Breaking van Gogh

Dieter Bührle had had a more subdued family Christmas holiday than in years past. He himself did okay—the family still managed to vacation at their ski chalet in the Swiss Alps. But no dividends were paid to the investors for the first time that he could recall; that bothered him, since it left him exposed to criticism from insiders and outsiders alike.

As he was about to pack his belongings and drive his family back to Zurich, he saw the international news on TV. The Canadian prime minister, Brian Mulroney, had elected André Bissonnette as minister of transport to his cabinet. Upon hearing the news, Dieter, breathing a sigh of relief, broke out a bottle of champagne and finally decided to celebrate. He could finally exhale, knowing that an insider would soon be in place to lock up more defense contracts with Canada.

Even with this booster shot of good news, Dieter was still planning to get his van Gogh painting appraised. Given the recent developments, however, it could wait a little, at least until Oerlikon-Bührle made its financial statements public in a couple of weeks and after he fielded questions from the press and investors on all of the recent losses the arms manufacturer suffered. Once he got that painful exercise out of the way, he would turn his focus to making sure the new plant, located in St. Jean-sur-Richelieu, southeast of Montreal and thirty-two miles north of the Vermont border, would be up and running by September.

Sipping a glass of Dom Perignon, Dieter called Marco Genoni, head of Oerlikon, a subsidiary of the Oerlikon-Bührle Group, who was vacationing in Lake Como in the Italian Alps, and shared the good news out of Canada. They raised a glass of bubbly and said prost! over the phone, wishing Oerlikon Aerospace great success in the new year. After they discussed Marco’s trip to the project site in the coming week, Dieter called Michael Funk, who was already back in Zurich, sharing the great news on Bissonnette’s appointment. “Michael, we need to find more business partners like André Bissonnette this year. I will make a trip to the US and see if old partners could provide us with access to a Washington senator,” he said.

They laughed at the thought, at the opportunity to be explored and exploited, wished each other good health and better profits in the New Year, and said prost! again, blessing their endeavors with good luck to come in 1987.

Luck is a fickle and feckless lady. Just as 1987 started off with a bang of great news that their man in Canada was now an advisor in Prime Minister Brian Mulroney’s cabinet, bad news drove a wedge through the hope and optimism that Dieter and his executives shared on New Year’s Day. A little over two weeks into his new post, André Bissonnette was forced to resign. The deed took place at an emergency cabinet meeting on Sunday—a Sunday meeting, like Dieter’s stealth board meetings held on Saturdays, was rarely a good sign, since it usually meant a scandal.

Prime Minister Brian Mulroney was caught in the hornet’s nest of a land-for-money bribery case. His rivals in the Liberal Party, whom Mulroney had ousted three years earlier in the 1984 election rout, now had the upper hand, and they managed to dislodge a seventh cabinet member during Mulroney’s office tenure. Being forced to axe his close friend André Bissonnette in such a publicly humiliating way, a mere couple of weeks into the new post, made the deed all the more painful. But Mulroney had no choice. New elections would come in two years’ time. So there he was, seated in Parliament Hill in the nation’s capital of Ottawa, Ontario, forced to clean house in a public mea culpa on January 18.

A week after the news of the scandal exploded across the media airwaves, the New York Times put the political paroxysm in perspective:

In the House of Commons this week, Prime Minister Brian Mulroney, half-moon spectacles perched on his nose, spent several hours fending off attacks by opposition members aroused by a sense that his 28-month-old administration has suffered an irrecoverable blow….

What is known about the affair so far is that the 100-acre plot in the Quebec town changed hands three times in 11 days in January 1986, three months before Oerlikon obtained a contract valued at $440 million…. The land deals increased the value of the plot from $590,000 to $2.2 million, the profit going to local speculators, at least some of them known to Mr. Bissonnette.7

The Canadian Mounted Police launched its own investigation into the scandal. Stunned by the news as it became public in the wake of Brian Mulroney’s admission of making a mistake, Dieter Bührle worked the phones. He knew it was imperative to make sure that his two main executives in the Oerlikon Aerospace business unit in Canada did not speak to the press and that any press release had to come from his office.

Dieter instructed Marco Genoni to take a vacation, lie low, and be out of sight when the heat from the probe came, as they knew it would.

Dieter Bührle gave the same instructions to Michael Funk, adding that the best way for the company to stay out of the scandal was pretend nothing had happened. “Business as usual” became Dieter’s mantra. He repeated it now, and reminded them both that Oerlikon was losing money and they had to do everything in their power, legal or otherwise, to avoid the plant’s construction getting shut down, hit with a work stoppage, or otherwise delayed because of court action over matters that didn’t concern them. Canadian laws were friendly enough, but different from Switzerland’s, so they had to tread carefully and do their research. He told his capos to identify where the pitfalls might lie for Oerlikon Aerospace in the coming month.

