by Coll, Steve;
And while Bank of America mulled its options, Getty Oil’s attempts to contact family members through attorney Edward Landry finally yielded a response. In March, Landry telephoned Dave Copley and told him that he had been talking with Vanni Treves, J. Paul Jr.’s solicitor in London, about the growing tensions between Gordon and the company. Landry told Copley that Treves had indicated a desire to talk with somebody high up in Getty Oil, and Landry wondered if perhaps Copley would like to fly with him to London to meet with Treves and discuss the situation. If Treves could be convinced that something was amiss, then perhaps J. Paul Jr. would sponsor a lawsuit challenging the sole trusteeship of his brother Gordon.
Paul Jr. was regarded by company executives as the most intelligent of the old man’s surviving sons, but there was no doubt that any dealings with him would have to be channeled through his London attorney, Treves. Paul had only lately been released from his most recent hospital stay, which had lasted more than four months, from August 7, 1982, until December 22, just before Christmas, when the heir had returned temporarily to Tudor House, his London mansion. Apart from his dependency on heroin, Paul suffered from numerous circulatory problems and related ailments. He could walk only a few yards under his own power. He was in his fifties now, disheveled, overweight, reclusive, dependent on his doctors to relieve his physical pain and discomfort. Cirrhosis and pneumonia had left his liver and lung functions impaired, and he was able to stay away from the hospital for only weeks at a time.
His decrepit condition was the legacy of a wild, self-indulgent, decadent youth and early middle age that wasted his potential, once considered brighter than any other of the old man’s sons. In youth, he was charming, handsome, and intelligent, though even then he did not abide convention. He dropped out of San Francisco State University to educate himself in literature, music, and the arts, and then married Gail Harris, who produced the first of J. Paul Getty, Sr.’s grandsons, J. Paul Getty III. Paul ingratiated himself to his father from the start; christened Eugene Paul, he changed his name to J. Paul Jr. in 1958. “I am proud of my little family,” the old man wrote of his son and grandchildren in his diary—Gail had by now born three other children. But as the years passed, Paul Jr.’s idyllic world atrophied. As it had been for his younger brother Gordon—Paul Jr. and Gordon were the only full brothers among the old man’s sons—his stint in the family business was disastrous. After a short internship in California, Paul Jr. became head of Getty Oil’s refining and marketing operations in Italy. He floundered, and by the mid-1960s was fired by his father, who blamed him for a $2 million annual loss in the operation.
Spun off into the hedonistic society of European aristocracy, Paul underwent a radical transformation, and certainly not for the better, in his father’s view. The marriage to Gail Harris ended in 1964 and Paul began to drink heavily. Through his close friendship with Claus von Bülow, who would later achieve his own special notoriety in the United States, the young Getty heir met Talitha Pol, from the island of Bali, an exotic daughter of a Dutch painter and a friend to the most celebrated hippies of Europe. Paul and Talitha became friends with the Rolling Stones, and were seen galavanting through European capitals with lead singer Mick Jagger and his wife, Bianca. They had a son, and in keeping with the spirit of the times, they named him Tara Gabriel Galaxy Gramaphone Getty. The family appeared in European magazines, with Paul often wearing, as his father put it, “a tie-dyed velvet outfit that would make any genuine hippie green with envy.” By the end of the decade, Paul’s marriage to Talitha was disintegrating, and there were rumors of divorce. When she came to Rome in 1971 to discuss a reconciliation, however, Talitha died in Paul’s apartment of a massive heroin overdose.
