Milken, as you probably know, turned junk bonds from a financial backwater into a national mania, transformed Drexel Burnham Lambert from a third-rate firm into a powerhouse, touched off a wave of corporate takeovers and insider buyouts and entered the Guinness Book of Records by earning a grotesque $550 million salary in 1986. But even though Milken, now 46, was the richest and most powerful person on Wall Street, he managed to end up in jail, where he now languishes. He spent a vast fortune on lawyers like Arthur Liman and on public-relations people and ended up with a 10-year sentence that a second-year law student could have gotten him–and an image that seems to grow worse by the day.
Unlike Ivan Boesky, Milken didn’t get to be a giant by being a crook. Crookedness was only a small part of what made him the king of junk. Only most people don’t know that, and will probably never find out because Milken wouldn’t talk publicly while he was flying high, and now it’s too late. Which brings us to Highly Confident (384 pages. William Morrow. $23) by Jesse Kornbluth, a Vanity Fair magazine contributing editor who tries to explain Milken in human terms. This book, which Kornbluth says is based on 400 hours of interviews with Milken and access to previously unavailable documents, is the Milken crowd’s answer to “Den of Thieves,” the devastating portrayal of Milken by Wall Street Journal Front Page editor James B. Stewart.
Stewart, who based his book largely on information from lawyers, prosecutors and Drexeloids who turned state’s evidence, presents Milken as a one-dimensional demonic figure, which he’s not. Kornbluth gives us Milken’s view, which blames everything on prosecutors and former Drexel co-workers who turned state’s evidence. Milken portrays himself as a dewy-eyed innocent, which Kornbluth, to his credit, doesn’t fall for. He’s pro-Milken, but not slavishly so.
I’ve followed the saga since 1984, when I co-wrote a Forbes magazine story that exposed some of the inner workings of Milken’s special ring of junk-bond investors. But for all the time I’ve spent on this story and with Milken, with whom I’ve had an on-and-off personal relationship since 1987, I don’t pretend to know him. You can probably find something approaching the real Milken by mixing and matching parts of “Highly Confident” and “Den of Thieves.” The trouble is, the man is such an enigma that no one has a clue which parts to take from which book. It’s obvious that Milken’s biggest flaw, as Kornbluth says, was a desperate desire to do every deal there was, even if it led him to doing sleazy (and possibly illegal) deals with people like Ivan Boesky, arbitrageur and felon, and the loathsome Victor Posner, corporate carnivore and felon, a man who sucked companies like Sharon Steel and Fischbach Corp. dry and left many employees without jobs by taking obscenely excessive salaries and perks.
In the battle for public opinion, “Den of Thieves” will win hands down. Even though the book is filled with mistakes, like overstating the difficulty of tracking Boesky and Posner’s Fischbach transactions, is biased and treats deceivers and crooks like former takeover guru Martin Siegel as if they’re trustworthy, it reads beautifully. On the other hand, Kornbluth’s book is in desperate need of an editor. Unless you care a lot about Milken and know his transactions backward and forward, it’s hard to make your way through the book. For instance, on page 77 Kornbluth refers to “the Occidental Petroleum/Diamond Shamrock and MGM/ Turner Broadcasting transactions.” But what are they? He’s never told us.
Kornbluth obviously doesn’t understand Milken’s convoluted financial wheeling and dealing, so he resorts to armchair psychoanalysis, with which he’s more comfortable. Somehow I don’t think Milken’s problem was that his father was an orphan with a limp, as Kornbluth implies. And no knowledgeable reader can buy Kornbluth’s thesis that Milken is in jail and Drexel is destroyed because of the “highly confident” letters invented by Drexel merger maven Leon Black in the mid-1980s. The letters, used by corporate raiders to panic takeover targets, said Drexel was “highly confident” it could raise the money the raiders needed. Raiders used the letters for credibility, because they couldn’t get bankloan commitments. Kornbluth quotes Milken as having opposed hostile takeovers and the use of “highly confident” letters–which isn’t the way I remember things, or the way my sources remember them. But Milken, as ever, sees through blinders. He’s completely right, and everyone else is completely wrong.
The pro- and anti-Milken zealots have now been heard from, and still we’re no closer to the truth. It would be nice if someone, someday, wrote an insightful, hard-hitting, down-the-middle book about Milken and the 1980s. Don’t hold your breath.