As far as Dieter was concerned, André Bissonnette was Brian Mulroney’s problem, not that of Oerlikon-Bührle Group. He wanted to portray the company as the unaware, blameless buyers of land that seemed a bit overpriced but was critical to the long-term military contract that the company had won a year before.

As this scandal now threatened the only viable business that the military division of Oerlikon-Bührle had going for it, Dieter once again turned his attention to the van Gogh. The sooner he got the Wheat Field with Cypresses appraised, the better he would sleep at night. He began to make calls to a few art gallery owners he knew were familiar with his father’s art collection. Time was no longer Dieter’s ally.

Another issue cropped up in mid-January. Oerlikon-Bührle Group finally released its 1986 financial statements to the public and shareholders. The day after the release, the press came seeking comment about the multinational corporation’s first loss in revenue and profit in more than half a century. A reporter from Zurich’s Die Weltwoche—World Week—magazine called his office. She wanted to interview Dieter for an article and have him answer questions on the losses in the military division. Knowing that declining the interview would make investors suspicious, Dieter agreed to the interview in his office, on his turf.

Dieter wouldn’t attend the auction, since he wasn’t a collector or an art lover like his father, but he did make calls to colleagues and business associates in London to contact him as soon as they heard news on the sale of the painting, its price, and who won the bid. The last piece of information was critical to his plans to unload Wheat Field with Cypresses at a price he hoped would be above market value. He also kept track of the other factors surrounding the sale of the painting.

He learned, for instance, that Christie’s sent the Sunflowers on a mini roadshow at Christie’s sites in New York, Tokyo, and London to drive interest in the painting and drive up the price. The pre-auction roadshow worked. Sunflowers made the cover of the international edition of Newsweek. On the day of the auction, in the final Lot 43, Christie’s team placed Sunflowers on an easel for the packed house to see. They opened the bidding at 5 million pounds. The bidding war began, and the price quickly soared in 500,000-pound increments. The number of bidders slowly fell, and by the time Sunflowers reached 22.5 million pounds, the high-water mark, there was only one bidder left standing.

The final sale price, the equivalent of 36.3 million dollars, or 54.7 million Swiss francs, left Dieter astonished. He felt blood race through his veins; his face flushed. He jumped up and down, like when he played soccer in high school and his team scored a goal. Ecstatic, he phoned his art scout in London and told him to buy a copy of every UK newspaper and magazine the very next day. He needed to learn everything about how Christie’s operated, as well as about van Gogh’s masterpieces and the Japanese buyer who won the auction. He was especially interested in the painting’s roadshow because it reminded him of a strategy he had used time and time again in the 1960s and ’70s, when he visited the Saudi Kingdom, Nigeria, and South Africa and demonstrated the latest in anti-aircraft and ballistics weaponry. Nothing like a large, stylishly designed cold piece of steel, such as a cannon, or a loud and bright explosion of an artillery shell to close an arms deal with potential buyers.

His arms roadshow was a lot like Christie’s roadshow for van Gogh’s Sunflowers. Christie’s had done the same thing in an effort to create buzz, stoke a bidding war. The plan worked brilliantly. Dieter would emulate that for his van Gogh masterpiece.

By April, pressure mounted on Oerlikon Aerospace to respond to the charges and accusations about the land sale of the plant. Recalling the interview he did with journalist Rita Flubacher for Die Weltwoche, Dieter picked up the February 19, 1987, issue, opened to page 21, and began to read excerpts from the article “Balance Sheet Cosmetics Are the Only Answer—Oerlikon-Bührle: Massive Losses in Military Sales; Machine Tool Sales to US Down.” He looked past the title to the subheading, “International Military Sales Slowing,” and read:

Nor has the defense ministry developed a particular fondness for “ADATS,” the antiaircraft and antitank guided missile system mounted on armored personnel carriers.

Flubacher: It has been said that some 250 million francs have been spent on the “Escorter” so far.

Bührle: That is not an accurate figure. Depending on how the costs are figured, they range between 150 and 200 million francs. Let me emphasize that in this case—as opposed to “ADATS”—none of the development costs were capitalized.

Dieter closed the magazine and knew he had to have Marco Genoni respond to the mounting pressure on Oerlikon Aerospace in the next few days. He ordered his secretary to call the Canadian field office at the plant and get hold of Genoni. He then picked up the phone and told Marco to contact their Canadian chief counsel, John F. Lemieux, to write a press release and fax it over to Dieter at the Swiss headquarters.

When Dieter received Marco’s fax an hour later and noticed the press release was loaded with lawyerspeak, he realized his mistake. It was too contrived, too corporate. He needed to humanize Marco and Oerlikon Aerospace and make them approachable, while playing up the cultural gap between the two nations separated by the Atlantic Ocean.