From there, it all went from bad to worse. In 1973, Paul’s oldest son by his first marriage, J. Paul III, was kidnapped in Rome and held for ransom. He was returned only after losing his ear to the kidnappers while his family debated paying the $3.2 million demanded. As Paul’s health deteriorated, he moved to London, where he argued from time to time with his father and rarely saw anyone, including his own children. Gail Harris, his first wife, returned to California with disfigured J. Paul III and the others, while Tara Gabriel Galaxy Gramaphone enrolled in an English boarding school under the general supervision of his grandparents on Talitha’s side, who lived in France. Gail Harris also took an interest in Tara, certainly more interest than the boy’s father, who was proving himself a rather despicable parent. In 1981, for example, J. Paul III lapsed into a paralyzing coma after an alcoholic binge. Confined to a wheelchair, his medical bills began to run twenty-five thousands dollars a month, a tiny sum given his father’s income, but one Paul Jr. nonetheless refused to pay—Gordon had to take care of Paul III until a court action forced Paul Jr. to fork over the money, While the family controversy raged, Paul donated millions to British art museums. As Gail Harris became more and more estranged from her former husband, she came to admire Gordon both for his generosity to her family and for the relative stability and sweetness that seemed to prevail in his life at the Broadway mansion in San Francisco.
All these intimate, convoluted Getty family conflicts, deaths, disasters, and resentments were now of crucial importance to Sidney Petersen and his counselors at the highest rank of the billion-dollar Getty Oil corporation. Persuading Paul Jr. to join the company in its campaign to neutralize Gordon depended not only on business and financial imperatives, but on the strange, labyrinthine alliances that had taken hold within the family over the years. Paul Jr. now held his own family’s purse strings because he was an income beneficiary of the trust, but his children by Gail Harris would inherit a portion of the corpus when Paul and his brother and half-brother were dead. His children, then, were “remaindermen” and were also, in a legal sense, beneficiaries of the trust, even though they would not receive any money for years, perhaps decades. They, too, had a stake in the dispute with Gordon, Petersen believed.
Dave Copley’s hope in meeting with Vanni Treves, Paul Jr.’s London solicitor, that spring of 1983, was that Treves would persuade Paul that everyone involved would benefit by the appointment of a corporate cotrustee to serve with Gordon. If a representative of Security Pacific or Bank of America could be persuaded to serve with Gordon, Petersen and Copley thought, then the old man’s original intentions would be fulfilled. The trust would be stabilized, Getty Oil would remain independent, and Paul and his family would receive the appropriate portions of their wealth without interruption caused by Gordon. Paul might have his own views about Gordon’s qualifications to direct the family fortune, but he certainly would be concerned about any of his brother’s actions that affected Getty Oil Company, since Paul depended on company dividends for the life-style he maintained in his London mansion and hospital rooms.
Copley asked Landry to fly with him to London, at Getty Oil expense, to meet with Treves. Copley had never met the man, but Landry was becoming an important intermediary between the increasingly desperate executives at Getty Oil and the Getty family. Landry was someone to be cultivated. So it was Landry who called Treves and arranged for a dinner meeting at the solicitor’s private gentlemen’s club in central London on Thursday evening, April 7, 1983.
Landry had already told Treves that in his view, as one of the lawyers responsible for the old man’s will and estate, it was never J. Paul Getty, Sr.’s intention that Gordon should serve as sole trustee. Once they arrived in London, it was up to Copley to convince Treves that unless Paul Jr. helped the company do battle with his brother in San Francisco, grave consequences might ensue for everyone.
“Ever since Lansing Hays’ death, there has been less stability and cohesiveness in the trust’s representation in relation to Getty Oil,” Copley told the solicitor over supper at the gentlemen’s club that night. “We have concerns that information is getting to the market. There have been security analyst reports out of Wall Street that indicate Gordon is continuing to talk to people in New York about the company. We think it would be benefi
cial to all the shareholders, including the beneficiaries of the family trust, if there was a cotrustee appointed with Gordon—a corporate cotrustee experienced in handling large trusts.”
“In my judgment,” Treves answered, “any trust the size of the Getty trust would benefit by having more than one trustee. A cotrustee with Gordon would be desirable, particularly a corporate one. I would feel that way regardless of who the sole trustee was. At the same time, I know about Gordon Getty and his personality, and I can understand the concern.”
“The problem now, with Gordon in charge, is that we’re having difficulty finalizing decisions, so that the company can make long-term plans,” Copley said.
“I’m quite familiar with Gordon Getty. I can understand what you’re saying about a lack of stability,” Treves emphasized.
