The Billionaire Who Wasn't (20 page)

The difficulty in making a precise calculation arose from the fact that DFS was a private multinational and the value of Feeney's 38.75 percent shareholding was “in the eye of the beholder,” as he put it. On the basis of an offer for the company that Tony Pilaro had made that year to buy out the other owners for $610 million (in the end he couldn't raise the cash), Feeney's equity was worth some $236 million. But if DFS had been floated on the stock market, its value could have been much higher. On top of that, General Atlantic's fast-growing holdings and investments were by this stage worth several hundred million dollars, perhaps half a billion or more.

Among themselves, Feeney and Dale referred to the foundation's assets as being divided into “church” and “state,” with “church” signifying liquid assets for making grants and “state” being the businesses and the DFS shareholding. With the transfer, 90 percent of the assets were in “state”—an unheard of proportion among modern charitable foundations, which rarely control any businesses at all.

There was no celebratory drink or meal after the signing. Everyone rushed to catch their evening flights out of Nassau, Chuck and Danielle heading to New York, Harvey Dale back to West Palm Beach, Frank Mutch to Bermuda.

As far as Danielle was concerned, it was just another of her husband's business transactions, though one of great importance. She always did what her husband decided in such matters and she knew the assets weren't hers, though they had been in her name. Harvey Dale was her lawyer, too, and they were both friendly with Dale's family. She felt it was not for her to refuse, and she did not want it to become an issue in their marriage. She did not feel deprived in any way, though the $40 million was a fraction of the actual value of the assets.

But she would not look back on it in time as a happy event. As the 1980s progressed, friends noted that she and Chuck were living increasingly separate lives. Feeney was always on the road, now more than ever, as his business and philanthropic interests consumed almost all his time. Sometime afterward, she began to feel resentful and confused about the future. She felt something very bad and serious had happened in her life. She began to worry about the children being disinherited. Her relationship with Harvey Dale became very strained. She believed that the lawyer had too great an influence on her husband, and she made her feelings known to him in verbal exchanges in no uncertain terms on a number of occasions when they met.

The Feeney children were not sure what to make of their father's relationship with the New York lawyer. They wondered among themselves about the extent of Harvey Dale's influence, whether he had manipulated their father in any way, or if it was a case of Maimonides influencing Dale and Dale influencing their father. But they had little doubt that the idea of giving while living had germinated in their father's mind for a long time.

Feeney readily agreed that Harvey Dale was the most influential person in his life. “Yes, absolutely,” he said. “He is impeccably honest and is also a good person as a human being. He knew my motivations. The idea never changed in my mind—use your wealth to help people, use your wealth to create institutions to help people. I think he has the same pragmatic view that I have.”

“Harvey was very influential,” said Frank Mutch. “He was the one behind it all, really. He espoused Chuck's ideas. The unique feature was that Chuck never made any arrangement for himself to be provided for.” Feeney's legal counsel, Paul Hannon, felt that Dale not only interpreted his wishes but “to some extent he created Chuck's wishes.”

Diane Feeney, the youngest daughter, recalled that sometime after 1984, Harvey Dale explained the implications of the creation of the foundation to
family members. “I remember Harvey coming to see every single one of us,” she said. “I was in Cornell at the time. He dragged me out of a football game, so you knew it had to be pretty major, sat me down and explained that Dad wanted to give all his money away to charity, this was in the process of being implemented, and he wanted to tell us about it.”

The cleverly constructed setup in Bermuda was flawed, however, as they discovered to their acute dismay a year later. Under Bermuda law, the Articles of the Foundation, lodged with the company registrar on Parliament Street, was a public document. Anybody could inspect it and ascertain that the members were Chuck Feeney, Danielle Feeney, Harvey Dale, Frank Mutch, and Cummings Zuill. There was no evidence that anyone undesirable—for example, a financial journalist—had inspected the register, but at any time Feeney could be “outed” as a member of the board of a secret philanthropy. There was only one solution—to have the law changed.

