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 BULL
STREET
– The art of the Con
John DeLorean was the heir apparent at General Motors,
then the largest company in the world. He was the perfect executive, highly
respected, an excellent manager and socially accepted by one and all. Things
didn’t quite work out the way John wanted at General Motors for a number of
reasons, and when he saw the top spot was not going to be his, he determined
to open a company that would compete toe to toe with GM’s most profitable line,
the Corvette, a car that had taken the upscale yuppie market by storm and a
niche which DeLorean thought could stand a lot more competition.
DeLorean wasn’t much of a historian of the automobile
business. He should have known that the odds were very much against a new,
independent automobile company succeeding. It may well be that DeLorean didn’t
care a lot one way or the other whether his venture was successful, and may
have only been looking for a method of maintaining a lifestyle appropriate to
a person of his social charms. The fact that Tucker, Crosley, Bricken, Cimarron
Corvair, Kaiser-Frazer, American Motors, Studebaker, Edsel and LaSalle had bitten
the dust along with a list that is too long to count had nothing to do with
Delorean’s decision. Ego and greed were the compelling factors.
DeLorean determined to build a gull-winged, stainless
steel sports car in Northern Ireland where the British government was interested
in making a substantial investment to alleviate persistent unemployment linked
to social unrest. Many have compared DeLorean to his predecessor Preston Thomas
Tucker, who in 1948 built a rear-engined sedan with disc brakes, seat belts
and an independent suspension system. What the two had in common is that they
were both charismatic, they were both indicted by the United States Government
for fraud on numerous counts, they were both ultimately found to be not guilty
([50]) and both were way ahead of their times in terms of what they
tried to produce. ([51]) They differed in the Tucker was trying to build a sports car
that would appeal to the masses and saves lives whereas DeLorean was attempting
to deliver an overpriced automobile that not only couldn’t be properly produced
and whose bugs had bugs.
DeLorean raised money from anyone and everyone.
His presentations were public relations dreams. Like Ponzi’s schemes, everyone
wanted to get in on Delorean’s good thing. DeLorean was well prepared for them.
He set up a Panamanian Company, which was to do work for DeLorean but basically
wound up being a conduit leading to a Swiss post office box. It seems that over
seventeen million dollars found their way from DeLorean Motors to Panama, then
to Switzerland and from there to Swiss and Dutch banks. The next step in this
highly sophisticated money laundering operation said to be right back to DeLorean’
s personal account in the Untied States.
DeLorean went first class in everything he did and in line
with that, he hired the prestigious accounting firm of Arthur Anderson to do
his books. Anderson saw DeLorean as a super-charged customer who would always
be in the public view. Because of their anxiety to please DeLorean, they were
not as careful in auditing the books, as they perhaps should have been.
Courts in both Great Britain and the United States
found Anderson’s audits overlooked what appeared to be a number of instances
of fraud but particularly the Panamanian fiasco. In addition, an Anderson memorandum
was found that indicated that some were on to DeLorean and that the whole project
would collapse if the sensitive material involved ever became public. Anderson,
for its part, lamely explained the memo away with the strange story that it
involved something else relative to DeLorean that had been solved and had nothing
to do with the point in question. Whether it was or was not, the memo itself
would certainly indicate that in order to protect the public trust, Anderson
should have gone deeper into the books. When they didn’t, they ultimately got
hammered for their failure to follow “good accounting principals” and to make
appropriate public disclosures.
All of these things became almost secondary when
the U.S. Government took some pictures of DeLorean making a huge drug buy. If
anybody had any doubts before about the fact that something strange was going
on with the ex-General Motors honcho, this certainly should have put the matter
into clearer focus. However, John DeLorean was not just making a drug buy.
He was making a world-class drug buy that probably set the standard for that
era. This spelled the death knoll for DeLorean Motors and certainly didn’t
do their accounts any good either.
The DeLorean experience probably has cost Anderson
$100 million ([52]), including both the American and British settlements along
with a decade of attorneys’ fees and costs. The courts both here and abroad
did not seem even to think twice about the question of Anderson’s dereliction.
When this number is put into perspective, it becomes even larger. Probably $160
million was the total that was raised for DeLorean by all sources. The fact
that Anderson paid over 60 percent of the total amount raised is probably a
record even within the world of accounting litigation where conflicts and lawsuits
seem to be as normal as a walk in the park.
DeLorean fought tooth and nail to avoid jail and bankruptcy.
While he was successful in the former because of an entrapment defense, he was
declared bankrupt several years ago. In a fitting end to the strange tale of
John DeLorean, his home of many years is becoming a golf course and little of
his empire remains.
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