Parallel Paths Diverging Sharply
By LANDON THOMAS Jr.
May 17, 2007
On a hot evening this week in the Museum of Modern Art’s garden, Marie-Josée Kravis, the museum president, and her husband, Henry, played host to more than 900 guests who mingled near two giant Richard Serra sculptures. Her presence was cool and reserved, and her outfit of a shimmering sequin top and dark slacks struck a conservative tone amid the sun-fired skin and tummy-hugging gowns that the wives of other moguls favored.
Mayor Michael R. Bloomberg was there, as was Martin Scorsese — clad in tuxedos, as were most other men. The buyout executives Leon Black and Stephen A. Schwarzman huddled in a corner, and Bruce Wasserstein, the chairman of Lazard, chatted with Richard D. Parsons, the chief executive of Time Warner.
Part society gala, part networking session for the city’s business titans, it was the kind of event that Ms. Kravis, who is 57, has been working with verve and diligence since her days as a young economist in Canada, making her the toast of Ottawa, Montreal and now New York. With her smile sparkling, she was far removed from the pained testimony she gave this month as a prosecution witness in the trial of her friend Conrad Black, the former chief executive of Hollinger International, where she served as board member for eight years.
Part of the Canadian establishment in the 1980s, they emerged together in New York business and social circles in the 1990s. Today, Ms. Kravis remains a pillar of New York society, while Mr. Black, if convicted, faces a life prison term.
With its mix of high society and big business, the MoMA event might have appealed to Mr. Black.
“The essence of social life," he said in an interview in 1989, “is to make your contacts as interesting as they can be. Many people are intellectually stimulating. Some are not, but they happen to be important. So there is some utility in my knowing them.”
Marie-Josée Kravis, who would not comment for this article, was indeed a person worth knowing — a charter member of the Canadian establishment, whose conservative politics and glamorous countenance gave her entree to numerous Canadian boardrooms throughout the 1980s. In 1994, her marriage to Mr. Kravis, the buyout executive, gave her an additional luster, and several months later she accepted an offer from Mr. Black to join the Hollinger Inc. board.
Since his early days as a newspaperman in Montreal, Mr. Black has blended his business and social ambitions, packing his board with social and political dignitaries, and prosecutors say he charged to his company part of a birthday party and household expenses for a Park Avenue apartment and made liberal personal use of the company’s private plane. Prosecutors say Mr. Black and others took more than $60 million from his company, and engaged in fraud by using Hollinger’s money to help finance such a grand lifestyle.
In today’s era of increased scrutiny, corporate spending on social and personal matters, a once blurred line, can now be questioned by directors, shareholders and in some cases, regulators and prosecutors.
Such indulgences can also be tiresome, as Mr. Black himself seemed to suggest when he sent an e-mail message to an associate in 2001 expressing some exasperation at having to buy a $15,000 table at a Museum of Modern Art party in honor of Ms. Kravis.
“I suppose in accordance with our longstanding custom of supporting our directors that we’re stuck with this,” he wrote. “These New York charities are terribly rapacious.”
In fact, as evidenced by some long faces and slack jaws as the evening wore on at the MoMA party, getting ahead in society can be hard work.
“Go very light on the vices such as carrying on in society,” counseled Satchel Paige, the baseball pitcher and aphorist. “The social ramble ain’t restful.” Now facing 100 years in prison, Mr. Black might well agree.
Until recently, Ms. Kravis and Mr. Black pursued a similar path.
With their taste for conservative politics, hunger for social advancement and ease in corporate boardrooms, Ms. Kravis and Mr. Black left their Canadian origins in the past.
How sharply the symmetry of their respective ascents has diverged was displayed vividly this month in a Chicago courtroom.
On the stand was Ms. Kravis, who at various times has served on the audit committee of four major corporate boards in addition to Hollinger. Watching her intently was Mr. Black.
Subjected to a barrage of pointed questions by Mr. Black’s lawyer, she admitted to missing some board meetings, to not being a financial expert as defined by new Sarbanes-Oxley requirements for audit committee members, and most crucially, to not having read parts of documents that disclosed the noncompete payments made to Mr. Black. Other audit committee members who testified were Richard Burt and former Gov. James R. Thompson of Illinois.
Legal analysts say that by admitting that she was shown papers that described the payments, she may have undercut the prosecution’s case that he schemed to steal the money.
