The Billionaire Who Wasn't (15 page)

“Saipan had no tourism and didn't even have a hotel,” recalled Alan Parker. “Chuck came up with the idea that this has to be a good place for tourism, but all that existed from the war was this runway, old and long and overgrown. We went to the government authority and said, ‘We will finance the building of an airport, the redoing of the runway in return for a twenty-year concession on the duty free in Saipan.'” “Then we did the best tax deal in the world,” said Pilaro. “We made Saipan the biggest tax haven in the United States, waving the flag. We had legislation enacted that exempted Saipan-sourced income from being taxed. We built the whole thing. It was a gold mine. No tax.”

DFS paid $5 million toward construction of the terminal, and when the civilian airport opened in 1976, DFS operated everything—the duty-free stores, the gift shops, the cafés, and eventually four hotel shops and a downtown store. Among themselves, DFS people called the airport runway the Pilaro Runway because of his role in building it. Soon, 100,000 visitors a year were coming to the island, almost all of them from Japan. The big hotel chains came to Saipan and the number of Japanese tourists increased again. “It was a wonderful jewel of a business. There wasn't anything to do but go to the beach and our shops,” said Pilaro.

It was for quite a long time cheaper to fly from Tokyo to Guam or Saipan, play golf for the weekend, purchase $200 or $300 worth of goods, and fly back, than to pay for one round of golf in Japan.

In this era of rapid expansion, DFS was also able to secure the first duty-free concessions at Toronto airport in Canada and at San Francisco and Oakland airports in California, and open downtown shops in San Francisco and Los Angeles for overseas travelers. It became a roaring capitalistic venture at a time when Wall Street was in retreat. From 1968 to 1974, the average stock on Wall Street fell 70 percent. In the same period, DFS cash dividends were rising by several hundred percent a year. By 1977, the annual dividend was $34 million. Feeney and Miller each took $12 million, Parker almost $6 million, and Tony Pilaro almost $1 million. It was all in cash. They were becoming seriously rich.

CHAPTER 10

How Much Is Rich?

After four years operating out of Hong Kong, Feeney had sufficient financial reserves to start more new business ventures outside of DFS. He told his partners that he was stepping down from day-to-day management of the company. At a board meeting in 1971, he suggested that Tony Pilaro should take over as chief executive. Feeney would still be involved as an owner in seeking new locations, developing overall strategy, and jointly deciding on bids to renew concessions.

Feeney had had enough of the artificial expatriate life in Hong Kong. He and Danielle returned to France, mainly so that their children could attend French schools. They now had five, the fifth, Patrick, born in November 1971. They first went to Paris but moved to the French Riviera, where Feeney bought a magnificent villa in Saint-Jean-Cap-Ferrat, a favorite holiday destination for wealthy Europeans on the Mediterranean coast. It overlooked the beach at Villefranche where Chuck and Danielle had met fifteen years before. The couple moved there in May 1972. The house was in poor shape and the garden was overgrown. But the family loved it. Feeney insisted on keeping the old rattan chairs and velvet-covered furniture. Danielle found him reluctant to invest in décor. It was as if he were torn between the enjoyment of what wealth could bring and his discomfort with the elegant lifestyle. Buying the house was an investment for the cash he was accumulating, but Feeney was showing increasing signs of discomfort with the trappings of wealth, and with the sense of entitlement to the expensive things that went with it.

He was even beginning to have doubts about his right to have so much money. When asked many years later if he was rich at this point in his life, he replied: “How much is rich? Beyond all expectations. Beyond all deserving, so to speak. I just reached the conclusion with myself that money, buying boats and all the trimmings, didn't appeal to me.” He consciously cultivated a frugal lifestyle, wearing a cheap Timex watch and buying a secondhand Volvo. He insisted that he and his family fly economy class, even on long transoceanic flights, as it was better value for money. He reluctantly attended a few black-tie dinners in Paris and Monte Carlo but when a picture of him and Danielle appeared in
Paris Match,
he was furious. He stopped attending such events and broke off all connection with the wealthy social group the couple had started to become part of in the south of France.

