CHAPTER 14
"IT'S A WHITE MAN'S WORLD"
There is a much-discussed story in the Lazard annals about a private-jet trip that the CEO of an important client took with Michel, Lou Perlmutter, and their wives down to a gathering at Caneel Bay in the U.S. Virgin Islands. "And here they are at twenty-five thousand feet," explained a Lazard partner.
Three odd couples. The CEO is a good guy, Midwestern, good-looking, white button-down shirt. Just what you would expect. And somehow the discussion got to be about the difficulties of getting into college in the U.S. And the CEO starts telling the story about his seventeen-year-old son, eighteen-year-old son, who was going to be taking the SAT test and how they hired a tutor for the English and the math. Once or twice a week you have these prep sessions. Anyway, they hired a teacher from the school, he was at a private school, and they hired a teacher. So the CEO and his wife are out one night and the wife gets sick and asks to come home early. And they come back after forty-five minutes or so or something like that, and they find the kid in the sack with the SAT prep teacher. Lou Perlmutter can't believe this story. The CEO is sort of baring his soul a little bit. Well, Lou didn't know what to say. The first person to speak was Michel, who offered his very French way of consoling, of expressing his sympathies for the CEO. His comment was, "Well, I think an experience like that can be very valuable to a young man." Lou said that one incident just summarized Michel's view of sexual harassment: It's open season. It's part of life. And everybody's behavior in the firm, you know, followed down from that. And that led to the whole lack of discipline and lack of accountability.
Sadly, this is an accurate assessment of the plight of women at Lazard. Equally discomfiting, there is no question that the firm's treatment of its women over the years has derived from, shall we say, the European sensibilities of the firm's most senior partners. Andre had many affairs, as did Pierre David-Weill. Michel said his father was "a natural" with women because he was quietly confident and very charming. "I have never seen it to that extent," he explained. "He just found it so normal and evident that if a lady was beautiful and he found her attractive why didn't they go to bed together? Why not? I think women were pretty convinced but disarmed in a way. All their defenses were useless. So he was very gifted that way." Michel's stepmother was not happy with the arrangement but accepted it, more or less. "I mean it's a fact of life," he said. As for his client's son, Michel said--years later--"He was a lively young man."
Less than a mile away as the crow flies from Viking's Cove, Michel's Locust Valley home, sits Morgan's Island, a 140-acre boot jutting into Long Island Sound, due north of Glen Cove and adjacent to the 110-acre tidal lake known as Dosoris Pond. Morgan's Island, also known locally as East Island, is connected to Long Island by a stone bridge J. P. Morgan Jr.--Jack--had constructed using stones taken from the demolished Harlem Bridge in Manhattan. In 1929, just to show that the partners of the house of Morgan still had plenty of cash at their disposal after the market crash, Morgan's son, Junius Spencer Morgan, built Salutations, a forty-room stone mansion on what has become known as West Island, or Dana's Island, an eighty-eight-acre heart-shaped promontory adjacent to his father's island. Son and grandson Morgan lived like the barons they were on these two adjacent islands off the Gold Coast of Long Island; many scholars believe that F. Scott Fitzgerald memorialized the two islands in The Great Gatsby as West Egg and East Egg. In April 1960, Junius Spencer Morgan celebrated at Salutations, along with eight hundred invited guests, the first anniversary of the historic merger of Guaranty Trust and J. P. Morgan & Co. He died six months later, at age sixty-eight, from ulcers suffered on a hunting trip in Ontario. After Junius's wife, Louise, died in 1993, her estate put the mansion up for auction.
The buyer, who paid "several million dollars" turned out to be Margaret "Margo" Walker, Michel's longtime mistress. With Michel's help, she had already purchased three of the five houses on West Island. At Salutations, there is an indoor swimming pool and an outdoor swimming pool; an indoor tennis court and an outdoor tennis court. There are beautiful gardens and a stunning view across Long Island Sound. In 2000, Walker bought the fifth house on the island and now owns the island and all the houses on it. She rents them out to a well-heeled crowd, once they have passed muster with her. Among the renters have been Stephen Volk, since July 2004 a vice chairman of Citigroup, and Richard Plepler, an executive at Time Warner's HBO. Jeff Sechrest, a current Lazard partner covering the media industry, also rents a house from Walker. In years past, three former Lazard partners, Robert Agostinelli, Steve Langman, and Luis Rinaldini, now head of Groton Partners, his own advisory firm, have also rented from Walker. So far, she has refused the repeated requests of her A-list renters to buy the homes.
