More than honor is at stake
Charles Bluhdorn, the ultimate conglomerateur who merged some 150 companies into the $5 billion-a-year Gulf & Western Industries, is a tough, autonomous type, well known for his flamboyant and freewheeling manner. Last week, in a 60-page civil suit, the Securities and Exchange Commission charged G &W, Board Chairman Bluhdorn and Executive Vice President Don F. Gaston with "fraudulent courses of conduct."
The complaint follows a three-year investigation, aided by the confessions of Joel Dolkart, G& W's former general counsel, who was convicted in 1976 of forging a $250,000 check. The charges accuse the company of artificially inflating the value of some G &W assets; hiding losses by shuffling money and stock among subsidiaries; risking huge sums in unauthorized speculations in the commodities market; improperly transferring funds in and out of the Dominican Republic; investing G & W pension funds in outside businesses that benefited the officers; and using company legal, tax and financial services for private endeavors.
SEC officials offered to settle out of court, but Bluhdorn, calling the allegations "totally unwarranted and outrageous," vowed to do battle before a judge. More than honor is at stake. If the SEC prevails, it could order G & W to hire an outside auditor to fully investigate the company's affairs, recruit a more independent board of directors and adopt new management procedures.