The Taking of Getty Oil

by Coll, Steve;

  So when Carl Icahn, spurred by beer and conversation with Jamail, began shuttling between Texaco’s corporate estate in White Plains and Hugh Liedtke’s Waldorf apartment in Manhattan that December, Texaco’s executives were willing to listen, as they had never been before. By paying $3 billion to Pennzoil, Texaco was able to preserve itself, at least for a time, as a profitable and independent—albeit considerably smaller—oil company. Though it faced a takeover threat from Icahn when it emerged from bankruptcy, the company was also able to restructure itself as a leaner and less vulnerable organization.

  Lawyers on all sides of the case made out handsomely. As part of the final settlement agreement, Pennzoil and Texaco agreed to absolve everyone involved in the taking of Getty Oil—Gordon Getty, the former Getty Oil directors, Marty Lipton and Harold Williams of the museum, the lawyers at Skadden Arps who forgot to file Texaco’s answer in Delaware, the investment bankers at First Boston and Goldman, Sachs, Texaco’s officers and directors, and, naturally, all of the lawyers for all of the parties—from any future liability arising from the case or the events that preceded it. For a brief time, lawyers representing Texaco shareholders objected to this arrangement, arguing that Texaco could recover much of its $3 billion payment by suing its lawyers and investment bankers for malpractice, but quickly these dissenters were taken care of as well—the shareholder lawyers were permitted to file with the bankruptcy court an application for fees not to exceed $10 million.

  Upon receipt of his $3 billion, J. Hugh Liedtke decided to retire from day-to-day involvement in the affairs of Pennzoil Co., saying he wished to spend more time fishing and with his grandchildren. After the court hearing in White Plains, N.Y., where Texaco’s bankruptcy judge, Howard Schwartzberg, pronounced his final blessing on Pennzoil’s unprecedented award, the dog-faced Liedtke stood before the courtroom’s jury box for a few moments and reflected on his accomplishment. “It hasn’t exactly been pleasant over these last four years,” Liedtke said. “But it was something that had to be done.”

  Bibliographical Note

  The use of recollected and reconstructed dialogue in works of narrative nonfiction, while increasingly widespread, is in many ways problematic. First off, there is, or should be, the question of accuracy. In the absence of verbatim transcripts or detailed, contemporaneous notes, it is impossible for any journalist to recreate precisely a conversation that occurred outside his earshot months or years in the past. Memories, even the best ones, are inherently distorted. It is a primary human trait to filter the past through a prism of self-esteem, recalling nuance and detail which by their very precision cast the teller in the best possible light. No one vaguely remembers being a hero. But memories of cowardice or duplicity or malice—memories we all possess—are often shrouded and muddled. This is the essence of nationalism, of course, but it is also a plague on the work of journalists.

  The obvious solution, taken by some scholarly historians, is to forego the use of dialogue altogether, unless it was transcribed contemporaneously. There are many reasons why modern journalists reject this approach, not the least of which are commercial. The strict constructionist is often a boring storyteller. Slogging through his books, the reader must wonder whether the scholar found his style only after practiced suppression of his imagination. So one must acknowledge the truth: a great many modern journalists write books the way they do, and publishers publish them, in large part because they all want the books to be widely read.

  I point this out not because I think it is evil, but because so many journalists these days go to such absurd lengths to justify their use of reconstructed dialogue on moral and professional grounds. There is the standard disclaimer: “The author does not represent that the dialogue herein reflects the exact words used by the participants, but he does assert that the conversations are accurate in substance and spirit.” Nowadays, journalists don’t go much further than that; by their brief disclaimers they seem to feel that they have fulfilled some legal obligation to their readers, and now the reader is on his own—caveat emptor.

  A few years back, before this disclaimer proliferated like a warning label on a popular product, authors occasionally tried to explain themselves a little. David McClintick, whose wonderful, best-selling book about the scandal at Columbia Pictures Industries gave birth to a thousand jacket blurbs declaring “Told in the style of Indecent Exposure,” ventured that his reconstructed dialogue captured the truth “more accurately than paraphrase would. Human beings do not speak in paraphrase.” (His emphasis.) Interesting, but in Tony Kornheiser’s memorable phrase, I have trouble getting in a full upright and locked position on that one. How can a work of nonfiction that deliberately alters the available facts, however slightly, be more accurate than one that doesn’t? Perhaps such a work could be more truthful, in the sense that Dickens holds more truth about nineteenth-century England than any history does, but McClintick does not make that lofty claim. Nor should he. He is writing journalism, not a novel, and not a “docudrama,” that insipid and deceptive television hybrid. Theodore Dreiser, in thinking about a sensational murder case of his day, decided that the basic facts would make for a story of tremendous resonance. So he wrote An American Tragedy, a novel. If he had lived in our time, he might well have written a work of narrative nonfiction, complete with reconstructed dialogue, and then sold the miniseries rights to one of the networks.