After driving over the short stone bridge, all the renters arrive at a closed iron gate. To gain access, they punch a secret code into an electronic monitoring system, which opens the gate. Two roads wind through the spit of land, Salutation Road and Pond Road, but access to them is restricted unless you have the code that opens the gate. Walker has been described less than favorably, when she has been described at all. "She has this house with birds that fly around inside," a "friend" told Vanity Fair in 1997. A "New York fashion editor" also told the magazine, "She's a total eccentric. She'll walk you around her properties in spiky heels. Margo must be--what?--in her 50s? But she's still the complete sweater girl, always perfectly groomed." She has two children with her former husband, David Walker.
Neighbors, of course, wonder where Margo, a local real estate broker (whom, although he disputes it, Michel once tried to get his partner Disque Deane to hire; Deane declined), got the money to buy the properties, which are now said to be collectively worth around $100 million. All roads--correctly--lead to Michel. "Fees for services rendered," sniffed one former Lazard partner. Having a wife and a mistress has occasionally led to some curious, schizophrenic behavior. A Lazard partner tells the story of how he was outside Michel's office one day--waiting to go in to see him--when he overheard Annik having to juggle phone calls from the two women simultaneously. On one phone line was Margo, for whom Annik was arranging a private jet to take her to Moscow, at a cost of $100,000. On the other line was Helene, reminding Annik to return rented videos to the video store in order not to be charged a two-dollar late fee. During one of our many interviews--this one at his magnificent Paris home--I asked Michel about his relationship with Margo. Moments before, he had introduced me to Helene, his thin and somewhat dour wife of fifty years, as she walked through the grand living room where we were meeting. Although New York disclosed the relationship in 1996, Michel seemed to shudder visibly at the question and asked me, for the only time in all of our many meetings, to turn off the tape recorder. He then proceeded to explain that while it may be difficult for an American to understand, he had been able to create for himself loving relationships with both of these women. He said he loved both Helene, the mother of his four daughters, and Margo, whom he has been with for some twenty-five years. They both understand the arrangement, although he conceded that Helene might be less sympathetic to it than Margo. Margo knows, he said, that he would never leave his wife but believes "half of Michel is better than the whole of someone else." How very French.
His sensitivity on the subject, while perfectly understandable, derives not from any personal shame but rather from, he said, the love he has for his wife. Helene, he said, had suffered from the affair's disclosure and from the chattering of her friends in New York. (In Paris, her friends are more accepting, he explained.) His concern is for "my wife, who is not terribly sensitive, but is fairly sensitive to the subject," he said. "And I love her dearly." Michel said that he lamented his wife's pain in this regard but that Margo continues to be an equally important part of his life: they still travel together to exotic locations around the globe and see each other in the "country" on Long Island. Whereas in the past Michel would occasionally go out with Margo in New York City, now they are far more discreet so
cially. Yes, he explained, he did help Margo with the "financing" of the purchase of the houses on West Island, but the Junius Morgan house was an "opportunity" because it was being sold in distress by Mrs. Morgan's estate. And about that he was certainly correct. One person who understands well Michel's approach to women explained: "He adored his girls, but he's French, so he's, you know, women are there to be dressed and fed and fucked."
Another, possibly apocryphal, story about indiscretions with women involves Felix. In the 1970s, before he remarried, he had quite a reputation as a ladies' man. In one particular tale, Andre Meyer came looking for Felix one day in his office, only to find the door locked. This was unusual at the time. So Andre, a man without much patience, knocked briskly on the door and called Felix's name. No answer. Andre knocked again. Still no answer. Finally he yelled, loud enough to be heard around the floor, "Felix, why don't you go to a hotel room like the rest of my partners!"--a perfectly logical request given that many of his partners did in fact have hotel rooms. Word was that Felix was behind locked doors with the actress Shirley MacLaine. Others remembered the incident well but said Felix was there with a secretary, who shortly thereafter enrolled--at no cost to her--in business school and later worked on Wall Street.
