Viva Las Vegas(originally published by Booz & Company)
Well, we’re in some fix this time. As you so eloquently thumbed from your BlackBerry at the executive committee meeting of Monte Jr.’s private school capital campaign:
How the heeIl did thi5 hapPened,????
Using all my digits, allow me to recap: It seems that AmSmelt board directors Otto and Carl — who are, of course, also the founder’s twin 65-year-old sons — somehow decided to follow in the venerated footsteps of Orange County, Calif., and invest the AmSmelt employee pension fund, whole, in a hedge fund.
Ordinarily, this wouldn’t be totally imprudent (higher returns and all that), save for the fact that (a) the hedge fund was managed by (as you put it) “the idiot brother of my ex-wife,” and (b) he had chosen to go long — at precisely the wrong moment — in the subprime mortgage market, most notably in a Vegas resort/condo/casino complex that was being built by a Grand Cayman Islands entity with the curious name of “O&C Twin Enterprises LLC.”
Yes, I know you had nothing to do with this. But let me unwind it, for the sake of clarity: Otto and Carl took the pension money, washed it through your estranged brother-in-law’s hedge fund, and invested in their own Xanadu in the desert.
This does not, shall we say, look good. Or reflect any understanding at all of the phrase “corporate fiduciary responsibility.”
And just to make matters worse, now that the hedge fund has blown up, Otto and Carl seem to have suddenly remembered that they’re fast approaching the mandatory retirement age for AmSmelt directors, whereupon they’re due to receive something in the neighborhood of $138 million, each. (Yes, I know. Nice neighborhood. I’d love to be a fly on the wall at the homeowners association meeting when Otto and Carl run up against Citigroup’s Charles Prince, the NYSE’s Dick Grasso, and Merrill Lynch’s Stan O’Neal.)
So what’s our game plan here? How do we save your job and your reputation, and somehow avoid a series of unpleasant events that may involve the words indictment, fines, convicted felon, and mandatory sentencing guidelines?
Taking the lead here, my team has come up with two press releases. The first announces that in recognition of Otto and Carl’s irreplaceable value to AmSmelt, the board has elected to extend the mandatory retirement age to 75; and in a gesture of community spirit, Otto and Carl have recommended combining the executive pension fund with the employee fund, thus wiping out all the hedge fund losses — after which they will embark on a two-year worldwide “meet and greet” tour of AmSmelt subsidiaries.
The second press release announces your resignation from the company and calls for an SEC investigation that you have every intention of cooperating with.
Let the boys choose which one gets released. If they’re teetering, offer to sweeten the deal with some matching luggage. Is there really any question which way they’ll go?
Monte, Monte, I know this isn’t the perfect solution. And your own pension money is going to take a hit. But at the very least, it’ll get the twins out of the office for two years, keep the company (and your reputation) intact, and give you a chance to make good on whatever pledge you made to Monte Jr.’s private school capital campaign.
I’ll be in touch —
PS: I just received a phone call from your former brother-in-law asking whether I could help him find a new line of work. Coincidentally, I just signed on a new client in the private-security sector that is opening an office in Kabul. Yr thoughts, pls.