The Korshak series got me hooked on the interplay of organized crime, politics, and big business, as well as the workings of America in the 1970s. I was desperate to look into more of it. One of the fringe players in Korshak’s world was Charles Bluhdorn, the chief executive officer of Gulf and Western (G&W), one of America’s largest conglomerates, whose holdings included Simon & Schuster, a major publisher; Paramount Pictures; and the Madison Square Garden Corporation, owners of New York’s professional hockey and basketball teams. G&W, which was widely known for its on-the-edge business practices, by early 1977 was under no fewer than fourteen separate investigations by Washington’s Securities and Exchange Commission, whose enforcement division was headed by Stanley Sporkin, a charismatic federal official who was not afraid of the big boys. Sporkin had a huge edge: One of Bluhdorn’s key associates had been convicted of embezzlement and was cooperating with the SEC, in lieu of beginning a prison sentence.
I’d been a New Yorker for two years and had worked my way around, which included occasional tennis games with Robert Morgenthau, the district attorney of New York City, and a few of his associates. They all knew who the dirtiest mogul in town was; Morgenthau’s office was then running its own investigation into Gulf and Western’s corporate practices—to the profound annoyance of Sporkin. Competition among investigating agencies was very good for journalists, as was the fact that few in the publishing world, with the notable exception of The Wall Street Journal, had taken on Bluhdorn. The company was an obvious target; Mel Brooks had gone so far as to call an evil corporation “Engulf & Devour” in Silent Movie, his 1976 slapstick film. Nonetheless, I was lobbying inside the Times for permission to work on the story with Gerth when I was told that Arthur “Punch” Sulzberger, the publisher of the Times, had socialized with Bluhdorn, which included previewing soon-to-be-released Paramount movies in Bluhdorn’s home theater. It took months of intense research before Gerth and I were able to present—“confront” might be a more accurate word—the top editors with specific evidence of Bluhdorn’s financial wrongdoing. We got the go-ahead, began finding past and present senior G&W officials to interview, and walked into four months of sheer hell.
There was a constant stream of letters to Abe Rosenthal and Punch and others at the paper from Bluhdorn and Martin Davis, a G&W vice president, accusing me of character assassination and gangster tactics. It was a theme that I had been living with for nearly two decades, that my success as a reporter was in part due to my incessant bullying of sources. Profile after profile had depicted me as a kamikaze reporter who terrified generals and cabinet officials into revealing the gravest of secrets. I often wondered why my media colleagues thought that anyone could induce a battle-tested general or senior cabinet official to open up by yelling at them. I was once seriously quoted as saying that I would run over my mother to get a story. It was just silly stuff that I had no choice but to endure. So it was not surprising that Gulf and Western, masters of invective, would jump at the chance to depict me as a journalistic terrorist. Their letters all reinforced that theme, such as one sent to the Times leadership by Davis on May 6, 1977:
We are not a company writing to try and kill what may turn out to be an unfavorable story….We want to stop these vicious, prejudiced attacks [from me] masquerading under the name of a newspaper that is known throughout the world for its aggressive, but responsible ferreting out of information. Your name gives weight, dignity, support to these sick, twisted, malicious, hateful attacks….We believe you have an obligation to investigate Mr. Hersh’s tactics in the same way we would expect you to investigate any other story.
The letter then included a list of some of my alleged comments to present and former officers of G&W, as related to the Times’s management:
“You’d better see me…[said to a former G&W employee]. Otherwise you are going to jail.”
“Why is G&W like the Mafia where no one (former employees) wants to talk to us?”
“Every transaction they enter into, they do so with tax fraud in mind.”
“I know all about Bluhdorn perjuring himself in the A&P case.”
“I know that Levinson [a lawyer and G&W vice president] shredded documents.”
“Levinson holds Bluhdorn’s coat, lights his candles.”
“Bluhdorn lied to me.”
“G&W is a piece of shit—garbage.”
