FROM WATERGATE TO WALL STREET; TERRY LENZNER

High above the Washington traffic, a block or two from the White House, a small quiet man who helped change the face of US politics sits behind a large cluttered desk.

Terry Lenzner, a lawyer, has moved out of public service into corporate investigations the man who traced the whereabouts of the Nixon administration’s slush funds is for hire.

Those who would like to know more about his credentials but do not have the time to read the transcripts of the Watergate hearings, can take a short-cut and rent a video of Mississippi Burning. Lenzner maintains that the young attorney depicted in the film is not actually based on him. But those who see the film one day and meet him the next might have their doubts. It is easy to picture him as the young attorney, Alan Ward, telling his more experienced sidekick: “I want the entire area searched, every inch.” The area is a Mississippi swamp, from where a car belonging to three civil rights workers has just been recovered.

Lenzner was just six weeks out of law school and getting the feel of his desk in the Department of Justice, Civil Rights Division, when he was sent to Mississippi. Back in Washington, 25 years later, Lenzner is still having entire areas searched, “every inch.” But no longer is he looking for bodies in a swamp, but skeletons in corporate cupboards.

Lenzner heads The Investigative Group, a business which has at its heart an enormous database, and a collections of individuals with inquiring minds and the ability to think laterally. The computers can tell you who lives where, which number on which street, who drives what car and probably their tennis partner. There are Press cuttings from around the globe, from The Times to the most obscure newsletter. Most of The Investigative Group’s work is routine, little more than due diligence required in mergers and acquisitions, or gathering evidence for legal actions.

Detailed company investigation work is still relatively new and largely untried in Britain. Its cause advances only slowly, and is not helped by illegal and hamfisted surveillance, such as the “biscuit tin bug” buried beneath a telephone pole outside the home of a Woolworth executive when the company was last involved in a takeover battle with Dixons.

Lenzner, and a handful of upmarket competitors who have made company investigations legitimate business in the United States, are well aware of the damage that can be done by hole-in-the-corner downmarket sleuths. Equally, they are determined to make sure their own operatives, a curious mixture of lawyers and journalists, do not step the wrong side of the ethical and legal divides. “I worry about it all the time,” said Lenzner, and the pots of pills on his desk suggest he is not kidding.

“My greatest nightmare is that one of my investigators will create a problem for the client. We do not seek information if there is an ethical problem.” “Ethics” in the case of the private investigation, relate to legality, rather than privacy. An individual put under the spotlight on behalf of a client will have much of his life exposed to view. The state of his finances, whether his property is mortgaged, the clubs to which he belongs, his brushes with the law, whether he is being sued.But the surveillance will usually be done from a distance, from the megabytes of public records stored, legally and above board, on Lenzner’s computers or those of the authorities to which there is legitimate public access. “Most people are not aware they are being investigated,” Lenzner claims. A peek at the public record leaves no trace. The days of cigarette smoking, trilby-hatted, trenchcoated private eyes are almost gone almost, but not quite. Even companies such as Lenzner’s have not totally abandoned interviews with friends and neighbours, tip-offs and paid contacts.

Lenzner is already making headway in Europe. His company was recently called in when a leading British company felt threatened by a United States takeover artist. The accumulated file on the predator resembled a set of encyclopaedia. It contained highly damaging material, all of it taken from public filings with the Securities and Exchange Commission and other bodies. The takeover bid never came. Rarely is Lenzner able to disclose the identities of his clients, but
one recent case where Lenzner and his team saved a client tens of millions of dollars has been opened up to public view.

The investigation surrounded a company called ZZZZ Best, one of those all-American stories which inspire every taxi driver to believe he can make a million, if only he has a good idea. The mythology was that a young teenager, Barry Minkow, borrowed his mother’s carpet cleaner and built a #200 million business in contract carpet cleaning before he was even old enough to vote. At the end of 1986 Minkow’s company, ZZZZ Best, was floated on the New York Stock Exchange. And he used the strength of the shares to buy other businesses. Lenzner was called in by a banking house planning to finance one of Minkow’s deals. What interested Lenzner was not so much the state of Minkow’s business, but who had bankrolled him in the first place. Lenzner discovered the money came from two individuals. The first was connected with organized crime. The other had, under a previous alias, been convicted in New York of hijacking and extortion, and was involved in credit card frauds. Through contacts, it was discovered that the business was already under scrutiny by the law enforcement agencies. Lenzner’s clients withdrew from
the financing and officers of the company were indicted and convicted of a variety of offences.

