The Devil's Casino_ Friendship, Betrayal - Vicky Ward [77]
the world. It was the first time, one board member said to him, that they'd heard the
"unvarnished truth" about where Lehman was weak, and the board loved it so much he
ended up giving them two more presentations.
Fuld was proud of his protege's performance. He increasingly called on him to present at
corporate retreats. He would introduce him with a snippet of Shakespeare he reserved for
a favored few: "Lay on, Macduff." Freidheim obliged.
Jeremy Isaacs, believed that he too was a candidate for the seat of president. "Jeremy
thought he was the rightful number two," explains a former colleague who was close to
Isaacs. "If anything happened to Joe, he thought he should be number two. He had reason
to believe this. . . . He says be had said to Dick in May 2007: ' I've been running Europe
and Asia now for eight or nine years. I've done what you asked. Europe now contributes
50 percent of Lehman's revenues. I need to have an idea of where I' m going next. So, if
you can give me a signal of that forward pathway, good. If not, let's have a conversation
about how I can gracefully move on.' According to Isaacs, Dick basically said, 'Oh, you
are wrong. Give me a year. If I can't work something out, I will give you $500 million to
start your own firm, but give me a year.' "
But Isaacs did not help himself when he gave an interview to the Daily Telegraph at the
end of 2006 in which he stated that the following year Lehman planned to open an office
in Russia. The plans had not been finalized (even before the 1998 default, Fuld mistrusted
the Russians), but Isaacs had been involved in two years of discussions on the matter and
thought he'd expedite matters if he went public with the plan. It was not a move Isaacs
could get away with, and the new public relations chief, former Financial Times editor
Andrew Gowers, knew it.
"Jeremy," he asked gently during the interview, "are you sure you are now off the
record?"
"No," Isaacs insisted. "It's on the record."
As soon as the interview appeared, Gregory called Isaacs and tore him apart. Isaacs later
told Gowers, "You were quite right to try to stop that story. . . . I had myself a new
asshole ripped by Joe Gregory."
Gregory installed another golden boy in 2006, hiring George Walker away from
Goldman Sachs, where he'd been the CEO of Hedge Fund Strategies and then Alternative
Investment Solutions. Walker, a relative of President George Bush, was made head of
investment management and immediately put on the executive committee. Gregory told
the understated, likable Walker that he was a future candidate to run the firm. That year
investment management had its third record-breaking year in a row, with revenue of $1.7
billion.
But Gregory's most successful--and divisive--teacher's-pet project was yet to come. She
was a young blonde banker named Erin Callan, who--with a push from Gregory's hidden
hand--was vaulting up Lehman's ranks. He planned for her to be the most visible symbol
of his cultural remake of Lehman Brothers.
In 2004 Erin Callan was one of three Lehman executives to deliver a keynote speech
before the annual dinner of Lehman's group for women executives, Women's Initiatives
Leading Lehman (WILL), at Avery Fisher Hall in New York's Lincoln Center. Diane
Sawyer was the paid keynote speaker; 1,500 Lehman employees were in attendance. It
was an event that got the blonde banker noticed by all the senior management.
Gregory was pleased.
"It was never clear if [Callan] took the position at WILL to get noticed by Joe, or if Joe
gave her the position to make sure she got noticed by everyone else," one of her peers, a
banker, noted wryly. (Callan's ex-husband, Michael Thompson, says Gregory asked her
to make the speech and she spent a great deal of time preparing it.)
Whatever the case, it was soon widely understood within Lehman that Callan was
Gregory's newest diversity initiative. Senior executives who were privy to who got paid
what in banking noticed