Mickey Rudin fully supported
Hirschfield
's basic position on
Begelman
. While Rudin grasped the pro-
Begelman
line, he felt that reinstatement was unwise in every respect. It would invite publicity. It would invite closer scrutiny by the police and the SEC. It would invite stockholder lawsuits. And it was unnecessary. There were other talented people who could do
Begelman
's job. It seemed to Rudin that even from
Begelman
's point of view the wisest and least painful course would be to take an independent production deal that Columbia was prepared to offer.
With Hirschfield still in the office, Rudin telephoned Frank Rothman,
Begelman
's lawyer, with whom he had last spoken during the first week of October. Rothman had called then to announce that he had been retained to represent Begelman and to ask Rudin's assessment of the inclination of the Beverly Hills Police Department in the Cliff Robertson matter. (Rudin had told Rothman that the police, in the person of Detectiv
e Joyce Silvey, did not seem to
regard the forgery as a "major crime" and seemed content for the moment to leave the matter in the hands of Columbia's lawyers and the Securities and Exchange Commission. But, Rudin cautioned, the case had "bounced around" the police bureaucracy a good bit, and he advised that if Rothman wanted to make sure the case went no farther, he should "touch base" with Detective Silvey.)
Now, at dusk on the Monday before Thanksgiving, these two elite members of the Beverly Hills legal fraternity, professional friends for many years, were discussing a more complex subject than the mood of the Beverly Hills police. Rothman was learning for the first time that Alan
Hirschfield
had, in effect, retained Mickey Rudin as his personal counselor in the Begelman matter—an indication to Rothman that
Hirschfield
was having considerable difficulty wrestling with the decision of whether to reinstate
Begelman
.
"Frank, I want to talk to you as a friend," Rudin began.
"1
wouldn't presume to tell you how to practice law, but it seems to me you're trying to accomplish too much by trying to have your client reinstated as president of the Columbia studio. It's too arrogant to expect that you or he will get away with it. If he steps back, resigns, takes an independent production contract, there's a good chance that things will quiet down and nobody will get hurt. But if he stays in office, I think you may end up with him being prosecuted. It's sort of spitting in everybody's eye just to keep a guy in office and hope to get by with it, where there's evidence that he stole money. The SEC will get up in arms, the police may get up in arms, and I think you're making your task too tough. The sooner it's quieted down, the less chance there is that somebody will come along and jump all ov
er you. Alan doesn't want to see
David hurt and is trying to base his decision on what is best for all concerned. And yet there are people like Ray Stark, who may have their own interest in keeping David in office, pressuring Alan to reinstate him, when it's not in David's own best interest to stay as president. Maybe David isn't aware of all these issues. My recommendation to you is that you talk to your client and try to convince him to step back."
"I
disagree, Mickey," Rothman said. "I see things from an entirely different perspective. David is under the care of a very reputable psychiatrist who has assured us that his acts stemmed from emotional problems which are being successfully treated. This is not a criminal matter, it is not an SEC matter, it is a medical and psychiatric matter. The doctor has given assurances that David is well on the way to recovery, and is eminently able and ready to resume his duties. It is important for his continued psychological health that he be reinstated, and in fact it would be a severe psychological blow to him if he were not. So, contrary to what you say, it is very much in David's interest that this suspension be lifted."
"I still think you're making a mistake, Frank. Whatever the merits of David's psychiatric treatment, the SEC, the police, the press, and whoever takes a look at this situation may not put all the stock in his treatment that you do. They may put no stock in it at all. Alan has to take all of this into account in making his decision. He has to consider how all of this will be perceived by skeptical outsiders who may take a look at it. And beyond all of that, it's very unfair for Alan, the chief executive who has to make the decision, to be subjected to the kind of pressure he's getting from his board."
"Alan's relationship with his board is none of my business," Rothman said.
"I
think it becomes your business if your client knows about the kinds of things that
are
being done in his behalf."
"I have no idea what you are talking about."
"For example, a few years ago, Alan
Hirschfield
's wife was involved in a business venture, a company that did some business with Columbia. The situation was examined by the board at the time and declared clean and proper. Now the board is suggesting that there might have been a conflict of interest, and it has been reported to
Hirschfield
through an intermediary that if he insists on holding David
Begelman
to a strict standard and insists on his leaving the company, he had better be prepared for full disclosure of his wife's relationship to Columbia, which the board is now claiming may have been corrupt. Alan is very angry about this and considers it blackmail."
"I can only repeat that I have no idea what you
are
talking about," Rothman said. "This comes as a total surprise to me. It's the first I've heard of it."
"I'm not implying that you do know anything about it. I'm only saying that this is the kind of tactic that your client's friends and associates are using to force Alan to keep him in the company. It is highly improper and it also will be counterproductive, because Alan feels very
strongly, and I agree with him,
that David runs the risk of being hurt badly in the long run if he returns to his job. I still believe you should talk to him and make sure that he recognizes the dangers."
"I will talk to him because I'm certain that he is not a party to any of the kind of pressure tactic that you are suggesting is being used. But none of this changes my feeling that he belongs back in his job."
