The Chairman

by Stephen Frey

  And Troy Mason had become the messiah. The one who would ultimately run Everest Capital.

  Until Donovan had met an untimely death on a Connecticut stream.

  “Hello, Kyle.” Gillette was the only one at Everest who didn’t call Lefors by his Donovan-given nickname. He’d never liked it. “What’s up?”

  “Just putting chicken in the bucket for the man,” Lefors answered smoothly. “Punching that Everest time clock.”

  While Marcie was relentlessly aggressive—a bull in a china shop—Lefors was smooth. He was always ready with an amusing story or an engaging remark to put others at ease. Calmly, almost imperceptibly taking center stage when he wanted to, he never appeared rushed or uncomfortable.

  Marcie and Lefors were different in their methods, but equally effective. And, down deep, they both craved their own empires. Which Gillette was wary of because, sooner or later, they’d both want to break away from Everest and start their own firms. It was the natural progression.

  “Did you hear about Richard Harris?” Lefors asked casually.

  “Yeah.”

  Lefors opened a bag of potato chips that was lying in his lap. He inhaled junk food constantly, but never gained weight. “Think he was murdered?”

  Gillette glanced up from his computer. Dominion had come back a little at the closing bell but had drifted lower again in after-hours trading. “Why do you ask?”

  Lefors shrugged. “A man like Harris probably had lots of enemies. You don’t get to be CEO of U.S. Petroleum without ruining a few careers. I never met him, but I heard he was a deliberate man. Deliberate men don’t step in front of buses. That’s why.”

  “It was an accident,” Gillette said. “At least, that’s what I was told. No one at the scene saw anything suspicious.”

  “I’m considering all the possibilities,” Lefors said, munching on a chip. “Like you’ve taught me.”

  “Just make sure Harris’s death doesn’t throw a wrench into our deals with U.S. Petroleum.”

  “I’ve already talked to the business development guy there who’s handling everything,” Lefors answered. “I reminded him that we still expect to close both transactions no later than January tenth. He started backpedaling at first. Said things would probably go on hold with Harris’s death, so I reminded him of the five-million-dollar no-go fee I put in the letter of intent I made him sign.”

  “What if we crater the deal?” asked Gillette. “Does the no-go fee go both ways?”

  “No,” Lefors replied proudly. “We don’t pay a cent if we cut off negotiations.”

  “Good.”

  Lefors wiped his mouth with a paper napkin. “So, why did you want to see me?”

  “I’m promoting you to managing partner.”

  Lefors stuffed several more chips in his mouth. “Do I at least get a cost-of-living increase?” he asked through a mouthful.

  “More than that,” Gillette said straight-faced. “Six percent.”

  “You’re a generous man.”

  “I’m kidding,” Gillette said, breaking into a grin. “You’ll make a million a year, up from the five hundred grand you make now. And I’m going to make you chairman of six of our companies.”

  Lefors tossed his tie over his shoulder and brushed crumbs off his shirt. “What about incentive comp? I heard we were raising a new fund. You going to spread some of the ups around now that Donovan and Mason are out of the picture?”

  “How did you find out we were raising a new fund?” Gillette wanted to know, irritated. Nobody in New York could keep a damn secret. For such a big city, sometimes it seemed like a small town.

  “I gotta plead the Fifth on this one, Christian. I can’t give away my sources. My network would fall apart if it got out that I didn’t keep things confidential.”

  “This time you’re going to make an exception, Kyle,” Gillette said. “Tell me.”

  “All right, all right.” Lefors closed the bag of chips and dropped it on the floor. “A buddy of mine over at North America Guaranty & Life told me. I went to business school with him. He’s putting together some kind of investment memo on us for the Mac Daddy over there. For Miles Whitman.”

  “I know who the Mac Daddy at NAG is.”

  “You know who all the Mac Daddies in New York are, Christian. That’s why I like hanging with you.” Lefors shook his head. “Thirty-six and chairman of Everest Capital. Did you wake up this morning and pinch yourself to make sure you weren’t dreaming? I mean, where do you go from here? Hell, you are one of the Mac Daddies now.”

