For many Americans, the image is indelible: Soon after President Reagan was struck by John Hinckley's bullet in 1981, Secretary of State Alexander M. Haig commandeered a White House stage and declared: "I am in control here." Haig's associates complain that television reports deleted the rest of his sentence: ". . . pending return of the Vice-President." But for many who witnessed the event, it was a jarring display of the legendary Haig ego.
A decade later, a cloud of controversy still hovers over the jut-jawed, four-star general. Some of it stems from his combative three decades of public service. A new book, Silent Coup, even claims Haig was a key source for the Washington Post's coverage of the Watergate scandal. Haig dismisses the book as "absolute hogwash."
But much of the flak Haig gets these days stems from his adventures in the corporate world. The head of a lucrative consulting business, Worldwide Associates Inc., the 66-year-old Haig has raked in hundreds of thousands in director's and consulting fees and holds stock options now worth more than $1 million. His current board seats are at computer maker Commodore, hotel operator MGM Grand, drugmaker Interneuron Pharmaceuticals, and privately held Quantum Computer Services.
SINKING STOCKS. Companies say Haig is valuable for his "marquee" name and his network of international contacts. When MGM/UA Entertainment Co. was to begin shooting a James Bond movie in Morocco, for instance, the government of King Hassan II backed out of a promise to provide fighters and tanks. Board member Haig and an aide got on the horn and straightened things out.
But some shareholders contend that as a corporate steward, the gung-ho general hasn't always been in control. Since resigning as Secretary of State in 1982, he has served on the boards of two companies that collapsed and eventually sought bankruptcy protection: consumer-goods company Allegheny International and retirement-home builder Leisure Technology Inc. Haig says he suspected there were serious problems at Allegheny but argues that the board wasn't getting adequate information until it was too late. He pins Leisure Technology's woes on plummeting real estate values.
Commodore International Ltd., meanwhile, has seen its market share plummet. Its stock has sunk from 61 in 1983 to 17, and its executive suite has been in turmoil. One former CEO, Thomas Rattigan, claimed Commodore reneged on Haig's promise of a "generous" severance package. In court, Haig denied making such a promise, but Rattigan collected a $9.25 million settlement from Commodore in his wrongful-discharge suit. The shareholders of another company, MGM/UA, sued Haig and other board members, charging that they approved the 1986 sale of the company to cable entrepreneur Ted Turner for too low a price. Haig argues that the MGM sale was good for shareholders.
In fact, he vigorously defends all of his work as a director. "I don't know anybody who's a stronger advocate of the shareholder," Haig barks during an intense interview in his company's office, located just blocks from the White House. In a low voice, flashing his trademark steely stare, he warns a reporter: "My business depends upon my reputation, my ability to attract clients who say this guy can get things done. . . . Be careful what you say about me."
STAR NAMES. But Haig concedes that the transition from government to the private sector hasn't always been easy. At first, he says, he had "vernacular problems" and had to bone up on such terms as debt-equity ratio and return on assets. Although he took a few courses at Columbia University business school back in the 1950s, he says, "that was a force-feed for me."
To many shareholder activists, Haig symbolizes everything that's wrong with boards. Too often, activists say, companies seek celebrity directors who are unlikely to challenge management. "The star names often don't have the commitment to be independent," says Sarah Teslik, executive director of the Council of Institutional Investors.
All Al Haig ever wanted to be was a soldier. After West Point, the Philadelphia native began a rapid climb to the top, serving as an aide to such powerful figures as Douglas MacArthur, Henry Kissinger, and Richard Nixon. Following a stint as Nixon's Chief of Staff and as head of NATO, Haig joined United Technologies Corp. in 1979 as president of the defense contractor. He left to become Secretary of State, a job he quit two years later after clashing with the White House over foreign policy.
To show his commitment to shareholders, Haig cites the stocks of some companies he has served: Shares in MGM/UA and Carteret Savings Bank doubled in price when the companies were bought. Then there's Interneuron Pharmaceuticals Inc., which licenses a weight-loss drug for sale in Europe. Units composed of stock and warrants have climbed nearly 600% since March, 1990.