But for Mr. Black, the sharpest cut of all may have come with the low regard she seemed to show for the 60th-birthday party he gave for his second wife, Barbara, in 2000. Held at La Grenouille, a restaurant that caters to tastemakers on the Upper East Side, it was a lavish bid by Mr. Black to cement his place in Manhattan society, and those invited included Oscar de la Renta, Dixon Boardman and Barbara Walters.
Prosecutors contend that this was a social gathering, not a business one as Mr. Black contends. On the stand, Ms. Kravis agreed: “It was a birthday celebration,” not a business event, she said. And had she attended the party?
“Only the last 15 or 30 minutes,” she replied flatly. “I had another obligation that evening.”
For a woman used to wielding her influence in the privacy of closed boardrooms and evening dinner parties, the Black trial was a rude blast of publicity. But it was not the first time she had been thrust uncomfortably into the spotlight.
In 1976, Ms. Kravis, then known as Marie-Josée Drouin, was a 27-year-old economist working at the Hudson Institute in Canada. According to The Globe and Mail, a Canadian newspaper, Ms. Drouin became embroiled in a controversy when she flew free of charge to a holiday in Mexico with Jean-Pierre Goyer, a cabinet minister in the government of Pierre Trudeau whom she had previously served as an executive assistant. Such a privilege was supposed to be accorded only to family members. In offering an explanation, Mr. Goyer, who was living apart from his wife although not legally separated, said Ms. Drouin, who was single, was his common-law wife.
B. Bruce-Briggs, the author of “Supergenius,” an independently published biography of Herman Kahn, the founder of the Hudson Institute, recalled that Ms. Kravis escaped the headlines by locking herself in her house in Ottawa for 72 hours.
“She was embarrassed,” he recalled. “But she had a stiff upper lip and she adjusted her makeup and moved on.”
Her willingness to work long hours, an ability to communicate on television or in print in French and English and a well-honed glamorous side would make Ms. Kravis indispensable to a series of powerful men who would support her career over the coming decades. They included Mr. Kahn; Paul G. Desmarais Sr., the head of one of Canada’s wealthiest families; and the former prime minister, Brian Mulroney, as well as Mr. Black.
“I knew she would go far,” said Claude Frenette, a financial executive who gave Ms. Drouin her first job as a graduate of the University of Ottawa.
She became head of the Hudson Institute in Canada, and her public stature grew through a serious of columns that she wrote for The Financial Post.
In 1987, she joined the board of the Canadian Imperial Bank of Commerce, perhaps the most prestigious corporate board in Canada; Mr. Black had long been a member.
According to her testimony, it was through the bank’s board that she came to know Mr. Black. She soon became part of his expanding social world, attending such luminous events as the annual Hollinger dinner in 1989, when President Ronald Reagan spoke.
In 1994, after her marriage to Mr. Kravis — for both of them it was their third — Ms. Kravis moved to New York.
People who know Mr. Black say he is an imperious, headstrong man and not one to take criticism easily. Yet in 2003, as Hollinger came under scrutiny, it was Ms. Kravis who, according to her testimony, advised him “to be a little more humble” toward his antagonists. She was, however, one of the first major directors to resign as the scandal broke, doing so in late 2003 in a serious public relations blow for Mr. Black.
As she acknowledged on the witness stand, her role in Hollinger’s downfall has been embarrassing. On the stand, she admitted to receiving a notice from the Securities and Exchange Commission saying that she might be under investigation, although the commission did not bring any action against her. Stung by the Hollinger experience, she has resigned from her major corporate boards, including Ford Motor, Vivendi and IAC/InterActiveCorp.
“She was an excellent director,” said Barry Diller, the chief executive of IAC. “But she said this has become an unpleasant process.”
Now, she has assumed the full trappings of the billionaire’s wife: she is an active trustee and past chairwoman of the Robin Hood Foundation and is in the middle of a five-year term as president of MoMA, where she has used her corporate ties to energize and deepen support for MoMA from business leaders.
“Marie-Josée is a serious person,” said Jerry I. Speyer, a real estate executive and fellow MoMA trustee. “And she is not a lady who goes to lunch. She is successful in her own right and not just because she married Henry.”
She and Mr. Kravis split time among homes in Southampton, N.Y.; Paris; and New York.
For some close followers of Mr. Black, it was this rapidly elevated status that enhanced the couple’s taste for the luxurious lifestyle that would prove to be his undoing.
“The Kravises were a role model for Conrad and Barbara,” said Peter C. Newman, a biographer. “It was the jets, it was Palm Beach and it was New York society where they wanted to be accepted. And that is where the trouble started, because Marie-Josée’s husband was a billionaire and Conrad was only a millionaire.”
Copyright 2007 The New York Times Company