Part 14 (1/2)
”That's right. The waste management company is based in Cleveland, but it operates landfills and hauling companies in twenty-one states. The food company has facilities up and down both coasts, and in Chicago and St. Louis. I believe, in total, with the twenty-seven companies in the portfolio, we have offices, plants, and distribution centers in all fifty states.”
”Excellent.”
”Why?”
”As I told you at Donovan's funeral reception, I want votes from you, Christian. Those million employees at your portfolio companies as well as their families and friends. I want you to let me talk to them, then I want you to follow up with memos and videotapes that support me.”
”Senator, I don't-”
”And, over the next year, I want to make announcements and speeches from your factories and offices. You know, with lots of cheering people in front of me while the TV cameras are on. In return, you'll have a friend in Was.h.i.+ngton who has lots of other friends in Was.h.i.+ngton. Understand?”
The waiter was headed toward their table, but Gillette waved him off. ”I appreciate that offer, Senator.”
”Good,” Stockman said, continuing quickly. ”I know one of the companies in your portfolio is a media company. Newspapers, magazines, and a string of radio and television stations. NBC affiliates on the TV side. Correct?”
”That's right.”
”Which will be very helpful. You should work with my PR people on ideas there. Point is you need to do everything and anything you can to get me elected.”
”I'm not prepared to go that far,” said Gillette flatly. He didn't like Stockman now that he'd had a chance to spend some time with him, but he could have gotten past that. He did business with plenty of people he didn't like-and who didn't like him. But he didn't believe in trying to influence people at their workplace. Even so, he could have figured out a way to string the senator along without committing to anything so as not to make an enemy-at least, not right away. The reason for his up-front refusal was that he wanted wanted to provoke a reaction. He wanted the confrontation because he wanted to know why Stockman had dug so deeply into his background. Why the senator was going after Everest-and him-so hard. Maybe it really was just for votes, but Gillette suspected there was something else. ”I'm not letting Everest Capital get dragged into all that.” to provoke a reaction. He wanted the confrontation because he wanted to know why Stockman had dug so deeply into his background. Why the senator was going after Everest-and him-so hard. Maybe it really was just for votes, but Gillette suspected there was something else. ”I'm not letting Everest Capital get dragged into all that.”
”Dragged?”
”You heard me.”
Stockman straightened up in his chair and paused, moving his lips without speaking. Silently counting to ten to let off steam. ”Do you understand what will happen if you don't cooperate with me?” he asked. ”Do you understand how powerful I am?”
Gillette remained silent.
”You'll have an enemy enemy in Was.h.i.+ngton instead of an ally.” in Was.h.i.+ngton instead of an ally.”
”I hear you.”
”Is that good business?”
”Maybe not, but I'm chairman of Everest, and I have to do what I think is best in the long run. And I think it's best to stay out of this.”
Stockman smiled. A fake smile. Like he had a pain in his side but was trying not to let on. ”I hear Everest Capital is going to be raising a new fund soon.”
Gillette looked up slowly from the table. ”How did you hear that?”
”I hear lots of things. Which is why you'd be a fool not to work with me.”
Gillette ticked off the different ways Stockman could have gotten that information. Remembering who he'd told about his plans for the new fund. ”What are you saying?”
”You still own shares of companies you've taken public. Don't you, Christian?”
When private equity firms sold companies to the public, they didn't sell all their holdings in the initial public offering. The investment bankers-who distributed the new shares to their individual and inst.i.tutional clients-wanted the private equity firms to retain at least some of their owners.h.i.+p after the IPO. As a sign of good faith. So the new investors would feel like the existing owners had continuing confidence in the business's prospects. That they weren't getting out at the top. And, once a company was trading publicly, there were strict rules governing how and when the original owners could sell their shares.
”That's right,” Gillette agreed. ”We own some publicly traded stuff.” Which was no secret. Stockman's aides could have found that information in the mandatory SEC filings available on the Internet. ”But we don't count those as portfolio companies. Not like the twenty-seven we control.”