“It was possibly a front for laundering narcotics money. The contracts for carpet cleaning were non-existent. When the auditors were coming by the company would rent a couple of floors of an office building and clean the carpets. When the auditors went, they would pack up and go.”
Had the bankers relied solely on the accounts of ZZZZ Best, which had been audited by a top firm, they would have found themselves writing off substantial losses. Shareholders in Ferranti International Signal, who have seen their company taken to the cleaners for some Pounds 200 million on non-existent contracts might wish that a company such as Lenzer’s had been called in
before the ISC purchase was made.

Lenzner’s greatest hour, however, was not when he collapsed the fraud surrounding a West coast carpet cleaner, but when he was appointed chief counsel to the Senate committee investigating the break-in at the Watergate complex in Washington, a committee which eventually brought the downfall and disgrace of President Nixon. Lenzner was already accustomed to rough assignments. He was a veteran of the Civil Rights Division of the Department of Justice and had seen service
in Alabama when the civil rights movement was fighting its bloodiest battles with the southern “rednecks.”

On that very first case, he had to come to terms with the unpopularity involved in exposing “a whole litany of excesses of police brutality.” Lenzner and the Department of Justice were determined to bring it to an end. It was, as Mississippi Burning reminds us, almost impossible to get convictions for those carrying out the institutionalized terror.

After a couple of years in the civil rights front line, where he became too close to other people’s murders for comfort, Lenzner “ended up sleeping on the floor in motels, with the mattress over the window. When it got to that stage, I figured it was time to get out.”

After the hatred and the excesses of the Ku Klux Klan, organized crime almost appeared attractive. In New York, Lenzner got to work on the some of the most notorious families, and Godfathers went behind bars as a result. The highway from New York led to Washington and Watergate. “All we knew was that the Cubans had been convicted of breaking and entering the
Watergate Complex. We also knew that (Howard) Hunt and (Gordon) Liddy had a White House number.
“On top of that there was a suspicion the prosecution had not plumbed the depths of the case. The judge made it clear in public he believed the full story had not been told.”

But when Lenzer tried to enlist the help of other law enforcement officers to investigate the affair, “they just laughed at me. They worked for the Federal Government, and their careers were at stake. “So I hired a bunch of young lawyers and people fresh out of law school,” in addition to a couple of ex-FBI heavyweights with whom he had worked to bust corruption in the Teamsters Union.

What happened after that, as they say, is history, a book and a movie. But Lenzner recalls drafting the subpoenas for Nixon’s papers lying on the floor, because “there was no space in that small office to sit up.” It was his mission to serve the papers on the President. “I was walking down the corridor of the White House. Everybody knew what was about to happen and secretaries were coming out of their offices and saying good luck.”

Lenzner reveals that many of the White House secretaries had been sources of confidential information passed to the investigation. In the early stages there was great public hostility to the investigation of the President, and there were moments when Lenzner feared for his life. But the mood changed. “The television reached into every corner of America. We began to receive telegrams suggesting questions to ask at the committee hearings.”

But, although he could not help but make enemies in high places in Washington, “our investigations into the Teamsters money were more of a danger than anything to do with Watergate.” Corporate investigations do not pose the same kind of danger as mixing with mobsters, but Lenzner did not leave criminal investigations behind when he moved into the private sector. In 1981 Lenzner’s company was called in to help track down a killer who had plagued the city of Atlanta, brutally murdering 28 young blacks. It set up the computer program which combed through vehicle records, dog owners and a host of interview material looking for cross-references.

Eventually a 23-year-old, Wayne Williams, was put behind bars, although to this day Lenzer remains convinced he was not responsible for all the killings. But the backbone of the business has to be the corporate work, and this is growing fast. In the battle for BAT Industries, corporate raider Sir James Goldsmith of Hoylake climbed aboard his high horse when he learned that BAT had employed Kroll Associates to look into Hoylake. Goldsmith “deplored” the use of BAT shareholders’ funds to pay investigators. Yet in the US, as Goldsmith would know full well, it can be regarded as irresponsible not to use investigators to search in the forgotten corners
of public records when billions of dollars are at stake.