Murder Saves Face

by Haughton Murphy

  He had never taken to Hanford. Originally from Birmingham, Alabama, the banker had about him a southern bonhomie that seemed to Frost patently false, embodying the slickest qualities of an overgrown fraternity boy and a purveyor of snake oil. He was, Frost thought, just a trifle too old—at forty-two—to get away with calculated boyishness; there were the beginnings of too many lines in his face for that. And his constantly darting eyes, too closely set together, added to the furtiveness Frost was sure he had detected. It would not have surprised Reuben at all if someday the Teflon wore off and Thomas Hanford was found to be something other than a benign good ole boy.

  Frost’s strategy was in two parts, the first being the confrontation with Hanford. The pressure of one Wall Street institution, Chase & Ward, on another, Schoonmaker, might just energize Hanford into getting to the bottom of the puzzle and—here Reuben was aware there was a gamble—would either lead to a sellout of Harvey Rawson or result in a protective blanket being thrown around him. Frost’s hunch was that Hanford would not be eager to risk being once again on the outer boundaries of scandal.

  The second prong of Frost’s proposed attack was a reassembly of all those who had been at the On-Line closing, and the pre-closing on the day Merriman had been killed. This would perhaps be a futile effort, he realized, but the exercise might yield up a valuable clue. A meeting with Hanford should come first, however.

  Frost took his idea to Charlie Parkes; if he was going to risk alienating one of the most powerful figures on Wall Street, the Executive Partner had a right to sign off on it. Besides, he wanted Parkes to take part, so that any meeting would include the two heads of state, Parkes and Hanford.

  Parkes shared Frost’s aversion to Hanford and did not hesitate to endorse his idea. “Getting this mess straightened out is worth more to this firm than the middling amount of business we get from Schoonmaker,” he said.

  Frost speculated about whether Parkes’ alacrity would have been diminished if Schoonmaker were a major client, but he dismissed it as irrelevant and, on the basis of knowing Parkes over the years, most likely wrong.

  “How do you want to set this up, Reuben?” Parkes asked.

  “Well, Alan Lovett is coming in from L.A. today. He should be here by five or five-thirty. I’d suggest we try to sit down with Hanford around seven.”

  “Who should be there?”

  “You, definitely,” Frost said, explaining his head-of-state theory. “Then, just to show we mean business, a litigator. Preferably Ron Crutcher, who’s up to speed on this. Plus Lovett.”

  “And Richardson and Heyworth, I suppose,” Parkes said.

  “That’s a tough one. I think so. The Schoonmaker people will just lie through their teeth if Bill and Brian aren’t there.”

  “Now, on their side. Who in addition to Hanford?”

  “I’d scare him a little by telling him to bring a lawyer. And Rawson and his sidekick, Lewis.”

  “It’s getting kind of big.”

  “Yes, but if we show our concern by strength of numbers, they’ll want to do that, too. The alternative’s a one-on-one meeting between you and Hanford.”

  “No, thanks. What about you doing it?”

  “I’m afraid he’d just fob me off as an old busybody,” Reuben said. “We don’t have time for that.”

  “And I don’t imagine you want to make the call to Hanford?” Parkes asked.

  “You’re the head of state, Charlie.”

  Parkes sighed and called in his secretary. “Miss Stinson, get me Tom Hanford at Schoonmaker. If they give you any static, tell them I said it’s important.”

  Frost and Parkes sat across from each other, gazing at each other silently. Both knew that this was the kind of call that occurs only on the rarest occasions in a lifetime of legal practice, confrontation at the highest level over a sensitive and potentially scandalous matter. The trick, if there was one, was to be direct, low-key and polite. No name-calling, no loaded adjectives, no sarcasm or insults.

  “Mr. Hanford’s on,” Ms. Stinson called from the outer room.

  “Tom, how are you?” Parkes said. “I’m delighted I caught you. I’m here with my old colleague Reuben Frost. I’m sure you know him. Can I put you on the speaker?”

  Hanford apparently agreed, since Parkes manipulated his telephone console until Hanford’s voice was audible.