I did not see the letter until years later. Why it and others like it were not shared with me and Jeff at the time remains a mystery. We were never given a chance to respond to them, and thus were unable to note that they were supposedly based on remarks I allegedly made to unnamed others, as relayed by them to G&W’s management, with no evidence provided by Bluhdorn and his gaggle of proxies that I had indeed threatened a former company official with jail time, depicted the company as a piece of shit, and all the other nonsense. If I had been shown the letters when they arrived, I would have told my bosses that there was no question I often took umbrage when someone lied to me or misstated our conversations—I still do—but I would never have threatened anyone with going to jail for not talking to me, nor would I tell someone who worked for Gulf and Western that his company was “a piece of shit.” I learned early in my career that the way to get someone to open up was to know what I was talking about and ask questions that showed it. Humor and persistence often would work, as it did with Charles Colson’s wife, but being threatening or aggressive never would.
We heard nothing about the many G&W complaints from the Times’s management before Jeff and I met for three hours in early May with Martin Davis and an outside lawyer for the firm and were subjected to repeated insults and threats of legal action for doing what I had been doing all my career: reporting. I told Seymour Topping, the managing editor, what had happened. “It was the most disturbing interview I’ve had in more than seventeen years in the business,” I wrote. Some of the remarks directed at me and Jeff were little more than school-yard trash talk. The series on Sidney Korshak had “diminished my reputation,” and the story was “a rathole” that some Times editors had privately told G&W officials was below the newspaper’s standards “for fairness and accuracy.”
Gulf and Western later warned Jeff and me that they were doing research on our families and knew that one of my wife’s aunts had flirted with the Communist Party in the 1930s. They also suggested that Jeff’s father, who was a broker in the steel business in Cleveland, had some unsavory business ties. One offensive senior officer of the company taped a deservedly tough call from me—he had lied to us and about us and was continuing to do so—and sent it to Sulzberger, who was a most gentle man and surely was upset about the dialogue, which did not include all of the conversation. Rosenthal was pissed about the drama enveloping the corporate offices over our investigation, and the tape sent to the publisher, but he told me, with a smile, that I was lucky that the dummies at Gulf and Western went over his head to the publisher, because he then had no choice but to defend me.
This went on through the spring and summer until Gerth and I finally delivered our fifteen-thousand-word bill of attainder. At that point, there was a new element, one that I and Jeff were not to be told of. Our story was submitted to John Lee, the editor of the Times business news section that had been renamed something like Business Day. Jeff and I had our own sardonic name for the tepid section—biz/ millennium. We did not like or respect Lee and his ass-kissing coterie of moronic editors, and they surely did not like us. Lee savaged us in a confidential memorandum to Topping, Abe’s chief deputy. In the memo, which did not mention either me or Gerth by name, Lee acknowledged that “We”—who in the hell was “We”? I wondered—“have the unique opportunity to detail the practices which are a focus of a major SEC investigation….As for the material on hand, it is excessive, diffuse and poorly organized. Much closer sourcing is needed. The anonymous quotes are unusable.” The last was a kiss-up to Abe, with whom I had been arguing for years abou
t anonymous quotes, which he hated and which I insisted had to be published, especially because he knew who the anonymous sources were, if we were to get to the truth.
Lee’s timing was perfect: It was the right moment to lay into me, because the top echelon of the paper was having fits about the letters from Bluhdorn and Davis and my memos about the threatening and abusive telephone calls we were getting from the company, and the direct abuse we got when we interviewed those corporate officials who were sanctioned to talk to us. We eventually came to believe, fairly or not, that all of G&W’s senior employees had been warned of severe sanctions if they talked to us. (The threats inevitably propelled some to talk to us, of course.)
