Wednesday, May 18, 2011

CRS Design - John T. Jones, Jr. - and JESSE JONES

This is a fascinating account by John T. Jones, Jr. of how the Saudis got involved with the group of businessmen descended from parts of the "Suite 8F Crowd." Like his Uncle Jesse (who built and owned the Lamar Hotel where the crowd met), John Jones hailed from Houston, Texas. His father was Jesse Jones' brother, and he inherited what power he had from the foundation his uncle set up before his death--Houston Endowment--devised as a tax-free means of financing engineering work through "charitable" projects, such as museums, concert halls, and the like.

John T. Jones, Jr.'s favorite expression is "I don't know much," and he proves it in this oral interview. Was it that he didn't know, or that he just preferred not to tell us? One glaring example of what he didn't know is the omission of the name of Saudi investor Ghaith Pharaon, who entered the Houston scene at about the time CRS was intent on finding work abroad in areas where the oil money was abundant in the mid and late 1970s.

From Dec. 27, 1974 People of the Times column published in the Corpus Christi Times

"Earlier this month ARMAND HAMMER (above), chairman of Occidental Petroleum Co., told a Senate subcommittee on integrated oil operations that a Saudi Arabian businessman had purchased about one million shares of Occidental stock. He did not identify the businessman at that time. A company spokesman yesterday confirmed that the purchaser was GHAITH PHARAON, who represents Occidental's interests in Saudi Arabia. The confirmation followed identification of Pharaon by a Beirut financial magazine as the purchaser of shares. The company spokesman could not say precisely how many shares were bought. It has about 55 million common shares outstanding.
Another example concerns his involvement with the electrical contracting firm of Fischbach & Moore, Inc., which had not only been convicted and fined by a court in a lawsuit described below, but which had sold considerable shares of its stock to Ivan Boesky, who then conspired with Michael Milken, convicted in a later prosecution for violations of federal law. Yet John T. Jones, Jr. apparently saw himself as incidental to all this criminal activity going on all around him. What else was he in the middle of? More on that later. In the meantime, wrap your head around these blatant omissions:

Original File : 

Kevin Noon interviewed John Jones at his home in Hempstead on December 10, 1991. It was transcribed by Barbara Anderson.

KFN: This is real informal. . .what we are trying to get at is. . .if you could start with the beginning of how you got involved with CRS.

JTJ: Okay. I think probably the best thing for me to do first is identify myself. I am John T. Jones, Jr. My relationship with CRS was as a corporate director. I have no training, no experience of any kind in the field of architecture or engineering. I was selected as a director, I think, because of my general business background, because I knew some of the active senior members of CRS, because I had employed CRS earlier for a major job. . .and we both spoke to each other after it was over. I wasn't very loud but I was a member of that Board from sometime in the early 70's to about the mid-eighties. The exact dates, I'm sure, are in the company records. There would be no problem about that. I resigned from the CRS Board at the same time directorship in the Fishbach Corp. of New York put me in danger of a conflict of interest with one or the other. This was at a time when both CRS and Fishbach Corp. were very interested in going into the general contracting business. Prior to that time, Fishbach had been a general electrical and plumbing contractor, national and international in scope.

KFN: And your relationship with Fishbach was. . . ?

JTJ: As a Director. My relationship with Fishbach was about ten years longer than with CRS. So when I had to give up one, I gave up the one with whom I had the shortest relationship. Without reference to personalities or anything like that, because at the time, I had a great many very good friends in both organizations, but sooner or later I would have been in conflict and I wanted to avoid that before it came to a head.

My business background is primarily in communications. From 1950 to 1965, I was President of the Houston Chronicle Publishing Co.; President of the Houston Consolidated Television Co. from its inception in 1954 to its sale to Capital Cities Broadcasting Corp. in 1967. That is a Texas Corporation, which owns Ch.13 in Houston; and was and still am Chairman of the Board of the Rusk Corp., a radio broadcasting company, which has KTRH-AM and K101-FM in Houston, an FM stations in San Antonio, Austin, and the Permian Basin, generally in Midland.