Feeney showed his dislike for ostentation by how he dressed. Thomas Harville, a former member of the management consultants Cresap, Mc-Cormick and Paget in Manhattan who was hired by DFS to help evaluate Japanese tourism trends, recalled going to Honolulu to meet top DFS executives. “In walked this man dressed in a faded aloha shirt, white dungarees, and shoes with no socks. Of course, this was Chuck Feeney.”

He had another reason for keeping a low profile as a successful businessman. The kidnapping of children for ransom was rife in Italy in the 1970s, at a time when the Feeneys were living in France just thirty miles from the Italian frontier. Between 1970 and 1982, criminal and political gangs in Italy carried out 512 kidnappings. He feared that one of his children could end up like Christina Mazzotti, an eighteen-year-old Italian girl who was killed by abductors despite payment of a $2-million ransom in 1975. He would not let his daughters visit Italy, and they didn't until they were adults. The kidnap gangs sometimes crossed the border: In 1977, a five-year-old Italian girl was seized on her way to school in Geneva and released after a $2-million ransom was paid.

Feeney's concern for the safety of his children was heightened when his daughter Caroleen befriended Isabella Rizzoli, the daughter of Angelo Rizzoli, the Italian moviemaker and publisher of the Milan newspaper
Corriere della Sera,
whose home was a five-minute drive away. They both attended the same school, and Caroleen started bringing Isabella to their home. When Caroleen visited Isabella's house, she saw guards with Uzi submachine guns patrolling the grounds. Once, when the two girls went to an amusement park together, Isabella's father provided armor-plated cars
and six armed bodyguards. “Her father was a very high-profile target and I was always nervous,” said Feeney. “They used to flaunt their money and drive up to school in a huge car.” He refused to let Caroleen accompany her friend to Italy “because they would have got two for one.” Isabella Rizzoli loved the Feeney family so much that when the Feeneys moved to the United States some years later, she begged her parents to be allowed to go with them. They sent her instead to a school for the rich in Switzerland. There she got hooked on drugs, and in 1987, a month after her twenty-third birthday, she committed suicide. “This beautiful girl, Caroleen's friend, got drugged up and threw herself off a building in Monaco and killed herself,” said Feeney. Her short life illustrated dramatically that money did not guarantee happiness.

Feeney made a practice of welcoming at the house lost and unhappy people like Isabella, especially children from broken homes. He gave teenagers jobs or sent them to college and became their mentor. It was something his own kids had to learn to cope with. In his teenage years in New Jersey, Feeney was noted for bringing friends home to be looked after. A boy from a single-parent family came for one night and stayed the summer, recalled his sister Arlene.

People close to Feeney saw a change in his personality during this period of his life and noted how, as he approached middle age, he worried more about the state of the world. The early days of business had been a time of optimism for Americans and Feeney had discovered a new, vibrant world where everything seemed possible. Following the Great Depression and World War II, the world was enjoying an unprecedented period of stability and prosperity. Then came the assassination of President John F. Kennedy in 1963, the war in Vietnam, and anti-American protests around the world. “He and so many of his friends were able to pull themselves up by their bootstraps,” reflected his son, Patrick. “I think with that momentum he was expecting the world to be a better place. As he grew older that hasn't happened. His disappointment comes from having so much hope when he was younger.”

Paradoxically, while Feeney became more frugal, he was pushing himself ever harder to build up the global duty-free business that was making him even richer. To Danielle, he seemed more driven, more involved in his professional interests. He read business books and biographies of successful businessmen. He was constantly traveling, to London, New York, Hawaii,
Hong Kong, Tokyo, Guam, Saipan. Associates such as Tom Harville remembered Feeney in those days as “a driven man, constantly searching for new opportunities, constantly traveling and constantly studying, rarely traveling with luggage, preferring to leave a change of clothes at each of his many travel ports.”

