Broker, Trader, Lawyer, Spy - Eamon Javers [54]
For Kroll, politics was over, and so was his chance to become another Robert Kennedy. He went back into business, starting up J. Kroll Associates in 1972. In the new company he would build on lessons he had learned in the printing business and in the DA’s office. Corruption was strangling the printing industry, inflating costs, and creating massive waste. Kroll would develop a business helping companies to do an end run around their own purchasing departments, which often chose the highest bidder—not the lowest bidder or the best supplier—after accepting food, clothes, trips, and even cash from eager vendors. Kroll knew he could knock prices down by running an honest purchasing effort for the companies. He signed up his first client, Cadence Industries, which owned Marvel Comics, published several catalogs, and ran a direct mail business. Cadence would be Kroll’s only client for his first year, but it was a global company, and the fee it paid was enough to feed his family. Most important, Cadence gave him space to work—inside the company’s own headquarters on Lexington Avenue in Manhattan.
After lowering costs for Cadence, Kroll began to develop new clients, focusing in each case on increasing transparency, creating a competitive bidding process, and sending a message to employees that fraud wouldn’t be tolerated. There was so much corruption in the industry that the methods were bound to work. Kroll couldn’t miss.
It was a heady time. Society was changing—shedding old ways of doing things—and Kroll found himself at the intersection of powerful trends in America. “The chances of a business like ours being successful at any other time are probably de minimis,” Kroll says. “But Watergate changed things.” In the aftermath of the scandals surrounding President Richard Nixon, people at all levels of society were reevaluating corruption. After Woodward and Bernstein, crusading young reformers were in vogue. On top of that, the late 1970s brought malaise, oil shocks, and economic slowdown. The fat profit margins of an earlier era—margins that could more than account for waste and abuse in the system—were gone. And the industry reform that Kroll was selling was seen not as the naive concept of an outsider, but as a sensible business strategy for a new era of belt-tightening.
By 1978, Kroll had about thirty employees, new offices, and new opportunities for his growing company. He signed a joint venture agreement with a publishing house to put together a text for corporate readers: Crimes against Business: A Practical Guide to the Prevention and Detection of Business Crime. Kroll hired experts to write think pieces on each aspect of the problem that he’d seen: commercial bribery, theft of intellectual property, antitrust violations, and so on. The project put Kroll in touch with the leading thinkers in his field, and gave him time to organize his own thoughts on fighting corporate crime. The work led to an intellectual framework for the company he would build. Kroll concluded that the nation was about to enter a prolonged period of self-examination, and issues such as transparency and accountability would be more important in America’s future than they had been in its past. He wanted to put himself at the center of the emerging trend.
Kroll’s big break came in the form of a European playboy and millionaire, Sir James Goldsmith, known as “Jimmy.” Goldsmith was a corporate raider with a taste for yachts and high living, and the heir to a family fortune that traced its roots back to sixteenth-century Germany. Goldsmith had already acquired a slew of companies around the world, including the British foods company Bovril, the corporate parent of the French weekly newsmagazine L’Express, and the American supermarket chain Grand Union. He was eyeing other American targets for takeover. He settled on Diamond International, a paper company whose executives