Now, CRS. . .what would you like to know?

KFN: First of all. The initial project that got you involved.

JTJ: The initial project that got me involved with CRS was the construction of Jesse.H. Jones Hall for the Performing Arts, which in this year, 1991, celebrated its 25th anniversary. At the time I was Chairman of Houston Endowment Inc., which financed the construction of the Hall as a gift to the City of Houston from Houston Endowment. Houston Endowment, incidentally, was the foundation formed by Jesse H. and Mary Gibbs Jones in 1938, principally funded at Jesse Jones' death in 1956. When we decided to do this, I had talked to several architectural firms but not very many. At the time, through the Jones interests, which had been commercial builders in Houston for a long time, I was in touch with a great many architectural firms. I was particularly impressed with background of CRS, Caudill Rowlett Scott. They had done a great many major school or college projects and other public type projects. I was rather naive about architecture then, but I thought if they could design a college campus, they surely ought to know how to handle people. I was also impressed with the representatives from CRS who called on me. The ones who called on me were Wallie Scott, Tom Bullock and Willie Peña. The selection process was really not scientific at all. We were just impressed with these people, and they left me brochures and that kind of stuff, which were pretty. Every good architectural firm has brochures and they are certainly not going to showcase their bad jobs. I asked them what they thought about it.

KFN: So that was your impression of them, essentially, and how they performed when you interviewed them. How many other firms do you think you might have talked to?

JTJ: I don't know. . .two or three. Besides that, they sure wanted the job.

KFN: Oh, I'll bet.

JTJ: They sure wanted the job. It was a good job for them because it was a chance for them to showcase themselves in Houston. They had only recently come into Houston. Before then, they were headquartered around College Station, doing work nationally. . .scattered around. When they moved into Houston, they really needed a real good job there. I thought because of that they might work just a little bit harder to make it a good job, a real showcase job. All the principals of the company I talked to were intrigued with the idea of this gift to the people of Houston on the same site as the old City Auditorium. The old City Auditorium, I'm sure, was a great building in its day but its day was long gone. That's basically the reason I picked them.

KFN: How did things evolve after that?

JTJ: Naturally, during the construction of Jones Hall, I was with them quite often. They were easy to get along with. They were the designers, supervisor of construction. I had never dealt with them before. I trusted them completely. . .but another architect was Clerk of the Works. He was there. . .

KFN: To give a second opinion and keep an eye on things.

JTJ: To see that it was being built as drawn and if not, that it was explained why. . .and to watch the architects and watch the contractor. He was our only direct employee; he worked for the owner. He has since then become quite a successful architect on his own. That is probably the basis and background. I got to know Tom Bullock very well and Herb Paseur. We used to have regular meetings of the Building Committee, and I was chairman. That didn't mean I knew a damn thing about building but it meant I was at all the meetings. We always had two or three people from Houston Endowment and most of the principals of CRS. . .always Bullock, Paseur. . . .

KFN: Was Bill Caudill ever involved?

JTJ: Bill Caudill was there from time to time. When he was there, he was very active, constantly offering suggestions, and just as frequently, offered questions. I was very impressed with the man. He had a mind that was . . .unfettered, let's say that. He liked to question and experiment, but never dangerous in his experimentation. Anyway I got to know the principals quite well. Jim Gatton was the Project Architect and I got to know him best of all. Jim, I will say, turned in a good job. No job is perfect. There are always glitches that show up now and then. But Jim did a good job on smoothing them out. If he couldn't smooth them out, he worked them out. Now what else do you want to know?

KFN: I have a communication background myself, a degree, no work in the field at all. I'm interested in that topic and we're going to hit that topic pretty hard. Given all the possible definitions of communication, feel free to hit on any of those. What kind of communication structure did you see in the company when you tried to deal with them in the early years? Did you see any problems there, any advantages, examples of how they communicated with each other?

