Riviera Club Sale to Japanese

As a publicly owned company with a reputation for ethical dealings based on more than a century of business relationships in Southern California, LAACO is deeply distressed at the innuendoes created by your May 2 article that LAACO’s sale of the Riviera Country Club to Marukin Shoji has somehow made LAACO a party to alleged wrongdoing by public figures in Japan.

After the article appeared, LAACO contacted the U.S. government agency conducting the investigation reported by The Times. A federal law enforcement official stated categorically that LAACO is “absolutely not” under investigation nor the subject or target of any investigation.

Contrary to your implication about “secrecy surrounding the deal,” it was fully disclosed even before it was consummated. We made a public announcement in May of 1988, when we reached an agreement in principle, rather than waiting for a final agreement. This was because our attorneys felt the very material financial impact of this transaction on LAACO made early disclosure appropriate.

As with any major business transaction, the Riviera sale required complex and lengthy negotiations, which were slowed further by the need to use interpreters. A further public announcement was made when the agreement was finalized in September, 1988. These and other announcements by LAACO were reported by The Times and other publications.

The negotiation and sale of the Riviera Country Club was an arms-length transaction. Marukin Shoji came to LAACO represented by well-respected American attorneys and accountants. LAACO was represented by equally competent and highly regarded attorneys and accountants. Since 1988 Marukin has lived up to its commitment to honor existing memberships at Riviera and to maintain Riviera as one of the finest golf courses in the world.

Your article stated the $108 million price paid for the Riviera “is difficult to justify.” This transaction occurred at a time when both the California real estate market and the Japanese economy were at record highs. Exceptional prices were being paid by Japanese purchasers for “trophy” properties all across the U.S. In addition, the Riviera property includes 168 acres of prime real estate in the heart of Pacific Palisades. If viewed as raw land which potentially could be rezoned and subdivided as home sites, the price paid was consistent with the land value. As noted in the article, Marukin planned to use the Riviera name for other real estate developments, so the acquisition included a significant “brand name” value to the buyer.

The article contained numerous other factual errors and damaging innuendoes which, intentionally or inadvertently, misled your readers about LAACO and distorted the history of this transaction.

KAREN L. HATHAWAY

President and Managing Partner

LAACO Ltd., Los Angeles