Murder at the B-School Page 7
“Then you mix in your background interviews, which give you some idea about whether your victim is a tippler. Let’s assume he isn’t. In fact, let’s assume he never touches the stuff. So what happened in the Jacuzzi? A party of one, made special by some booze? Some kind of suicidal gesture? If so, a plea for help, or the real thing?
“And that, Professor Vermeer, is my personal version of the Dirtball Theoretical. For what it’s worth.”
10
A SMALL STIR ON THE OTHER SIDE OF THE RESTAURANT ANnounced the arrival of Professor Marc Pirle. He walked so purposefully across the room, with the maître d’ struggling to keep ahead of him, that heads turned in his wake. “Sorry I’m late,” he said, still ten feet from the table but closing quickly. “The traffic was unforgivable. Grotesque.” He tossed his silk-lined black wool overcoat onto the waiting arm of the maître d’, who seemed to know the drill. “Thanks, Henri. I’ll hold on to the briefcase today.”
He extended his hand across the table to Brouillard. “You must be Captain Brouillard. Marc Pirle. Very nice to meet you. Hello again, Mr. Vermeer.”
“Thank you for agreeing to meet with me on such short notice, Professor Pirle,” Brouillard began. “I’m sorry to drag you away from your meetings.”
“I’ve found that meetings can usually wait if there are other meetings to attend.” He sat down as if he owned the chair, and the table, and perhaps the restaurant. “And Dean Bishop has strongly encouraged me to cooperate in any way I can. So how can I help you?”
“I understand that you’re close to the MacInnes family.”
“On a strictly professional basis, reasonably so.”
“It’s a formality, really. We’re looking into the circumstances of Eric MacInnes’s death. I need to get a handle on where the family’s money comes from, and who stands to benefit from Eric’s death.”
“Certainly,” Pirle replied. “To some extent, I can assist you with the former. As for the latter, I am certainly not privy to the contents of their individual wills.”
“Fine. So we’ll start with the money.”
Pirle paused as a beige-aproned waiter who had been hovering in the background, looking for an opening, jumped in to take their lunch orders. Brouillard and Vermeer ordered sandwiches and more coffee. “Just a seltzer with lime for me,” Pirle said, looking at his watch.
“So,” he continued after the waiter departed, “a primer on the MacInnes fortune. This would take a while to do properly, and of course we don’t have time for that. In any case, the MacInnes empire is like a lot of old family enterprises: some of this, some of that, and some other things, too. That’s mainly because opportunities show up in different places over the decades. If a family stays in business long enough, and if it includes the occasional competent person from generation to generation, its portfolio becomes more and more diversified. And as things get bigger and more complicated, new functional organizations get set up to keep track of and service the various businesses. Sooner or later, for example, a financial group gets created. Maybe a transportation enterprise, if one or more businesses need things to get moved from here to there.
“Going back to specific origins: the MacInneses hit these rude shores in the mid-seventeenth century with more than ample resources. Why they came is a small mystery. They don’t appear to have been under a cloud. They don’t seem to have had any particular religious motivations. My best guess is that they were unnaturally ambitious, especially in light of their aristocratic background, which is not normally a spur toward entrepreneurship. When the king of England granted them a substantial piece of what is now central New York State, this was probably no more than a small token of His Majesty’s esteem. After all, how valuable could a trackless forest populated by hostile savages, too far from the navigable Hudson and St. Lawrence Rivers, turn out to be?
“The answer is, very valuable, but you had to wait a century or two. Meanwhile, the first New World MacInneses exploited the raw materials that God had given them: pelts, some iron, wood for charcoal, ice for transshipping to the south, and so on. As they had back in England, these MacInneses encouraged tenant farmers to clear and farm the flat lands. This was wealth-building the old-fashioned way: by the sweat of other people’s brows.
“Anyway,” Pirle paused, briefly interrupting his own lecture as he caught someone’s eye at a far table and nodded in that direction, “you get the picture. Then came capitalism. The arrival of the canals and the railroads in the mid-nineteenth century raised the stakes considerably. Gradually, the MacInneses’ remote landholdings came within reach of the largest metropolitan area, the biggest market, in the nation. The timber from their forests became more valuable, as did the produce from their farms.
“More and more money flowed in. When the surpluses started to pile up, they founded the MacInnes Bank of Commerce, serving commercial accounts only. They bought the railroad that ser-viced their various valleys. They set up a real estate arm to manage their lands. Originally, they were probably worried about poachers. In recent years, they’ve involved themselves in a housing development on the periphery of the one reasonably vital college community within their sphere of influence. Meanwhile, they shipped in engineers, who built dams on their rivers to provide power for their gristmills, and later for their textile factories. When the time was ripe, around the beginning of the twentieth century, they rebuilt the old dams and started selling hydroelectricity. Several of their friendly little freestanding hydro plants helped jump-start the regional grid in the wake of the most recent regional blackouts. A little-known fact, but true.
