Do You Sincerely Want To Be Rich? (55 page)

    After this point Ed Cowett, who had already preferred his resignation, took virtually no further part in the proceedings. He withdrew up the road to 119 Rue de Lausanne. His version is that 'someone had to go back and run the company'. Others suspected that his withdrawal perhaps had something to do with the rather critical responses he was now drawing from colleagues who had worshipped at his financial feet a very little time before. At some time during the week, a man who went briefly back to Bella Vista came back with a slightly awed word-picture of the great architect in retreat: 'It's incredible. There he is, the man who, single handed, has just about brought down the economy of the western world. And he's just sitting there, stroking his beard, and saying: "The fools - they won't listen to me". '

    The 'fools' had a great deal on their minds, but business discussion broke off for a moment while Bernie and George Landau expatiated upon the wonderful support the board was getting from the humble employees. Immediately after this an accountant entered the meeting to ask if (a) there was any information that could be given to the staff, and (b) could he check that the executives who were firing people had the board's authority to do so? No information was given, either to employees or to the reporters who were now besieging Bella Vista. Firing of employees continued.

    Discussion resumed. It emerged that doubts about King were spreading. Ira Weinstein returned to the suggestion that IOS should try to borrow some more money, without offering anyone control.

    Then Martin Seligson, who had been dispatched to meet John King's plane, came back to report the great man's attitude. King, it appeared, had expressed much admiration for the 'mystique' of Bernie Cornfeld, which he felt was necessary to IOS, anyway for some time. But King had also made the point that nobody except himself was likely to give IOS any more money until an audit had been done.

    Cornfeld made a speech about the need for the men who had built IOS to stick together in the face of disaster. From this category, he apparently excluded Ed Cowett, however. Cornfeld said that while no doubt Cowett was doing his best, and had everyone's interests at heart - that wasn't enough. Cowett, he thought, should resign. He, Cornfeld, should remain. If they wanted to chop his head off too, of course, they were most welcome to it. But what he suggested was that they should wait until they could get a really good price for it. This argument that they should only trade off his head for a good price was used heavily by Cornfeld over the next few days.

    Cornfeld wound up his speech with an appeal to all the directors to follow the dictates of their own consciences, whereupon Wilson Wyatt moved successfully that John King should be asked to address the meeting.

    The vast figure of John M. King now emerged from a black limousine outside Bella Vista, and strode into the long boardroom. In view of the fact that King Resources itself was virtually bankrupt within months of this meeting, and that there was a sharp liquidity squeeze in the us at the time, it may seem remarkable that King should have been able to scratch up the finance to answer Cowett's call for help. However, King Resources had increased its liquidity in several ways during the past few weeks. First, the company had conducted a thorough review of all the sums owed to it by the IOS funds, principally the Fund of Funds. Through what Ed Cowett called 'a strict and full interpretation of all obligations', King Resources had been able to obtain by the end of April a total of $20 million from the cash resources of the Fund of Funds. This money was earmarked for Arctic and other exploration costs, but even so it substantially improved the liquidity of King Resources. Secondly, King had just discovered an oasis in the American credit desert. Although rather exclusive, this oasis was frequented by his own companies, by Harry Trueblood's Consolidated Oil & Gas, and by that IOS investment favourite, Four Seasons Nursing Homes. It was refreshed by funds from the Treasury of the State of Ohio, and from the Disabled Workmen's Compensation Fund of the Ohio Industrial Commission, whose monies were handled by the State Treasury. King's access to this cash had been arranged via money brokers in California, Miami and Ohio; before the sec declared the loans to be 'illegal'
¹
this seemed a promising source of cash. On April 17, King Resources borrowed $3 million from the Ohio Treasury, and on May 1, the day before King left for Geneva, the company borrowed another $5 million. And King, who was then being described by
Forbes
magazine as 'an American Croesus', was confident of getting more cash from orthodox banking and insurance sources. (King probably did not notice the
as possible that IOS might survive without King. But in that case, it would be necessary for Bernie to lay down his head, in order that his colleagues should have a decent chance of preserving theirs.

    It was Cornfeld's old friend, Eli Wallitt, who faced the Emperor at last. Speaking slowly and sorrowfully, he proposed that votes of confidence should be passed upon both Bernard Cornfeld and Edward Cowett. Having done that, he said, the board must decide whether to negotiate with King alone, or whether to keep looking for other help while negotiating with King. Finally, in the event that Cornfeld and Cowett should be removed, a new, small committee should be set up to run the company. Wallitt proposed a bulky portmanteau resolution covering all these points. It was late Wednesday evening.

    For the moment, Cornfeld remained cool and controlled. His innate tactical sense told him that Wallitt's vast, sprawling motion could not possibly be voted as it stood, and it would have to be broken up. Indeed, the idea of removing Cornfeld was too vast to be assimilated in one gulp.

    The directors decided not to vote on Eli Wallitt's resolution at all. Instead, they voted on a new motion to negotiate immediately with King. They decided that they would not take King's offer as it stood, but would try to persuade him to share his rescue with at least one American and one European partner. The immediate effect of this was to eliminate Cowett. Anxious to assure themselves that there was no unduly close connection with King, the board voted that Cowett should resign from the board, and from all his other positions, as from the time that new management should take over. The directors, all of whom were showing signs of strain, dispersed.

    The
one of the reasons for this was that its revenues were being eaten up by the sales force.