Mr. Eskenazi’s new company provides a classic example of how
capitalism works in France, where a coterie of personal friends,
professional managers, senior civil servants and private
investors forge business alliances that link many of the
nation’s largest companies in a complex network of cross-shareholdings.
—Charles Fleming, The Wall Street Journal, 2/22/91, A7F.
27. Eskenazi, Gerard (1931- )
Former chief operating officer of the French bank Paribas (on the right in photo above). When François Mitterrand and the socialists started to nationalize French companies after they swept into power in 1981, Eskenazi convinced Belgian industrialist Baron Albert Frère (on the left above) to invest $20 million in Pargesa, a Geneva shell company which then bought Paribas’ Swiss assets. The socialists were furious and Eskenazi resigned from Paribas. But this began a very fruitful business relationship between Frère and Eskenazi, who proceeded to buy controlling interests in some of Europe’s most powerful companies.
One of their first acquisitions was Groupe Bruxelles Lambert, Drexel Burnham Lambert’s biggest shareholder. Eskenazi, Frère, and Baron Léon Lambert all sat on Drexel’s board. Eskenazi was the financial wizard of the team, so it was he who sat down with Drexel’s “wunderkind” Mike Milken in 1986 to set up a European company called Transcapital, which was supposed to sell U.S. junk bonds to European investors. These plans came tumbling down after American speculator Ivan Boesky pleaded guilty to massive insider trading and started to implicate the high-flying securities firm Drexel in his crimes. (see #11 on my list)
After Drexel went into Chapter 11 bankruptcy in 1990, Groupe Bruxelles Lambert wrote off its $91 million loss against its 1989 earnings. A rift soon developed between Eskenazi and Frère. This may have been because Frère thought that Eskenazi should have sought more control over Drexel, or because Frère did not like Eskenazi’s plan to renew his relationship with Paribas. Whatever the case, Frère and Canadian Financier Paul Desmarais raised their joint stake in Pargesa and froze Eskenazi out.