  Lefors could charm a leopard out of his spots, so you couldn’t assume he was being sincere. Still, it was nice to hear that someone understood what he’d accomplished. Marcie had congratulated him, but only because that made sense from a political perspective. There was no doubt that her congratulations were insincere. But you never knew with Lefors. He might actually mean it. Which made him more unpredictable than Marcie. And, therefore, more dangerous. “I’m giving you 5 percent of the ups on the next fund.”

  “What’s the target raise?”

  “Fifteen billion.”

  Lefors let out a low whistle. “Hey, I might actually be worth something someday. No more filling chicken buckets. If you can raise that much,” he added.

  “I can and I will.”

  “Is this the same deal Marcie’s getting?”

  Gillette knew what was coming. Lefors was a natural negotiator, a man who always assumed that no one started with their best offer. Which wasn’t necessarily a bad assumption. But in this case, he was wrong. “Yeah, and don’t think you’re going to get any more. You aren’t.”

  “I want two million a year in salary and 10 percent of the ups.”

  “Then I’ll promote Danny Wagner instead of you.” Wagner was another Everest managing director.

  “Wagner.” Lefors laughed. “What a joke. You wouldn’t promote him if he was the last private equity guy on earth. He’s okay at blocking and tackling, like Cohen, but he can’t get people, you know? Which is what really sets a private equity person apart. What sets you apart. You take control of a situation whenever you want to. It’s a gift. Not many people have it.”

  Gillette passed a finger slowly over his lower lip. Lefors was right. The bluff had been called. Wagner would never be a managing partner. “Or I could go outside the firm.”

  Lefors shook his head. “Look, in the last six months I’ve been approached by three other private equity firms. They’re all offering me nice packages, better than what you just did. Of course, you already know that. From Tom McGuire. And here’s how I know you know.” He pulled the tie from over his shoulder and laid it down over the buttons of his shirt. “So I’m having lunch with a senior partner at one of these firms a few weeks ago, and I notice two guys a few tables over. One of them looks real familiar. I can’t place him for a while, then suddenly I remember. A couple of months ago I rode out to Kennedy Airport with Donovan. I was briefing him on developments at a couple of our portfolio companies. He was on his way to Africa for that presidential delegation, remember? And I was with him because you know how he always had to be doing ten things at once? Anyway, he’s dragging a McGuire bodyguard with him, too. The guy’s sitting in the front seat with the driver. Turns out, it was the same guy who was watching me eat lunch.” Lefors hesitated. “And he didn’t touch his food the whole time. He was just watching me. Like he was trying to read my lips.”

  “I know you’ve been approached,” Gillette acknowledged quietly, “but I don’t care. The deal I presented to you is the deal. There’s nothing more.”

  Lefors said nothing.

  It was time to deliver the knockout punch. If there was one person in the firm who was economically motivated, it was Lefors. He’d made it into Yale undergraduate by conning the university’s admissions office. He’d grown up in a Louisiana trailer park outside a small town thirty miles north of Baton Rouge called McManus. His real high school transcript was a train wreck because he hadn’t tri
ed, but he’d made 1580 on his SATs, then submitted a fraudulent application to Yale—third in his class with a 3.96 GPA, captain of the football team, student council. All bogus claims. But Yale had fallen in love with the SAT scores and were too frothy to have a kid from rural Louisiana that actually fit their admissions standards. Lefors had conned them perfectly. And, Gillette knew, for a con man, it always came down to money.

  “Kyle, I know which three firms are recruiting you. They’re nice firms, but the biggest fund any of them has is nine hundred million. You’ll make a lot more owning 5 percent of the ups of a fifteen-billion-dollar fund than you ever would owning even 50 percent of a nine-hundred-million-dollar fund. Which, of course, you won’t get. You’d get ten at most. And, if you keep doing well here, you’ll get more. Don’t be stupid.”

  They stared at each other over Gillette’s desk for several moments.

  Finally, Lefors nodded. “Okay, fine.” He laughed. Nervously this time.

