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Henry Kissinger
FORBES MAGAZINE
- Richard Behar

C: Maybe you could start out by just briefly
for a couple of minutes, bringing us up to date on what
you're doing at Kissinger Associates, how many people you're
consulting with, how big your staff is, what kind of work
you're doing.

K: Well, the staff, we have what? Four full-time (Overlap) ... Four senior members and then there are three researchers and then ... professional ... and then, you know, the secretaries. And an administrative .

C: And how many clients do you have at this
point?

B: Well, there are about ... We don't give
out the names of clients. Around 30.

B: Would you say these are FORBES 500 companies
or they range in all different sizes?

K: Some are and some aren't. Some are foreign,
so it would be difficult.

B: Yes.

C: Are they all corporations, or are you doing

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B: You may suggest they see so-and-so ...

K: We may suggest that, in the context where involved in a company's overall? we participate in the planning, and where we add a value, we may suggest whom to see, and in the rarest cases, we might be an ongoing negotiation. I can think of helpful in helping them negotiate it, but that would be a very only two instances. I simply rare case. But in no case would we take a fee in order to introduce somebody to a government or to anybody else.

C: You say you're not that familiar with the whole area of corporate governance, and yet you are on one very prominent board, American Express.

K: Yes.

C: Why did you join American Express and what did you hope and do you hope to bring to that company as a board member?

K: Of course, you'd have to ask them what I bring. It's a board of a company that has global activities, whose activities are very varied. They are not just selling one product that's in the area of financial services or travel, so I think my knowledge of the world can be of some relevance to decisions that they have to make.

B: Presumably you do similar kinds of activities for many companies as a consultant. Why join the board of a

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company? What do you bring as a board member?

K: Well, I have high regard for the chairman of that company and I knew several of the board members when I joined the company, and I thought it might be an interesting experience, and they obviously thought I could contribute.

B: So you help strategically in analyzing problems politically in every country in (Overlap) ...

K: Or when they have foreign problems. When they have problems abroad, they occasionally ask my opinion.

B: So they'll bring them up at board meetings?

K: Well, or the chairman will call me. But that doesn't mean that ... They have many other ways of getting information, too.

C: Do you have any sense of problems that boards of directors are having today? It's sort of a battleground out there, with lawsuits and hard to get insurance, and what-have-you. In the consulting that you do, do you see any problems or solutions?

K: I have not come against it in my consulting business. And I've not come up against it in American Express board.

C: So it's not something you've done?

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K: And I have served on a lot of advisory boards but they don't have the question of (Overlap)

C: I'm surious as to, were you asked to join other corporate boards, as well?

K: Yes, when I left government, but I took the position that I wouldn't serve on any board for one presidential term, so that it didn't look ... So that it wouldn't look as if I had any ... As if I were using my governmental influence. contacts.

B: I'm curious why you chose American Express's board over some of the other offers you had. Was it simply your relationship with Mr. Robinson or some of the other people on the board?

K: Well, it seemed to me ... I have served on a number of boards that ... Of companies that are privately owned. And that actually operate like public boards and, in fact ...

B: Was this before you joined government? Was this when you (Overlap) ...

K: No. Since I left government.

B: Okay. Which companies were those?

K: Well, I don't think, since they're privately owned that I should state it.

C.Y.J

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B: How many boards are you on, of private companies?

K: Two.

B: Are you open to joining more public boards now?

K: It would really depend on the board. Not many. If one particularly interesting one came along, I might take a look at it, but my schedule is very full, as it is.

B: You're not running down the street looking for ...

K: No.

B: Seats on boards. What would interest you in a board? What's the challenge?

K: Well, American Express is in many ways an ideal board for me because of its global activities, its diversified activities, so it isn't ... It isn't just one product, because so much of what they do depends on an assessment of the international situation, and they are involved in so many projects that interest me, you know, they have to know about the debt situation in Latin America, and they have a very good board.

C: Were you able to attend all the meetings in

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1985?

K: I think I missed one.

C: So you attend most?

K: I would never miss more than one.

B: As a consultant to American Express, did you have a similar arrangement like in 1984. In 1984, I think, you received about over $400,000 in different consultant arrangements with Shearson, Kissinger & Associates.

K: Yes.

B: Similar in 1985?

K: Yes.

B: Was it more?

K: No.

B: Is there any tension between your work as a consultant for them or your work as a board member for them? Is that an overlap? How do you distinguish between those two functions?

K: I don't make a huge ... I mean, usually, I mean, invariably the consulting arrangements are much more ... I mean, the consulting ... The board has a very structured agenda.

