four years, DFS had sold $242 million worth of Camus cognac compared to $50 million of Hennessy brandy. Would Arnault, who owned Hennessy, not reverse this? In response, Arnault gave an assurance that he would not interfere with the long-standing arrangement. But Camus had other problems. It produced only a small percentage of its own “juice” and bought the bulk from outsiders, which required massive borrowings. It was near bankruptcy, and the bank looked for somebody to lay off their loans. Feeney and Parker were asked to attend a meeting at a bank in Paris. There were ten to fifteen French bankers there, recalled Parker. The bankers said, “You guys have made a ton out of Camus, it's your problem, not ours.” He retorted, “We have our commitments to Camus, and we will meet those commitments and we will buy the cognac we have committed to buy, and that's all, and the rest is your problem.” Feeney and Parker walked out of the bank. Morgan Stanley valued COL at $600 million, but “eventually we gave the whole thing back to Camus for nothing, the distribution rights on a worldwide basis, in return for being let off the hook,” said Parker.

Lee Sterling and Jeff Mahlstedt, who left DFS in 1965 to pursue their own business interests, reflected on the wisdom of their career move when they heard about the multi-billion-dollar sale of the company which they once partly owned. “I think I left a few years too early,” said Sterling. “I don't regret it, but it sure would have been nice to stay on!” “Was I sorry?” said Mahlstedt. “Anybody in their right mind would have to say, ‘Of course!'”

After the DFS sale, Chuck Feeney and Alan Parker arranged for checks to be sent from the proceeds to 2,400 long-term employees at the duty-free stores. Feeney set aside $26 million for this, and Parker $13.5 million. Those who qualified were managers with five years' service, employees with ten years, and retired staff with fifteen years who had left in the previous five years. In an accompanying letter, Feeney described the payments as a gift “by which we intend to show our goodwill, esteem, and kindliness.”

It was an almost unheard-of act of generosity in the corporate world. Feeney and Parker got hundreds of letters from grateful workers who had no idea the
checks were coming. A production manager in Honolulu described how when the staff opened their envelopes, there were “whoops of joy, tears, some had to sit down due to nervousness—all the emotions of having received a generous gift.” A woman in the Waikiki duty-free shop told Alan Parker that when she was informed she would get a gift, she had expected a watch or a purse. “Then the next day when I came to work and was handed the two letters, I opened your letter first, my heart stopped a bit, I couldn't think and went into shock. I cried and cried, I just couldn't believe it. Then I opened Mr. Feeney's letter! One of the managers had to comfort me before I started my shift.”

There is much nostalgia in DFS for the time when Chuck Feeney and Alan Parker were owners. Both—especially Feeney—had inculcated a caring culture in DFS, said Bellamy. “Chuck was always for the little person, the salesladies and their families.” DFS had once been a happy company and people loved it from top to bottom. “We always had parties at year's end, and management would dress up in funny clothes up on the stage telling the salesladies how good they were. We paid people well and gave them good benefits. That undoubtedly came as much as anybody from Chuck.”

In Waikiki in January 2006, staff members openly expressed their despondency at the erosion of their benefits and working conditions since the sale. The level of health care, scholarships, and bonuses that the original owners had introduced was a thing of the past, they said. There were rumors of more layoffs at the DFS Galleria, where staff had been cut back again after the 9/11 attacks hit air travel.

“The Japanese visitor to Hawaii is younger now and has been here a number of times,” said Phil Fong, DFS Hawaii's former inventory controller, at the Honolulu warehouse where he today runs a jeans business. “The focus now in DFS is more on cost savings and efficiency. It is 100 percent different culture from before the sale.” He related that in 1998, he was asked to tell the thirty staff in the DFS Honolulu accounts department that they were all being let go. As soon as he had completed this unpleasant task, he was told his own job was being eliminated and that he must leave immediately.

In January 2006 in the Waikiki DFS Galleria in Hawaii, the eyes of an elderly Japanese sales assistant crinkled up in delight at mention of Chuck Feeney's name. She clasped her hands. “Oh! I remember Feeney-
san.
Very nice man. He gave me $10,000. Mr. Parker gave me $2,500. When I got the checks my husband said, ‘Count the naughts!' We were so full of thanks!”

CHAPTER 26

“A Great Op.”

The sale by Chuck Feeney of his foundation's share in DFS meant that his days of anonymity were about to end. Submissions made to the Wise Man and to the New York Supreme Court disclosing that he had secretly transferred his ownership of the duty-free empire to his charitable foundation might be accessed by the media at any time. With the injection of $1.6 billion from the DFS sale on top of an already overflowing treasure chest of investments and properties, his foundation had surely become too big to escape notice for much longer.

Harvey Dale worried that without proper management of the publicity, people would suspect the money in the foundation was tainted. Two years earlier, the pretense of anonymous giving was used to perpetrate the biggest scam in the history of American charities, when the Foundation for New Era Philanthropy, founded by Philadelphia-area Christian businessman John G. Bennett Jr., defrauded donors of $135 million by inviting them to contribute large sums to his foundation for fixed periods that would be matched by secret donors—who did not exist.

Atlantic Foundation put its strategy for the “unveiling” of its secret existence into motion on January 13, 1997. That day, the president of the Atlantic Foundation's service company, Joel Fleishman, called
New York Times
publisher Arthur (Punch) Sulzberger and asked for an urgent meeting. They had been friends for years, but Fleishman, a professor of law and public policy at Duke University and onetime wine columnist for
Vanity Fair,
had
never told Sulzberger that he was secretly running the service arm of a major world philanthropy.