In an interview, Felix said he had heard this story about him before many times. And he was not happy to be asked about it. "No, it didn't happen," he stated firmly. "I didn't need the office to get laid." He said he never dated Shirley MacLaine and may have been on a date with Barbara Walters--despite their liaisons being much rumored--"once," along with Howard Stein and his wife at a Chinese restaurant. In 1977, about a year before he remarried, Felix moved from the Alrae, where he had supposedly lived the bachelor life, into a duplex on the twelfth and thirteenth floors at 770 Park Avenue. His partner Alan McFarland was the president of the co-op board, and he helped Felix get into the building. "Getting into our building was a real pain in the ass," McFarland said. "I had to do a favor for a friend who was the executor of the estate, selling it to Felix." After Felix got into 770 Park, McFarland watched as he "moved from bachelor around town to marry Liz and set up shop in this huge apartment in the back of my building." But apparently, Felix had not settled down completely. As the story goes, according to a former partner, two hookers showed up at the same time one night in the lobby of 770 Park, and each of them asked for Felix. Both Felix and McFarland ended up in the lobby to settle the dispute. Still, Felix had a reputation around both New York and Lazard of being an inveterate flirt. "When I was there he had a terrible reputation, I mean for having affairs and for hitting on women," said a young woman who was at the firm around 1990. "I mean, he was like notorious."
Needless to say, this misogynist, profligate behavior, such as it was, trickled down throughout Lazard. There was one horrible story about a particularly attractive secretary in the bond department, who had coincidentally dated Robert Agostinelli when Robert was still an undergraduate at Columbia. "Like all these beautiful young girls, she wanted to build herself a career," one Lazard partner recalled. "She was going to school, and she got a job working at Lazard. And she was very good-looking. I'm sure she got the job--she's smart, too--but she got it because she was really beautiful." Anyway, one night, she called Agostinelli in London, where he was working for Jacob Rothschild, years before he came to Lazard.
Previously, when they would occasionally speak, Agostinelli would try to warn her to be careful about Wall Street bankers. "And sure enough, she got taken to one of these parties by this preppy crowd--one guy from Lazard Brothers and one guy from Lazard New York--and they allegedly date-raped her," a Lazard banker said. "They fed her a Mickey and viciously raped her in this guy's Park Avenue apartment." But the two Lazard bankers were not prosecuted. "Lazard being the way it is, they were both eased out," someone familiar with the incident explained. Bill Loomis chalked up the firm's shameful treatment of its women to a number of factors. First, he said, "I think the firm was small and had no tradition--as Wall Street generally didn't--of treating women with equality of opportunity." There was simply no infrastructure at the firm, or any policies, to deal with issues such as sexual harassment, diversity, recruiting, or mentoring. The bigger, more institutional firms, such as Goldman Sachs and Morgan Stanley, were able to focus on improving these problems far more quickly than Lazard. Lazard's DNA continuously rejected any kind of bureaucracy to handle such things. Stuff happens. Move on. "We were kind of putting bricks together," Loomis said, "not pulling levers."