  So the author has to make choices. They are not easy, but it is important to think them through. And it seems to me that if a journalist decides, as I have, to employ reconstructed dialogue in the text of his narrative, then he has redoubled his obligation to the reader. The real problem with the modern journalistic genre is not that writers put quotation marks around words that would otherwise be presented as paraphrase. That, in itself, is essentially an artistic choice, an attempt to convey the life and corporeal energy of human action. By employing a simple cosmetic device, the journalist endows historical events with the feeling of truth—a feeling the reader intuitively appreciates. The choice to use quotation marks is influenced in part by commerce, in part by the cinematic tenor of our times, in part by a desire to coax resonance from the flat historical record—that is, it is a choice made for both good and bad reasons. Still, the choice belongs to the author, even when the author is a journalist. The important thing is that having made the choice, the author should justify himself to the reader. He should not treat the reader with condescension, or, as is more common, ignore the reader altogether with a dismissive disclaimer.

  The important thing, I mean to say, is sourcing. Where did this dialogue come from? Who remembered it that way? What contemporaneous and documentary evidence is there to support the recollection? What rules did the author follow with sources? What standards did the author adhere to in the writing? What is surprising about contemporary works of narrative nonfiction, many of them written by excellent journalists, is that authors so rarely answer these questions for the reader, and if they do, their answers are sometimes appalling. There are prominent journalists who do not disclose in their books that they have made contractual arrangements with sources to share in the profits from publication and future sale to the movies. Why is that not scandalous? There are many nonfiction authors who do not write any endnotes at all, leaving the whole of their history unattributed. Some of these same authors work for newspapers that require them, with apparent contempt for the art of their writing, to attribute virtually every piece of information they publish to some source, even if the source is confidential. Why does a book contract liberate them from this policy?

  Then there is the issue of fact-checking. It is perhaps impossible in a book-length work about a complex subject not to make factual errors. One can only hope to minimize them. To this end, some authors submit their manuscripts to trustworthy sources for review in advance of publication. The sources identify mistakes for the author. If there is disagreement over whether a passage is correct or not, the source may marshal evidence to persuade the author
of his view, but the author is free to make his own decision. To a limited extent, I have used this method myself. While preparing an earlier book, I submitted the manuscript to one trustworthy source on each side of the conflict that I was writing about. The sources identified some embarrassing errors, argued with me about my interpretations, and questioned some of my assumptions. I found it a useful process, though regrettably and inevitably, it did not leave my book entirely error-free. Still, a journalist’s decision to submit his work to a source in advance of publication, however trustworthy the source, cannot be made casually. Legally and ethically, it is a complicated decision, I think. One must weigh independence against accuracy, integrity against thoroughness.

  Sometimes, for example, a source will insist on the right to see the manuscript as a condition of granting an interview. This, too, is a complicated issue. While working on my first book, I refused all such requests. In the course of researching this book, I turned down several more requests, but eventually granted one to Texaco, with the caveat that they could see only those portions of the manuscript pertaining to the company. I ceded no obligation to them other than to listen to their comments, but still, I do not feel entirely comfortable about my decision. If I had turned them down, I would have been denied a number of important interviews. But the compromise we arrived at, like many compromises, was unsettling. In meetings with two other sources who have nothing to do with Texaco, I read passages from my manuscript out loud and asked for comment. Somehow, this felt like a better arrangement, although clearly it was not materially different from my agreement with Texaco. Still, sitting at the table with my arms wrapped around the manuscript, I felt better. The book was mine. There are nonfiction authors, not ghostwriters, who routinely enter into written agreements with sources—agreements which permit the sources to dictate changes to the author’s manuscript. One institution I contacted in the course of researching this book even had its lawyer send me a standard contract letter that would have granted it the right to make changes in my manuscript—it was a standardized form, I was told, because so many other authors signed it. These are serious journalists, seriously reviewed. I cannot understand why publishers do not insist such arrangements be disclosed to their readers.