B: Yes.

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that was not the purpose of the exercise. The purpose of
the exercise was to... His knowledge of the economics of
the problem and my knowledge of the politics of the problem
enabled us then to make a joint assessment of what the future
of American-Japanese relationships were, and in some specific
areas, discuss what the role of American Express was in this.

We were not there to negotiate anything.

B: What was the result of the Japanese-Hong Kong work? Was there a successful result?

K: Well, you'd have to him, you know, whether
there was ... I did not follow up ... I'm not ... I was told
that the American Express people considered it a very useful
trip. Now, why they did ... We did not when we went at
any meeting that I attended, ask for anything specific for
American Express. So I can't tell you whether there is a
measurement for achieving things, but I may take another trip,
may take other trips with Mr. Robinson, but the point is, I
know many of these heads of government. When I want to see
them for my reasons, to educate myself, to exchange ideas and
we're there together, since I have great confidence in him, I
take him along, if they agree. The understanding is that on
those appointments I make, I can't say American Express busi-
ness would not be discussed if the interlocutor raises it.

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But we're not going there to sell American Express. And
it worked rather well in Japan, but it was not a door-
opening operation.

B: Now, were you there in your role as a board member or as consultant or as a friend of Mr. Robinson's on ...

K: I would think as a consultant and as a board member. I was introduced as a board member.

B: Right,

K: In addition I attended a number of lunches for business and governmental leaders which were entirely arranged by American Express and which I didn't even know ... lunches and dinners ... where I even didn't know the guest list ahead of time. And I showed up and if it added any prestige to them, I don't know, but ...

B: Right. The trip, though, was as a board member?

K: Yes. Well, as a board member and as a consultant.

B: So you did bill them some consulting work but primarily as (Overlap).

K: I didn't bill them separately. That was part of my general consulting fee. I didn't ...

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B: Are you on a consulting retainer, or how ...
K: I did not bill them separately for the
time.

B: Yes.

K: Of the trip.

B: Now, you mention prestige. Is that ...
American Express is clearly a very prestigious board. It
has some of the most outstanding people in the country I think.

K: Absolutely.

B: Is that one of the reasons you wanted to
join it and in turn ...

K: You know how it happens with boards. I
did not ask to join the board. I was invited to join the
board. President Ford is on it. (Overlap) Jordan ...

B: (Overlap. Inaudible)

K: I beg your pardon. Ann Armstrong. These
are all friends of mine. How my name got out for considera-
tion ... I did not know it until, I think, Robinson called
me up, or the chairman of the nominating committee called me
up and asked me whether I objected to have my name put for-
ward. And then Robinson conducted the discussion. I did
not put my name forward, obviously.

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C: You were a consultant before?

K: No.

C: Oh. Consultant came after.

K: After.

C: All right. I guess my question related to whether or not one of the things that you add to American Express, or the primary thing you might add to them is prestige.

K: I cannot that.

C: What do you think your primary contribution is?

K: I hope it's substantive.

C: Okay. In terms of some of the strategic and broader global and economic and political issues ...

K: Yes, I have, I hope, some understanding of the relationship between the economic and political issues in the world. They operate all over the world. They run banks around the world. The have offices around the world, and so an understanding of how certain economic decisions are affected by politics, might be a contribution, but I certainly don't ... They don't need my name to add prestige to it ... very prestigious board.

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B: Now, you said you didn't even know about it until the chairman of the nominating committee had called you ... (Overlap) ...

K: Or something like that. I forget.

B: I mean, presumably, if I had a little corporation and the chairman of my nominating committee called and said, "Do you have any objection?" you'd probably say, "Well, who are you?" I mean ...

K: Yes, but I didn't need that at American Express.

B: Okay. They must have had some reason to believe you would be interested in American Express (Overlap)

K: (Overlap)

B: No. Okay ... (Overlap)

K: Well, I suppose the way it happened is, I had served with Sandy Weil, who is no longer with them, on the board of 20th Century Fox.

B: Okay, that's right.

K: And this is how it must have started. And Sandy Weil gave me a ride back east from one of these trips. That's about a year before it happened. And he said, you know, you really should be on our board. And I paid no further

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attention to it. That is how it must have started.

B: Okay. Now, you said you might go on some
other trips with Mr. Robinson. Do you have any (Overlap) ...

K: Well, I don't have any fixed plan but ... I
don't exclude it, but when I do, it must be understood that
I don't go along to make introductions. That's the meaning
to him, and it's the meaning to me.