JTJ: Not particularly. I was pleased. . .I won't say surprised. . .with the internal communications of the organization. I expected that because the principals I met were, to say the least, were garrulous. They were intent on everyone's knowing. . .Bullock, in particular, had this business of everybody working together. I don't know whether Tom Bullock can draw a straight line or not, but he's a hell of a mover. I got to know him and like him a great deal and my opinion hasn't changed at all.

KFN: He had some great things to say before I came down here. I could tell he wanted to do this interview but he can't.

JTJ: He'd have done a good job but he'd have done most of the talking. Anyway, I was pleased with the internal communication and I expected that. Certainly Bill Caudill. . .he was the Daddy Rabbit of the organization, the thing everybody coalesced around. . .was the fountainhead of a constant "stream of consciousness" memos, going at it all the time. Must have been a full time job for one person to keep him supplied with those damn little cards he used to send them out on.

KFN: Yeah, he was a thinker.

JTJ: Yes he was. . .thought all the time. He used to fly an old float plane. . .looked like a float plane, a cumbersome old thing. He'd fly it from College Station to Houston and come by this place, our ranch here in Hempstead, Texas; and there is old Oxbow Lake down there. He would fly over that thing and wiggle his wings and I knew next I was going to get one of those little cards with what he was thinking about when he flew over.

KFN: That's wonderful!

JTJ: What's next?

KFN: Okay, you marked off "Mergers and Acquisitions." You were involved with some of those as they came along, possibly Sirrine and others.

JTJ: Yeah, well. That was a long time after I got on the Board. I was interested in the Sirrine merger. I thought it was very much to the benefit of the company. When I first got on the Board, whatever that elusive date is. . .I can't think of it right now. . .CRS was just starting to grow out of being a pure architectural design company. They were going into Construction Management in a pretty big way, and they put in a pretty sophisticated. . .computerized, that's what sophisticated means these days, I guess. . .computerized construction management system. And they were doing very well. It was quite good and by that I mean they were getting work.

KFN: So you think it was the right thing to do, switch over and start. . . . .

JTJ: As you know from talking with others, at this time they were doing quite a bit of overseas work. When I joined the board, they were in the process of one big deal and going into another one, the HOK+4 consortium in the Saudi Kingdom. They were pretty well wrapped up with that. Incidentally, that went well and wound up that the companies' top echelon were more concerned with how to get the money out of Europe and back to the U.S. than they were with any glitches in their actual process in Saudi Arabia.

KFN: I see, how to get the receivables back to the country.

JTJ: I was kind of familiar with that because the Fishbach board. . .this other company I was with, an international electrical contractor, had just done a tremendous electrification job for the new nation of Zaire, and they were in the midst of electrifying. . .I don't know the name of the river. . .there's one great huge river that runs almost the full length of Afghanistan. . .and they were electrifying a lot of Afghanistan, hydroelectric dams, hydroelectric (?) and they had the same problem of how to get their money out. Seems all these countries want you to come in and do the work but make it difficult to get it out and the U.S. makes it difficult to get it in.

KFN: So that was the big problem. . .

JTJ: Not a big problem but was a problem, one that occupied some board time. Bought an awful lot of airplane tickets to Africa. . .

KFN: Were you involved with the Sirrine acquisition?

JTJ: No, not directly, just as a board member

KFN: How did you feel about that?

JTJ: I was for it. I thought a long time about it but I was for it. Architecture hadn't gone into a slump or anything like that, but architecture was a little flat. Sirrine was pure engineering company and had a real specialty. . .they were the leading paper-making engineers in the U. S. Having been closely associated with the newspaper industry for a number of years, I knew that was an industry that had not topped out. Canadian paper was becoming more and more expensive. European paper was certainly more expensive and very limited. . .all the companies were in Sweden and Finland. At that time we could not get any importation from Russia. I don't know whether there is any now or not. Russia's got the greatest potential in the world. The Canadians have got the raw material but the Canadian plants were all old, old, old. The new plants were all in the southern pine belt. Southern pine is a very rapidly renewing resource. You can grow pulp logs in 14-15 years. It takes 20-30 years to grow a tree the same size in Canada because the growing season is so short. Takes even longer than that in Finland. They've got to get their growth in 2-1/2 to 3 months. I was very much for the Sirrine and did everything I could to foster it .

