The Taking of Getty Oil

by Coll, Steve;

  “Let me put you at ease by assuring you that I am always willing to give you information about the 1934 trust so far as you, as a beneficiary, have any interest, but always short of revealing private Getty Oil Company information. I cannot abdicate my duties and responsibilities by acceding to efforts to dilute my position. The relationship between the trust and the company is now amicable, perhaps more so than at any time since Father’s death. Management and I are cooperating to the common good of everyone. I hope you will not try to upset this amity. Love, Gordon.”

  It was an extraordinary letter, perhaps most of all because of what it revealed about Gordon’s perception of his relationship with Sid Petersen. Gordon believed that Thursday morning in early November that relations between himself and management were perhaps better than at any time in the previous seven years. Yet, virtually as he wrote those words, Getty Oil management was taking its final steps to undermine Gordon’s authority as sole trustee of the Getty family’s wealth.

  Petersen’s attempt to find a family member who would file suit against Gordon had languished since the recruitment of Seth Hufstedler the previous June. While Caroline and the other Georgettes seemed concerned about Gordon, their lawyer, Isaacs, apparently was unwilling or unable to spur his clients to action against Gordon. After the near fiasco in London, and their conversation with Vanni Treves on the way to Heathrow, Petersen and Dave Copley had focused their attention on Paul Jr. Informed by Treves of Gordon’s actions in London, Paul had tried at first to solve the problem directly, through his telephone conversation with Gordon and Ann, and then through an exchange of letters. But Gordon was unyielding, and so Paul had finally indicated to Treves that he was willing to consider the sponsorship of a lawsuit. During the first week of November, just as Gordon was writing Paul to ask him not to “upset this amity” between himself and the company, Treves contacted Dave Copley and said that he would fly to Los Angeles on Monday, the seventh, to meet with Hufstedler and discuss his appointment as guardian ad litem for one of Paul’s children. Copley arranged a two-day meeting between Hufstedler and Treves, as well as a number of other attorneys now involved, for Tuesday and Wednesday, November 8 and 9, at a law office in downtown Los Angeles.

  On Monday, the day before the meeting between Treves and Hufstedler, Moses Lasky called Dave Copley at Getty Oil headquarters. Lasky had heard about the telephone call and letter from Paul to Gordon asking about the appointment of a corporate cotrustee.

  “Have you talked to Paul Getty about what’s been going on at the company?” Lasky asked Copley.

  “No, I haven’t,” he answered.

  In the narrowest sense, Copley told the truth; he had not talked to Paul Jr. directly. But two days later, when Lasky’s partner Tom Wood-house spoke with Bart Winokur, Winokur decided that he should answer the question about Paul somewhat more honestly.

  “I know there was a conversation between Dave and Mr. Lasky about this,” Winokur said when Woodhouse asked if the company’s lawyers had been talking to Paul Jr. about Gordon. “And Dave gave a narrow answer. To my knowledge, and to Dave’s knowledge, nobody from the company has met with Paul Getty. But there has been some contact between representatives of the company and Paul Getty’s counsel.”

  Beyond that, Winokur said, he could not elaborate.

  Meanwhile, the two-day meeting between Treves and Hufstedler in Los Angeles was progressing smoothly. Early on, the crucial decision as to which minor child would actually be the sponsor for the lawsuit had been made: it would be Tara Gabriel Galaxy Gramaphone Getty, 15, Paul’s only son by the late Talitha Pol, who was living at a boarding school in England. Though he knew nothing at all about the plans now afoot, Tara was now the obvious choice to file the suit against Gordon. The rest of Paul Jr.’s children, those born to his first wife, Gail Harris, had been living in California with their mother for years. It was not clear whether Gail Harris would even permit a guardian ad litem such as attorney Seth Hufstedler to be appointed for one of her four children in a lawsuit against Gordon. After all, Gordon had supported Harris and her children when Paul refused to pay his paraplegic son’s medical bills. Tara Getty, on the other hand, had no particular loyalties to Gordon, and no mother to intervene against Paul Jr. if he decided to sponsor a lawsuit against his brother. So Treves and Hufstedler drafted a consent form for Paul Jr. to sign, authorizing Hufstedler’s appointment as Tara’s guardian ad litem in California. In addition, they prepared other documents, including the lawsuit petition itself, so that all would be ready when Paul’s signature was obtained. Satisfied, Vanni Treves flew back to London on Wednesday, the ninth. He said that he would return the signed documents as soon as he was able to present them to his client.