Very slowly, Loomis said, this began to change, but not always very successfully. There were no women professionals at Lazard--other than the secretaries--until around August 1980, when Mina Gerowin was hired, fresh out of Harvard Business School. Before Gerowin, the Lazard old-timers have a vague recollection of another woman professional being hired. "She'd been there for a couple of months," remembered one. "But she'd been killed off is my understanding, brutally." Given that the law of the land with regard to employers' discriminating against women had been in place since the Civil Rights Act of 1964, Lazard was not exactly acting in an enlightened way. But with Gerowin, the firm made a tiny bit more of an effort. Related by marriage to Andre Meyer, she was a lawyer and a Baker scholar at Harvard Business School. She had worked for Nestle in Switzerland and spoke fluent French. She was one of the first women to attend classes at Amherst College before graduating from Smith. When she arrived in the late summer of 1980, the firm had her share an office with Peter Mattingly on the thirty-second floor--the partners' floor--at One Rockefeller Plaza. She would be sure to be seen by one and all. "It was a very small firm," Gerowin recalled. "I doubt if there were three hundred people, counting the coffee ladies. And you got a desk, and you punched all these numbers by hand. You had little HP calculators and that's it. No computers, no nothing. Lots of paper. Lots of models by hand." She also got plenty of unsolicited advice from various partners about how to survive at Lazard. But none of this advice prepared her for the education she received within weeks of joining the firm. She had been assigned to work with clients in the industrial heartland, which didn't necessarily play to her international experience. In any event, one day early on, she found herself riding the elevator with another associate, John Grambling Jr. (the same man who later spent years in prison for masterminding any number of schemes to steal millions of dollars from North American banks). Grambling had been working with Felix on a deal with Renault, the French carmaker. Once in the elevator with Gerowin, Grambling started to grope her and push himself on her.
She was appalled. "I told him to fuck off," she said. She knew from then on that she, too, needed to become more barracuda-like. She decided to get even, in her way. "I'm so frosted at this," she said. "This sleaze, his wife had a baby the week before. That's when I said, 'Screw this, get yourself on the French deal, he ain't going to last long anyway, the way the kid's behaving.' I didn't know about the other stuff at the time. I just knew this guy did not understand reality." Soon after the incident, when she saw Felix talking to one of the senior Renault executives in the thirty-second-floor hallway, she went up to them and, in perfect French, offered to help out on the deal. Grambling spoke no French. Next thing she knew she was on the deal and Grambling was gone.
She worked for several years on various assignments for Renault as it slowly acquired Mack Trucks--first Renault took a 10 percent stake, then 20 percent, then 40 percent, until eventually Mack became a wholly owned subsidiary of Renault. It was very touch-and-go and very hard work. She had no life outside the firm. She worked directly with Felix and with David Supino. After Renault increased its stake in Mack to 40 percent, in 1983, Lazard received a huge fee, something like $8 million, one of the largest fees in its history to that point. But Felix never thanked Gerowin for her hard work.
Of course, there was more insult. Once, Allan Chapin, then a partner at Sullivan & Cromwell, the law firm (years later Chapin was briefly a partner at Lazard), organized a closing dinner for a Renault-Mack deal at one
of the private clubs on the East Side. But the club did not allow women as members, nor did it, incredibly, allow women to enter the dining room. When Gerowin tried to join the dinner, she was not permitted into the dining room. The matter greatly offended the CFO of Renault, for whom the dinner had been arranged. "He heard what was happening," Gerowin recalled, "and says, 'Renault is owned by the government of France, we are a fair and equal opportunity employer. We cannot have a to-do. So I will go and have dinner with Mina.'" So the guest of honor left the event and had dinner with Gerowin. "His answer to Chapin was, 'Il y a mille restaurants au New York.' There are a thousand restaurants in New York. You schmuck. You had to put it in this one? So he and I went and had dinner and the rest of them went to Allan Chapin's dinner and the next morning I explained to George Ames what had happened at the dinner. I didn't realize that this guy also told Michel."
Michel decided that Lazard's honor had been impugned, and for a brief time Sullivan & Cromwell was in the penalty box with Lazard. But only for a brief time. "So did these things happen?" Gerowin asked rhetorically. "You bet they did. I told you, 'You just never let them see you cry.' Actually, things reached a point where I didn't even cry. I would just be seething, absolutely seething." She often felt she would be assigned work the male bankers didn't want to do. And there was also the problem that some of the partners did not want to work with a woman. "You'd walk into their office, and they'd go into a cold sweat," she said. The best it got for her, she explained, was when after she had done some work for Ward Woods, he managed to give her a backhanded compliment at the year-end review meeting. Gerowin was told that Woods said: "I don't know why she's here. I don't think we should have women here.... But you know what? If we've got to have them here, I gotta say she did a hell of a good job." Recalled Gerowin: "I can deal with a guy like that."
The last tycoons: the secret history of Lazard Frères & Co Page 54