The New York Observer, June 18, 2001
By James Verini
If the Guardian Angels celebrating their 22nd anniversary at Tavern on the Green wasn’t an incongruous enough sight, there were the four famous New Yorkers, from wildly disparate walks of public life, standing on the small stage in the restaurant’s back room at the event’s climax. None of them knew each other, but all four were wearing red nylon jackets and red berets.
They were, from left to right, Regis Philbin, who, for reasons nobody quite understood, received a “lifetime achievement” award; Mayor Rudolph Giuliani, who, for reasons slightly better understood, received the same honor; Angels founder and radio talk-show host Curtis Sliwa, giving out the awards; and, finally, Carl Icahn, Wall Street myth-maker, who was the Angels’ Man of the Year.
Mr. Icahn was once one of the most controversial figures on Wall Street, and still is, even as he rather quietly approaches the autumn of his career. But the crowd — save perhaps Mr. Giuliani — was feeling nothing but love for him. Mr. Sliwa called him “a son of the earth,” a smart Jewish kid from Bayswater, Queens, who grew up to “offset the trade balance with Japan.”
Regis Philbin introduced him. “This next guy is a man’s man,” he boomed. “He’s the toughest trader on Wall Street — a killer! … He’s buying, he’s selling, he’s coming, he’s going, he’s doing. He makes the other guys on Wall Street shudder!”
Mr. Icahn, who recently turned 65 and has not been a trader for some time, got up and, always the contrarian, insisted that he didn’t like charity events. “Especially when I’m the one being honored,” he said.
So why was he at this strange party — standing next to the onetime federal prosecutor who helped put away so many of his business associates, no less? Why wasn’t he in the office working on a deal (still his favorite activity) or at home watching one of his Clint Eastwood movies?
Carl Icahn has never liked to do what other New York billionaires like to do. But he was at Tavern on the Green for another reason as well, one that can be put into a single word, a word he repeated at least a half-dozen times that night: privatization.
It has become Mr. Icahn’s mantra lately, and not because he is reminiscing about his days in the hostile-takeover business. He was not talking about business at all; he was talking about charter schools.
“I think we need to get education out of the hands of government, away from all the bureaucracy,” he said, without deference to the presence of the Mayor. “A large percentage of kids aren’t graduating; 52 percent of kids aren’t passing the Regents [exam].
“We need to privatize it,” he concluded, to loud applause — including the Mayor’s.
Mr. Icahn is putting up the money. Earlier this year, the city approved an application for a charter school sponsored by his Foundation for Greater Opportunity, and in September, if all goes according to plan, eight teachers and about 100 students from kindergarten to the second grade will start classes at the Icahn Charter School in the Morrisania section of the South Bronx.
Construction of the school building, situated across Brook Avenue from the Icahn House, a temporary shelter for women and children that now houses 65 families, is underway. It is costing Mr. Icahn about $3 million. Costs for the first year of operations will run him about $1 million.
But like everything else about Carl Icahn, this tale has a slight twist: Mr. Icahn is not just driven by his concern for New York’s children. The man whose high-flying days in the 1980’s inspired a number of new laws is dedicating this stage of his life to working around government bureaucrats.
“If society is going to be successful,” Mr. Icahn said the day before the Guardian Angels party, speaking in the conference room at Icahn Associates Corporation, on the 47th floor of the General Motors building at 767 Fifth Avenue, “we’ve got to have free enterprise in everything. A system of rewards and motivations. A carrot-and-stick kind of thing.”
Mr. Icahn’s offices are not what one might expect from the man who begat Gordon Gekko. There is a Remingtonesque sculpture and some nicely manicured plants. The indices of power are subtle: a framed stock certificate from the real-estate investment trust Baird & Warner Mortgage & Realty Investors, his first target, which he renamed Bayswater Realty & Capital Corporation. A model train car on which ACF — the rail-car maker he acquired in 1984 for $405 million — is subtly printed.
More impressive are the views of the city, suggesting that Mr. Icahn can see all, can have all.
And, sure enough, he has. He was the most feared greenmailer and corporate raider (he’s always disliked those terms, preferring to call himself a “financier”) in America, with a list of conquests that has become the stuff of legend: Phillips Petroleum, Texaco, Viacom, Western Union — and those are just examples from the end of the alphabet. His perverse love of proxy-fighting and his pursuit of companies during the 1980’s was so omnivorous that Mr. Icahn seemed not so much a name as a force, the mere mention of which was enough to make C.E.O.’s quake in their John Loeb’s.
