Business Above the Law

...Even if ITT is a rogue element susceptible to a violent end, the rest of the herd are likely to persist, and probably will extend their power...

...It passes belief that he has repealed the business cycle, and in fact ITT succeeded in suppressing and turning into a rare collector's item a highly critical analysis of its accounting practices by an analyst for Smith and Barney, one of Wall Street's most respected houses...

...Reviewed by Robert Lekachmart The major merit of this highly competent account of International Telephone and Telegraph the multinational conglomerate we all love to hate is the author's exposition of most that is public and significant in ITT's history within a single volume of reasonable size...

...Ragbags of essentially unrelated domestic and overseas enterprises, these creatures of stock market booms, accounting manipulations and accidents of charismatic personality subsided or crashed when the stock indices declined, the regulatory authorities caught up with the gaudier accounting ploys and the empire builders died or retired...

...But the ambiguities of corporate accounting as practiced by the masters of that black art extend to a realm outside of Sampson's competence...

...Has it all been done with mirrors...

...No doubt because Sampson became understandably fascinated by ITT's life and high times, he failed to examine the entire multinational phenomenon...

...Although Sampson necessarily went to press before the more recent installments of Sam Ervin's long daytime serial, he does his part to document the deceptions, pressures, bribes, blackmail threats, and deployment of White House influence that characterize behavior in the land of the partially free and the home of the too rarely brave...

...This is a troubling fact about an enterprise that employs 400,000 men and women in at least 70 countries...

...Who sings today of the deeds of LTV, Litton or Leasco...

...One wonders...

...For ITT did not begin just yesterday to meddle in the affairs of foreign governments, to threaten reporters and to purchase the favors of complaisant officials in the United States and elsewhere...

...The evidence on both points is inconclusive...

...Sampson's almost novelistic evocation of the monthly meetings Geneen presides over, with omniscent eye for managerial dereliction and Jovian wrath at unfavorable surprises, strongly implies that ITT's performance is intimately linked with the presence of the tyrant himself, now a man in his mid-60s...

...One of the more illuminating aspects of the corporate giant's past, well told by Sampson, is the seamy story of how Colonel Behn, mysterious predecessor to its present chief Harold Geneen, played extremely profitable games with the Nazis and with Franco's Fascists...

...If it is typical, we are in dreadful shape, for then the agents of most or all major multinationals are everywhere busy subverting normal political processes, poisoning the wells of public debate and depriving countries of the chance to regulate their economies...

...The Watergate extravaganza has made perfectly clear the congruence between the ethical standards of Geneen's and Richard Nixon's respective administrations...

...Still, many if not most of the prominent multinationals are conventionally managed, relatively stable enterprises such as Xerox, Honeywell, Corning Glass, Scott Paper, the major pharmaceutical suppliers, and the big oil companies...

...Sampson does demonstrate beyond cavil, however, that no government, weak or strong, effectively regulates Geneen's company...

...After reading and enjoying this book, I am left with two vital questions: Is ITT typical...

...The story is told that Geneen, when urged to sell to less fortunate organizations ITT's celebrated cost-control systems and reporting procedures, rejected the notion because, he maintained, an indispensable element of the company's package could not be sold?i.e., Harold Geneen...

...Geneen, who like Maurice Stans was a CPA before proceeding to greater things, has managed to produce (or at least claim) a steady, unbroken rise in profits each and every quarter since taking over at ITT...

...By 1970, this unfettered giant had attained ninth place on Fortune's honor role and was beginning to jostle IBM and Unilever...

...At the same time that ITT was waging and winning its battle to acquire the Hartford Insurance company, for example, and publicly proclaiming splendid plans to reinvigorate that stodgy old-line enterprise, it was privately boasting to stockholders how valuable Hartford's ample cash assets would be in acquiring still more companies...

...Other conglomerates that operated in their days of glory as the lengthened shadows of business wizards have fallen on evil times...

...In the same year its sales were in excess of $5.5 billion...

...Is ITT efficient...

...Geneen, whose salary and fringe benefits approach $1 million each year, presides over an empire that includes construction, hotels, rental cars, insurance, communications, industrial feeding, publishing, and almost any other activity onto which the conglomerate has been able to latch...

...After all, how can weak, often corrupt and usually cowardly politicians avoid being controlled by, instead of controlling, these bewildering entities capable of shifting capital, money and facilities around the globe...

...And if it is efficient, then ITT will probably pursue its practices for many years to come...

...To the honorif that is the wordof its leaders, ITT has never hesitated to deal with Communists, military dictators and corrupt parliamentary politicians in pursuit of the buck...

...For this reason, I look forward to the sequel...