Thursday, July 19, 2007
Flashback: The Unfriendly Attempt to Take Over Quaker Brings ONeill to the Rescue.
[More than 50 years of politics written for my kids and grandchildren].
The 1980s was a decade of unprecedented hostile takeovers. For years there had been rumors that The Quaker Oats Company would be taken over. Free market purists would welcome that as a healthy sign of a rambunctious free marketbut for those of us who regarded the company as a surrogate parent, we were less than enthusiastic. And especially so when it appeared that a lustful attempt to grab our fair young Quaker maiden came from the Brascan people in Canada a reputedly unsavory offshoot of the Seagrams people in New York. The Brascan people were extraordinarily antsy of publicity because one of the founding members of the family had been involved, purportedly, in smuggling guns into South Africa as part of some venture or other. Their shyness encouraged me.
Accordingly, I hired a former Director of the CIA, William Colby, to head up a research study privately on the company. He returned with a not too good bill of particulars. Whatever the difficulties were, Brascan was very shy, very timid about press attention. They wanted to grab Quaker by romancing the stockholders as soon as possible. Getting to know Colby was rewarding for me. His subsequent deathnot having anything to do with thiswas mysterious. His body was found in a drifting rowboat with his fishing tackle arranged meticulously. Death from a major heart attack, they said. But the rank and file of the CIA was infuriated at him for giving, too precipitously it said, the details on the family jewels. His heart was stopped all rightbut from natural causes? It has never been fully explained.
The more my superiors studied the situation he less sanguine they became. But what to do?
I decided that it would be interesting to at least try to rise above principle for a corporation that was resolutely free-market. The elements of fair play seemed to hold sway here. Canada had a foreign investment review board which would have to pass judgment on any attempt from a foreign countrys business to acquire a Canadian company. The U. S. had no such animal but, gaining permission from my leaders, I convened a small think-tank to draw up a philosophical rationale for legislation in this country which would apply the foreign investment review concept to our country. There was absolutely no possibility of such an animal being accepted by the free market-oriented Reagan administration, howeverbut that didnt bother me. I rationalized that if legislation could be introduced and hearings convened, news media accounts of such legislation and invitations extended to foreign companies would be a no-no for Brascan. But by no circumstances could it be regarded as a Quaker Oats bill. It would have to be a bill introduced by protectionist, largely Democratic sources with the media nonexistent in this country but trumpeted in Canada where it might dissuade a very shy Brascan from its takeover of us.
The private think tank was convened in the famous M & M club and involed an economics PH.D, Douglas Lamont, who headed the business department of Roosevelt University, a few lawyers andwho else? My old friend now not so warmly my friend but still accommodating Bill Geimer who worked for me at the Commerce Department, who worked to help devise the National Advertising Review Board (which still exists I am pleased to note by a recent story in the Wall Street Journal), who worked on the abortive wage-and-price control fiasco of President Nixon. Geimer was probably the most resourceful lawyer I had ever met and have ever met.
They sat down a group of free-market economists cum semi-protectionists and Geimer and wrote legislation that would install a foreign investment review board for the United States. When it was perfected, I took a copy to Washington, calling ahead to my one ace-in-the-hole, the Speaker of the House, Thomas P. (Tip) ONeill, the repository of a laudable TV documentary which we financed partially and the hugely disappointed prospective honoree of a gala event at Fords Theatre that was cancelled by a twittering executive at WGBH-TV who had frightened everybody out of their shoes and wits by alleging that he would blow the whistle on a nefarious scheme that was not nefarious at all. At the conclusion of that madcap escapade, ONeill had said: Tommy, Im so indebted to ya. Whatever you want within reason I will do. Okay.
Once more the huge walnut doors opened as I approached and walked through the sub-chambers, past rows of secretaries and eager, lean young lawyers and interns, into the sancto sanctorum where the Speaker dwelled. He was hugely glad to see me and had our scotch and a light evening dinner scheduled.
As I sat down, I recalled that when I had asked him why he chose Quaker as the signatory to his film, he said that because it would not do to have Exxon or Mobil Oil and added: Tommy, Quaker is why, its a piece of the American flag!
Thus I told him that his piece of the American flag would be shortly bought by Canadas Brascan because this country did not have what Canada had taken pains to havea foreign investment review board. He saw the point quicklythat if the Congress were to pass a board, Reagan would veto it. He added: See, Tommy? Your buddy down there and he jerked a thumb toward the White House.