Happily, the Bermuda attorney general was a former partner of Frank Mutch and understanding of their dilemma. The Atlantic Foundation lawyers drew up an amending act, inserting a new clause, 17A, into the Atlantic Foundation Company Act, 1982. This stated that only the attorney general, or a person named by the Charity Commissioners or by the Supreme Court, could inspect the register of Atlantic Foundation. Otherwise, it was to be kept secret from the public.

“We put up a rationale,” said Mutch. “We said the members or the board didn't want to receive solicitations; we didn't want to be bothered with phone calls. We were a private foundation, but were not trying to hide anything.” The amending act went through before anyone noticed what was going on. “We closed the door before reporters got the names,” he said.

It was a coup against freedom of information in Bermuda. The
Royal Gazette,
Bermuda's daily newspaper, realizing what had happened, protested in an article about restricting the freedom of the press. It was too late. But for the first time, the name Atlantic Foundation came out in a newspaper report.

In 1986, Feeney established a second foundation in Bermuda called the Atlantic Trust to handle U.S. giving. This was made necessary by new U.S. federal tax legislation that prompted the four DFS owners to restructure the company into two groups: the U.S. and Guam operations and the non-U.S. and Pacific Rim operations. DFS holdings in the United States and Guam
went into the Atlantic Trust and those in the non-U.S. and Pacific Rim into the Atlantic Foundation.

No one in the world of philanthropy in the United States or elsewhere was aware that a major new player had come on the scene. Dale, who assumed the role of president and chief executive of the Atlantic Foundation, required everyone involved in setting up the foundation to sign a highly lawyered confidentiality agreement, drawn up by the Manhattan law firm Cadwalader, Wickersham & Taft, to protect Feeney's privacy. Strict rules were formulated for the conduct of the foundation. No solicitations would be entertained. Gifts would be made anonymously, and those who received them would not be told where they came from. The recipients, too, would have to sign confidentiality agreements. If they found out anything about the Atlantic Foundation or Chuck Feeney and made it public, the money would stop. The Atlantic Foundation would be the biggest secret foundation of its size in the world.

From the start, Chuck Feeney was adamant that he did not want recognition for his giving. There would be no plaques or names on buildings he funded, no black-tie “thank-you” dinners, no honorary degrees. People should not know that he was behind the foundation. Beneficiaries should not even be told its name.

While this stemmed from the absence of a demanding ego, being secretive had become almost second nature to Feeney. Practically everything he undertook in his life depended on keeping confidences and maintaining a low profile. His family in New Jersey believe that it started with his intelligence work in Japan during the Korean War, which had been so sensitive he was not allowed to talk about it. In Europe, he had operated out of Lichtenstein like a character in a spy movie, always one step ahead of the immigration police. When selling booze to the fleet in Europe, he and Bob Miller had to rely on classified information on fleet movements, and their car sales in the Pacific depended on no one else knowing about it. Similarly, in the United States his monopoly on the five-bottle import scheme only flourished until competitors found out and muscled in. The whole edifice of DFS was based on secrecy. If a rival company learned how much DFS planned to bid for a major concession, it could outbid them and force them out of business. The key to getting some of the most profitable concessions was not letting airport authorities know just how much money they were making. As a private company, DFS did not have to declare
its profits to anyone. Top managers in DFS had to sign strict confidentiality pledges about financial returns, and there was a written agreement among the four DFS owners that they would give only one response to press queries: “I would like to answer this question but I am bound not to.” John Monteiro recalled Feeney insisting at meetings, “Don't go out and blow your horns about how big and successful we are.” And of course, when living in France, he was always apprehensive that his children might be kidnapped for ransom by some gang that thought, “Here is another guy who has got a lot of money.”

Feeney had been dismayed when Bob and Chantal Miller threw a lavish three-day party in Hong Kong's Repulse Bay in 1978, with a Caribbean steel band, a South American rock group, and a disc jockey flown in from Paris, during which Chantal descended among her guests in a hot-air balloon dressed as an Inca princess. It was reported in the social columns, along with the Millers' announcement that they gave the equivalent cost to charity.

