Do You Sincerely Want To Be Rich? (46 page)

    The corporate structure that King assembled contained some of the most incestuous inter-company relationships which have ever been attempted, and it was the complexity of the relationships that caused people to be puzzled about just what King Resources did. The companies that King formed to manage the new set of drilling funds were not subsidiaries of King Resources Company, but were all owned by John King personally. These private companies managed the funds, but they contracted most of the oil exploration work - geological surveys, drilling, pipeline laying and so on - to King Resources, which in turn often passed on the contracts to independent concerns.

    An investor's money was subject to many charges in its progress through the corporate layers. Indeed the prospectuses had to warn the customers that once John King had taken his cut, they might not get their money back.

    'It's simple,' said King. 'You put $100,000 into an oil well and you can expect to make 30 % a year if it hits - but you might have to spend a lot more to get that oil. We'll sell you the property, drill the well for you, manage the production, do all the work. If we strike oil, you will make the 30 %, but we may make as high as 60%.' (Was this the 'use of money factor'?).

    King succeeded in making this package attractive, at least while there was a lot of money around, through two important innovations which he built into the old concept of the drilling fund. Previously, these had been thought of as suitable only for the very wealthy. King said that it 'annoyed the hell' out of him that 'only rich people could invest in oil drilling', and with populist fervour he set out to create tax shelters for the common man. His customers in the end were not exactly dirt common -
    The Denver Corporation was headed by Dr Edward Annis, ex-president of the American Medical Association, and the man who led the battle against John F. Kennedy's Medicare programme. Together with Hal Azine, the scriptwriter who helped him in the Medicare campaign, Dr Annis prepared drilling fund propaganda to be beamed especially at doctors, whose average income topped $32,000 in the US in 1969, but who tended to 'lack adequate knowledge of investments', as King publicity noted.

    The astronaut Frank Borman served on the King Resources Company board, and another astronaut, Walter Schirra, headed one of the Regency leasing companies. Like Richard V. Allen, a former foreign policy adviser in the Nixon White House, Schirra was hired to devote himself to King's international aspirations. Captain Schirra said that 'one of John's basic philosophies that drew me into this complex is that whenever you develop something in a country, you pump monies and know-how back in… bootstrap a country as I would say it.' He said that he and King had often talked about something called 'the high protein concept of feeding the world'. Helping undernourished nations, said Captain Schirra, was high risk business. But it was also 'humane, compassionate and exciting… That's what it's all about. The people here. The ideas. Every once in a while Ed Annis and I meet in the corridor. I say, "What the hell are you doing here, Doctor?" and he'll say, "What the hell
axe you
doing here, Astronaut?" '

    In early summer, 1967, John King sent a couple of men to Europe to look at the chances of selling drilling funds there to Americans, who still pay US taxes when abroad, and they duly visited IOS in Geneva. But as IOS was about to agree with the
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not to sell anything to American citizens anywhere, there was nothing to be done.

    The next contact came in December 1967, when Ed Cowett was in New York and got a message saying that King would like to meet him. The introduction was made by Myer Feldman, the Washington lawyer who had been a background brain in the Kennedy presidential campaign of 1960, and had then spent three years in the White House as the President's deputy special counsel. His acute mind was one of the first to spot the possibilities of the fund idea.

    ‘I organized one of the first art funds,' he told us, 'one of the first real estate funds, and one of the first shipping funds. Natural resources had more potential than any of them.' Feldman was already a director of some of the King drilling funds, and he knew Cowett. 'One of my dubious claims to distinction,' he says wryly, 'was to introduce Edward M. Cowett and John M. King.'

    Superficially, the two men seemed to have little in common. Ed Cowett fives in a mansion overlooking the lake of Geneva, drives a Maserati and relaxes over the backgammon board. John King's style is a specially stretched black Lincoln with a sunshine roof fixed so that he can shoot out of it, and a million dollar ranch house at the foot of the Rockies. But Feldman's introduction brought about a true meeting of minds.

    King's first suggestion was that he might buy Investors Planning Corporation, the American subsidiary that IOS had bought from the Benedicks, but which it was necessary to sell under the terms of the
sec
settlement. The deal fell through, and it is hardly likely that the
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would have approved.

    But the attraction of the two firms for each other was quite powerful enough to survive this setback. The more money King could 'manage', the more profits he could make. And IOS was anxious to invest money in situations where spectacular 'performance' might be created.