KFN: On the downside, what were some of the opposition comments? Do you remember any?

JTJ: There was lots of questioning. There was only one real "con." Chuck was very reluctant to go into it. He had been for it for a long time. . .first he was indecisive and then was actually against it. That's the reason he left the company. He thought it was the wrong move, they were going too fast into uncharted areas. He was kind of a. . .I won't say cautious. . .but in this case, was careful to a fault. I think the good points were obvious. He didn't see it that way and wanted to keep the status quo a little longer. He was a little more apprehensive about going into uncharted waters. . .

KFN: What other mergers and types of things did you look at. Do you remember?

JTJ: There were lots of flirtations. One that went through was the Geren firm in Fort Worth. That was a relatively small firm, very, very strong in its market. That went through and I have no idea what came out of it.

KFN: What was their specialty?

JTJ: They were general architects in Fort Worth, did a little of everything. I'm sure they'd have been delighted to build you a church, office building, factory, whatever. It was a fair-size firm. . .my memory is bad. You can check with Bullock, although I know his memory isn't a damn bit better than mine, but he might add to it. I think they had close to 40 associates, but owned by an individual. . .at least that's my recollection. What else do you want to know about CRS?

They had great board meetings, I'll tell you. You ate, you drank. . .anything you wanted. Extremely eclectic board, too.

KFN: Yeah, I noticed there were some really interesting people on the board.

JTJ: Characters, characters.

KFN: Now did that help to broaden perspectives on where the company should go? Did that cause problems?

JTJ: I don't think it caused any problems. This board was . . . .I don't remember any real arguments. . .lots of discussions, very open and free. It was a very good board in that respect. The character I referred to principally, I guess, was John Naisbitt, the author of Megatrends and all that stuff. He had a bunch of correspondents who clipped newspapers and sent them to him. From this wealth of clippings, etc. he would project things. I guess it turned out all right. . .I don't know whether he was an economist or just a good collator. He turned out to be a hell of an author, probably made a lot of money out of it.

KFN: Do you think he sparked a lot of visionary ideas being there?

JTJ: He sparked more discussions than interest. He may have headed off a few things. He pointed areas where you could concentrate (?). He was pretty firm in his projection that the future states, as far as economic growth was concerned, were California and Florida. Then the other sunbelt states with Texas in thelead as a sort of secondary role. That's my recollection. . .he kind of ruled out a lot of the rust belt states. He hasn't been completely accurate in that because some have done fairly well.

KFN: Basically, then, he stirred up a lot of conversation.

JTJ: Oh yeah. We had a board member who was a particular friend of mine, named Aaron Farfel. Who resigned before I got off the board. Aaron was, I guess you would call him, a general businessman and extremely successful. . .very quiet, softspoken and sharp as a tack. When he spoke, he never raised his voice but everybody stopped and listened. He didn't interject many comments, but when he thought he saw something, he would bring it up.

KFN: What was that name again?

JTJ: Aaron Farfel. He was. .. .

KFN: Was he on the board for a long time?

JTJ: He was on it for several years. He was particularly good with finances. He was also one of my board members on the old Ch. 13 board.

KFN: Based on your work in the communication industry, coming into an advisory capacity for an architectural firm, did you think these folks were a little out in left field. . .were they progressive. . .aggressive. . .moderately so. . .visionary?

JTJ: They were everything you said. They were kind of wide-ranging. They also. . .at least a number of them. . .had their eye on the bottom line too. . .knew what the company was there to do. It was there to be a great architectural firm but they didn't have a Medici family back of them to support them, so they knew they had to make money. They were good at that.

KFN: Do you remember any of the other folks who served on the board with you?

JTJ: Sure. At first, there were Bill Caudill, Wallie Scott. . .

Side 2

JTJ: We always had the financial side of the company represented. The outside directors, Naisbitt, myself, Farfel.

KFN: What did you say Farfel's contribution was, mostly?

JTJ: Financial. He was an excellent financial man.

