In the business world, there are scoundrels and speculators who operate by wiliness and a second group that operates by charm. Count Meshulam Riklis, who died in Tel Aviv Friday at the age of 95, as an emblematic member of both categories.
Riklis was one of the original members of the junk-bond-financed corporate raiding circle overseen by Michael Milken out of Drexel Burnham Lambert’s Beverly Hills office. But his history as a raider dated back decades before then, to the 1960s and even, depending on how you count, to the 1950s. As he claimed in his self-published 2017 memoir, “$950 Million in 40 Minutes,” he originated, or at least pioneered, the technique of using borrowed cash to fund corporate takeovers.
“Some years passed before Michael Milken, one of America’s financiers, embraced my modus operandi,” he wrote. “But Milken got carried away [and] eventually pleaded guilty to felony charges” in 1990. “I was extremely careful to always adhere to the law.”
Well, maybe. Riklis laid out his career as a raider for me in 1986, resulting in a cover story for Los Angeles Times Magazine that remains to this date my favorite profile ever, largely because one could listen to Riklis for hours. He displayed all the charm, drive and resentment of a man who had risen from immigrant poverty — born in 1923 in Turkey, raised in Tel Aviv, he relocated finally to Columbus, Ohio, to study at Ohio State while teaching Hebrew on the side.
Riklis’ life was written in many distinct chapters. When I met him, he was living a chapter as “Mr. Pia Zadora.” He had married the singer and starlet in 1977, when she was 21 and he was 53, and immediately set about bankrolling her movie career.
The dealmaking did little for her reputation as an actress or that of the Golden Globes, which gave her what was widely considered a Riklis-funded award as New Star of the Year in 1981 for “Butterfly.” The film was an adaptation of a James M. Cain novella about an incestuous father-daughter relationship in the backwoods that was praised (sorta) by Vincent Canby of the New York Times with the words, “If it had been made with taste it would have been unbearable.” Riklis and Zadora divorced in 1993. Driven out of Hollywood by critical brickbats, she went on to a creditable cabaret career.
It was obvious when I met Riklis that he felt rather irked at having been overlooked as a takeover pioneer, at the very moment when muscular Wall Street finance was at the center of the news, both praised for its aggressiveness and damned for its crookedness. Ivan Boesky, with whom Riklis did deals, was arrested for insider trading a few months after my profile ran and eventually pleaded guilty.
Riklis explained his financing technique as “the effective non-use of cash.” As long as one had cash in the bank, he asserted, one could buy anything on credit. “That was a Riklis principle,” he told me. “Money is to look at, not to use.”
He exploited the principle in his first major deal, the purchase of Schenley, the distiller or Dewar’s Scotch, in 1966. Riklis waved $600 million of what he happily called his “funny money” in the face of Lewis Rosenstiel, Schenley’s obstinate owner. He also slathered on the charm, to hear him tell it. “To make a deal with Lew Rosenstiel,” he said, “you had to sit down and listen to his crap and smother him with love and affection. … You had to be a real lover.” Rosenstiel was 70 when Riklis first bid for his company in 1961 and 75 when the deal was made.
The balance sheet of Riklis’ core corporate platform, Rapid-American Corp., resembled that of a banana republic, with debt accounting for as much as 80% of net worth. That placed a premium on attentive management, which Riklis didn’t always provide. When his attention wandered, the consequences often were dire. He almost lost everything in 1963 and again in 1983, when his ownership of the failing Riviera Casino in Las Vegas almost brought him down.
But he never abandoned his financing technique. “If you make long-term investments and pay for them with long-term debt, you will not be in trouble,” he told me. “You must understand a basic principle: I have 20 years to pay it. In 20 years the rabbi and the dog will be able to converse.”
He smiled. “You know the story?”
It was an antique Jewish parable from Europe, about a Polish landlord who orders the rabbi of his village to teach the landlord’s dog to talk, on pain of exterminating the entire community. “So the rabbi says, ‘All right, but I want you to know it’s going to take 10 years.’
“So all the people say, ‘But rabbi, you’re crazy. You’ll never be able to teach the dog how to talk.’