B: Right. Okay. Have you had a hard time
getting that point over to the media.

K: Well, there was one article that made
that point which ... They hadn't asked me, and I found ...
Yes. No other media have reported it that way.

B: Now, clearly, a board of directors also
... Their primary goal is to look out for shareholder inter-
ests. Is there any way specifically our concern with
the shareholders in American Express?

K: Of course. You know, I give my judgment
to others when decisions come up as to which way to maximize
the value. Obviously, I have to do it in the areas in which
I'm most competent, but I'm doing my utmost to understand
the business end, having served on other boards, al-
beit of private companies, some of them fairly substantial

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very substantial. I mean, they don't maximize shareholders'
interests, but you want to maximize profits.

B: Right. Any idea how much time a year
you spend on simply ... not as a consultant, but as a board
member ...?

K: As a board member, you would have to assume
... I'm on the finance committee, which meets four times a
year and I have attended all those meetings, and I've atten-
ded nine out of ten of the others, so that's 13 meetings that
I have attended. That doesn't count, it has happened on a
number of occasions that the chairman who called me and asked
my opinion about a decision that he has to make ... You're
talking about board members?

B: Yes. Not the consulting

K: On the board.

B: Say 13 ...

K: No, no, but there are a number of occa-
sions when he has asked me for my opinion in my capacity as
member of the board, not as consultant.

B: Is it very time-consuming for you, outside
of the meetings?

C: Are you weighed down for a lot of American

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Express work?

K: I'm not weighed down, but they send very
detailed documents before meetings, and I feel I have an
obligation to read them and to go through the numbers, for
the reason that you gave. I feel I have, not a legal obli-
gation, but I'll say a moral obligation to do the best I can.

C: I'm curious. This is something we asked
a number of directors, that the amount of money that a direc-
tor makes is not really that ...

K: Negligible.

C: It's negligible, right. And the amount of
bad public exposure or possible public embarrassment, risk
of a lawsuit is so tremendous, it outweighs that so much,
what's the attraction in it? Why do people do it?

K: Well, of cours ... I did it originally
when I started out, leaving government in order to learn about
business.

B: Let me stop you for just a second. You
were on some private boards before there was one presiden---
one presidential term was up? To learn about business?

K: I think in the fourth year of the first
presidential ...

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B: Okay.

K: I went (inaudible)

B: Okay.

K: Certainly not for 3½ years. But I went on a number of advisory boards. Now, why I do at American Express? It's a public board with the risks that you mentioned. Well, first, it's an interesting experience. Secondly, you're associated with high-class people, both in the management and on the board. I think those are the two principal reasons. It's a sense of accomplishment, not ... certainly not the financial reward. Now, why people ... Now, if somebody were on eight boards, I would wonder why he did it.

B: You're on three. Well, I guess, you've still got a ways to go. Is there any sense ... Apparently the American Express board was quite divided about bringing you on. Do you have any sense ...

K: (Inaudible).

B: Okay.

K: I wasn't told about that.

B: Right. And this ... President Ford was one of your strongest supporters, and one of the pitches that you

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made as to why the board should bring you on is that you
could open more doors around the world than he could. To
me that sounds specifically like ...

K: Since I was not part of those delibera-
tions, I really don't know the answer to that question. I
was never told that there was division, and there certainly
has been a very friendly acceptance and whatever argument
he used I think they will tell you that that is not the
capacity in which I have acted.

C: One former board member of American Express
whom I spoke to was upset and felt it was wrong and outrageous
to be a consultant and a board director at the same time. Do
you see any possible conflict of interest in doing both?

K: Again, this is true of others, and I know
board members of many companies who are also consultants.
Why should it be a conflict of interest? I mean, as a direc-
tor you have a moral obligation and a legal obligation to maxi-
mize shareholder return and profit; as a consultant, I assume
you have the same obligation to help the company.

C: As a consultant, you might be more concerned
with maximizing value for yourself.

B: Or, as a consultant, you're often hired by

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management to look at specific problems. You're working
with management. As with board of directors it's presumed
on some issues you may be opposed to management, so it's to
oversee management.

K: I haven't been ...

B: It hasn't been a problem?

K: I haven't been used that way.

B: You said most of your consulting actually
is quite separate and has to do with Shearson, Lehman.

K: A good slice of (Overlap)

B: What aspect of Shearson, Lehman?

K: Well, again, they have many foreign inter-
ests and we sometimes get in our consulting work the people
request us to do things for which we don't have the compe-
tence, for which ... I mean, we don't have the technical
(Inaudible), so it's in this way that we help each other out.