Sulzberger was suffering from a cold, and he invited Fleishman to drop by his apartment on Fifth Avenue. There the Duke professor told him, “Well, Punch, I've never been able to tell you what I really do. I have always been a bit obscure in my answers to your questions. Now I can tell you what I do, and this is it, and we are going to announce the existence of this organization in ten days' time, and the
New York Times
can have an exclusive.”

The publication of the story was set for Thursday, January 23.
New York Times
senior executive Michael Oreskes assigned reporters Judith Miller and David Cay Johnston to check everything out. They established that Feeney's giving and his passion for secrecy were indeed unique. When they called Thomas A. Troyer, a specialist in philanthropic law from Caplin & Drysdale in Washington, he assured them, “I've never heard of anything like this.” David Cay Johnston did not need to be told how important the disclosure was. For years he had been aware of a huge presence in the world of philanthropy, a personage who regularly funded universities and nonprofit organizations, and was known only as “Anonymous.”

On January 22, Harvey Dale told three academic colleagues in a midtown restaurant that the next day the
New York Times
would reveal that he was the head of one of the world's biggest private philanthropies. None of his close circle knew about his secret life. Dale had become director of the National Center on Philanthropy and the Law at New York University Law School but had never told members of the board where their funding was coming from. In his mind it was the right thing to do, to go public, he now told them, but in his heart he would miss being a private person.

That same day, with jet engines screaming in the background, Feeney lifted a pay phone in San Francisco airport and by prior arrangement called the
New York Times.
He told Judith Miller he was prepared to reveal his secret to the world, that he was not a billionaire, as he was usually referred to in the business pages, and that he had long ago given everything, including his DFS shares and his businesses, to his two philanthropic foundations, the Atlantic Foundation and the Atlantic Trust, based in Bermuda. He was personally worth less than $2 million, a fact known only to a tight circle of family and friends. In the last fifteen years he—or rather, his charities—had given $600 million to good causes in the United States and elsewhere across
the world. He now planned to set about giving away the remainder—which after the DFS sale amounted to some $3.5 billion.

“I simply decided I had enough money. It doesn't drive my life. I'm a what-you-see-is-what-you-get kind of guy,” Feeney told Miller. “Money has an attraction for some people, but you can't wear two pairs of shoes at one time.” He divulged a few details of his private lifestyle. Yes, it was true what his friends said about him, he said, he flew economy class and he wore a $15 watch.

The newspaper splashed the story as its lead the next day under the headline “He Gave Away $600 Million and No One Knew.” Judith Miller's 1,800-word report was hugely positive. It described how over the previous fifteen years, the businessman from New Jersey had given immense sums to universities, medical centers, and other beneficiaries—but with such secrecy that “most recipients never learned who their benefactor was.” The donor, Charles F. Feeney, covered his tracks so well, she reported, that business magazines had for years estimated his net worth in billions, not realizing he had given everything away. Her story went on to quote several beneficiaries who had been released for the occasion from their vows of secrecy and were effusive in their praise for his style of giving, and what it had enabled them to do.

Although prepared to talk to the
New York Times
, Feeney still did not consent to his picture being taken. He was happy that the only photograph the paper could find of him was taken when he was seventeen years younger.

The carefully planned unveiling operation did not go entirely smoothly. Jim Dwyer of the
New York Daily News
also had the story that day. “He got a leak. He was all over me on the phone,” remembered Dale, who refused to take his calls. Dwyer, too, was extremely positive about Feeney. “I was intrigued by him,” recalled the reporter, who had encountered Feeney in Ireland when writing about the peace process. “He is the opposite of the grotesque consumption and excess that has been coursing through American society for decades, where ostentatious wealth is not something to be ashamed of but flattered. He turned that extravagance on its head to defy all the lurid conventions of our society.”

“Chuck Feeney,” he wrote in the
Daily News,
“is what Donald Trump would be if he lived his entire existence backward.”

When Feeney's sister Arlene called him from New Jersey to say he was on the front page of the
New York Times
, Chuck pretended to be surprised.
She told him to go out and buy the newspaper “and not wait until it was in the public library in a few days' time.” An old acquaintance called Feeney's office from Hawaii to sympathize with his secretary, thinking Feeney had died.

The day of the unveiling, Harvey Dale released a twenty-three-page statement to the media designed to allay any suspicions that locating the foundations in Bermuda was for shady purposes. He revealed that the board of Feeney's foundation was a blue-ribbon “who's who” from the American philanthropic and educational establishment.

Up to the mid-1990s, there had been only four directors, Chuck Feeney, Harvey Dale, Frank Mutch, and Cummings Zuill, but the board had been expanded after Mutch had warned, “It will look as if there really is some ulterior motive if it's just Chuck Feeney and two lawyers and a banker with all of this money.” Sometime before the DFS sale, the Atlantic Foundation had recruited as directors Elizabeth McCormack, adviser to the Rockefeller family and vice chairman of the MacArthur Foundation; Christine V. Downton, a founding partner of Pareto Partners in the United Kingdom and a governor of the London School of Economics and of Kingston University; Fritz Schwarz, chairman of several prestigious bodies, and Feeney's lead attorney during the battle over DFS; Frank Rhodes, who had stepped down as president of Cornell; and Michael Sovern, president emeritus of Columbia University.