  Which Gillette picked up on instantly. He’d only seen Lefors nervous a few times.

  “No hard feelings, right?” Lefors asked. “I mean, you’d expect me to negotiate because I—”

  “How did you know Troy was in the basement with the Hays woman?” Gillette interrupted, changing tracks. “At Donovan’s funeral reception.”

  “Marcie told me,” Lefors answered quickly.

  “What?”

  “Sure. Marcie always watched Troy like a hawk. Personally, I think they had something going on. She was pissed he was down there.”

  And Marcie had made it seem like she couldn’t stand Troy. “Why did you tell me Troy was in the basement with Ms. Hays?”

  “I thought Troy was out of control for a while. I heard he was banging women at all his portfolio companies. I was worried it could hurt us big-time.” Lefors hesitated. “And . . .’’ His voice drifted off.

  “And what?” Gillette pressed.

  “And I figured if I told you, it might create a spot for me.” Lefors looked around. “Guess what? It did.”

  Gillette gazed at Lefors for a moment without responding. It had just hit him. Lefors was from a tiny, backwoods Louisiana town, but he didn’t have a trace of a southern accent. In the five years Lefors had been at Everest, Gillette couldn’t remember a single time he’d heard even the slightest twang. Lefors ought to have an accent thick enough to cut, but he didn’t. He’d erased it because he knew it wouldn’t go over well in the New York private equity world. Or maybe he wasn’t really from Louisiana.

  “Christian.” Debbie’s voice crackled through the intercom.

  “Yes?”

  “Ann Donovan is here to see you.”

  14

  The Wild Card. You never know.

  “PLEASE, COME IN.” DONOVAN’S WIDOW looked much better than she had the day of the funeral. There was color to her face, and her lips weren’t as drawn and tight. “Let’s go over here.” He took her gently by the arm and guided her to the chairs around the coffee table, where he’d interviewed Quentin Stiles. “Would you like something to drink?”

  “No, thank you,” she said, her head shaking slightly. She was in the early stages of Parkinson’s. “I’m sorry to drop in on you like this without calling ahead.”

  “No problem.” Gillette settled into a chair beside hers. “How are you?”

  “Better.”

  “I’m sure it’s been difficult. If there’s anything I can do . . .”

  The widow patted his hand. “Thank you, dear,” she said softly.

  “Everyone around here misses Bill very much. It hasn’t been the same without him.”

  Her lips formed a wry smile and she pulled a tissue from her black purse. “I’m sure not everyone misses him. I’m not naÏve, Christian.”

  “Of course you aren’t.”

  “Bill wasn’t an easy person to deal with.”

  “Well, he . . .” Gillette’s voice trailed off again.

  The widow glanced into Gillette’s eyes. “I’m sure it was terrible when he turned his back on you, when he started favoring Troy. You must have hated him for that.”

  “I never hated him.”

  “It was despicable what he did,” she muttered. “Stealing money from Everest to help a friend. And himself,” she added. “A friend who was a horrible person anyway, trying to bed every woman he could,” she continued, her voice beginning to tremble. “You’d think a man in his fifties wouldn’t have to chase twenty-year-olds.”

  Gillette knew her bitter tone wasn’t really directed at Donovan’s friend.

  “But Bill helped him,” the widow continued, sniffing. “Got him all that money after his wife finally wised up and took him for everything he had. Or so she and I thought.” She shut her eyes tightly. “He ended up with more money after the divorce because of Bill, and Bill’s fee was that mansion in the Caymans.”

  Gillette hesitated. “How did you know?”

  “I overheard him on the phone one night laughing about it.”

  “Oh.”

  “Bill thought I was out, or off in another wing, I suppose.” The widow dabbed at the corners of her eyes with the tissue. “He didn’t keep track of me very closely for the last few years of our marriage. But he should have.”

  It was better to say nothing. Gillette understood what she meant thanks to Tom McGuire.

  She drew a deep breath, her head shaking more noticeably. “Bill did leave me quite a fortune.”

  “Yes, he did.”

  “And I intend to protect it.”

  “Of course.”