  The next evening, Thursday, Treves met with J. Paul Getty, Jr. Treves showed him the documents he had drafted with Hufstedler and explained that if Paul signed them, a lawsuit would be filed against Gordon in Tara Getty’s name. Paul agreed to the plan, and he signed the documents.

  Earlier that same day, Mark Harris, Tara Getty’s half-brother, had been in London for a visit with his father. Paul told him that based on the information supplied to him by Getty Oil management, he wished to impose a corporate cotrustee on Gordon. He said that he was prepared to engage in litigation to that end and that he was going to meet with Vanni Treves that night to discuss it. When Mark Harris himself met with Treves two days later, concerned that alternatives to a lawsuit had not been fully explored, Treves told him: “You must realize that I hate litigation. Everybody on this floor hates litigation. And everyone in this building hates litigation. We do everything possible to avoid litigation.”

  Still worried, Mark Harris spoke with Tara’s maternal grandparents in France and even rode out to visit with his half-brother at his boarding school. Tara said that he had never met Seth Hufstedler, had never even spoken or corresponded with him. All Tara knew, he said, was that his father had told him that his interests were being looked after and that he should not be concerned if his name began to appear in the newspapers during the next few weeks.

  Six thousand miles to the west, on the eighteenth floor of Getty Oil headquarters, the tangled web was being spun with increasing speed and urgency. On Friday, November 11, the company’s quarterly board meeting was scheduled to convene at Getty Oil’s regional headquarters in Houston, Texas. If Seth Hufstedler was now ready to file his lawsuit, then the company’s board of directors had to be informed. Petersen and Copley had indicated to Hufstedler all along that Getty Oil would officially “intervene” in the lawsuit against Gordon and argue that everyone would be better off if a corporate cotrustee was appointed. For Petersen to take such action when Hufstedler filed his suit, he would need board approval. Petersen spoke with Winokur, Boisi, and Copley and told them that they should fly to Houston and be ready to assist with a presentationn to the board about the lawsuit.

  In time, much would be said and written about the Getty Oil board meeting that began that Friday morning in one of downtown Houston’s clumped steel-and-glass skyscrapers. There would be a great deal of moralizing about the conduct of management, the directors, and particularly their chief outside counsel, Bart Winokur, who carried the presentation that day about Hufstedler’s lawsuit against Gordon. A number of Getty Oil executives and advisors would privately express regret about the decision undertaken at the meeting. But at the time, they felt they had little choice. They had come this far down the road. It seemed to them that it was impossible now to turn back. “You get to the point where you’re up against the wall,” one company executive at the meeting said later. “You end up fighting like the other guy.”

  Sid Petersen, at the head of the conference table, called the session to order. The minutes of the Pebble Beach board meeting, which had been distributed to the directors in advance, were quickly approved. And then, by prior agreement, Gordon Getty and Harold Berg were asked to leave the conference room. The board, Petersen said, was about to consider approval of the standstill agreement si
gned some three weeks earlier in San Francisco. Gordon could not participate in that discussion because he was a party to the truce, and neither could Berg, since he was chairman of the museum’s board of trustees, and the museum was also a party to the agreement. Gordon had traveled to Houston without his lawyers; Gordon had told his attorneys that there was no need for them to attend the board meeting.

  As Gordon and Harold Berg left the conference room, Bart Winokur, Geoff Boisi, and Herbert Galant stepped inside. There would later be some dispute over precisely how this occurred. Some recalled that when Gordon and Berg left, the company advisors came into the conference room through a side door, out of Gordon’s view. Others, including Winokur, Boisi, and Galant themselves, remembered it differently; they recalled going in the same door through which Gordon exited. As a matter of substance, the point was hardly important. But the image of that moment, its suggestion of “back door” duplicity and deceit by the company advisors, lingered for years.