  Now, then, to the dialogue recorded in this book. So far as I have been able to determine, and I have worked very hard at it, the people who appear in this book really did say these things to each other, difficult though it may be to believe at times. It is true, as the standard warning label has it, that they did not necessarily use the exact words inside the quotation marks—except when those words are taken from transcribed proceedings. But the words I attribute to the characters in the book did not come from my imagination—they came from the sources listed in the Notes. As can be deduced from a careful reading of these endnotes, I tried to follow certain rules. For obvious reasons, I gave first preference to contemporaneous documents: handwritten notes, dictated memos to file, minutes, interoffice memos, and so on. Such documents say what they say; there is little bias about them. Absent such documents, I relied secondly on the sworn testimony of the participants, under the theory that people are less likely to perjure themselves under oath than they are likely to lie to journalists. Absent documents or testimony, I relied thirdly on the recollections of persons willing to be interviewed on-the-record. I do not discount the importance of confidentiality in journalism, but I embraced the theory that people are less likely to lie on-the-record than on background. I realize that this theory is debatable, but since it appeals to common sense, I prefer it to the competing notion that people are more likely to be truthful when they are not accountable for what they say. And lastly, I relied on interviews with confidential sources. I wish I could say that these interviews play no significant role in the narrative. I cannot. What I can say is that there is not one important conversation in this book sourced exclusively to confidential interviews. If the reader wonders where a particular conversation or discussion comes from, in virtually every case he or she can turn to the back and find a name or two or three attached to it. And then, presumably, the reader can begin to make an independent judgment about possible biases, whether mine or those of my characters. A substantial portion of the sworn testimony cited in the endnotes is not publicly available, but some of it will eventually be released. In any event, I have managed to get hold of it from those ubiquitous confidential sources.

  In the interests of both full disclosure and personal sentiment, it should be known that my wife, Susan, was in many ways an equal partner in the research of this book. She traveled with me as well as on her own, researched the Getty family’s history, obtained and sorted through legal and government documents, and even conducted a few interviews—all of this while raising our young daughter without significant outside help. However this book is judged, hers was an amazing feat.

  NOTES

  Chapter One

  3–5

  The account of Hays’ last days is primarily from author’s interview with Spencer Hays, supported by confidential interviews with three former partners in Hays’ firm.

  5–6

  Gordon’s trust income: the exact amount varied with Getty Oil dividend payments. On June 15, 1982, the trust received a $20,673,307.20 quarterly dividend check, of which one-third belonged to Gordon.

  6–7

  Memorial service eulogy: from handwritten notes retained by Spencer Hays and made available to the author.

  10–11

  Gordon’s board room demeanor: from interviews with twelve former Getty Oil executives and directors, including former chief executives Sid Petersen and Harold Berg. Gordon Getty said in an interview with the author that the stories about his absent-mindedness are “all true,” except one which had it that he composed opera scores in his mind during board meetings. “At a dinner party, maybe,” Gordon said. “But never at a board meeting.”

  11

  “Well-rounded and seasoned”: letter from George Getty to J. Paul Getty, June 17, 1965.

  11

  “Your musical compositions”: cited in Robert Lenzner, The Great Getty (New York, 1985), p. 151.

  13

  Ann’s view of her role and Gordon’s view of his father as a formidable lion: from televised interview on ABC’s “20/20” broadcast, August 30, 1984. Also from author’s interview with Gordon Getty.

  13

  Gordon’s feelings about Lansing, and “You’re going to have to go it alone” conversation: from author’s interview with Gordon Getty.

  14

  “You left one word off your list” conversation: from author’s interviews with Gordon Getty and Spencer Hays.

  14

  Value of trust: Getty Oil’s stock price was fluctuating around $50 per share. The trust owned 31.8 million shares.

  17

  “Gordon is going to be around” meeting, and Hays’ remarks: from February 9, 1981, memo to file by Robert H. Smith, executive vice-president of Security Pacific National Bank.

  Chapter Two

  20

  “What is your luxury?”: from “20/20” interview, August 30, 1984.

  21–23

  Ronald’s biography: from The Great Getty; Russell Miller, The House of Getty (New York), 1985; and author’s interviews with former Getty Oil executives. Executor fees and price of Italian house: from The Economist, November 14, 1984.

  24

  “I would be very pleased”: cited in The Great Getty, p. 151.

  25

  “Keep hammering Gordon”: Lenzner reports J. Paul telling his lawyer, “Keep killing my son.” Lasky said in an interview with the author that “hammering” was the word his client employed.

  26

  Letter from J. Ronald Getty to Gordon Getty, May 18, 1982. Letter from Gordon Getty to J. Ronald Getty, May 28, 1982. Letter from Horst Osterkamp to Gordon Getty, June 28, 1982. Letter from Moses Lasky to Gordon Getty, July 12, 1982.

  26

  What Gordon believed: from author�
�s interview with Gordon Getty.

  Chapter Three

  28–30

  What Petersen thought to himself: from author’s interview with Sid Petersen. Gordon’s comment about his ERC vote: from author’s interviews with Petersen and former Getty Oil director Norman Topping.

  30–31

  Petersen’s biography: from author’s interviews with Petersen and former Getty Oil executives.

  31–33

  Decision to promote Petersen over Miller, and resentment of Petersen’s new status: from author’s interviews with former Getty Oil executives and directors. It should be noted that much of the bitterness about Petersen expressed in interviews with the author was perhaps colored, at the time of the interviews, by resentment over severance and retirement benefits awarded to different groups of former Getty Oil executives. Petersen received the most lucrative benefits.