  “Most of that fortune is tied up in my ownership stake in Everest.”

  Gillette sensed there was more coming. That the widow hadn’t dropped by just to tell him what he already knew.

  “How are the portfolio companies doing?” she asked.

  “Most of them are doing fine. We have problems with a few, but that’s normal, Ann. I’m sure Bill told you stories about things that happened to our companies.”

  “No, he didn’t.”

  “Oh.”

  “Are there any big problems the world hasn’t heard about?”

  There were always problems, but she didn’t need to hear about them. “No.”

  “What about the companies that were taken public? The ones that trade on the stock exchanges and Everest still owns shares of?”

  Gillette felt his pulse tick up slightly. “They’re all fine,” he said calmly. “Why?”

  “I heard there might be problems.”

  “Heard?”

  “From someone.”

  “Someone?” Gillette leaned forward in his chair. Stockman was already at work. “Who was it?” He wanted her to confirm his suspicions.

  “It doesn’t matter,” she said quickly. “What does matter is that I’ve been offered a lot of money for my ownership stake. A lot of money,” she repeated. “Not as much as I’d get by holding on to it until you sell all the portfolio companies over the next few years. But of course that assumes there aren’t any problems with the portfolio, too. That assumes everything goes smoothly and that you can sell all those companies for big price tags. But if it turns out there are problems, I’ll be very sorry I didn’t accept this offer.”

  Gillette sat in his office staring at the ceiling. It was seven o’clock and the only light in the office came from the computer screen.

  He ran his hands through his hair and exhaled heavily. The widow wouldn’t say who had told her there were problems in the Everest portfolio and that she ought to get out now for a discounted price, but he was certain Stockman was involved. The timing was too coincidental. If it turned out Marcie hadn’t been diligent enough while Everest controlled Dominion and there were problems with the loan portfolio—or, worse, there was fraud—the fallout would rain down on Everest. Gillette could see the headlines: “Market Manipulation.” “Insider Dealings.” Raising a $15 billion fund—any fund—would quickly become impossible.

  The problem was he didn’t know who to believe: Stock
man or Marcie. The auditors had been all over Dominion before the IPO, but in a $40 billion loan portfolio, experienced auditors could still miss things. Lots of things. Even if Stockman was bluffing, it might not matter. In the Internet age, rumors could be just as devastating as facts.

  Maybe Stockman hadn’t been the one to actually approach the widow, Gillette thought to himself. Maybe it had been one of his aides or someone involved in the campaign. Maybe Stockman had made the call to Ann Donovan to set up the meeting with whoever had actually delivered the message so it didn’t look like he knew anything. Just him doing her a favor. He and Ann had known each other socially for a long time, and it would be appropriate for him to help her if he happened to hear important information. Even though Stockman and Bill Donovan had hated each other, Stockman and the widow always got along—probably because they shared a common loathing. The outside world didn’t know the extent of the animosity between the two men. In public, at the never-ending string of charity functions, they behaved as though they were friends. But, down deep, they despised each other.

  The widow was seriously considering selling her Everest stake. Gillette had no doubt of that after their conversation today. Which created a huge problem. If she sold it, that 25 percent voting block she controlled would fall into someone else’s hands, someone who would undoubtedly want to install his own chairman.

  If Stockman was responsible for putting the fear of Jesus into the widow, then he had to be working with someone else. He didn’t have the resources to buy her position—$2 billion assuming a 50 percent discount to Cohen’s $4 billion estimate of its value. In fact, there were very few people who did have that kind of wherewithal and would have an interest in buying it. Gillette could count on the fingers of one hand who it might be—and Paul Strazzi was at the top of the list. And Strazzi’s call to Troy Mason right after the funeral reception proved he had a mole inside Everest.

  Gillette hadn’t heard any rumors of a Strazzi-Stockman connection, and, if you’d been at the top of the financial food chain long enough, you usually would. He considered putting Tom McGuire on it—to confirm a Strazzi-Stockman connection. Tom had already done all the background work on Stockman, so it would be easier. But he didn’t know if he could trust Tom anymore. It would have to be Stiles.