40

Ed Myers balanced two coffees in his hand as he knocked on the half-open door. Frederick “Fred” Carlyle, Jr. was famous for the long hours he kept. He was often the first executive to arrive in the morning and the last to leave at night. He was at his desk reading a newspaper.

“Ed, come in,” he said, surprised by the early morning intrusion.

“Thanks, Fred,” he replied. “I was hoping to catch you before the secretaries and admins get in. I took a chance that you might be in the mood for a coffee,” he said, handing him a cup.

“I already had one, but I’m ready for another,” Carlyle responded while accepting the cup. “Have a seat,” he said, gesturing at one of the leather chairs facing his large mahogany desk.

“Junior,” as he was known throughout the company, had taken over his father’s large corner office when the company founder had stopped coming to the office on a regular basis a year earlier. The move had been a surprise to many. Dick Sherman had been open about his plans to take over this office after “the old man” retired. But the CEO had shown an uncharacteristic level of restraint in not picking a fight with Junior.

The rumors about “the old man” had begun to circulate almost immediately. In the beginning Myers and everyone else had dismissed it as fatigue or being distracted. He remembered one incident in particular. In a financial meeting Carlyle Sr. had asked a marginally relevant question about the revenue generated by the cable affiliates in the Los Angeles area. Sherman had answered it and continued with his presentation. Fifteen minutes later, the founder had interrupted him midsentence and asked the exact same question. Standing in the front of the room, Myers could see the look of concern on the faces of the executives in the room.

A few weeks later Myers had been in Sherman’s office when REL’s head of public relations knocked on the door. John Shea explained that earlier that morning he had been prepping the Founder for an upcoming meeting with industry analysts. Carlyle Sr. twice misidentified the anchors of REL’s leading news programs and insisted automobile advertising was the company’s largest growth area in the current year. As they all knew, the credit belonged to pharmaceutical advertising.

The company had been unsure about what it should do. Whose job is it to tell the boss he can no longer do his job? The fact that Carlyle Sr. was a widower further complicated matters. The Founder lived alone in a stately mansion in Scarsdale. A longtime housekeeper/cook was his only companion.

It was Junior who had helped resolve the quandary. He had hand-delivered a letter to the REL board announcing his father’s retirement. The retirement solved one problem but gave birth to another. Because he owned a majority of the shares, Carlyle Sr. controlled the company. Was control now in the hands of the board or Junior?

As Myers looked around, it occurred to him how infrequently he had been in this office since the Founder’s retirement. Carlyle Sr. had enjoyed impromptu meetings. He would often call a group of executives to “come by for lunch.” Invariably there would be a sushi spread or baby lamb chops and other hors d’oeuvres. Sr. enjoyed telling war stories about the early days of REL News and how often the company had gone to the brink financially. At the same time Sr. was a good listener. If he heard about a spouse being sick, he always followed up. If any member of the team experienced the arrival of a new child or grandchild, a handwritten, congratulatory note from the Founder along with a gift would be sent shortly thereafter.

Junior in many ways was the opposite of his father. The Founder was a born salesman. Sr. rarely took a group of advertisers to a “smokes and drinks” lunch without securing their commitment to devote an extra chunk of their budget to REL. His desk was always piled high with papers. It was nothing short of miraculous that he would somehow manage to find the document he was looking for. Dress for him was an afterthought. He often had to be reminded by his secretary to close his top button or straighten his mismatched tie before rushing to his next meeting.

While affable in his own way, Junior was far more formal. He had gone to prep school at Exeter. Sr. had been so proud that his son had graduated from an Ivy League school, Cornell, a far cry from his father, who had finished just two years at SUNY, Binghamton. Junior was liked by many but loved by none. He was meticulous about his appearance. Shirts and ties were carefully chosen to bring out the best in his Paul Stuart suits. Even on the windiest of days it was rare to see him with a hair out of place.

Sr. would have insisted that they sit at the conference table in the corner, Myers thought. Junior remained seated behind his desk, happy to gaze down on the CFO.

“So, Ed, what’s so important you felt you had to get me a cup of coffee before telling me about it?” he asked with a forced smile.

“Fred, if I were more articulate, I’d do a better job explaining the circumstances that brought me here today. I’m not, so I’m just going to say it straight. I screwed up.”

For the next ten minutes, Myers recounted the meeting in Sherman’s office, the wiring of the money, and the potentially fraudulent tax filings. As he spoke the CFO tried to gauge Carlyle’s reaction. It was pointless. Junior remained poker-faced throughout. He interrupted only once. “This Carter & Associates who received the money, do you have any idea who they are?”

“None.”

“Have you made an effort to find out?”

Myers sighed, not liking how the questioning was going. “No, I haven’t. I thought about it, but I was concerned that knowing more would only get me in deeper. Whatever I learned about Carter, how would I use it, would it be actionable?”

Junior sat back in his chair and folded his hands on his desk. For the second time in not even a month Myers thought he was about to lose his job. A frightening thought flickered in his mind: If he fires me and I get in trouble for what I did, will REL pay my legal bills, or will I be on the hook for them?

When Junior spoke, his voice was methodical, almost devoid of emotion. “Ed, you did the right thing by coming to me. I probably shouldn’t share this with you, but you have a right to know. For several years I’ve suspected that Dick Sherman has been enriching himself at company expense. This latest incident confirms my suspicions.”

Myers was dumbfounded. “Oh God, Mr. Carlyle, it’s my job to watch the company’s money. If I’ve missed something, I can’t tell you how sorry I am.”

Junior waved him off. “It’s nothing you could have known about. As you’re aware, in addition to being the anchor of the REL evening news program, Brad Matthews is editor in chief. He has the final say on what stories are covered and the tone of the broadcast. Companies’ stocks have been known to rise and fall the day after receiving coverage on his program.

“Sherman spotted an opportunity and recruited Matthews. Through a dummy company they established, the two of them have been purchasing shares of companies in advance of REL News doing favorable stories about those companies. They’ve even made money from companies in exchange for favorable coverage. I’m surprised the SEC hasn’t caught on yet.”

“If I may ask, Fred, how do you know about this?”

Junior looked around, as if uncertain about how to continue. “I’m not sure I should tell you more, but it’s hard to carry this alone. One of the companies must have assumed my father was in on the scheme. Their CEO called my father at home and complained to him that they had paid the money but REL News had not kept its end of the bargain.”

“Your father told you this?”

“No, he wouldn’t have wanted me to get involved. I believe my father knew that toward the end of his working days his memory was slipping. He began recording his calls so that he could refresh himself on what was discussed. I’ve got the CEO of Statewide Oil on tape.”

“Wow! I don’t know what to say,” Myers exclaimed.

“Ed, I’ve taken you into my confidence. Don’t say anything to anyone. I’m quietly conducting an investigation. The only thing I need you to do is to let me know immediately if Sherman demands more money for Carter or for any reason that doesn’t pass the smell test.”

“I give you my word.”

“And Ed, sending money to Carter & Associates was a lapse in judgment on your part. But it’s understandable under the circumstances and can be put right.”

“Thanks, Fred,” he said, a huge feeling of relief washing over him.

As Myers got up to leave, he realized he had not taken a single sip of his coffee.