The series, when published, had been lawyered to death, but it managed to tell the newspaper’s readership about a corporation that had misrepresented its financial standing in every legal and illegal way it could, and had been caught, to a large degree, by the Securities and Exchange Commission. I was particularly proud of the fact that we were able to tell, with firsthand (and anonymous) accounts, of how a group of corporate officers had worked through the night in the summer of 1968 moving the firm’s tax records from midtown Manhattan to Stamford, Connecticut, where Bluhdorn and others were convinced they would be subjected to less informed and intrusive Internal Revenue Service auditing. The story quoted one unnamed senior corporate official as explaining that G&W was “afraid of the New York tax people who were more sophisticated.” Many Times readers undoubtedly shared that sentiment, but they did not have the luxury of changing their location, for IRS purposes, overnight.
I was proud of our series, which fulfilled our initial promise to Rosenthal—that a serious story on the methods of Gulf and Western would “help explain how things work in this nation.” At one point in our research, Jeff decided on his own to take a look at the Times’s corporate filings with the SEC—that type of thing was why I hooked up with the guy—and discovered that Rosenthal had taken a loan from the newspaper’s board of directors at one-half of the prime rate to purchase a penthouse apartment on elegant Central Park West. Punch Sulzberger and the newspaper’s board were generous with many of its reporters and editors: I was later given a short-term bridge loan by the paper to help my transition back to Washington from New York. But I had no responsibility to the newspaper’s board of directors, as Abe did. He was beholden to the newsroom and the men and women in it, and the loan he sought and received from the board compromised that obligation. Jeff and I had discovered a few weeks earlier that Bluhdorn had borrowed millions of dollars from the G&W board at a ridiculously low interest rate and used the money to buy G&W stock a week or so before a two-for-one stock split. His unethical insider trading was matched by the dumbness and obviousness of his greed. In any case, we felt we could no longer cite that chunk of greed because the executive editor of our paper, who was supposed to be independent of its board, had acted in a questionable manner.
I was enraged when Jeff showed me the SEC filing that noted the loan, and headed for Abe’s office. He was talking to Robert “Rosey” Rosenthal, a well-liked onetime Times copyboy on the foreign desk, who was seeking a reporting job. (Rosey would go on to become the editor of The Philadelphia Inquirer and director of a California reporting consortium.) As Rosey described the scene to me for this book, the encounter took place in the newsroom. He was chatting with Abe when I came “pouring” into the newsroom: “You looked your normal disheveled look, hair mussed up, shirt half out, and you were holding copy…your story. You came up to Abe, upset about something. He was talking to me and you started yelling, shaking the copy, your story, in his face. I don’t recall anything you said about the story you were holding, but you were pissed off. After yelling at Abe, you looked at me and said something like ‘He’s nuts,’ pointing at Abe, and said, ‘Don’t come to work at this fucked-up place.’ After that you stormed away.”
I remember the scene as having taken place in Abe’s office. I had told Abe about Jeff’s research, with Rosey watching, and asked him how in hell he could do such a dumb thing as getting a financial break from the paper’s board of directors. Abe’s answer was out of the corporate textbook: “I asked my lawyer and he said it was okay.” I will never forget my answer: “That’s what they all say. The Bluhdorns of the world; that’s why they have lawyers.” I told Abe that because of him we were forced to pull some great stuff out of the article. I began a morally superior strut out of his office. At the door, Abe stopped me by saying, “Seymour,” in a stern voice. My full name again. “What?” “Do you think you have the right to investigate anything, anybody, in this newspaper?” I hesitated and said, “No.” He said “Good” and turned back to the interview with poor Rosey. A few weeks later his secretary dropped a large manila envelope from Abe on my desk. It was a copy of his new mortgage from a local bank, at the mandated rate of interest, with a note stating that his monthly payment was now doubled. How could anyone stay mad at the guy?
I’ll let another voice discuss the outcome of our Gulf and Western work. Mark Ames, a freelance journalist who did much admirable work in Moscow, analyzed the G&W series and its impact in 2015 for an online journal. His finding was brutal, but pretty much on the mark:
Hersh’s massive Gulf & Western exposé was…13,000 words long, in three parts, revealing a private labyrinth of corporate fraud, abuse, tax avoidance schemes, and mobbed-up malfeasance. And yet—in spite of all the pre-publication hype, the story landed with a whimper. Something Hersh wasn’t at all used to. For one thing, the article’s language was unusually cautious and dull for a Hersh scoop. As New York magazine quipped, [T]he general reaction has been a big yawn.