Interneuron President Charles J. Casamento considers Haig a worthwhile asset. He praises Haig's "knowledge of world markets, of cultures, of customs, and even religions." However, several former employees of Interneuron's underwriter, D. H. Blair & Co., say the Securities & Exchange Commission is asking whether the stock's rise is part of a broad pattern of manipulation by Interneuron co-founder and Blair's 100% owner, J. Morton Davis.
Robert McCaw, attorney for Davis and Blair, confirms that the SEC is examining Blair but says the agency hasn't asked about Interneuron. Haig, who received options to buy 225,000 shares for joining Interneuron's board in January, 1990, and has paper profits of $870,000, disputes any wrongdoing behind the stock's gains. "If the stock's gone up, it's because people smell a good thing."
There's no disputing Haig's international connections. In 1983, working as a consultant to United Technologies, he visited Philippine President Ferdinand Marcos and snared a $63 million contract for 19 helicopters--after the Philippines had already signed a preliminary agreement with Bell Helicopter Textron Inc. More recently, Haig accompanied UTC Chairman Robert Daniell to see Turkish President Turgut Ozal and Polish President Lech Walesa in search of business opportunities. Haig "is quite highly regarded in many nations around the world," says Daniell.
For Haig, the schmoozing that goes with board service can be a kick. He has especially fond memories of the MGM/UA board: dining at Morton's, a hangout for Hollywood stars, playing tennis with controlling shareholder Kirk Kerkorian, and rubbing shoulders with fellow board members Art Linkletter, Dinah Shore, and the late Cary Grant. "It was great exposure," he says.
'SELF-SERVING.' But many MGM/UA shareholders don't remember the experience so warmly. Dissident shareholders sued Haig and other directors in 1986 for approving the sale of the company to Turner, who retained the film library but sold the studio back to Kerkorian. In lawsuits, shareholders said Kerkorian persuaded the board to accept an artificially low price as part of a sweetheart deal that enabled him to buy back the studio on the cheap. MGM settled with shareholders for $35 million.
Shareholders at Leisure Technology are also up in arms about a supposedly sweet deal for insiders. In his role as chairman of the stock-option committee, Haig recommended in 1988 that top executives receive 880,000 new shares--equal to 21% of all outstanding shares. While the stock was trading at $4.75, executives could buy the restricted shares for just 10~--with funds lent by the company. Haig insists the option plan was necessary to retain key executives. But that explanation doesn't satisfy Michael A. Connor, a senior vice-president of Fahnestock & Co.'s Connor-Ballan Div., who placed more than 15% of Leisure's stock with his clients. Complains Connor: "It was a totally self-serving exercise."
The collapse of the real estate market forced Leisure to file for Chapter 11 bankruptcy protection in April. Haig resigned from the board about two months earlier. Was this a strategic retreat by the general? "I suppose you could say subjectively that I knew it was going to require a hell of a lot of the directors' time," he says.
He didn't want to devote that much effort to the company, Haig explains, because he was in the midst of a "restructuring of my activities." Nowadays, Haig wants to offer his consulting expertise not for fees but for equity stakes in companies and construction projects. He's also taking some time away from business to write an autobiography called Inner Circles. In it, Haig plans to answer the latest Watergate allegations. He might want to save room for replying to his corporate critics as well.
Controversy has continued to follow Al Haig since he left the State Dept. in 1982. Among the companies in which he has served as a director:
LEISURE TECHNOLOGY August, 1983 - February, 1991. Retirement-home builder now in Chapter 11 bankruptcy protection
MGM/UA ENTERTAINMENT Early 1983 - mid -1986. Stock climbed, but shareholders sued in 1986, claiming board let Chairman Kirk Kerkorian cut himself a sweetheart deal when selling film library. Result: $35 million settlement in favor of shareholders
ALLEGHENY INTERNATIONAL September, 1983 - March, 1987. Consumer-goods company filed for Chapter 11 after disclosures of lavish perks, bad real estate investments. Since acquired by Japonica Partners
COMMODORE INTERNATIONAL November, 1984 - present. Struggling personal computer maker's market share has dropped from 26% to 6% since 1984. In 1988, Commodore was sued for wrongful discharge by former CEO Thomas Rattigan, who won $9.25 million in a settlement
INTERNEURON PHARMACEUTICALS January, 1990 - present. Stock surging, but underwriter and market-maker being questioned by SEC over possible stock manipulation