He published diatribes in Business Week comparing America to an ailing corporation; he was the subject of volumes of fierce criticism in newspapers and in minutes of board meetings. He was, and is, a figure of awesome respect and also revulsion — for some, the embodiment of the “greed is good” culture of Wall Street; for others, a revolutionary icon. He made billions of dollars for himself and for shareholders, but his motives and his effect on corporations — did he want to whip them into shape by excising the “fraternities” of management, or sap them? — will always be debated.
But in 1992 Trans World Airlines, which Mr. Icahn had taken over and tried unsuccessfully to manage for several years, went bankrupt. Since then, he has been largely out of the spotlight, quietly cutting deals, shorting Internet stocks like Priceline.com, and occasionally coming up for air to make not-very-hostile runs at such dogs as Nabisco and, ironically enough, G.M. In April he made a short-lived bid for VISX, an optical-surgery-equipment maker.
He lives with his wife of two years, Gail Golden, in a duplex at the Museum Tower and at an estate in East Hampton. He also has residences in Florida and Las Vegas. He loves gambling: horses, card games, sporting events, Monopoly — but especially poker. He bought his first stocks 40 years ago with a few thousand dollars he won in the Army and today is worth an estimated $4.5 billion, according to Forbes magazine. (“I don’t want to discuss that,” he told The Observer.)
At well over six feet, he is a towering man even when he slouches, and he resembles Mel Brooks. He’s funny, too, and has a child’s capacity for spontaneous glee.
Sitting in his office dressed in a yellow Oxford and wrinkly blue blazer, he often looks out of the window while he’s talking, as if he’s still amazed by how high up he is. But his thoughts are in the Bronx.
“Most of these places start on a shoestring budget, so they are almost doomed to failure,” he said. “But we can put up the money.”
Because both the public and the government are still wary of charter schools as an alternative to public education, Mr. Icahn thinks it’s up to people like him to get them going as not-for-profit companies. Foundations need to embrace them, not just to fund grants, he said. “If they understood how good charter schools could be, I think they would get into them. But they’re expensive.”
Mr. Icahn became interested in starting his own charter school years ago, he said, but couldn’t act on it until 1998, when Governor George Pataki (whom Mr. Icahn calls a friend) pushed the legislation through. Since then, specialists and assistants have been planning the school’s curriculum, which will be based on the “core knowledge” ideas of the education theorist E.D. Hirsch, and a battery of lawyers has been going through the tedious process of bureaucratic approvals.
“It will be rigorous,” said Julie Goodyear, who is in charge of the Icahn Charter School project. “We feel that kids need more knowledge to be prepared to enter the marketplace.”
Mr. Icahn said that the most significant obstacle he encountered was buying the land on Brook Avenue. The city told him it would take two years. He threatened to publish an Op-Ed piece in The New York Times. In a matter of months, he had his deed. While the teachers’ union predictably opposed it, Mayor Giuliani and Governor Pataki both expressed their support, he said.
But Mr. Icahn believes that it is always a struggle dealing with government. He and Ms. Golden (for a long time, the assistant who directed his charitable efforts) recalled the reaction of city officials when they proposed to build temporary shelters like Icahn House. “They said they didn’t need it,” said Mr. Icahn, baffled.
“Families were living in these awful residential hotels,” said Ms. Golden, a pretty, affable woman who matches Mr. Icahn for wisecracks and has no qualms about ribbing him (he takes it and seems to like it). “Kids were stepping over crack dealers on their way to school in the morning, and they said they didn’t need it! Then they put a moratorium on temporary housing.”
“We need less bureaucracy in everything,” Mr. Icahn said, magnifying his signature complaint about the corporate world. He has been screaming about bureaucracy for decades, and he uses the word about as frequently as he does “privatization.” “We live with some almost socialistic systems. Not many people realize that … socialism doesn’t work.”
Besides schools, he’d like to see other areas of government privatized. “The Reagan years helped a lot,” he said. “And so did Monica Lewinsky, ironically, by keeping the government from doing too much.”
So would the world be better off if more corporate types — those, like him, who eschew the omnipresence of government — went into politics? More Michael Bloombergs? “I like that he’s running for Mayor — but that’s not an official endorsement,” Mr. Icahn said. He added that he’s only met Mr. Bloomberg once.
“Jon Corzine and I are friends. We argue about government, but I think that he would agree with me on education.” (Mr. Corzine does, in fact, support charter schools.)
