Threshold Resistance (14 page)

By the early 1990s, then, my private businesses and private life had been transformed. I served as chairman of two large publicly held companies (Sotheby's and Taubman Centers) was involved in many civic organizations, and had grown accustomed to seeing my name in print a great deal, although I was never totally comfortable with that. My net worth and the contents of my art collection were a matter of continual public speculation. Sure, I enjoyed the accolades and attention and the opportunities it presented. But I was to learn with Sotheby's that being a public figure involved with a highly public company could be a double-edged sword.

O
n Tuesday, March 10, 1994, we celebrated the 250th anniversary of the founding of Sotheby's. The company's New Bond Street galleries never looked more festive as members of London society arrived to honor the venerable auction house on its birthday.

As chairman and majority owner of Sotheby's, I was called upon to deliver the toast to Sotheby's. The pomp and circumstance surrounding the dinner, described in a detailed agenda, let me know I was a long way from A&W. We greeted guests for a champagne reception in a receiving line. After a fanfare of trumpets, a single bagpiper led us up the stairs and through the building for an elegant dinner. At the end of dinner, a line of bagpipers marched slowly among the tables and assembled behind me. As the toastmaster cried out, “The Queen,” an orchestra played the British national anthem. After the pipers marched out, it was my turn to speak.

Of the 250 years Sotheby's had been in business, I had been involved for just a bit more than a decade. But it had been a period of significant change, growth, and success. While the company's financial and market position had never been stronger, there were still some doubters who feared that American control would forever alter the character of this very British institution. This was my opportunity to put those fears to rest.

While I knew most of the people in the room, I had some reason to be concerned. I had not always done well with audiences beyond the borders of the United States. In 1987, while on the board of directors of the Chase Manhattan Bank, I was invited to address the leaders of the business community in Brazil. At the time, Brazil was attempting to get out from under billions of dollars of international debt (they were no longer paying principal or interest). The nation owed about $8 billion to a bank consortium that included Chase. I'm not sure why, but the officers of the bank thought I was just the guy to go down to Brasilia to encourage this struggling nation—rich in resources but short on political and economic stability—to make good on their obligations.

I was as diplomatic as I could be. But I did suggest that the nation's leaders consider “resuming productive relations with the international community, including negotiating an arrangement with the IMF and reconsidering the interest moratorium.” I don't speak Portuguese. But I do know when I'm being chewed out in any language. Following what I thought was enthusiastic applause from the attendees, my host, Brazil's minister of finance, delivered an animated, heated rebuttal. The newspapers came to my defense the next day, but I never got the key to the city.

Thankfully, my duties and message before the assembled lords and ladies at Sotheby's were quite different than my fool's errand to Brazil. The program was entirely in English, we were paying our bills, and I was among friends. Promptly at 10:05 p.m. following an introduction by the toastmaster, I began my toast with the proper salutation: “Your Royal Highnesses, Excellencies, my Lords, Ladies, and Gentlemen.” When there are several royals in the audience—and there were many this evening—one is permitted to address them in the generic plural. “On behalf of the board of directors, I would like to thank you for honoring us with your presence on this special evening.”

I continued: “Two hundred and fifty years ago tomorrow, March
11, 1744, in London, Sotheby's held its first auction. Contrary to published reports, I was not present.” (Polite laughter from the assembled lords and ladies.) “But historians tell us that a library of 475 books was sold that day by our founder, Samuel Baker. His nephew, John Sotheby, inherited the firm soon after.”

I was nervous but holding my own. “Tonight we celebrate our first 250 years of business. And it is appropriate that we do so here in London, this great city that represents so much of our past accomplishments and so much of our future promise. As an American, I am indeed humbled by the fact that well before there was a United States of America, there was a Sotheby's. In fact, when I learned that my responsibility tonight would be the toast to Sotheby's, a story came to mind that is told about Sir Winston Churchill.”

I don't think there is a historic figure I admire more than Winston Churchill, and I incorporate his quotes in my public speaking whenever it makes sense. I hoped this anecdote would effectively communicate the positive aspects of Sotheby's Anglo-American personality.