  “Tom, I don’t know how much you know about the Applications/On-Line merger that was consummated last week, where we represented Applications.”

  “Next to nothing. Except that our M&A people were handling it for On-Line.”

  “That’s right. Not the usual megabuck takeover you fellows are used to, but, yes, your M&A department was involved.”

  “What’s the problem, Charlie? Can’t you get your bill paid?”

  “I wish it were that simple, Tom. Let me get right to the point. The merger was conditioned upon getting a consent from Machikin Bank in Tokyo. Machikin had On-Line tied up in knots under a loan agreement—the merger’s a default about a hundred ways to Sunday without that consent. A crucial part of the deal, from our client’s standpoint, was keeping that loan in place.”

  “Low interest and airtight covenants, I’ll bet.”

  “Precisely.”

  “Sounds like a typical Pacific Rim loan to me.”

  “Be that as it may, the merger took place last Friday. A year-end deal. Everybody closed on the basis of a fax from Japan which purported to be a consent from Machikin. So it was quite a jolt when we learned last night that Machikin doesn’t know anything about the transaction.”

  “Then where the hell did the consent come from? The tooth fairy?”

  “We’re trying to track that down now. Meanwhile, we’ve got a first-class eruption on our hands, and an extremely angry client,” Parkes said. He did not know whether Lovett was in fact angry, but felt he was safe in assuming it. “I know it’s short notice, and probably inconvenient, but we’d like to arrange a meeting of the interested parties to figure out where we’re at. Our client’s coming in from Los Angeles this afternoon, and we would like to meet early this evening.”

  “That’s all very fine, Charlie, but what’s this got to do with me? I know I’ve got a reputation as a hands-on manager, but I really don’t know a thing about the deal. In any event, tonight’s impossible. It’s the Books and Bonnets Ball—the women’s benefit for the Public Library—and Barb’s the co-chair. I’ve got to be there.”

  “Tom, in any normal circumstances, I wouldn’t disturb you about this. But there are three things you ought to know. First, you probably read in the papers over the weekend about the murder of our associate, Juliana Merriman. She was working on the merger. Second, Merriman apparently quarreled with your man on the deal, Harvey Rawson, over the consent that turned out to be fake. And third, as I understand it Rawson was responsible for all the dealings with Machikin about the consent.”

  Hanford was silent for at least ten seconds. “Are you saying there’s some link between that murder and the consent?”

  “We can only speculate on that, Tom. But it’s the reason we want to unravel things. In addition to seeing that our client gets what he thought he bargained for.”

  “Are you telling me that one of my vice presidents is a murderer?”

  “No, I’m not saying that. But once this leaks out, there may be others who do.”

  “Like our friends in the press?”

  “And the police.”

  “Christ, I don’t know what to do. I’ve got an appointment here at five, then I’ve got to go home and change. I don’t see what a meeting with me is going to accomplish. But if you insist, can we do it in midtown?”

  Frost nodded his head affirmatively. When Parkes hesitated, he mouthed the word “Gotham” silently.

  “How about the Gotham Club? Let’s say at seven?”

  “All right. Who do I bring along?”

  “Frankly, Tom, I suggest you bring your lawyer,” Parkes said. Hanford did not respond to
this, so the Executive Partner ran through the list on both sides that he and Frost had drawn up.

  “Sounds like a convention to me.”

  “I’m not happy with the numbers either, Tom, but I think they’re necessary if we’re really going to talk this thing out.”

  “I’ll see what I can do,” Hanford said, sounding most unhappy.

  Alan Lovett arrived at Clinton Plaza around five forty-five. Brian Heyworth, not eager to be alone with an angry client, called Frost and Richardson immediately and introduced Frost when he came in. Despite the urgency of the business at hand, Lovett pressed for details about Merriman’s death and the on-going investigation. The others deferred to Frost, Heyworth explaining that Reuben was “following the case” for the firm.

  Frost gave an abbreviated summary of developments, tactfully omitting any mention of Bill Richardson, who sat listening calmly to Reuben’s account. When Genakis’ name came up, Lovett offered the comment that “I’ve known Ted Genakis for fifteen years. He’s gotten bent out of shape in his day, but he’s not a bad person.”