”One of those public companies you still own a piece of is Dominion Savings & Loan down in Virginia,” Stockman continued. ”It's headquartered across the Potomac River from Was.h.i.+ngton in Alexandria, but it has branches in the District. I see them all over the place on my way in to the Capitol from my apartment in Georgetown.”
”Yeah, so?”
”What if the federal regulators were to uncover problems at Dominion?”
”Dominion's squeaky-clean. There's nothing-”
”Still, what if they did? Would that be a problem?”
”It's a waste of time to talk hypothetically. At least, in this case.”
The senator smiled thinly. ”Humor me, Christian.”
”What are you trying to tell me?”
Stockman spread his arms, shrugged, and gave Gillette a quizzical look. ”I don't know what you mean,” he said. ”It's just a simple question. If the feds start a probe into Dominion's IPO, would that be a problem for Everest?”
”Depends on what they find,” Gillette said bluntly.
”My aides tell me Everest took in two billion dollars on that IPO. After investing just two hundred million three years ago,” Stockman added.
”Our profit on the deal was a billion eight,” Gillette acknowledged. ”It was a great transaction. And, like I said, we scrubbed Dominion with Ajax and steel wool for ninety days before the SEC came on the scene. Then they were in our shorts for months before the IPO.”
”All the same, if an investigation was announced, it wouldn't be good for your next fund, would it? Might make your partners wonder what was going on at Everest. Might even make them not invest.”
Dominion's loan portfolio was almost forty billion dollars. In a loan portfolio that huge, there were bound to be problems, especially when the portfolio was grown quickly. And Gillette knew that to maximize the value of the transaction, to get that billion eight profit, Donovan had grown the Dominion loan portfolio very very quickly during the year before the IPO. Gillette also knew that Donovan had given Dominion's employees huge bonuses to grow the business, even the credit officers-the people charged with making certain the loans Dominion made were good-quality loans, loans that were likely to be repaid-had gotten something. Which was a tremendous conflict-to pay credit officers to quickly during the year before the IPO. Gillette also knew that Donovan had given Dominion's employees huge bonuses to grow the business, even the credit officers-the people charged with making certain the loans Dominion made were good-quality loans, loans that were likely to be repaid-had gotten something. Which was a tremendous conflict-to pay credit officers to grow grow a portfolio rather than a portfolio rather than protect protect it. it.
Donovan had been chairman of Dominion while Everest controlled it, and Marcie Reed had been his second-like at Blalock. She and Donovan hadn't told the other managing partners much about what was going on, but Gillette knew that the general strategy had been to grow Dominion as fast as possible. Suddenly he was concerned that Stockman's threats might be backed up by credible information.
”One of the Big Four accounting firms audits Dominion,” Gillette pointed out, ”and has since before it was public. I'm comfortable everything is fine there.”
Stockman chuckled snidely. ”Are you now?”
”Yes.” Not really. As Donovan had gotten older, he'd developed a bulletproof mentality, as if he thought he was somehow above the law. It wouldn't surprise Gillette at all if Donovan had done something shady at Dominion to a.s.sure Everest of that huge payday.
The senator drew himself up in his chair, his forced smile fading. ”Are you going to support me, Christian?”
”Senator Stockman, I think we should-”
”Answer the question.”
”Not to the extent you're talking about. Now, I'm willing to consider-”
”Thank you for the drinks,” Stockman said, standing up abruptly. ”Unfortunately, I don't have time for lunch thanks to your being so late. I wish you all the best as the new chairman of Everest Capital.” He smiled again. ”For as long as you are are chairman, anyway.” chairman, anyway.”
Gillette watched the senator move off, stopping to shake hands at several tables as he worked his way toward the door, smiling and chatting with people as if his nasty exchange with Gillette hadn't happened.
Tom McGuire knew that Bill Donovan had found out something about Stockman. Something so significant that, in McGuire's judgment, Stockman would have wanted Donovan dead. And, by extension, now would want him dead.