“In 1942, while reviewing a joint command of British and American troops in North Africa, Sir Winston was warned that the two cultures often clashed most dramatically in, of all places, the officers' mess. The Americans, who religiously drank their whiskey highballs before dinner, forbade alcohol during the meal. The British, on the other hand, allowed no drinking before dinner, but always served claret and burgundy at the table.”

I continued: “Faced with the task of toasting the officers that evening, Churchill arrived early and announced, ‘Before dinner we Brits will have to defer to the American rules. But at the table, you Yanks must abide by the British regulations.'” (Enthusiastic laughter and applause from the assembled lords and ladies.) “Churchill raised his glass and added, ‘I hope this arrangement for the fraternity of Anglo-American relationships will be accepted in good
spirits
by all!'”

The mood in the room changed from rigid formality to genuine
celebration. I paid tribute to the memory our former chairman, David Westmorland, and acknowledged the contributions of senior executives: Michael Ainslie, who was just about to step down as chief executive officer; Henry Wyndham, chairman in the U.K.; and Diana Brooks, who was to replace Michael as CEO of Sotheby's in a matter of weeks.

I lifted my glass and concluded with the toast: “We look forward with optimism to our next 250 years. The opportunities are great, as is our commitment. In support of our efforts, I ask you to join me in a toast to Sotheby's. Happy birthday, Sotheby's!”

The room erupted with the words, “Happy birthday, Sotheby's!” What a great evening. Our horizons couldn't have been brighter. At least it seemed that way as the trumpets sounded, the Scots Guards marched into place, and the handsome guests celebrated with champagne in the Colonnade Gallery.

In reality, the company was heading into one of the most difficult and damaging periods in its history. The years ahead were not going to be rosy for me, either. A storm was gathering that would ultimately cripple Sotheby's, rock the art market, and send me to federal prison.

About a year earlier, in February 1993, Michael Ainslie had come to me with a strange proposal. He wanted to buy me out of Sotheby's. He explained that it had become intolerable for him to work with me. Michael felt that I rode him as if he were a junior executive and gave him little real authority to run the organization. Oh, and he had a tentative agreement with First Boston to assist with a management buyout, using my stock as collateral. That's right, Michael was proposing that I allow him to buy Sotheby's using my stock.

I was more surprised than hurt by Michael's proposal. It was beyond naïve of him to think that I would go along with such a deal. But the deterioration of our working relationship did bother me. I liked and trusted Michael. He had been good for Sotheby's, and I
respected his leadership abilities. I never kept office space at Sotheby's for myself, and I thought it had been clear to investors, customers, and employees that Michael was running the show. With so many other businesses to look after, I wanted it that way. He was the public voice and face of Sotheby's, and with our public offering, Michael had become a very wealthy man. He deserved every penny.

Many of my closest friends and advisers agreed with Michael that I had been rough on him. I had noticeably changed the way I dealt with him over the previous year or so. I had become impatient with what I interpreted as a deteriorating work ethic. He was constantly traveling, often absent for weeks at a time. Much like Ed Hoffman at Woodies, who had perfected his golf stroke while in my employ, Michael's tennis game was improving by leaps and bounds as he found his way onto the courts of Manhattan, Westchester, and Greenwich at every opportunity.

What I didn't know at the time was that Dede Brooks, who was always nipping at Michael's heels, had put in place an elaborate office intelligence network to alert her to every Ainslie absence. The minute Michael departed from 1334 York Avenue, Dede was informed. After an hour or so—just long enough to let Michael get into his tennis shoes and get onto the court—Dede would call me with an issue requiring immediate attention. I would always ask to get Michael on the line. Of course, Michael was never available. That would set me off and give Dede the chance to be indispensable.

When I informed Michael that I was not interested in facilitating (that is, funding) his “management buyout,” he made it clear that he would have to leave the company. When I asked him who would be best to take his place he recommended Dede Brooks without hesitation. She certainly had the talent and drive, although Michael was concerned she might need a bit more maturity and would have to gain respect with colleagues outside the United States.