KFN: Do you remember where he came from?

JTJ: I know exactly. He was an accountant and lawyer by training; came to Houston following WWII as an IRS officer. He spent five-six years as an IRS officer auditing some of the major organizations in Houston, including our own. Then he opened A.J.Farfel & Co., a CPA firm. He did that for, I guess, 15-20 years and then gave that firm to his employees. It was a successful firm and is now Peat Marwick Mitchell in Houston. He was President of Pyramid Rubber Co. , which during WWII made an absolute mint of money because they had stockpiled most of the natural rubber available for baby bottle nipples. That's the only thing the federal government released natural rubber for and they owned the company. He was Board Chairman of Spaulding Sporting Goods Co., a big company. Their principal product was golf balls. . .which are, here again, wrapped in rubber. He was in a lot of things. . .real estate. . .a real entrepreneur. If it had possibilities, he would take it on, quite a venture capitalist. He gave me long lectures on the investment of money and gold. . .he said it was the worst investment of all. He said its dead, inert. . .money invested in gold does nothing. Money should be invested in production, something that's created.

KFN: Well, he proved that.

JTJ: Oh yeah, he proved that. He wasn't wrong very often.

KFN: How did you guys get along as a team on the board?

JTJ: Pretty good. I think everything was pretty copasetic most of the time. There were disagreements, sure. There are bound to be lots of disagreements in any company. Those were either settled, worked out or laid to rest before they ever got to board level. We didn't have to worry around with much of that. When Chuck left the company, that did get to the board level who accepted his resignation.

KFN: If you could start over again, back when you first joined the board in the early years. What would you have done differently from what they had going? Brought on different people, tried different strategies, different economic directions. . ./

JTJ: No, I think they did pretty well like they did. On the board, I didn't talk very much, unless I thought something was going the wrong way. (This part unintelligible. . .the parrot drowns out Mr. Jones). But I didn't do that very much. I don't know that I'd have done anything very differently. I think CRS. . .although with many name changes. . .has been quite successful and done a damn good job. . .they've left very happy tracks behind them all through Texas.

KFN: That's the point of our effort here, to find out why that happened.

JTJ: I think this, in very large measure, is the pattern set by old Bill Caudill. He was kind oaf bear of a guy, but a great fellow.

KFN: And of course, Tom, keeping up with the production end of it.

JTJ: Oh yes. Tom had a little hand on the sales effort, too. Quite a bit. . .he was damn good at it.

KFN: I'm sure he'll be glad to hear that. Did you follow the company at all when you left in the mid-eighties or so?

JTJ: It was 84-85, something like that. Yes, I kept up with it. Certainly I kept up with Tom, Herb Paseur. . .I see quite a few of them.

KFN: Let me go back and ask you one other thing. Did you get involved with any of the management of the company at all, anything internally, management-wise, how they were running things?

JTJ: Not particularly. Tom might have been worried about something and talked to me. He likes to have somebody to bounce things off of. So I got involved in very small ways. But to be available to have things bounced off you is pretty good service sometimes.

KFN: Oh yeah, especially with your background in your other interests. At the same time you were serving on the CRS Board, what other positions did you hold?

JTJ: At one time or another during that period of service, I was involved with television. I was no longer involved with the Houston Chronicle. I resigned from the Chronicle because I had bought its radio station and didn't want to be in conflict with that. I was a director of what's now Texas Commerce Bank. It was then the National Bank of Commerce; I was director of the Houston local Chemical Bank, Chemical Bank & Trust, which was later absorbed by National Bank of Commerce. I was a director, just retired a couple of years ago, of American General [later AIG] for thirty years, and a director of Fishbach Corp. Fishbach Corp. is a New York contracting company. With a conflict of interest, I left the CRS Board. [The corporation's name is misspelled throughout this oral transcript. Correct spelling was "Fischbach".]

KFN: So with the banking, communication and Fishbach, can you make any comparisons as to how they conducted business in those other industries vs. this one. Is there anything you . . . .

JTJ: The difference between the boards?

KFN: The boards, exactly.

