The Devil's Casino_ Friendship, Betrayal - Vicky Ward [72]
Fuld when he was appointed CFO.) The two men were also pretty dissimilar. Millard is a
cultured, cerebral man; Gregory was a self-made man who, many felt, still couldn't
believe he had made it. There was always tension between them.
After Lehman relocated, Millard was given a small corner office at the 399 Park Avenue
location, next to a conference room. He asked the architect if he could have a glass door
installed so that he could see into the adjoining conference room. A while later the
answer came back: The glass door would violate the building code. Millard, who had a
degree in architecture, knew that was not true. He suspected Gregory 's handiwork, and
called Fuld to complain.
Fuld laughed at him. "You are paranoid," he told him. "Don't be ridiculous. Of course Joe
has nothing to do with it. But I will look into it for you and see if I can get you your glass
door."
A few days later, Fuld called Millard back. "Well, I have to say it--and I cannot quite
believe it--but you were right. It was Joe. Joe wants to talk to you. And you will, of
course, get your glass door. I am very sorry for having doubted you."
A few minutes later, Millard's phone rang again. It was Gregory. "I will come and see
you," Millard said.
"No, no, I will come to you," said Gregory. The episode swiftly descended into farce.
Millard found himself stuck listening to Gregory for an hour as Gregory's apology
meandered on and on. "I know I haven't behaved well toward you in the past," Gregory
said.
From then on the two men stayed distant but cordial.
Fuld's efforts to cultivate the press were starting to pay off--though not without much
pain in Lehman's PR department. If ever a story appeared that was remotely negative,
Fuld would give the press officer responsible a grilling--or worse. One by one, over the
years, the most senior Lehman PR executives--Bill Ahearn, Tony Zehnder, Hannah
Burns, and Andrew Gowers--were fired because of stories Fuld had not liked. Only Scott
Freidheim (who was in charge of them all) survived, along with a hire of his, Rose
Shabet, a former chief of staff for Henry Paulson, John Thornton, and John Thain, the
former gods of Goldman Sachs. (Shabet resigned in April 2008 and moved to the hedge
fund Viking.)
By 2002 Moody's had improved its outlook on Lehman's long-term debt from stable to
positive, which the rating agency said reflected "the disciplined risk controls, posture and
culture that Lehman has installed throughout the organization and its people in recent
years." Fuld was named one of the "Top 25 Managers of the Year" by BusinessWeek. The
fixed income division had a record revenue year, and the European mortgage business
was expanded through the purchase of SPML--a subprime mortgage lender in the United
Kingdom. Lehman's business in Europe slowly started to improve under Jeremy Isaacs,
as did their prospects in Asia, thanks to Jesse Bhattal.
By now it was time to get rid of all weak links, so Gregory turned his knife on the last
remaining Ponderosa Boy: Steve Lessing.
Gregory believed that Lessing had hung himself by bringing too many friends into
Lehman who were not up to the job. Lessing had been running all capital market sales,
but, according to many sources, he was not respected by younger employees. In 2002, he
was made head of client relationship management, a title that was meant to save face
while he looked for another job.
Lessing's move was never announced publicly--that would have been too humiliating for
a man with so much tenure. To many, Lessing was synonymous with Lehman, so his
demotion was kept an internal secret. Still, everyone who knew about it expected Lessing
to quit.
But he did not. Instead, he turned the client relationship job into such a success that
within a year he rejoined the executive committee. Unlike most people who interpreted
the title "head of client relationship management" as "time to find a way out, " Lessing
actually did what it asked of him--he built client relationships. Furthermore, he got one