  As Gordon had been promised, the directors did discuss the standstill truce in his absence. But they spent more time debating an apparently contradictory topic: intervention in the Tara Getty lawsuit against Gordon. Winokur and the others said later that in their minds, the standstill agreement signed in San Francisco did not preclude Getty Oil from intervening in the Hufstedler suit. If they had believed it did, they would never have signed the document, they said. Indeed, the discussion about the lawsuit that afternoon in Houston did not center on whether company intervention was legally permissible under the standstill. Instead, the debate focused on the morality of Getty Oil’s involvement in the affairs of the Getty family.

  According to three sources who attended the meeting, several company directors, including Henry Wendt, John Teets, and later Harold Berg—who was allowed to rejoin the session when the topic shifted from the standstill to the lawsuit—expressed serious doubts about the propriety of management’s proposed intervention in the lawsuit. This is not the sort of thing a large, publicly owned corporation ought to be involved in, they said. Berg and others said that this was not the way Getty Oil used to conduct itself when the old man, J. Paul Getty, was alive. Winokur was asked whether there was some alternative to formal intervention, which was certain to raise charges of treachery and double-dealing. After all, not only had the company signed a standstill truce with Gordon, it had in London made “handcuff” proposals to restrict Gordon’s power for a limited time. Now, if the company intervened in the Hufstedler lawsuit, those proposals would appear hypocritical to Gordon, to say the least. The directors asked if there was a less onerous method than formal intervention to assist Hufstedler. Perhaps the company could file simple affidavits about Gordon’s behavior over the past eighteen months, it was suggested. Perhaps it could do nothing at all, and simply let Hufstedler disclose Getty Oil’s clandestine role while answering questions at some future deposition.

  Winokur and Petersen, however, were firm. The company had to intervene in the suit. They had raised this issue with Hufstedler, they reported, and Hufstedler insisted that they were in this together. Without the united front raised by Getty Oil’s formal intervention, Hufstedler was reluctant to file the lawsuit on Tara Getty’s behalf.

  “Intervention is the best alternative,” Winokur told the board. “The company has to intervene in the lawsuit.”

  Finally, the directors gave their approval. Gordon had pushed the company too far in London, they said later. Henry Wendt said that by making a takeover offer to the museum, Gordon had pointed a gun at the company’s head and pulled the trigger. It turned out that the gun wasn’t loaded, Wendt continued, because Harold Williams and Marty Lipton rejected Gordon’s proposal. But the important point was that Gordon had pulled the trigger. To stop that from happening again, even intervention in a family lawsuit challenging Gordon’s right to be sole trustee was justified, Wendt argued. Others, such as Bart Winokur, felt there was nothing to apologize about. Gordon Getty had set the rules of the game. He had declared at the Bonaventure that the morality of it all was his to determine. The company was only responding in kind.

  And so Gordon was invited back into the conference room, and the meeting continued. He was told nothing about the board’s decision to intervene in a lawsuit against him. He was informed, however, that the directors had approved the standstill truce, and with it, the appointment of Harold Williams and three of Gordon’s nominees as directors, effective at the next board meeting. Gordon was pleased to hear it, and the directors moved on to discuss their regular agenda of routine company business.

  Informed over the weekend about the board’s decision in Houston, Seth Hufstedler walked from his office to the downtown Los Angeles County Superior Court Building on Monday morning to file a lawsuit on behalf of Tara Getty seeking the appointment of Bank of America as cotrustee of the Getty family trust. For the Matter of the Declaration of Trust of Sarah C. Getty Dated December 31, 1934, was the suit’s appropriately Dickensian title. Hufstedler showed the lawsuit to a probate judge before filing it, and there was some discussion between them about whether Hufstedler had the legal right to serve as Tara’s guardian ad litem in California. Finally, later that morning, Hufstedler reached one of Paul Jr.’s attorneys in San Francisco, who had previously served as Tara’s guardian in California, and the lawyer assured the probate judge that Hufstedler was on the level. With that, the suit was filed. The next day, Getty Oil sent one of its own lawyers to the courthouse and filed a formal intervention in support of Hufstedler’s allegations against Gordon Getty.