  “You call him Ted?” Frost asked.

  “Yeah, he was Ted before he came to New York. Theodore. Marshall’s his middle name. He started using it when he opened the restaurant—made the place sound less like a Greek luncheonette, he said.”

  “I hope to God this deal of mine didn’t have anything to do with Julie’s murder,” Lovett added. “But now with this snafu with Machikin, I wonder. Until that came up, Harvey Rawson wasn’t on my A-list of suspects, even though he’s a nasty piece of work.”

  “Who is on your A-list, Mr. Lovett?” Frost asked.

  “A figure of speech, sir. I don’t have a list. My bet was somebody who had a grudge against Julie here in your office.”

  Frost glanced at Richardson, but detected no reaction to Lovett’s observation. “And you wouldn’t include Genakis?” Reuben pressed.

  “No, as I said, I can’t buy that.”

  Realizing that time was running out, Frost was anxious to begin briefing Lovett on the meeting scheduled to take place almost within the hour. Before he could do so, Lovett asked if he could use the telephone. Having had no success in mastering Chase & Ward’s multi-digit system for making a long distance call when camped out in the office the previous week, he used his credit card to call his office.

  “Jesus Christ!” he shouted, as the three lawyers listened. “Can you fax me the damned thing right away?” he asked, then relayed the firm’s fax number, which Heyworth quickly wrote down for him, to his colleague in Palo Alto.

  “Those bastards have called On-Line’s loan!” he explained, once he had hung up. “They sent a notice to the Wylie boys this morning demanding immediate payment.”

  “Let me make sure our people are alerted to bring the fax down here,” Heyworth said.

  “I don’t know as I can raise the money that fast,” Lovett said. “All I can say is it’ll be one for the books if we have to hit Chapter Eleven five days after our merger.”

  “I’m sure you can raise it, Mr. Lovett,” Richardson said.

  “I suppose so, but the Wylies are sure as hell going to have to pay for it. Or the great Tommy Teflon.”

  Frost was surprised that Hanford’s moniker had traveled to California, but he used the mention of Hanford to bring the discussion around to the imminent meeting. When Frost had explained his plan, Lovett offered no objection, so Reuben suggested that Heyworth “get the rest of our brave little band down here so we can spend a few minutes plotting how to handle Tommy Teflon.”

  The Chase & Ward delegation opted not to fight rush-hour traffic and walked across to Fifth Avenue and the Gotham Club. Jasper Darmes, the Club’s agreeable doorman, seemed surprised to see Frost, usually the picture of retired ease when he visited his Club, arriving with his grim-faced entourage burdened down with attaché cases. It was enough to keep Darmes from making his usual jokes—he and Frost had maintained a years-long badinage that continued on each visit—and he told Frost, with gravity, that his meeting room was ready.

  “Show the other gentlemen right up when they get here,” he instructed Darmes.

  The austere room assigned to Frost had not been touched up with the normal amenities—no tablecloth, no flowers and no open bar. Frost had specified that the only bow to comfort was to be pitchers of ice water—not even Perrier or diet drinks—which had been placed on the green felt cover on the single oval table. Alcohol and the plain-speaking that Frost was anticipating would not mix, though he personally could have done with one of the Gotham’s infamous martinis.

  While no directions were given, the group—Frost, Parkes, Crutcher, Richardson, Heyworth and Lovett—sat on one side of the table, perhaps huddling together in preparation for the onslaught they were sure would be forthcoming.

  To their surprise, Hanford and Brendan McLeery, senior partner of Hallowell, King & Nicholls, Schoonmaker’s outside lawyers, arrived unaccompanied by others.

  “Where’s the rest of your party, Tom?” Parkes asked.

  “We decided to economize,” Hanford said.

  “So no one else is coming?”

  “That’s right. Brendan and I can take care of whatever needs handling.”

  Lovett was introduced to the two new arrivals and Crutcher to Hanford, whom he had not met before (Parkes taking care to make it known, though very quietly, that Crutcher was a litigator). Frost was angry, but concealed it; Rawson’s absence meant that they would not get very far in establishing what had happened and would give Hanford and McLeery a chance to probe while at the same time professing their own ignorance. He was not sorry that his own team was fully manned, since it underscored the seriousness with which they viewed the situation.

