EXTRACT/THE NEW SAATCHI BOOK: Behind the scenes during the Saatchis debacle - The secret trips, the debts: Kevin Goldman’s account shows what really went on

The celebration was lively at the Saatchi Gallery on the evening of 19 June 1996 as more than 1,200 individuals gathered on a spectacularly beautiful night to celebrate M&C Saatchi’s first birthday.

The celebration was lively at the Saatchi Gallery on the evening of

19 June 1996 as more than 1,200 individuals gathered on a spectacularly

beautiful night to celebrate M&C Saatchi’s first birthday.



Waiters generously poured Bouvet champagne, Foster’s lager, Hildon

mineral soda and Sub, an alcoholic soda. Tray upon tray of chicken legs,

cold lamb chops, shrimp, and egg rolls spilled out of a makeshift

kitchen.



It was quite a party, with guests including John Major as well as

Auberon Waugh, Evelyn de Rothschild and members of Major’s cabinet.



In reality, there was much to celebrate: after only one year M&C Saatchi

boasted worldwide billings of pounds 250 million with a total of 250

employees in offices in London, Hong Kong, New York, Sydney, Singapore,

Dubai and Auckland.



Not all was smooth at the self-confident agency, however. Unknown to

most people, Maurice quietly made a rare trip to the US on 21 May 1996,

specifically to Cincinnati and his former client, Procter and

Gamble.



Maurice’s most stable contact at the giant company, Ed Artzt, had

retired as chairman and now he was immersed in untested waters. The

sojourn was hardly productive and confirmed Saatchi’s worst fears: that

there would be no role for M&C Saatchi to play in P&G’s advertising

strategy. A P&G senior executive told him that it would do nothing that

would harm Saatchi and Saatchi Advertising, which remained a P&G

agency.



M&C Saatchi’s growth in the US, arguably the most important region for

worldwide acceptance, was, at best, slow. It wasn’t until March 1996

that its US operation finally won a piece of business: Packard Bell, a

company whose advertising had been dormant prior to naming M&C

Saatchi.



Cynics from Cordiant and Saatchi and Saatchi Advertising whispered that

the only reason the new Saatchi agency won the account was because, in

the UK, Packard Bell is distributed by Dixons, the giant retail chain

whose advertising is done by M&C Saatchi.



An odd and somewhat psychologically unhealthy bond remained between

Cordiant and M&C Saatchi, though Cordiant executives liked to stress

that they had gone on with their lives.



Nevertheless, on 5 May 1996, a bizarre dinner took place between Bill

Muirhead (an M&C Saatchi partner) and David Herro (the US fund manager

who led the shareholder revolt against Maurice).



Muirhead had never met nor spoken with Herro and he wanted to see what

made the Chicago money manager tick. Both individuals came away from the

lengthy meal more convinced than ever that the other was wrong.



Muirhead more than once thanked Herro for creating the situation that

made him a richer man at M&C Saatchi than he ever was at Saatchi and

Saatchi Advertising. Although no-one believed that, Muirhead insisted it

was true.



Herro warned Muirhead to watch himself because he was, after all, in

business with Maurice Saatchi. Muirhead later described Herro as ’a kind

of Billy Graham who believes he is on a crusade’.



For his part, Herro was amused by the whole incident. The following

evening, he, Tim Jackson (Cordiant’s director of investor relations) and

Alan Bishop (then chief executive of Saatchi and Saatchi in North

America) had a good chuckle over the Muirhead dinner.



But Cordiant couldn’t walk away from Maurice either. An individual with

ties to Cordiant compiled estimates of Maurice’s borrowings - in other

words, how much he was in debt - dating back to 1987, when Maurice was

estimated to have debts of pounds 7.3 million.



Maurice’s finances grew so bad that in 1991 he was forced by his banks

to sell a glorious Italianate mansion, Lees House. The initial asking

price was pounds 5.75 million; it finally sold for pounds 2.5

million.



By the end of 1995, Maurice was estimated to have debts of pounds 4.1

million; there were whispers that Charles Saatchi actually owned Old

Hall, Maurice’s estate in Sussex, or at least it was Charles who

financed the purchase.



But others with knowledge of the brothers said that was simply

untrue.



And another with a Cordiant connection said in July 1996 that Maurice

sold three of his Bentleys merely to finance the purchase of a newer

Bentley, a fact confirmed by a partner in M&C Saatchi.



Appearances are everything to Maurice and now that he had a new agency,

he needed to show everything was right within his world.



Demons still plagued him, however. Either he couldn’t believe the truth

or he chose to ignore it: that his downfall was cleverly orchestrated

not by a peer, which is what he considered Robert Louis-Dreyfus, but by

individuals he felt were below him and who, therefore, he did not take

seriously.



These included Suzanna Taverne (recruited by Maurice to construct a

strategic review of the Saatchi group), Ted Levitt (a group board

member), the group corporate secretary, Graham Howell, and Herro.



As one person with intimate knowledge of the events leading to Maurice’s

ousting said in June 1996: ’Suzanna and Ted supplied the bullets that

Herro shot.’ Herro would not be specific, but one person close to him

said: ’Don’t underestimate what he got from Howell.’ Howell was hired by

Saatchi and Saatchi plc in 1994, shortly after he resigned as director

of legal and personnel services at London Weekend Television. He was

unimpressed with Maurice’s lack of concern toward shareholders, which

was in sharp contrast to his former employer.



However, Maurice set past troubles aside as M&C Saatchi reached its

first birthday and prepared to move out of its temporary headquarters in

Marylebone Lane. The estimated cost to M&C Saatchi to renovate its new

Golden Square offices: pounds 3.5 million. Cynics said that the agency

was erecting an 80s building in the 90s.



Such criticism, as usual, fell on Maurice’s deaf ears. Anyone who

wondered whether he had learned anything from the lesson of his former

company had meted out should note that M&C Saatchi, in late 1996, had no

plans to go public. Instead, it would remain a private company, far from

the scrutiny of meddling shareholders.



On 21 August 1996, Maurice became Lord Saatchi. John Major had rewarded

him for almost two decades of loyal service to the Conservatives with a

peerage.



Instantly, his critics seized upon the honour to ridicule Maurice. A

Labour spokesman suggested that he be dubbed ’lord of the lies’.



If such sniping hurt Lord Saatchi, he didn’t show it. He had risen to a

status reserved in the UK for only a handful. Along the way, he created

hundreds of jobs and made more than one employee, including himself, of

course, quite rich.



He had got away with a tremendous amount and had almost everything he

wanted, with one critical exception.



Cordiant - and Saatchi and Saatchi Advertising - survived.



Taken from ’Conflicting Accounts: The Creation and Crash of the Saatchi

and Saatchi Advertising Empire’, by Kevin Goldman, which was published

in the US by Simon and Schuster last week and will be on sale in the UK

this month.



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