“One problem is that Security Pacific has declined to act. I don’t think they will accept an appointment. But there probably will be another bank that would agree to accept such an appointment. We think that if one of the beneficiaries, such as your client, was interested in moving ahead with this, then another bank would probably be interested also. But everyone would have to agree that it is appropriate.”
“Again, I think a corporate cotrustee would be highly desirable. If something specific is available from Getty Oil, in the way of a proposal, I would be willing to examine it and make my own decision, at that time, about whether to recommend it or not recommend it to Paul.”
The supper ended cordially; Copley was encouraged. He felt that the next step would be to present Treves with a detailed package of documents—a proposed lawsuit, drafted by Getty Oil’s lawyers and ready to be filed in California court, including the precise arguments to be made and a decision on which family members would be named in the lawsuit as the plaintiffs officially challenging Gordon in the case. Getty Oil would not actually file the suit, even though it was orchestrating the case; Paul Jr. or his children or possibly the Georgettes and their children would serve as proxies for the company in court, arguing that Gordon had abused his trusteeship by jockeying for power at Getty Oil Company.
The next day, Copley and Landry flew back to Los Angeles from London. Copley reported on his dinner meeting to Petersen and Winokur. This was good news indeed, a potential breakthrough. It was essential now to move as quickly as possible, to neutralize Gordon before he did any real damage to the company. Each week, it seemed, there were fresh rumors about Gordon’s plans and, as Winokur liked to describe it, about the hungry sharks swimming feverishly toward blood in San Francisco Bay. Describing their predicament with such violent metaphors lent a certain urgency and importance to the Getty Oil executives’ work. It made their pulses quicken. Hostile takeover battles were raging in the oil business and in other sectors all across the country; now they, too, were being drawn into the vortex of modern finance and industry, where executives proved themselves not by their ability to make and sell products, but by their courage and stamina and wit in a warlike exigency. They did not ask for this, they did not want it, but they were willing to meet the challenges—indeed, by now they were moving aggressively on new fronts, stirring up new combatants. The odd thing about it was that their opponent in this campaign seemed utterly oblivious to the culture of modern industrial warfare. Gordon seemed unmoved, uncomprehending. There seemed to be a shell around him; he was impenetrable. He was like a boy wandering through the raging battlefield, pulling a red wagon, selling apples to the soldiers, Was he genuinely innocent? Were those apples in that wagon, or grenades? The triumvirate at Getty Oil had decided they could wait no longer to find out.
7
The Puppy and the Sledgehammer
None of it seemed to matter to him. He would have been angry, of course, if he had known the company was trying to stir up mutiny within his family. He listened closely, he said, to all the frightened, angry admonitions against contacting outsiders and disclosing company information and leaving a trail of blood in the water. But none of it really took hold. The Bonaventure Hotel meeting, the letter about insider trading from his lawyer, Moses Lasky, the now explicit demands by Getty Oil financial executives that all these studies on royalty trusts and limited partnerships be ended—these seemed to have no impact on Gordon Getty during the early weeks of 1983. As he always had, as he always would, Gordon answered to his own muse. That was, he implied, a prerogative of his wealth and position.
So while Sid Petersen and his company lawyers regarded the Bonaventure confrontation as a turning point, one forcing them to pursue drastic new strategies, Gordon saw the event as merely another unsettling spat with Getty Oil’s rude managers. It certainly would not slow his drive to control the company’s policies and to raise the price of its stock through some kind of restructuring. He concluded simply that Sid Petersen and Bart Winokur were being unwise to provoke him, that they should know better than to treat him disrespectfully. For his part, Petersen wished—as he told Copley and Winokur one afternoon that winter in his office—that Gordon would just go back to singing opera. “And he isn’t much good at that, either,” Petersen added.
No matter what they said or thought about him, however, Gordon Getty was still a 40 percent stockholder. Gordon understood, he said later, that his actions that winter might lead eventually to the loss of his family-controlled company to some aggressive outsider or to Sid Petersen’s management. But he was not sentimental about Getty Oil. Like his father, he viewed companies as merely the means to an end: money. And toward that end he was now in unbridled pursuit.