But for his children these were the happiest times. They loved their school on the French Riviera. They remembered that when they went to “snow school” up in the mountains, their father would drive for three hours with projector and screen in the car to show their class the latest movies, for instance,
The Sound of Music
and
Born Free
. Feeney brought his elderly father out to Saint-Jean-Cap-Ferrat and organized trips to New Jersey for the family. There were frequent guests, and always, a sense of fun.

Feeney established a personal business office in Monaco, a short drive along the Côte d'Azur, where he could do his dictation and manage his growing business interests. He recruited a tax specialist, Jack Moore, and employed Helga Flaiz, who had been with DFS since the Cars International days, as his secretary.

Feeney was drawn back to an executive role in DFS by a management crisis in 1975. Tony Pilaro, having assumed the role of chairman, had brought in professional management, hiring Ed Attebury, an abrasive American retailer from Hawaii's Liberty House, as the first outside executive, to help grow the business. Attebury brought in his own people and stripped the division presidents, Joe Lyons in Hawaii, Dick Wade in Guam, and John Monteiro in Hong Kong, of much of their autonomy. He centralized warehousing at Geneva and called it Central Buying Office Switzerland (CBOS). It was a nightmare, recalled Monteiro. “The result was that Hawaiian shirts were ending up in Hong Kong, and Hong Kong specialty gifts were going to Waikiki.” Worse, he abused people who had sweated to build the company. “He would belittle us and berate us,” said Monteiro. “Every time I was called to his office, it was a screaming session.” With the regional presidents all threatening to quit, Feeney came to the conclusion that Attebury had to go. Bob Miller and Alan Parker agreed. Feeney told Pilaro, “Fire him!” There was always friction between the corporate head office and where the cash register rang, reflected Pilaro, but Attebury failed to understand the nature of the business and had to go.

Feeney took the chair at a DFS board meeting in the CBOS office in Geneva, at which he resumed control of the company as chief executive officer.
Monteiro remembered that Feeney pulled no punches. With Attebury and his team gone, the owners hired an experienced retailer from Boston, Bob Futoran, to manage the company professionally, and Feeney stayed on for some months to make sure the new man understood the culture of DFS. Under Futoran's management, CBOS was wound down, the regional presidents became barons again, and DFS continued to expand.

As the flow of cash into the owners' pockets increased, some DFS executives thought they were being too greedy. Thomas Harville, who had been promoted to DFS vice president for planning and administration, quit in disgust in June 1977. He sent the owners a letter that made clear his problems with the ethics of what they were doing. He left, he explained diplomatically many years later, because of his “philosophical distaste for devoting the prime years of my business career to the sole benefit of four shareholders who seemed to be accumulating a quantum amount of wealth beyond their needs.”

With the company under Futoran's management, Feeney stepped down again from active involvement and distanced himself further from his co-owners. Without a majority shareholding, he could never guarantee that he would get his way on policy matters, and friends thought that this troubled him. In late 1977, he stopped attending board meetings, nominating George Parker, a friend and a U.S. Navy comrade of Jeff Mahlstedt, to represent him instead on the DFS board. In future he would only see his partners when necessary, such as when they gathered to decide on the renewable concession bids on which the company's survival depended. On November 24, 1977, he wrote to Jean-Paul Camus, who had taken over the cognac business from his father, Michel Camus, that he was stepping back “to devote more time to my fast-growing family.”

Feeney was clearly frustrated that he did not control the destiny of the company he had co-founded and built up. “I frankly wanted out, for one because I said if I am going to do things, I am not going to do them as I did them before where I do all the work, and people pick up their share of the action,” he said. He regarded Tony as “a hardworking guy” who did his share, and Alan as “a good accountant.” But the old problems with Bob festered.

“In the early days they had a good partnership,” recalled Farid Khan, a Hong Kong-born Pakistani who bought opals in Mexico and Australia for DFS, often at great personal risk from thieves, and who had become a family friend of the Feeneys. “They got a printing machine to print money.
Chuck was the spearhead, the mastermind, and Bob the tough driver. But Feeney became angry when the other owners tried to control him more. He was the founding member, and these little guys were ganging up on him. Chuck alone could not sign approval of the contracts. He drifted away. He could not take defeat any more.”