“Marco, what is a hole we can exploit between us Swiss and the Canucks?” Dieter asked.

Marco thought for a moment, and then replied, “Appearances. What about appearances?”

“Ja, ja. That’s it,” Dieter said. “Come up with a line or two, call back the media and give it to them as if we were victims, too, along with the Canadian taxpayers.”

The fax printed out. Dieter flipped it over and read Marco’s answer: “Appearances count more in Canada than they do in Switzerland. I didn’t look enough at appearances.”

Subtle but effective, Dieter thought, since Marco pointed out to Canadian authorities that Oerlikon Aerospace was also a victim of the scandal. They had simply misunderstood Canadian business etiquette.

Ten days after a request to respond to charges about the land sale, Marco gave the press his one-line answer, word for word—not through Oerlikon’s chief counsel, but in his own humble voice. The response worked. It deflected the hot-button issue, putting the blame back on the Mulroney government.

Prime Minister Brian Mulroney survived the scandal, as did Dieter Bührle. In September 1987, the new Oerlikon Aerospace plant opened in a small ceremony with the Canadian government. Dieter was nowhere to be seen, nor was André Bissonnette, his liaison to the prime minister and the conduit to winning the ADATS contract.

In the meantime, Dieter’s attention was diverted to New Mexico. At the US Army’s Air Defense Artillery testing site in the Oscura Range, a joint venture between Martin Marietta and Oerlikon Aerospace, he was one of four military contractors competing for the right to sell the ADATS missile-guided system to the US Army. This was the billion-franc contract Dieter had hoped to land for his company to pull it out of the red.

In October, the ADATS contest was drawing to a close in New Mexico White Sands. Around the same time, Dieter learned that Sotheby’s in New York City was going to host its own van Gogh auction in November. Irises, a van Gogh masterpiece painted during the artist’s stay at the Saint-Rémy asylum in France, was being put up on the auction block. This time, Dieter would have people in place at the auction. He wasn’t going to bid on the painting, but he needed to learn which art experts were involved and whom in the New York and London art orbits he could hire to catalogue a book about his father’s art collection, since his sister Hortense had already put together a concept roadshow to celebrate their father’s centennial birthday in 1990. Dieter recalled that his sister had started inquiries a year earlier for an exhibit, a tour to honor their father. Now her queries to American museums finally made sense to him.

It was still late 1987, so Dieter and his sister would have two full years to produce the show, secure sponsors, and attract a few wealthy Americans to buy his painting. For the plan to work, he needed to do what Christie’s had done six months earlier and what Sotheby’s was about to do in early November: build an air of exclusivity. He needed to speak to Hortense about how to best position the exhibit to drum up auction-house style press with global impact, sex appeal, and excitement.

The US stock market crashed in what would be called “Black Monday.” The Dow Jones Industrial Average cratered by more than 22 percent. It was the end of a five-year bull market. It also spelled trouble for Oerlikon-Bührle’s stock price and international holdings.

Dieter kept his wits about him and stayed calm. November came and proved to be a fruitful month for the skyrocketing value of van Gogh art. At the Sotheby’s auction, Alan Bond, the Australian real estate and media magnate, made news and set a new world record. Bond was the last bidder to drop out of the Christie’s Sunflowers auction when the painting was ultimately sold to the Japanese insurance conglomerate. In an unusual deal with Sotheby’s, Alan Bond took out a loan from the auction house for 50 percent of the sale price of van Gogh’s Irises, a Saint-Rémy masterpiece, like Wheat Field.

Van Gogh’s Irises sold for $53.9 million to Bond. This figure represented a 33 percent increase on Sunflowers, and it was good news for Dieter and his Wheat Field with Cypresses.

To add to the good news of a new world record sale price, word came back from the US Government Accounting Office (GAO): the US Army submitted its findings on the trials and testing of the ADATS. They were good.

On November 30, a letter was sent to GAO officials, including the future Director of Homeland Security, Tom Ridge. It read:

On November 30, 1987, the Army announced that it had selected the system produced by a Swiss firm, Oerlikon Bührle, teamed with Martin Marietta, called the Air Defense Antitank System (ADATS). Although none of the four systems tested met the Army’s total requirements, the Army concluded that ADATS showed the best potential for achieving that goal. The results of the competitive test are classified.

The 1987 year-end board meeting was going to be a major improvement from the one Dieter held a year ago, when he had to announce the gut-wrenching 250 million francs in company losses. This time, the news was stellar: “The Army announced Monday that a team headed by Martin Marietta Corp. beat three other defense contractors for the right to build a $1.7 billion weapon to protect troops from enemy planes and helicopters.”9

It was time for Dieter to expand the business and let his sister take the lead on their father’s art exhibition. Things were finally looking bright.