  All along, Sid Petersen, Bart Winokur, and the rest of them had assumed that Gordon would not be pleased to learn that Getty Oil had intervened in a lawsuit seeking the appointment of Bank of America as cotrustee. But Petersen and his advisors had consoled themselves with the belief that they were only doing what was necessary to protect the company’s public stockholders from Gordon’s whimsical exercise of power. What they had not anticipated, to their deep and lasting chagrin, was the reaction of Harold Williams and Martin Lipton.

  When the company’s intervention was filed publicly in Los Angeles, they heard from Lipton almost immediately, and it was not a pleasant experience. The violence of Lipton’s reaction, his outrage at what he called Getty Oil’s “duplicity and deceit” shocked Winokur, Boisi, and Galant. It also frightened them. Until now, the camaraderie of the Wall Street merger advisors—Siegel, Lipton, Boisi, Galant—had helped to stabilize the fulminating atmosphere at Getty Oil. Now, suddenly, the fearsome Lipton, the man of a thousand takeovers, was on the rampage.

  They tried unsuccessfully to calm him. That week, they arranged a conference telephone call between Lipton, Boisi, Galant, and Winokur to explain to Lipton why the company had filed the intervention and why it believed it had not violated the letter or the spirit of the San Francisco truce agreement. But Lipton did not want to hear about it—he was morally outraged, he said. He simply could not believe the company had done such a thing. It violated even the most rudimentary notions of fairness and ethical behavior.

  They tried to move Lipton away from his talk about morality. They wanted him to understand that the lawsuit was an expression of strategy, not principle. Forget about the ethics of it, they told Lipton. What does this do to hurt the museum? Why are you so mad about it?

  “Supposing we are as dirty and nasty as you say we are,” Galant told Lipton during the conference call that week. “Supposing everything you say is true. What does this do to you? Why doesn’t this just preserve the museum’s position? I mean, are you going to deny the fact that the trust requires two trustees? Are you going to deny the family its legitimate rights?”

  “We got snookered,” Lipton answered.

  “Maybe Gordon should feel snookered,” Galant countered. “But you guys—what have we done to you? This is what you wanted, remember? You said in London that the reason a standstill was in our interest was that we could use the time to neutralize Gordon and the trust. We told you this was going to happen.
”

  “You never said anything about this in London. You never said anything about a lawsuit,” Lipton replied forcefully. “This is a complete violation and repudiation of the standstill agreement.”

  The conversation ended without any prospect of accommodation or agreement between them. Lipton and the museum were now on the loose. Winokur, Boisi, and Galant, who had never shed their suspicions about Harold Williams’ desire to run Getty Oil himself, feared that the museum president would seize this opportunity to “grasp for power.”

  All during the next two weeks, they talked back and forth by telephone in nearly every conceivable combination. Lipton spoke with the Lasky firm lawyers, who had been reconciled with Gordon partly because of the emergency presented by Hufstedler’s lawsuit, about what they should do next. Gordon spoke with Harold Williams, and once, very curtly, with Sid Petersen. Tim Cohler “put on his litigation hat,” as he liked to put it, and began to fight the Hufstedler suit by arranging to take the depositions of Winokur, Petersen, Copley, and others. Late in November, Gordon traveled to New York to meet with the three new Getty Oil directors he had nominated, and to inform them of this new phase of trouble with management. The new directors were Larry Tisch, a close friend of Marty Lipton’s and chairman of the Loews Corporation; Alfred Taubman, a Detroit real-estate developer who had recently acquired control of Sotheby’s, the art auction house; and Graham Allison, dean of Harvard University’s John F. Kennedy School of Government. (All three had been recruited to join the Getty Oil board not by Gordon, but by his wife Ann. She met with each of them in New York and agreed to join Sotheby’s board in exchange for Taubman’s promise to serve as a Getty Oil director with her husband). Meanwhile, the company’s executives and advisors tried to calm Harold Williams by talking to his boss, museum trustee chairman Harold Berg, to see if he could help. But it seemed that nothing would placate Williams. Through both Berg and Lipton the company’s executives learned that the museum president was absolutely furious about the lawsuit.