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224 CHAPTER 20 The Big Apple Turns Sour “They’re Going to Go after Us” Sy Hersh never aspired to be an editor. He was too restless to be desk bound or the comma police, but he had ideas how a newspaper should be run. He told Rosenthal, “The paper must always have a least one or two special projects in the works, some story or series of stories that make us different, that provide an edge that helps make the paper what it is. The biggest story in America in the next ten years is going to be corporations ,” he said in 1975. “If your local butcher pulled some of the acts these corporations pulled, he’d be in jail.”1 And he and Jeff Gerth knew which corporation they had in mind: Gulf and Western Industries, a fast-growing $3.4-billion New York–based company—the nation’s nineteenth largest employer—that owned Paramount Pictures, Simon and Schuster, Madison Square Garden (including the New York Knicks and Rangers), the world’s largest sugar mill, and millions of acres of real estate. Its president was Charles G. Bludhorn, a hot-tempered, hard-driving workaholic, once dubbed “The Mad Austrian of Wall Street,” who took a small auto-parts company and turned it into a Fortune 500 behemoth. Bludhorn had ties to none other than Sidney Korshak, which is how Hersh first encountered him.2 Following the path from Korshak, Hersh proposed an “extensive takeout” on G&W, “one of the most investigated conglomerates in modern times; almost an archetype of what is wrong, or suspected to be wrong, about modern big-time conglomerates.” This company, he said, “grows bigger not by building better products, but by playing the stock market.” Hersh felt the Gulf story could “help explain how things work in this nation.” He told Rosenthal, “I’ve been trying to get into big business stories since coming to NY, and this one is the ultimate.” Hersh again THE BIG APPLE TURNS SOUR 225 enlisted Gerth. The duo had taken on a mobster, but what was in store for them now was even more hostile.3 Investigating business has always been tricky. A primary function of the press is to check on government. Policymakers never like it, but they accept it. Disagreement begins, however, when it comes to its role vis- à-vis the private sector. Of course, the press is a business, beholden to advertisers, which might tamp down its enthusiasm for going after business wrongdoing. Consequently the function of checking on business has always been spotty. Certainly Ida Tarbell had no qualms when she tackled John D. Rockefeller and Standard Oil Company in 1902. Nor did Upton Sinclair hold back in his condemnation of business values in The Jungle in 1906. Nonetheless, the great investigative reporting surge that emerged in America in the late 1960s was more an attack against government malfeasance than business. Enter Hersh, the business school dropout who had written nothing about the corporate sector in his seventeen-year career.4 Hersh and Gerth began to prowl around—in public records, of course, but also looking closely at the fourteen investigations involving Bludhorn and Gulf and Western, many of which had been kicked off by the Internal Revenue Service and the Securities and Exchange Commission, which were looking at complex schemes that entangled the company. It led the reporters to conclude that company executives had lied to the government, destroyed damning documents, and duped shareholders and banks. Bludhorn, they felt, was using the company as his personal candy store, as backing for private loans and lavish personal purchases that he hid from shareholders. Over four months, the reporters spoke to seventy-five former company officials. Gulf and Western insisted that no one in the company but a spokesperson talk to them. About five weeks after Hersh wrote his initial memo scoping out his story, G&W fired back. Charles Davis, a vice president who was the front man in dealing with the Times, asked assistant managing editor Seymour Topping for a meeting. Your reporter, he said, is “spreading lies, although he bluntly asserts them as facts—lies of the most vicious kind. We are being investigated by a man whose repeated statements must lead us to believe that he is, in his own words, ‘out to get’ us.” He then cited some of the things Hersh was saying: “I am going to make trouble for G+W. . . . They tried to bribe IRS [18.189.2.122] Project...

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