When I discussed the situation with Jeffrey Miro, my attorney and
Sotheby's board member, he offered an observation I should have taken to heart. “Al,” he said, “Dede is a high-risk executive.” Max Fisher, who was also on the board, agreed with Jeffrey's prescient warning. No one questioned her smarts, guile, and dedication. But there was something about her character that troubled people. I have to admit that I didn't share or take heed of their concern.

For the most part I had been blessed with honest, ethical partners and associates. In my real estate business, Richard Kughn, followed by Robert Larson, had managed the day-to-day operations of the Taubman Company with impeccable moral standards. Dick and Bob were recognized throughout a rough-and-tumble industry as shining examples of personal integrity and professional competence. I also could trust Bernard Winograd, president of the Taubman Investment Company (the entity whose assets included A&W, Woodward & Lothrop, and Sotheby's), to always take the high road.

In the late 1960s, when we were completing a deal to bring Prudential into the partnership developing Woodland Mall in Grand Rapids, Michigan, I noticed that the good folks at Pru had overpaid us by $400,000. We pointed out the mistake, and it took us several phone calls and meetings to get Pru to understand the error and take their check back. But what's right is right, and we always conducted our business that way.

In 1990, I addressed the Greater Detroit Chamber of Commerce annual conference on Michigan's beautiful Mackinac Island. A focus of the session was ethics. To kick off my keynote remarks with some humor, I told this quick (made-up) story highlighting my relationship with Dick Kughn, who served on the chamber's board of directors:

The only reason I got away with this (it got a big laugh even at eight in the morning) was the fact that everyone in the audience knew Dick and me to be ethical people. My partners—people like Max Fisher, Les Wexner, Henry Ford II, and Milton Petrie—also were pillars of respectability in their industries and communities. I guess I had developed a blind spot when it came to Dede that even my closest advisers couldn't break through. If the people around you have the courage and comfort level to express honest opinions, you should always listen. And I kick myself whenever I think back on the opportunity I had to avoid disaster. For in this case, trusting the wrong person would turn out to be disastrous—not financially, but personally. My reputation, my family's good name, the company I had spent a lifetime building, my freedom—all would be placed in jeopardy because of my misplaced trust in a key executive.

Dede, who had been heading U.S. operations since 1987, was put in charge of worldwide auction operations in April 1993. That assignment would give her the opportunity to demonstrate her abilities with the intention of giving her Michael's job upon his departure a year later. She did in fact assume the chief executive officer's position—right on schedule—about a month after our 250th anniversary celebration.

Christie's, meanwhile, was going through its own management transition. Christopher Davidge had been promoted to chief executive officer, and Lord Carrington, Christie's highly respected chairman, was to step down in May 1993. Replacing him was Sir Anthony Tennant, who had been a very successful chairman and chief executive at Guiness. Shortly after the announcement of Sir Anthony's Christie's appointment, I met him by chance at a reception at the Royal Academy of Art in London, where we both served on committees. He introduced himself, I wished him the best of luck in his new role, and he asked if I would mind if he called me in the coming weeks to see if we could get together to discuss the auction business. I said sure, and we parted company.

A few weeks later Sir Anthony called my New York office to arrange a meeting. He asked my assistant when I would be in London again, and a breakfast meeting in my London apartment was scheduled for February 3 at 8:30 a.m. Given that Sir Anthony had essentially no experience in the world of art or auctioneering, I was not surprised that he would want to get my perspective on the industry. He was not due to join Christie's for another three months, so I agreed to the meeting with little hesitation. Executives of Sotheby's and Christie's had met together numerous times over the years for very legitimate reasons. For example, every year the two houses coordinate auction schedules in New York and London for the convenience of customers. During Asia Week in New York, Sotheby's and Christie's hold their sales of Asian art in conjunction with art shows, conferences, and cultural exchanges. Committees are formed with representatives from both companies to assure the least possible overlap.