It was no longer feasible for Getty Oil itself to conduct the royalty trust and other studies he desired. That much was clear to Gordon after the Bonaventure meeting. There was just too much hostility; the studies could no longer be presented objectively. Shortly after he returned to San Francisco, then, Gordon decided that he would hire an independent outside firm, an investment banker, to finish what he and the Getty Oil financial executives had begun. (Of course, the Getty Oil finance men thought they had finished, that the ideas simply wouldn’t work and there was nothing more to examine.) A Wall Street investment bank, Gordon thought, would be sure not only to crunch the numbers thoroughly and objectively, it would also lend its prestigious imprint to any conclusions reached, thus making it easier for Gordon to press the ideas on his reluctant adversaries in Getty Oil management. So only a few days after the Bonaventure meeting, Gordon telephoned one of his lawyers at the Lasky firm, Tom Woodhouse, and told him to prepare for a trip to New York on which Gordon intended to hire an investment banker. Gordon did not know which investment house he wished to engage; he would leave it to Woodhouse to make some recommendations. Like law firms, Wall Street’s investment banks varied in size, specialty, and reputation. It would be important to choose the right firm.
It was on a Friday evening that Woodhouse called Dave Copley at Getty Oil headquarters in Los Angeles. “Gordon is not satisfied with the studies the company has been doing,” Woodhouse said. “He wants to have an independent investment banker look at it. So Gordon and I are going to New York on Monday to hire an investment banker. Do you have any suggestions about who we should interview?”
The question was relayed to Petersen—they were both appalled by the inquiry. To them, it was an indication that Gordon’s small, litigation-oriented law firm was in over its head in matters of corporate intrigue, strategy, and finance. In a trial or lawsuit, Petersen and his advisors thought, Lasky and Cohler and even Woodhouse would be fine lawyers, perhaps some of the best around. But when it came to what Winokur liked to call “deal counsel”—the intangible blend of courage, aggression, wit, and savvy that made the difference between winning and losing in a takeover battle—Woodhouse, at least, seemed to be treading water.
What would he and Gordon be thinking? If Gordon Getty went back to Wall Street, lawyer in tow, and paraded through half a dozen major investment banking firms in search of someone to tell him what was wrong with his company, Getty Oil would be “in play,” as the Street descr
ibed corporations ripe for a takeover attempt, before Gordon’s head hit the pillow at his beloved Pierre Hotel that evening. If Gordon made a display of himself, the firm he hired would be busy not with investigations of royalty trusts, but with defenses against a hostile bid launched at the instigation of the firms that Gordon interviewed but chose not to engage. Besides, it would probably be against the law for Gordon to hire an investment banker in the manner Woodhouse seemed to be proposing. In order for an investment house to conduct the studies that Gordon wanted, it would need access to all the company financial data and oil field statistics compiled by the Getty Oil finance men for the earlier studies. Gordon did not have the right to independently disclose such confidential information to his own investment banker; he could only do it with the company’s permission and cooperation.
Quickly and somewhat desperately, Petersen and Copley tried that weekend to talk Woodhouse out of his proposal. They succeeded by offering a compromise: if Gordon really wanted an investment banker to repeat the same studies Getty Oil had already finished, that was all right with the company, Petersen said. But it should be Getty Oil, not Gordon or the Sarah Getty Trust, that hired the banker on Wall Street. That way, it would appear to the Street that Gordon and Petersen were in complete agreement about the need to study a company restructuring; there would be no rumors about problems between management and the trust, no trail of blood in the water. Also, the investment house could then have access to whatever company information it needed to perform a thorough and objective study. Such a study might be expensive—investment bankers charged about a million dollars for the sort of inquiry Gordon wanted—but if that was the price of peace, Petersen thought, so be it. He could use the time bought by the study to find someone in the Getty family willing to sue Gordon over his control of the trust. By Monday, they had agreed that representatives of both the company and the trust would travel to New York to hire an investment firm. After making separate lists and talking back and forth several times, they had also agreed on who that firm would be: Goldman, Sachs & Company.
