The Last Tycoons: The Secret History of Lazard Freres & Co.
On a recent visit to the headquarters of Goldman Sachs in London, I was struck by several things. The sheer scale of the interior fittings so that every door appeared to weigh a ton. The constant coming and going on the ground floor. The sleekness of the people. The silence. Upstairs, the hush, literally, was all-consuming.
As I was led to the meeting room to await my host, I glanced in to another room. Men in dark suits sat round a table. As I paused, the door was closed. Sitting in my room, I could hear muffled conversations and the occasional ‘click’ of a door opening and shutting in the corridor outside.
What goes on here? It’s one of the most powerful, deal-hungry institutions on earth, a place of trading and money-making on a vast, unimaginable scale. Yet, of evidence of all this activity there was none. Unless you work in such an organisation you can have no idea what it is really like. Clients, even the very grandest ones, usually only get to witness a small amount and even then if there’s a fee to be had, the bankers are on their best behaviour.
No, it takes the occasional outpouring from a former employee to lift the lid. It was the case with Michael Lewis’s Liar’s Poker that exposed the testosterone-overdosed routine of the Salomon bond trader. It is again with William Cohan’s The Last Tycoons. If the title is a deliberate nod in the direction of F Scott Fitzgerald’s The Last Tycoon, then the graphic detail contained within could easily grace the most dramatic novel or Hollywood blockbuster.
It’s all here: greed, ego, Machiavellian manoeuvres, sex, even murder. So much so, that even if a small scale of what has occurred at Lazard Freres & Co, the book’s subject, is replicated at the other houses, then Wall Street and the City truly are denizens of every vice imaginable.
All credit to Cohan for breathing life in all its forms into what is often presented publicly as the most anodyne of industries. There are serious problems with the book. It’s far from perfect – at over 700 pages in length, with 40 pages of footnotes, it is a daunting prospect.
Oddly, too, for a work of such size, the early years of Lazard are glossed over, in a canter to get to the real meat: the great men who transformed the bank from the 1970s onwards, and to whom, in its title, the book is dedicated.
It’s repetitive in places, too. We read how Felix Rohatyn, responsible for propelling the firm to number one in mergers and acquisitions, and celebrated as the greatest financial fixer ever, was having sex in his office one day (as you do) and forced another of the legends and the senior partner, Andre Meyer, to yell: “Felix, why don’t you go to a hotel room like the rest of my partners!”
Then, we’re told how two hookers turned up in the lobby of the block where Rohatyn had his duplex, asking for Felix – we’ve got the picture.
That is not a criticism, however. Such is the wealth of detail that the experience of reading The Last Tycoons is to enter a closed land – like going inside the wardrobe and appearing in the business equivalent of Narnia. Except that unlike CS Lewis, Lazard is a very real corporation and the characters really do exist.
Reading for instance about the beautiful young girl who was allegedly date-raped by two Lazard employees – ‘they fed her a Mickey and viciously raped her in this guy’s Park Avenue apartment’ – and their non-prosecution – ‘Lazard being the way it is, they were both eased out’ – you’re shocked, not only by the casual indifference but by the thought as to what happens elsewhere?
Cohan’s access, as someone who worked at Lazard for six years, has enabled him to present the most intimate, compelling portrait of a bank and its leading players. Unlike someone coming to the subject cold, he actually knows those he is writing about.
So when he describes the imperious Michel David-Weill and his penchant for cigars, he makes the point that the banker lights one, takes a few puffs, leaves it, then lights another – at $20 a throw. He also observes that David-Weill is that rarity: a smoker of cigars who inhales.
The lengths David-Weill would go to bring the cigars in from Cuba – legally they cannot be bought in the US – are faithfully documented, including the day when Customs intercepted a consignment of 1,500 at JFK. He wasn’t the only smoker – they were all it, in New York, a city where smoking was publicly frowned upon.
One colleague, Bill Loomis, the bank’s CEO, believed David-Weill’s advice that cigar-smoking could help relieve his flu-like symptoms. At times you have to pinch yourself: this isn’t some renegade US army unit, this is the most blue-chip of Wall Street banks. One of those David-Weill fired was Edouard Stern. He went off to run his own private equity operation – with $300 million invested from a fund controlled by David-Weill.
Stern was later found dead in a Geneva apartment after an S&M sex session with his dominatrix girlfriend. He was wearing a latex suit and was tied up. He had been shot four times. The girlfriend, Cecile Brossard, confessed to the killing, saying she reacted in anger, when he said: ‘A million dollars is expensive for a whore.”
On hearing the news, David-Weill said he believed it was risky of Stern to allow himself to be tied up, then have a row over money. It was, though, in Stern’s nature to take risks so his death wasn’t so surprising. In David-Weill’s words: ‘In sexual matters, nothing is astonishing.’
Also chronicled are the other games the people at Lazard liked to play: those that saw one star vault over another. These climaxed in the greatest play of all: the takeover engineered by another of the tycoons, Bruce Wasserstein. ‘Bid-Em Up Bruce’ was more than a match for David-Weill who had lost his way.
But while Cohan describes the succession of Wasserstein and the demise of David-Weill in 2004 he only hints at what in the end is a significant weakness with his book. While Wasserstein led the bank on a successful IPO a year later – thus removing much of the cloak of mystique surrounding it – questions remain about Lazard’s long-term future.
While other banks, notably Goldman Sachs, Lehman and JP Morgan continue to drive forward, Lazard has stalled. In the first quarter of 2007, global M&A volumes soared – but Lazard’s revenues from advising on deals remained flat.
The bank that had the greatest cachet of all, now simply does not. The move from private to public ownership which effectively ended the strangle-hold of the tycoons has also coincided with the bank’s slide into relative obscurity.
As a memoir of a bygone age – before regulation and compliance and in the US, Sarbanes-Oxley, took hold – Cohan is unbeatable. Tragically, unless Wasserstein can work some magic, his account is losing relevance. Someone must write the definitive account of life within Goldman Sachs before it is too late.