B: Can you give us an example (you may not want to) of specific work that you have done for American Express? As a consultant? Where you may have advised them?

K: I think that would be highly inappropriate.
But that has nothing to do with being on the board. If you
asked me that about anybody else, I would say the same thing.

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What ...

(Extraneous conversation)

B: I think we're about done.

K: I ... One thing I want to make clear is that in ... that the consulting that I do for American Express I do in my private capacity. It does not go through this company. Even though I say it's benefits for this company, because I don't think we should all do separate consulting, but no information that I acquire from American Express in any capacity goes through ... Shearson, Lehman is different because that's totally separated. I mean, they are ... Some of my associates may know, but American Express consulting I do entirely in my own private capacity.

C: Why is that?

K: In order to avoid sharing information and, you know, to have ... avoid making the distinction between consulting and being on the board.

B: The American Express Company, Kissinger and Associates does no consulting for? It's you privately?

K: Well ...

B: Although you share some of the ...

K: I have an arrangement ... We have an arrangement

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here where all consulting anybody does goes into the com-
pany funds. Not the board of directors fees. But, for
?
example, Ichleberger is on the ITT board, and he has a
consulting arrangement with them, and that is handled by
him. I do not know ...

B: I see. What he does.

K: What he does.

B: But the money he makes as a consultant
goes to ...

K: Not as a board member. The consulting
firm.

B: Goes to the company.

K: Yes.

B: And you own the company. ?

K: Yes, but we have a profit-sharing financial ...
Everybody that works for the company shares in the profits.

B: Yes.

K: I own 95 percent of it. (Inaudible). But
profit is not divided that way.

B: I see. Any plans for expansion?

K: There's nobody who works here, including
secretaries, who does not share in the profits.

FORBES INTERVIEW

1. K: Well; we've been more professionalized. When I first started, it was largely a personal consulting operation. Since then we have added Larry Eagleburger, an economist and Brent Scowcroft has become more involved.

It is a more institutional approach. Secondly, as we get to know our clients better, we get involved more in their strategic planning. The result is much more specific advice. When we started out, we made a general analysis of the world situation and let the clients apply it to their business. Now, several of our clients are telling us what their business is in some detail and we then apply our analysis of world affairs to particular problems.

B: You once said to other reporters, and I've read some things on you that we don't open doors. We don't do door-opening.

K: Absolutely not. We would not take a fee for introducing people.

B. You may suggest they see so-and-so...

K: We may suggest that, in the context of being involved in a company's overall planning. In a very rare case, we might be helpful in an ongoing negotiation. I can think of only two instances. But in no case would we take a fee simply in order to introduce somebody to a government or to anybody else.

2. K: Yes, when I left government, but I took the position that I wouldn't serve on any corporate board for one presidential

[LC]

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term, so that it did not look as if I were using my governmental
contacts.

3. K: The board has a very structured agenda and so, its subjects are very precisely defined. My consulting goes beyond the board's agenda.

B: Yes.

K: Part of the consulting is with Shearson, Lehman.
And I'm not on the board at Shearson, Lehman. So there is in
fact next to no overlap between what I consult about and what
goes before the board.

4. K: I saw one report which left the impression that I went
to Japan to make introductions for Jim Robinson. That is
absolutely not true. He made his appointments with the people
he wanted to see, mostly economic ministers. I made the
appointments with people I normally see on my own, mostly
ministers in the foreign policy area or heads of political factions.
He came along on some, but not all of my appointments that
dealt with foreign policy. I came along on some, but by no
means all of his business appointments.

Where I had been the initiator of the meetings, I was
the chief interlocutor and I talked about my usual agenda.
Where he had made the appointment, he was the chief interlocutor.
So it really was a way by which I helped him understand the

[L.C.]

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Japanese political situation and he helped me understand some of the business thinking. The Chairman of American Express doesn't need me to make introductions.

5. B: Now, were you there in your role as a board member or as a consult or as a friend of Mr. Robinson's on...

B: Right.

K: In addition I attended a number of lunches for business and governmental leaders which were entirely arranged by American Express and where I even didn't know the guestlist ahead of time.

6. K: I'm not weighed down but they send very detailed documents before meetings, and I feel I have an obligation to read them and to study them. I feel I have, not only a legal obligation, but a moral obligation to do the best I can.

7. K: No. I know board members of many companies who are also consultants. Why should it be a conflict of interest? As a director you have a moral obligation and a legal obligation to maximize shareholder return and profit; as a consultant, I assume you have the same obligation to help the company.