I said, well, Tip, actually, Im not interested in seeing it pass because I am free market. But I am interested in having the bill introduced and get a hearing. Then Ill be able to see that the media in Canada attends the hearings and that just subtly not overdone, of course but subtly the name Brascan can be brought up by certain members of the committee.
He said, that we will assuredly do. But first, let me try something that may save all of us time. He called in his secretary and asked her what the schedule of events were for foreign embassy parties in Washington. All foreign embassies had cocktail parties of one sort or another and would be delighted to have the Speaker attend. The Speaker chose not to attend any of them because he was bored by foreign policy. She checked, came back with a list. It developed that the Canadian embassy had a regular series of seminars and cocktail partiesthe first cocktail party held to honor a visiting Englishman in a week.
He said, can this wait a week?
I said, no but Id appreciate your visiting the embassy while at the same time we introduce the bill. He agreed. He invited me back the next morning.
Then as I sat by his desk, he got Rep. John Scheuer (D-N.Y) on the phone and told him frankly to my horror what the plan was.
I want this legislation that I have here introduced by you, John and that it be referred to your subcommittee. This is something for me personally, you understand. I want you to take the lead in it. What? Youre free market. The hell with that. Okay, you promise? I want you to make a statement when this thing is introduced that its high time that the United States receives the same protection as the foreigners have for their companies. What the hell, if I wanted to buy Brascan I couldnt now, could I? Damn right I couldnt. What kind of goddamn sense is that? I think its a real issue for our labor boys. Dingell Im thinking of. And others. Send a guy over here to pick up this legislation. My man, a personal friend, Mr. Roeser will be in touch with you.
I knew then that we had to move the think tank to Washingtonso we did. We set up camp in the Madison Hotel (where else?) and a team of experts wrote Scheuers introduction speech. I met with some labor union guys ONeill sent over and we got them willing to testify. After three days we had a pretty good little left-wing protectionist thing going. Just to make sure, I checked in with the smartest one of all, Tommy the Cork. I ran it by him. He suggested a number of people to testify and of course said that wed have to write their scripts which we did. I wanted more than just the labor union guys so I got Ralph Naders assistant, to testify for a consultancy.
As we worked in Washington, the time came due for ONeill to go to the Canadian embassy. His secretary called them and said that the Speaker of the House was going to attend. They were ecstatic. They called in more people from Canada to meet him and the reception was dolled up into a first-rate dinner. ONeill came to the cocktail party exceedingly well fortifiednot just with our data but with drinks he and I and Geimer partook of in his office.
Geimer sneaked into the reception as a solo, unassuming guest. His report said ONeill with full panoply arrived in what seemed to be a dour and grumpy mood. He accepted a drink then complained that it was too light got another one and when the Canadian ambassador nervously expressed gratitude for him attending, said this:
Well, I gotta tell ya I am not very goddamn happy.
Oh, why not Mr. Speaker?
Ya see, in this country we have businesses that mean near and dear to uslike a piece of the American flag. One of `em has to do with me because I have been eating oatmeal for breakfast for more than sixty years. The Quaker Oats Company is do you get me?...is a piece of the American flag!
I dont understand sir, what is the trouble?
The trouble, my good friend, is that you goddamn people are buying this company right out from under the people of the United States. And I tell you, Im going to fight it tooth and nail. You guys have a foreign investment review board which prohibits our people from buying any of your companies. Now we dont have one because all this time I thought we were friends. But the Brascan people and I mean to find out just who they are the Brascan people dont care about our American flag! Well, let me tell ya, if ya want to be a good friend of this Congress you will tell the Brascan people that I dont like them stealing a piece of the American flag. And Im going to start an investigation that may well call your foreign minister and your economic minister and I dont care who else. Now that I finished this drink, Im going to go but I just wanted you to know..all of you here that this battle has just begun! Goodnight all!
As he stormed out, Geimer said the Canadian ambassador gave a low whistle to himself and left the party immediately to place a call to Ottawa.
In the meantime, back at the Madison, we were putting the finishing touches on the committee hearing writing the congressmans introductory statement as well as the questions for him to ask when the hearing would convene.
Ah, thus proceedith the cause of benign international affairs. More anon.