“I always said, and I was preaching it, the less you speak and the less ostentatious you are, the fewer people who will be angry and jealous,” said Harvey Dale. “Bob Miller did not keep to that style, but the other partners really did. From Feeney's point of view Bob was increasingly ostentatious, a shogun, a big man in Hong Kong, all of which was personally distasteful to him.”

Tony Pilaro was less troubled by Bob Miller's high-society profile. “The fact that Miller drives a Rolls Royce doesn't mean people will make assumptions about the business model. Everyone, the travel agencies, the people who sold us Chanel, the airlines, they all knew we must be making a lot of money.”

The perception that duty-free shopping may not always be such a great bargain for shoppers was also something they did not want publicized but which was gaining ground. In March 1985, an article in the
Far Eastern Economic Review
warned travelers to be careful about the duty-free shops in Hong Kong, “which charge at least ten percent more than the thousands of shops in this duty free city.”

Ironically, after 1984, when he gave the vast bulk of his fortune away, everyone not in the know continued to think Chuck Feeney “was another guy who has got a lot of money.” By keeping what he did a secret, he allowed people to assume he was still very rich. Even his DFS partners did not know
that Feeney or his wife personally no longer owned 38.75 percent of the company. He still turned up as co-owner of DFS when concession bids had to be decided, and he continued to act as chairman and chief executive of General Atlantic Group Ltd., drawing a reduced salary of $200,000 a year. His philanthropic foundation owned all the business assets in GAGL, but outwardly nothing seemed to have changed.

Feeney, however, would sometimes hint at the real state of affairs. “He spent about two and a half hours explaining to me that he did not own what he owned, as it were, that he was its custodian and that he saw himself as being lucky enough to have made money but it was not his money, he was just essentially recycling it,” recalled Adrian Bellamy, who succeeded Bob Futoran as DFS chief executive in 1983. “I don't know that I ever knew he had irrevocably given it away.”

Paul Hannon recalled that after he was hired as general counsel for General Atlantic Group Ltd., Feeney gave him a copy of “Wealth,” and Harvey Dale took him aside to explain he would be working for a charity. “Chuck has a love-hate relationship with money,” Dale told him. “He likes to make it because it is his scorecard, but he doesn't like to keep it.” Hannon realized that Feeney wanted him to know he was working for something more important than making him rich. The Yale-educated lawyer was surprised to discover that his annual salary would be greater than Feeney's. “That made it difficult for me. If the boss is making a lot less than you, and you ask him for a raise, he says, ‘OK, but you're taking it from the starving children in Africa!'”

By the mid-1980s, General Atlantic Group was getting too big to stay under the radar of financial institutions and the media. Aside from DFS dividends, General Atlantic Group's annual income in 1984 was $30 million.

On May 23, 1985, Hannon presented Chuck with a confidential report, “The Benefits and Burdens of Secrecy,” in which he warned that a great deal of information had become a matter of public record. If domestically owned, the U.S. Internal Revenue Service would have taken half the $30 million and if the IRS focused on General Atlantic and prevailed in such a determination, “the cost would be horrendous and could easily reach into hundreds of millions . . . hence strenuous efforts should be made to conceal from the IRS by all legal means the offshore corporate structure, the identity of the owners and the extent of the wealth they control.”

It was difficult, Hannon warned, to deal with banks, partners, and employees when the company was presented as a “pool of capital of mysterious
origin,” conjuring up “images of oil sheiks, mafiosi and others who need to conceal their identity.” The banks they dealt with had agreed to keep separate secret files on transactions with General Atlantic, but Hannon guessed about 200 members of the financial community knew something about the undisclosed wealth, and that someone called Feeney was behind it. Atlantic's part ownerships of a number of U.S. companies were filed in those companies' Securities and Exchange Commission (SEC) returns. Acquisitions in the United States of a certain size had to be filed with the Justice Department, and it was already a matter of public record from concession bids in Hawaii and Alaska that an entity called General Atlantic held 38.75 percent of DFS. He concluded: “I believe it virtually inevitable that within the next few years, if we continue to invest as we have, we will be the subject of a big investigation by
Forbes,
the
Wall Street Journal,
or another member of the financial press. We are just too big and interesting to be ignored.”