  “Gentlemen, I don’t have much time,” Hanford said, once he had poured himself a glass of water and taken a seat. “Let me tell you where we are at.” The Chase & Ward team was not going to have a chance to set the agenda. “When you called me this morning, Charlie, I was pretty upset, as you can imagine. I dropped everything and began to investigate. Fortunately, Harvey Rawson was around and I’ve been able to clarify this whole business with Machikin. I’m glad to report it’s not as bad as you fellows seemed to think.”

  No one on the other side of the table spoke as they waited for the explanation.

  “I’m afraid some apologies are in order, but what we’ve got here is a simple mistake in judgment. A bad mistake in judgment, I’ll be the first to admit, but that’s all it is. Not a matter for the district attorney. Let me start by giving you a little bit of a genesis on Machikin. As you probably know, it’s not one of the international giants, like Bank of Tokyo or Dai-Ichi. It’s hooked up with Hakone Trading, and most of its loans benefit Hakone one way or another. That’s how the loan to On-Line came about. Hakone Electronics wanted to know how a software distribution company operates over here. What better way than to have Machikin become a lender and be able to monitor On-Line’s operations? Machikin would be privy to all sorts of financial and operational information that could be turned over to Hakone—not exactly Boy Scout behavior, but then our Japanese friends sometimes have rules of their own.

  “When the loan was made two years ago, we were On-Line’s bankers. We approached Machikin in Tokyo—they don’t negotiate through a New York office, like the other Japanese banks. Why Machikin? Because we’ve got closer relationships with them than any other Far Eastern bank—without any loan-production staff of their own over here, they’re delighted to have us steer business their way. We go back years with them—I emphasize this because it’s important—and the relationship has always been superb.

  “To get back to On-Line,” Hanford continued. “When we approached Machikin, the Japanese were enthusiastic, it turned out later for the reason I told you, the Hakone angle. On-Line got its loan on very favorable terms—except that the financial covenants they came up with were horrendous. Horrendous not because Machikin was worried about On-Line’s credit, but because the tougher the c
ovenants, the more financial reporting On-Line had to do to show its compliance. One of our guys in Tokyo did all the negotiating. Ian Wylie was the only one of the brothers that went over and, frankly, from what I’m told, he spent the three days he was there chasing geishas.

  “That’s the background. Now comes an L.A.-New York plane flight in November, when Harvey Rawson, from our shop, met Mr. Lovett’s investment banker, from Harrick, Millstein, and agreed that a merger of Applications and On-Line made real sense. Both guys crunched some numbers and talked with their principals, and you know the rest. The merger that was done last Friday.

  “Here’s where the bad judgment comes in. Rawson had dealt with Machikin—he’d even spent a couple of years in our Tokyo office a few years back. He knew they were about as slow-moving a bunch as you can find. The chances of their approving the merger by year-end were not very good. He also knew that Machikin, or rather Hakone, had designs on On-Line. So Rawson decided—completely on his own—that the best strategy was to present Machikin with a fait accompli. Do the merger, then get the consent. His hunch was that Machikin would go along, because if their friends at Hakone had any sense, they’d find the merged company stronger and even more attractive than On-Line by itself.”

  “As a target, you mean?” Lovett said, sardonically.

  “Yes, I suppose so.”

  “I wish Rawson had consulted me about the long-term plans for my company,” Lovett said.

  “I hear you, Mr. Lovett. But let me go on. Needless to say, Rawson’s approach is not the way Schoonmaker does business. He was very wrong in what he did, though I have to say I think he had everybody’s best interests at heart. But there’s no point in belaboring the issue. What we’ve got to do now is get Machikin’s consent. We stand ready to help you negotiate that—without fee, I might say, we’ll consider it part of the merger transaction—and I’m sure we can button things up in a matter of days. As I said, Machikin is an old customer. If Mr. Lovett’s willing to fly out, he and our people in Tokyo can probably wrap it up in one meeting.”