Rothman's staunchness did not surprise Hirschfield or Rudin, but at least the message had been delivered. If there was even the slightest chance of Begelman's backing down, it was worth a try.
The board meeting was scheduled for four o'clock on Tuesday afternoon, New York time. Herbert Allen, Irwin Kramer, Joe Fischer, Todd Lang, and Victor Kaufman gathered around a speaker-telephone i
n Leo Jaffe's office. Matty Rose
nhaus was on a telephone in his office three blocks up Fifth Avenue. James Wilmot was listening in from Rochester.
Hirschfield sat alone at a large desk in the visiting-executives' suite in Burbank. Spread before him were five sheets of yellow legal-size paper on which he had made no
tes with a black felt-tippe
d pen. He had gone over the notes twice, underlining certain points first in black and later in red.
"Is everybody there?"
Hirschfield
asked.
"Yes, we're all listening, Alan. Go ahead."
"I stated my basic position on this matter last Wednesday. But 1 have reconsidered it from every angle. I don't think my past reputa
tion, or your experience with me
, has been that I've been stubborn or uncompromising. On Wednesday I listened carefully to the lawyers' report and all the members of the board. I accept your decision that in the end I have to decide what's best for the company and I have to live with and believe in that decision. I am also mindful of the board's pro
mise to support my decision. So,
for all of the reasons I stated last Wednesday, I have decided not to reinstate David in any kind of management position."
There was hostile muttering at the New York end of the line.
"I think you'v
e made a terrible mistake," Rose
nhaus said.
"Let him go on," Jaffe said.
"There is now a more important issue I have to discuss," Hirschfield continued, "and that is my relationship with the board.
I
feel I've been treated shabbily.
I
feel the board is ungrateful. I feel that after four and a half years of a good record, good decisions, and having given everything I've got, after four and a half years where every man on this board has benefited—that when push came to shove and when I asked for support—even begged—the board walked away, made me the villain, allowed an adversary relationship to develop, acted behind my back, and is now attempting to blackmail mc and my family. I won't stand for it.
"Instead of supporting mc, it's obvious that the board has let Ray Stark become the final word and authority where Columbia is concerned. Somehow, he in effect is calling the shots. He's the one you listen to in terms of what's best for Columbia, not the man who led the company out of the wilderness. Suddenly, after four and a half years of a performance and life-style which speaks for itself,
I
became a power-hungry megalomaniac who would 'Go Hollywood' at the first opportunity. There's not a shred of evidence in this accusation. You can ask anyone in the community here. You can ask anyone in the investment community in New York. One of the reasons Columbia has sold at a higher multiple than any stock in the entertainment industry is that I was perceived as a
financial-managerial
person who had been able to restructure the company, not because
I
wanted to 'Go Hollywood' at the first chance. I have been able to assemble a bunch of highly visible, creative people, all of whom have egos substantially greater than mine. One of my abilities has been to live with that, and give wide range to their egos, and subordinate
mine. In the end. that makes me
look terrific along
with them. But now, al
l the confidence and friendship I have engendered for Columbia has suddenly become Alan
Hirschfield
versus David
Begelman
. What I am now asking for is support and confidence, at least the same support and confidence given to David
Begelman
. This doe
s not mean that I want blind faith and no right to disagree. I ne
ver have wanted that. But it doe
s mean that until the record proves otherwise, the board, after reasonable consideration, will support me in p
ersonnel decisions, in deals, in
the direction of the company and so forth.
"If the board isn't willing to do this, it will have a fight on its hands. I haven't spent four and a half years building Columbia to throw it away because Ray Stark is unhappy that he's not calling the shots.
"There is a further issue in the future of this relationship with Ray. He is a valued producer whom
I
want to keep. But under no conditions will I accept or tolerate his interference or involvement in any business of this company other than that which relates to his own movies. Ray has benefited from this relationship. So has Columbia. Neither owes the other anything.
"I have heard threats that Ray will bury me. If he does, then Columbia will be buried by him, too. Ray is in no position to threaten or blackmail. I assure every one of you that with two phone calls—to the SEC and IRS—Ray will be busy for the rest of his life. I will not hesitate to make those calls.*
"I've brought the company a long way in four and a half years. I hope to bring it just as far in the next four and a half years, and I would like to do it with your support and approval. If not, I still intend to fight for what I believe is best for the company. It has been said that David Begelman is irreplaceable. Well, we've got plenty of good people, most of them recruited by me, and I'll recruit more. The company can make progress without David Begelman and without Alan
Hirschfield
. The only difference is that I'm here and I intend to stay here. Thank you for your attention."
Hirschfield
's diatribe stunned the board. It was uncharacteristic of him to be so intemperate and blunt. Herbert Allen spoke: "Ninety percent of what you've said, Alan, is incorrect, offensive to this board, and irrelevant to the issue."
"I think what I've said is right on target."
"Well, at least you've finally made a decision, even if it's a bad one, and even if it's from behind a telephone three thousand miles away."
"What difference doe
s it make? The decision is made. It was you who asked me to reconsider."
Rosenhaus trembled with anger. "This is a terrible day for this company. It's a shocking and terribly disappointing decision that you
've made, Alan. You've got to learn
how to forgive people, give them another chance. I'm very disappointed, very upset."