“But like many wealthy families,” Pirle continued, “the MacInneses have been better at getting into things than at getting out of things. Business is oftentimes a very emotional pastime, and family businesses often exaggerate this problem. It’s not just ‘that tired little railroad that we own a large piece of’; it’s ‘the pioneering railroad that Great-Grandfather built.’ Obviously, this creates difficulties over the long run. As I’ve told them many times, if you’re going to be undisciplined about going into things, you have to be extremely disciplined about getting out of them.
“Think of the MacInneses as both a relic and a portent,” Pirle continued ponderously. Vermeer recognized the cadence: Pirle was winding up toward his finale. “They are antiques, curios, and perhaps also omens. They are the people who financed the explorations of the New World. They tolerated the excesses of the Napoleons and Bismarcks, mainly because their assets were beyond the reach of tin-pot despots and their wars. They paid for Queen Victoria’s empire and King Edward’s steamships. Through syndicates, they probably bankrolled both the Lusitania and the kaiser’s U-boat that sank her. In all of these ways, you could say that they are as irrelevant as yesterday’s dust.
“And in a real way, they are also tomorrow,” he went on. “They are the families of Asia and South America who are building extraordinarily powerful business networks. They mix family issues and business issues without a second thought. The family is in business—it doesn’t much matter which business—and this is the certainty as far out as the future stretches. They think of the fur trade and the semiconductor industry as points on a continuum of opportunity. I, for one, find all this endlessly fascinating.”
As he reached for his water glass, Pirle looked as if he expected a spontaneous burst of applause. Brouillard, Vermeer noticed, had not taken a single note. “Right,” she said. “Fascinating. So what does it all mean for today?”
“About thirty years ago,” Pirle responded, happy to expound further, “when William MacInnes was still fairly new to the job of family patriarch, he followed the advice of his financial advisers and took the family enterprise public. The whole thing: real estate, transportation, timber, construction, the finance operation, and so on. I was thoroughly astonished to discover recently that there are even a few fairly tired consumer brands in the mix: hair-care products, teeth whiteners, and so on.
“In any case, public they went,
and the results since then have been less than compelling. In retrospect, the whole idea of becoming a public corporation was ill conceived. I became involved perhaps a decade ago. Since that time, I’ve been telling William MacInnes that he needs to make significant changes in the structure of the empire. And until very recently, he would tell me in so many words that he was sick of hearing these arguments from me.”
“What kinds of changes?”
“Ruthless changes,” Pirle said, smiling malevolently. “Revisions to the company’s ownership structure. Wholesale prunings. In other words, things that families generally aren’t good at.”
Brouillard had begun taking notes. She acknowledged Pirle’s last comments with a nod, still scribbling, and then looked up. “You said, ‘until recently.’ So did he agree recently?”
“As a matter of fact, he did.”
“Was this something the family would have debated?”
“Debated, yes,” Pirle said. “Whether that debate would have affected what the paterfamilias ultimately did, I don’t know. I would doubt it. William and Elizabeth together own enough stock so that he could have imposed his will in any case.”
Brouillard nodded again, scribbling. “Uh-huh. That’s helpful. Tell me: Who owns what, and how does all that change as a result of Eric’s death?”
“Well, the stock ownership is public information, of course. Today, the MacInnes family owns fifty-one percent of the common stock of MacInnes Incorporated. I may have the breakouts wrong, but I believe William MacInnes owns fourteen percent, Elizabeth owns thirteen percent, and the three children own eight percent each. The parents were gifting shares to the children for many years, but that stopped a few years back. The current structure seems to be the one that William was aiming for, at least for the time being.”
“Except that Eric’s dead,” Brouillard said without looking up.
“Of course,” Pirle acknowledged. “Except that now Eric is dead.”
“What happens to his stock?”
“I have no idea what will happen to Eric’s stock, since they have wisely declined to involve me in their estate planning. I think it is unlikely that they would allow that stock to revert to the older generation and therefore become subject to estate taxes in the not-too-distant future. If there were grandchildren available, I would expect to see generation-skipping trust devices, but for better or worse, there are not. Most likely, the stock will go to the remaining son and the daughter, probably in equal amounts. So far, William MacInnes hasn’t shown the backbone that would be required for him to be nonegalitarian.”
“So,” Brouillard said slowly, doing some quick calculations on her pad, “nothing much changes, right? The parents still have twenty-seven percent between them, and if your guess is right, James and Libby go from eight to twelve percent each. The surviving kids get fifty percent richer. But from what I’ve seen, they were already rich enough.”
“As you say,” Pirle replied, effectively conveying his disapproval of the concept of “rich enough.” “And there are many other MacInnes assets that exist outside the corporation. So if anything, if you consider that stock alone, you risk understating the children’s real wealth rather substantially.”
The waiter arrived with their lunches. While Vermeer and Brouillard began working on their sandwiches, Pirle speared the thick wedge of lime in his seltzer and wrung it out vigorously, sending a shower of juice and pulp into his glass. At his request, the waiter returned with two more slices of lime in a small dish, and he treated them similarly.