Mr. Icahn says he has no political ambitions of his own. That’s not surprising, given his view of government. He was scrutinized by regulators for years, though he was never accused of wrongdoing — unlike his colleague Michael Milken, who is still waiting for that Presidential pardon to come through. But legislation passed in the early 1990’s made hostile takeovers of the sort he used to practice impossible.
Mr. Icahn is doing fewer business deals these days and devoting more time to philanthropy. He doesn’t go about it like Mr. Bloomberg or Henry Kravis, donating generously to everything under the sun and becoming a fixture on boards and at parties like the one at Tavern on the Green.
“It’s a bit of a chore,” Mr. Icahn said of the charity circuit. “They ask you to buy a couple of tables, and then you go and are supposed to make small talk for three or four hours. I’d rather read a good book or watch a movie and pay more not to go.” And if they happen to be honoring him? “You get up and everybody applauds you, and you say, ‘What the hell did I do?’”
So has there always been a heart of gold under the tough exterior, as Mr. Icahn’s friends and colleagues maintain? Or is this just another gimmick perpetrated by a lifelong con artist, like his critics contend?
If it’s a gimmick, it’s costing him. Mr. Icahn does not raise money; he only spends his own, through his four charitable foundations. It probably has more to do with Mr. Icahn’s nature than his charitable impulses: An only child and fiercely independent man, he famously hates having partners. Stories abound about colleagues he’s cut out of deals and friendships dissolved in rough competition.
Right now, though, he said he’s thinking about poor children. In the late 1980’s he founded the Children’s Rescue Fund, which operates the Icahn House, with the goal of aiding abused children. He also has the Carl C. Icahn Foundation and the Foundation for Greater Opportunity, which, in addition to funding the Icahn Charter School, sends about 20 adolescents a year to Choate academy in Connecticut. Mr. Icahn’s son Brett, who just graduated from Princeton, and his daughter Michelle, still a college student, attended high school there.
On the speaking circuit, Mr. Icahn can be blunt and funny. One-on-one, he can be warm or distant. But his eyes light up when he’s talking about children.
“We send kids from Indian reservations, from the slums of Chicago,” Mr. Icahn said of the Choate program, as though amazed that he — the man who made $500 million taking on Texaco and $600 million taking on Nabisco — could pull such transactions off.
What about the glory of it all? “I think they just put the banner that says ‘Icahn Science Center’ up when they know I’m coming to visit,” he said of the renovated science building at Choate. (Fittingly, the building used to be called the Mellon Science Center.)
In 1999, he gave $20 million to Princeton University, from which he graduated in 1957 with a degree in philosophy (after his mother, a school teacher in Queens, told him that studying economics would be a waste of her money). The money is for a genomics laboratory; he is also giving Mt. Sinai Hospital $10 million for a genetics lab.
By his own admission, Mr. Icahn prefers to pay for, but stay out of, the operations of his eponymous foundations. “I don’t believe in micromanaging,” he said. He leaves that up to a handful of trusted assistants, including Ms. Golden, whom he married in 1999 after a protracted (six years) divorce from his wife of 20 years, Liba, the mother of his children. (She told the press that Mr. Icahn had treated her like one of the companies he went after.) Ms. Golden, with whom Mr. Icahn has lived since 1993, also has two grown children.
Mr. Icahn claims that he has no plans to retire, and that doing deals still turns him on as much as ever. But, he said, these days “I like to spend time with my family, and with Gail.”
“I think I qualify as family,” Ms. Golden snapped back.
And he has his friends. “I have an eclectic group of friends,” Mr. Icahn said.
“Very eclectic,” Ms. Golden added.
Although he claims not to chair the rich men’s club, he counts among his friends Sam Waxell, an investor, producer and general man about town, and Leon Black, the former Drexel Burnham Lambert banker.
Then there’s the charity and speaking circuit, which seems to be drawing him more and more. He might say he dislikes public events, especially charity dinners, but that was difficult to tell at Tavern on the Green on June 7. He had the people at his table roaring — when he wasn’t milling about and squeezing palms, talking it up with everyone around him (although he and Mayor Giuliani did not greet one another when the Mayor arrived during the first course) and posing for pictures with what seemed to be every last Guardian Angel.
“We need to support the Curtises of the world,” he said, referring to Mr. Sliwa. And he used that word again: privatization.
His son, an English major just out of school, was sitting between his father and a lovely blonde who was lavishing attention on him. Any advice for him, Mr. Icahn?
“I just tell him, ‘Whatever you do, work hard. Don’t be a lazy rich man’s son.’”