No More Greedy Moguls!

In the close to four years that I've been writing this column, I've never mentioned business and the stock market, subjects I know little about and am interested in even less. But now, I fear, the time has come. Although the economy has recovered and the market should be booming, the small investors who make things happen have suddenly lost confidence in our captains of industry?those greedy chaps who use company loans and money to buy artwork, and pile their personal expenses, like houses in Florida, airplanes and yachts, however indirectly, on the backs of the stockholders.

But before I go on, a rather long digression. Once upon a time, a tycoon was a man who started with an idea, worked hard at it and made it happen. Some were inventive, like Henry Ford; others were great organizers, like Andrew Carnegie and John D. Rockefeller. All of them built up great companies that gave great returns to those who bet on their success by buying their stock. "What's good for General Motors is good for America," went the saying.

Never having read a book about a tycoon, or about business, I can only spout generalities, but I will tell you about a Greek tycoon whom I knew rather well. My old man. His father was a rich landowner who had nonstop affairs and very little time for his two sons. My father left home early and decided to strike out on his own. By the mid-1920s, he had managed to start a small thread business in Greece, building it up to become the biggest in the land. He beat the French competition?owned by the family of the great photographer Cartier-Bresson?and never looked back. By the time World War II began, his was a virtual monopoly in textiles. I remember walking across a factory floor with him and hearing his remarks to the women who worked the spindles and looms: "You're putting on weight, I'm going to have trouble finding you a husband..." Or, "Less lipstick, you don't need it, you're very pretty without it..." It might sound condescending in today's ludicrously politically correct climate, but his workers loved him like the proverbial father.

After the communists blew up the factories (despite the fact he had closed them so the Germans couldn't use them for their war effort), he started them up again not with government loans?the state was broke?but with money saved. He then went to America and got into shipping. He first bought old Liberty ships, then began building his own. To build a vessel, hundreds if not thousands of people need to be employed. After it's launched, especially in those days, close to 100 men are needed to run it, not counting the ground crews of agents, suppliers and so on. Two million tons of ships, as my dad owned at one point, provide a hell of a lot of employment.

Then one day, while shaving, he heard on the radio that Sudan was importing "damuria," or cloth. This was like hearing that Newcastle was importing coal. He quickly put a consortium together, arranged a loan with an American government agency that invested money in Third World projects, and presto, in three years a gleaming, fully air-conditioned textile factory?the biggest in Africa?was ready to roll in Khartoum North. We had 10,000 workers, using them in three shifts, all toiling under conditions unheard of even in America. (The factory was nationalized by Islamic socialists and is an empty skeleton since 1975.)

This was around 1960, a golden time for the old man, with close to 15,000 workers in textiles and a large shipping fleet. He of course owned the business outright, never having issued stock, except for later on when he allowed employees to buy into the business. He was tempted to go public many times, but never did because he felt funny about taking chances with other people's money. Although he lived very well, he was never extravagant, always keeping in mind that in business there are good times and then there are bad ones. At the end of his life he built an enormous hotel in Athens and bought a second one, and was planning to build a large free port in northern Greece when he died of a heart attack at age 81. Until the end he was always planning things. His workers showed up en masse at his funeral and cheered?a Greek custom I was unaware of?as his casket went by. For years following his death, business newspapers would carry items about his achievements, lest we forget.

I would say that I've never seen such love for an employer as what those who worked for my father felt for him. Which brings me back to the point of my story.

What is wrong with today's economy is the human element?the greed of those who run American business. These managers are the direct opposite of my old man. Their pay packages, which offer great rewards if stock prices rise, encourage them to inflate their figures, corrupt the boards and the accounting firms, control the information and in general go for the short-term goal, to be followed by dumping the stock while it's at an inflated high. Is this any way to run a business? Better yet, how many factories have these managers built? How many people have they employed? How many businesses have, say, Wall Street heroes like Henry Kravis or Ron Perelman ever created? Greenmail is one thing, creating from scratch is another.

Lawrence Kudlow, who in my opinion knows more about business than anyone else writing today, has it right when he says that as long as there are unsettled accounts?he means the accounting scams?the investors will stay away. Just look at this grotesque, social-climbing ex-CEO of ImClone, Sam Waksal. He and his brother and the rest of his family began unloading their stock 48 hours before the FDA rejected their claim of a miracle cancer drug, sending the stock plunging along with the hopes of millions of cancer sufferers. (Apparently so did Martha Stewart, whose daughter was dating the vulgarian.) Better yet, Sam steps down and his brother Harlan takes over as CEO. It may sound like a fraternal gesture, but for the fact that Harlan had allegedly been caught smuggling two kilos of cocaine sometime before but had beaten the rap on a technicality. How can a man who was smuggling two kilos of coke?obviously for profit?be named head of a public company whose managers had just unloaded for hundreds of millions in profit and left the suckers who had believed in their bullshit holding the bag? This makes the Mafia sound like a very small and very decently run business. BothWaksals should be in jail, not appearing with Mick Jagger in the glossies.

Again, what the hell is going on here? I'll tell you. We need more John Theodoracopuloses, and fewer Sam and Harlan Waksals, and while I'm at it, fewer Kravises, Perelmans, Kozlowskis, Lays and Winnicks, not to mention the fictional Gordon Gekko.