Watching Pirle watch them eat, Vermeer was reminded of his younger sister’s bout with anorexia. She used to love to watch people consume, because, as she later explained it when freed from her illness, the process was so manifestly disgusting that it reinforced her resolve to starve herself. On holidays and at other family gatherings, she always brought a camera to the table. She took pictures of people putting food in their mouths. Then she ordered up oversize prints of the worst shots and sent them to her victims with cheerful cover notes about nothing in particular.
“You’re welcome to my pickle, Marc,” Vermeer said to Pirle. “I’m not going to eat it.”
His senior colleague failed to suppress a shudder. “No, thank you, Mr. Vermeer. I only take two meals on the days that I don’t get a chance to work out.”
Brouillard seemed absorbed in her note taking, so Vermeer decided to poke at his prickly colleague. Pirle’s condescension had finally gotten to him. And, Vermeer admitted to himself, he wouldn’t mind if this Captain Brouillard stopped treating him like spoiled produce.
“Marc,” he began, “you focused on ownership. But obviously ownership and control can be different issues. Maybe you can give Captain Brouillard an idea about who actually controls the MacInnes assets.”
Pirle sighed just audibly. “Certainly, Mr. Vermeer. And again I’ll assume you’re talking about the corporation, as opposed to other family assets about which I have chosen to learn very little. As things stand today, there is a single class of stock. If the family acts in concert, which to date it always has, it can use its fifty-one percent stake to steer or override the nonfamily shareholders. It could actually get by with a significant minority interest, as I’ve pointed out to Father William several times, but this is a manifestation of their fundamental conservatism. And although there have been a few contested directors’ elections, those nonfamily shareholders have been more or less satisfied with the MacInneses’ management of the business. Rather inexplicable, in light of the mediocre performance of the stock. Foolish people can be very patient, I suppose.”
“Have they considered multiple classes of stock?” Vermeer remembered that this was a fairly common strategy among privately held companies, but had no idea if the tactic would work for a publicly held business dominated by a single large voting bloc.
“As a matter of fact,” Pirle replied, “they have, although I’ll ask you to keep this confidential. Before Eric left this world, William MacInnes was contemplating a move to create different classes of stock in the company, only some of which could be voted. It would basically convert certain larger holdings to preferred stock, which would be nonvoting except under extraordinary circumstances. The net result would be that the operating managers, who might or might not be family members, would be able to exert more effective control over the affairs of the company. Not an elegant solution, but a functional one.”
“Was this restructuring your idea?”
“It was. And is, Mr. Vermeer. It will solve a number of problems that the overall business will face in the next few years, beginning with the succession issue.”
“What other kinds of problems does the business face?”
“A lack of synergy among the various parts. I’ve already described the state of the enterprise to you. It is a hodgepodge, however well intentioned. Certain things need to go. Other things may need to be acquired. Concentrating voting rights in the hands of the managers will make that process vastly easier.”
“Does the rest of the family know about this plan?”
“I have no idea. I am careful to talk business only with the se-nior Mr. MacInnes.”
“Which family members were supposed to wind up with this voting stock?”
“Our discussions were still on a general level. But knowing William MacInnes, I suspect he intended to split the voting stock with the two boys. His wife, Elizabeth, is not a player, except insofar as I explained in our previous conversation—as an intermittent influence on her husband. The daughter, Libby, has never expressed much interest in the business. She’s a nurse, as I think I told you earlier.”
“And what happens to this scheme now?”
“You will have to ask the MacInneses those questions. I have no idea. My role was simply to advise William MacInnes as to what would be best for the business. At the risk of restating the obvious, I have tried very hard to stay out of family matters, which sooner or later almost always degenerate into the illogical.”
Pirle puffed up a little bit. “Hard work and good luck. They have combined to put me in the right places, I suppose.”
“But one more time, for the benefit of a Boston cop who doesn’t get out much,” she continued, “who comes out ahead as a result of Eric’s death?”
“That depends entirely on those wills that I haven’t seen. Assuming, of course, that Eric was clever and focused enough to have written one. But as I’ve already implied, rich families with good lawyers never let assets flow backwards—that is, from younger generations to older generations. I have to assume that lacking representatives from the next generation, Eric’s assets will be divided between James and Libby. So they benefit. James is married, so I suppose his spouse, an elegant but inconsequential young thing, benefits indirectly.
“And now”—Pirle arched his eyebrows at Brouillard as he reached for his briefcase—“if there’s nothing else?”
“Nothing for now. Thank you for your help. I’ll be in touch if I need more insights. Not planning on leaving the country anytime soon, are you?”
Pirle stopped in midrise, looking for an instant like a runner on a starter’s block. Then he straightened up stiffly. “No. I’m teaching this semester. I take that responsibility very seriously. So I’ll be here until the end of classes. Why do you ask?”
Brouillard, smiling pleasantly, tapped the eraser end of her pencil on her notepad. “Oh, I just don’t want to have to call long distance if I have any more questions.”
“Of course. Please contact my office.”
Vermeer chuckled as Pirle strode out of the restaurant, pausing only long enough to retrieve his coat from Henri. “That was funny,” Vermeer said. “Well worth the price of admission.”
“Excuse me?” Brouillard, looking slightly irritated, stuffed her pad and pencil in her bag.