The Chancellor is a Bank Robber

By Judi Bari - Anderson Valley Advertiser, October 9, 1991.

Things are not going well at the California State Universities. Barry Munitz, vice president of redwood raping, pension stealing Maxxam Corp. has recently been appointed chancellor. And as one of his first official acts he is spending one half million dollars to remodel and staff the new $1.2 million Mediterranean-style mansion that the University just bought him in Long Beach. The kitchen and living room are being enlarged, the closets updated, and a stained glass window is being installed over the tub in the master bath.

Coming at a time of serious budget crunch, when the CSU's have just raised fees by 20%, laid of 1,000 faculty and canceled 4,000 class sections, some people think Munitz redecorating project is in bad taste. But Munitz, who is used to living high, doesn't see what the fuss is all about. He says mansion is cheaper than the last chancellor.s mansion, and anyway he needs to be able to entertain important people there. Alan Wade, a professor at Sacramento State disagrees. "I don't think our chancellor needs to live like a sultan while we turn away students and lay off faculty. What's he going to do, entertain in the bath tub?"

But the Munitz mansion is, of course, just the tip of the iceberg. The real controversy around Barry Munitz involves his incredible background. While most chancellor wannabes were plodding along in the halls of academia, Munitz was making millions in private industry, bankrupting an S&L in a junk bond scam and looting the redwoods for Maxxam.

Den of Thieves

For the past 10 years, Barry Munitz has served as right-hand-man to corporate raider Charles Hurwitz. They conduct their sleazy business deals from behind a complex veil of interlocking companies. Hurwitz owns FDC, which has Munitz as vice president. FDC also owns UFG, whose chief executive used to be Hurwitz but switched to Munitz. If this sounds confusing, it's supposed to be. But it wasn't confusing enough to hide what Hurwitz and Munitz were up to. In common terms, it's called bank robbery.

One of the companies Hurwitz and Munitz control is United Savings Association of Texas, a Savings and Loan bank. They bankrupted this company by investing $1.4 billion of its funds in Michael Milken's worthless junk bonds. In other words, they just gave the bank's money to Milken. This was no skin off Hurwitz or Munitz, though, because the taxpayers had to finance the bailout of United Savings when it failed. It was the fifth largest S&L bailout in history. And, in exchange for all this generosity, Milken helped Hurwitz finance his junk bond takeover of Pacific Lumber.

The Maxxam takeover of Pacific Lumber reads like a star-studded chapter of Who's Who in Corporate Crime. Michael Milken, Boyd Jeffries and Ivan Boesky (all of whom have since been convicted of felony stock manipulation and fraud) helped Charles Hurwitz by buying stock for him or transferring it to him. So by the time Pacific Lumber got to vote on whether to sell the company to Maxxam, Hurwitz already controlled 65% of the vote. lie paid only $150 million in cash (which he got from Milken in another junk bond scheme) and got Drexel Burnham to float more junk bonds for the rest of the $900 million purchase price.

Shortly after the takeover, Hurwitz told a group of stunned Pacific Lumber employees that he believes in the golden rule - "Those who have the gold, rule: " And to prove it, he immediately began to liquidate the assets of the company to pay off his debt. Unfortunately, in this case the assets of the company include the last of the ancient redwoods. Maxxam doubled the rate of cut and, despite EPIC lawsuits, Earth First! tree sits and blockades and a near civil war in the redwood region over the issue, 1,000-year old trees are still falling to pay off Maxxam junk bonds.

Another particularly sleazy aspect of the takeover was the looting of the workers' $90 million pension plan Maxxam took the money from the P-L pension and used it to pay some of their junk bonds. Then they bought a new pension plan for much less money from Executive Life Insurance. But Executive Life was itself a junk bond financed company. In fact, it just happened to be the largest buyer of the Drexel-Burnham junk bonds that funded Maxxam's takeover of P-L, owning one-third of the company's debt. Of course you can't play this shell game forever, and last year Executive Life went bankrupt, leaving people who spent their lives working for Pacific Lumber with no secure pension. Right now, due to pending lawsuits and political pressure, Maxxam is making good on the pension payments, but the future does not look good for P-L workers.

Meanwhile, having gotten control of Pacific Lumber, Hurwitz and Munitz went on to bigger things. Maxxam's next target was Kaiser Aluminum. This time they worked their deal with Marc Rich, a man Forbes Magazine labeled as the "Champion Sleaze" of the business world. Rich lives in Switzerland and cannot return to the U.S. without facing jail for tax evasion and fraud. But he still does business here through people like Hurwitz and Munitz. Rich put up the cash for Maxxam's Kaiser takeover in exchange for control of the alumina Kaiser produces. Adding this to his other aluminum holdings, Rich now has enough of a corner on the market to manipulate world aluminum prices.

One more example of Munitz' business style showed up when a Maxxam development company headed by Munitz decided to build a Ritz Carlton Hotel on a bighorn sheep lambing ground in Rancho Mirage in Southern California. Rancho Mirage is so rich that they call it "The Playground of Presidents." Opposition to Munitz building project came from such powerful people as Frank Sinatra, and the wealthy residents of Rancho Mirage actually voted to stop the hotel from being built in their pristine backyard. But Barry Munitz was not to be stopped. He filed a $240 million lawsuit against the city council for interfering with his business, and the Ritz Carlton Hotel got built, showing that Munitz, and Hurwitz are equally capable of screwing the rich as well as the poor.

Hostile Takeover of CSU

So why did the Regents appoint someone like Barry Munitz to be chancellor of the California State University system? You can be sure it wasn't as a model of integrity for the students. The answer can be found in the budget crisis. Munitz' plan is to use his contacts in the business world to bring corporate money to the CSU's for research funding. He says the "short-term controversy" over his background will be more than made up for by his ability to get corporations to find University research.

Up until now, 90% of the CSU's funding has come from the state. If corporations control research funding, they will also control what research is done, and they will own the results of that research. For an example of the kind of research Maxxam is interested in, a 1990 report from one of their board members praises the University of British Columbia for their progress in developing square trees, which would create less mill waste and be easier to stack on the log decks.

So, having already taken over a redwood company, an aluminum company, a development company and a bank, it looks like Hurwitz and Munitz are now taking over a university system. Meanwhile Sen. Barry Keene, Maxxam's lapdog in the state legislature, is already using the Munitz chancellorship as an excuse to try and increase timber corporation control over state environmental rules. Keene's latest outrageous proposal is to appoint Chancellor Munitz as mediator for a special state arbitration panel on environmental disputes. At Sacramento State, where opposition to Munitz is strongest, the student newspaper put this proposal in its proper perspective. Appoint Munitz to arbitrate environmental disputes they say, is like appointing Pete Rose to head the Gaming Commission, Guns & Roses to run a pharmacy, Imelda Marcos to work at Kinneys, Colonel Sanders to be in charge of the Audobon Society, or Ted Kennedy to run SAFE RIDES.

Actually, one good thing has come out of the Munitz appointment as chancellor, and that is the rise of student activism. At Sacramento State they collected 600 signatures in two days on a petition asking for Munitz to be recalled. They are also attempting to pass a resolution of their student government opposing him being chancellor. In response, Munitz has agreed to personally appear at Sacramento State on Tuesday, Oct. 29. The students will hold a teach-in at 11 AM on Mon, Oct. 28 . . . Earth First! activist and troubadour Darryl Cherney is also doing a Corporate Fall Dump Munitz tour of the 20 CSU campuses, and will be at the Sac State teach-in. Maxxam has gotten away with an awful log of sleazy doings. We hope their latest takeover of the California State University system will ignite the opposition they deserve.