[U]nlike Hersh’s stories going after the CIA and the military, the Times was far more afraid, and careful, of the consequences of taking on a powerful private company…and getting sued out of existence….[T]he Times saddled Hersh with a team of editors and lawyers to vet his reporting, sucking the life out of the piece until it was almost unreadable. Among other things, the Times cut out all the colorful anonymous quotes that made his muckraking bombshells on the CIA…such memorable reads.
The critique had it right about the cowardly editing, but the story had legs in ways that were not immediately seen. I could tell from the mail I received that there were many experts, far more knowledgeable about corporate business practices, perhaps, than Ames or the editors of New York magazine, and even the editors of the Times, who understood how far Jeff and I had raised the bar. For example, John Kenneth Galbraith, the Harvard economist who had served as ambassador to India for President John F. Kennedy, wrote me to say, “The pieces on Gulf & Western are excellent—better than most readers will know. Extracting usable information from these characters, as I can attest from slight experience, is more difficult by a factor of ten than from the CIA.” He signed it, “Thanks again.” Charles Nesson, a longtime professor at Harvard Law School, told me in a note that the stories were “extremely important…the first I know that have attempted to give a picture to us laymen of the financial machinations of a mogul who is still riding high. I’m struck by how unexplored the territory seems to be in terms of lawyers and business ethics. You’ve done a great job.” Galbraith and Nesson apparently understood that the price of delving into a major corporation would be cautious editing and excessive worry about retribution—the factors that kept our series from being more colorful or lively to read. Bill Kovach, my former colleague in Washington who became the bureau chief, would later tell Bob Thomson of The Washington Post, who wrote a long profile of me in 1991, that the issue was that I and Jeff were writing about private power, as opposed to government issues. The reality was, Kovach added, that had my story been about a public institution, it “would have been in the paper the first time he wrote it, the first way he wrote it.”
The experience was frustrating and enervating. Writing about corporate America had sapped my energy, disappointed the editors, and unnerved me. There would be no check on
corporate America, I feared: Greed had won out. The ugly fight with Gulf and Western had rattled the publisher and the editors to the point that the editors who ran the business pages had been allowed to vitiate and undercut the good work Jeff and I had done. I could not but wonder if the editors there had been told about Bluhdorn’s personal connection to Punch. In any case, it was clear to me and Jeff that the courage the Times had shown in confronting the wrath of a president and an attorney general in the crisis over the Pentagon Papers in 1971 was nowhere to be seen when confronted by a gaggle of corporate con men who were struggling for their existence in the face of a major SEC investigation about which Gerth and I knew far more than we were allowed to write. There was no way the frightened, arrogant, and mouthy men who ran Gulf and Western would dare bring a lawsuit against the Times; they knew Jeff and I had penetrated deeply into their wrongdoing, and the discovery that would be allowed in a lawsuit would be extremely damaging.
After that experience, I was ready to leave New York. My wife had agreed to finish much of her last year in medical school at Georgetown University, and we would be returning to Washington.
I spent my last months in New York as an overpaid beat reporter, traveling back and forth to Washington to write about the Carter administration’s seemingly endless foreign policy debacles. I managed to do a good turn for Jeff Gerth, which shouldn’t have required my intervention. I had been lobbying the Times to hire Jeff as a full-time staffer since the Korshak series, with no response. No one said no, and no one said yes. Jeff told me late in the summer that he had been contacted by a senior editor of The Washington Post and asked to come in for an interview. When I heard that, I exaggerated a bit and told Arthur Gelb how wonderful it was that Gerth had received a terrific job offer from the Post. The suddenly desirable Gerth was immediately offered a job on the Times and went on to spend thirty years making whoopee in Washington.
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