JTJ: There was a lot difference.

KFN: Okay. Can you describe some of the more unique things that set them apart?

JTJ: The Fishbach Corp. was essentially a family company, founded by Harry Fishbach and Bob Moore, two men. Moore sold out a few years after the war. Harry Fishbach and his sons stayed on and they pretty much dominated the company, a New York organization. The people on the board had all been there a long time and it was a very close board. The ones who lived in New York, especially, used to see each other socially. . .very willful, argumentative. It was necessary to have a lawyer on that board and they did.

Fischbach & Moore, Inc. of Dallas (F&M) was sued for rigging contract bids on nuclear power plants
~~~~~~~~~ Result of the trial convicting the defendants was appealed and opinion announced in 1984 at 750 F.2d 1183 in The United States v. Fischbach and Moore, Inc.
For approximately seven years, from 1974 to 1981, representatives of several electrical contracting companies met at the Duquesne Club in Pittsburgh. The purpose of these meetings was to allocate electrical construction projects, by bid rigging, at the Western Pennsylvania Works (Works) of United States Steel (USS). Whenever one of the companies desired to rig a bid, that company's representative would telephone the other contractors and arrange a meeting. After deciding among themselves which firm would receive the contract, that firm's representative would contact the other contractors and would tell them what bid to submit, ensuring that his firm's bid would be the lowest. Some of the firms kept track of the allocations to ensure that each contracting company received its fair share of work....
F & M brazenly committed a grave crime. The jury found the company guilty of conspiring to commit per se violations of the Sherman Act in a series of meetings that obviously were illegal. Moreover, F & M was one of the ringleaders of that conspiracy. As to the sentences imposed in the same jurisdiction, the penalties levied on the other defendants in this case provide a good example. Every individual defendant received a fine and a prison sentence; all the corporate defendants received one million dollar fines. 

APRIL 25,1990 from AP--

"We believe that this prosecution and the fact that Mr. Milken has admitted to guilt will send the right message to the financial community," Assistant U.S. Attorney John K. Carroll told the court. Mr. Carroll said that after sentencing is completed, the public "should conclude that justice has been done." 
Milken was composed as he described the work of Drexel's Beverly Hills, Calif.-based junk bond department and his unlawful actions. He broke down in discussing his personal struggle during the four-year investigation. In addition to conspiracy, Milken admitted to violations including:  

Violating federal disclosure requirements by failing to record a deal compensating Boesky for trading losses in Fischbach Corp. in 1984. Boesky had acquired more than 10 percent of the takeover target on Milken's recommendation and Milken promised to to cover any trading losses.
—Securities fraud involving the sale of MCA Inc. stock by Drexel client Golden Nugget Inc. in the fallof 1384. Milken said he arranged illegal trades to cover losses by Boesky, who agreed to buy blocks of MCA stock to mask sales of large positions and create the appearance of market demand. Milken said his plea was an admission of personal responsibility "and not a reflection of the underlying soundness and integrity of the capital markets in which we specialized."
"Our business was in no way dependent on these practices," he said. "Nor did they comprise a fundamental part of our business and I regret them very much."
Junk bonds grew from an obscure form of debt to a $200 billion market almost entirely because of Milken, who controlled a wide network of buyers and sellers and wielded enormous power.
The market virtually dried up last fall because of problems involving several large defaults and Milken's departure from the scene.
KFN: As a moderator.

JTJ: But they all liked each other very much but were mostly individuals, men who had been CEO's of various contracting organizations, which had been taken over by Fishbach [sic]. They were all successful, all had very strong opinions. Sometimes it seemed to me that the one who could holler the loudest was the one who. . . . It wasn't quite that bad but it was a very open board. American General was more like a bank board. You had a very set agenda, stuck to it. As you come to everything on the agenda, the Chairman is more like a school teacher. He recites everything, explains the items, including all ramifications, and there is not as much feedback from the various board members because, everything is talked about and the only feedback you get is if somebody really does object. In those days, banking was a pretty well regulated industry, so there was not as much reason for much feedback, as long as you stayed within the law. American General [founded by Gus Wortham] was very much the same, possibly a little more discretion than the bank but not much. The one time when you had a whole lot of board feedback was if the bank ("hook 'em horns". . .you know where I went to school) was going through a change of direction or policy, something like that. . .if they were planning on a merger, a purchase, a major acquisition. That's when things really got out, but the routine, day-to-day things were not discussed, as say, they were on the CRS Board. They were on the Fishbach [sic] board.

KFN: They were discussed on the Fishbach [sic] board?

JTJ: Everything was.

KFN: Everything was?

JTJ: Just about. If it wasn't discussed, they'd bring it up and ask. . . ."where do you buy your pencils?"

KFN: Is that right? And CRS had a kind of mix of that, some details but not much. And in the banking and insurance. . . .

JTJ: Much more structured.

KFN: They didn't bring out the details as much. . .they were pretty much set anyway.

JTJ: Toward the end of my tenure on the CRS board, it was becoming more structured because it was getting so damn much bigger. So many different things to discuss, there had to be more structure to the board.

KFN: Was the attention to detail in Fishbach beneficial to them? Could they have done better without so much attention to detail?

JTJ: I don't think it would have made much difference, either way. The strength of Fishbach is that they had a core of employee built up over 25-30-40 years, who were extremely loyal. . .never underestimate people like that. . .god, they're important in the contracting industry. . .their various branch supervisors, people like that. You could have wiped out the Board of Directors and they wouldn't have known it for a year. The company would have just gone on. Sooner or later, they would have needed a board but actually the main things we discussed were major trends we saw coming up, things like that. There was a lot of petty discussion. We didn't actually quarrel of where they bought pencils, but it was. . . .

KFN: A level of detail there.

JTJ: And in the contracting business, you have a tremendous loophole for theft in purchasing, and the internal audit report was always a big part of the meeting. Outside auditors don't audit anything like that, so we had fairly substantial internal auditing system because there were literally buying millions of dollars worth of supplies every week or so. This is the biggest electrical contracting firm in the U.S. and about third in the world. A lot of that stuff can fall thru the cracks, one of the big problems. . .like the restaurant business. If you close the back door, you make money; if the back door's open, you don't. Something else I've been in too.

KFN: Really? Holy cow. You've certainly seen a lot of action. Then the CRS Board had a sort of happy balance between detail, vision and planning.

JTJ: I think so. It was a very happy and, I think, an effective board.

KFN: Did they socialize with each other as much as the other boards?

JTJ: Once or twice a year we would have a get-together.

KFN: Okay, but not real tight. . .no outside relationships or anything.

JTJ: A couple times a year there would be a get-together when wives would be invited.

KFN: Would it have helped if you had been a little closer with these board members on the outside, socially.

JTJ: No.

KFN: You don't think so. . .wouldn't have had any effect? Okay. Some folks mentioned that as being a.. . . .

JTJ: I think it was all right like it was.. If you wanted to see each other outside, you could. There were some business-related functions when they would invite the directors, sometimes all of them, sometimes just the ones in Houston they could get together in a hurry. They would get together, maybe for some potential major client who was in town. . .buy him a drink, give him a nice little snow-job.

KFN: Did you notice during your tenure an evolution of the board to a broader perspective. . .from design to. . . .?

JTJ: A little bit. We took in more outside members, and that broadens it some.

KFN: Were you really the first outside board member?

JTJ: No. John Naisbitt and Aaron Farfel were both there when I got there. I don't know which of them was the first outside member. I kind of think it was Aaron but am not sure.

KFN: Was this before Naisbitt wrote Megatrends?

JTJ: It was before. . .he wrote Megatrends while he was on the Board and after I got on it. He sent me an autographed copy and didn't even ask me for any money.

KFN: That was an incredible book and he struck a cord with folks all around the country. Don't know if it's true or not but it created a lot of interest and is still selling right now. You've been going for an hour now. This is a long interview.

JTJ: It's long enough as far as I'm concerned. I've told you everything I know.

End of taping session

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