01/20/97 FAITH AND FORTUNE--Part 1

FAITH AND FORTUNE--Part 1
Paul Reichmann: Talented, pious, driven--but not infallible
Few businessmen have ever single-handedly wielded so much power to as calamitous effect as did Paul Reichmann, the mastermind of Olympia & York Developments Ltd. Founded by Paul and two of his brothers in Toronto in the late 1950s, Olympia & York at its peak had amassed $25 billion in assets, including 40 office towers and controlling stock holdings in Abitibi-Price Inc., Gulf Canada, and a half-dozen other major industrial corporations. Yet no one but a Reichmann ever owned stock or sat on O&Y's board. Through his unrelenting drive and outsize talent, Paul, the fifth of six siblings, came to dominate completely this most private of corporate empires.
Reichmann's forte as a property developer was the contrarian masterstroke, whether it was erecting a 72-story tower in downtown Toronto when many considered the city already overbuilt or constructing the most distinguished addition to the New York City skyline in half a century--the World Financial Center--on a sandbar in the Hudson River. Paul was widely lauded as a commercial genius, ''an Einstein in a field that doesn't usually produce Einsteins,'' as one longtime colleague put it.
Rarely has extreme commercial ambition come as decorously packaged as in the person of Paul Reichmann. Born in Vienna in 1930, he had resided in Paris, Antwerp, London, Tangier, Casablanca, and Jerusalem before his 24th birthday. With his shy smile, soft-spoken politesse, and elegantly funereal attire, the peripatetic Reichmann was a capitalist daredevil in the genteel guise of an undertaker.
Like their Hungarian forebears, he and his brothers were strictly observant, or ultra-Orthodox, Jews. Even as their collective fortune topped $10 billion, ranking them among the dozen richest families in the world, the Reichmanns led rigorously devout, modest, and private lives, mixing as little as possible with nonbelievers away from business. Revered by their Orthodox peers for their charity and religiosity, the brothers were no less esteemed by their business peers for their integrity. In straddling the disparate worlds of casino capitalism and religious fundamentalism, the Reichmanns maintained an improbable equipoise that seemed to confound the Biblical command ''Ye cannot serve God and Mammon.''
In truth, the brothers were never quite the equal of the superhuman myth that grew up around them. Their unusual background instilled in them high purpose and considerable self-reliance, but it also bred an insularity that left fateful gaps in their knowledge, judgment, and abilities. When they finally lost their financial balance, they fell to earth with a resounding thud. In 1992, in the midst of a profound slump in global property markets, creditors seized control of O&Y, dismantling it in the process. In less than five years, the Reichmanns had squandered virtually their entire $10 billion fortune.
O&Y most likely would have survived had Paul not been compelled continually to top himself as a developer. Over the decades, his signature projects traced a steeply rising arc of scale and risk, culminating in the $6 billion, 24-building Canary Wharf in London. In the end, Reichmann's ambition overwhelmed his talent, vast though it was. The roots of his compulsion are buried deep in the tumultuous history of an almost miraculously accomplished family.

The Bar Mitzvah in Beled
Paul's father, Samuel Reichmann, grew up in Beled, a Hungarian village not far from the Austrian border. As a young man, he built an egg-wholesaling business that soon encompassed most of western Hungary. In 1921, he married Renee Gestetner, a descendant of one of the region's most distinguished Orthodox families. Seven years later, the couple breached the geographic constraints of Orthodox traditionalism to seek their fortune in Vienna, where Samuel's business thrived as never before. He entrusted his profits to a Swiss bank, as Austrian Jews were increasingly menaced by Nazi anti-Semitism.
In early 1938, the Reichmanns began planning the bar mitzvah of Edward, their second child and eldest of their five sons. The ceremony was set for Mar. 12 at Vienna's preeminent Orthodox synagogue. Two weeks before the great day, Samuel's father, David Reichmann, was felled by a stroke in Beled. To accommodate the ailing patriarch, Samuel decided to move the ceremony there. Edward traveled immediately to Beled and soon was joined by his mother and 15-year-old sister, Eva. On Mar. 11, Samuel arrived with Louis, 10. Albert, 9, Paul, 7, and Ralph, 4, remained in Vienna with Trudy, their nanny.
That very evening, thousands of brown-shirted Nazis and their sympathizers poured into the streets of Vienna chanting ''One people, one Reich, one Fuhrer!'' and ''Judah perish!'' The mob rampaged through the city's Jewish district, vandalizing stores and dragging Jews from taxicabs to assault them. Radio reports from Vienna triggered copycat violence throughout the Hungarian countryside. In Beled, a roving gang of youths hurled stones at Jewish houses.
Behind the stoutly shuttered windows of the Reichmann home on Beled's main street, the family continued its preparations, listening to the radio and ignoring the racket outside as best as they could. Edward was crestfallen when his mother took him aside and explained that it had become too dangerous for his mentor, the chief rabbi of the nearby town of Papa, to attend.
At daybreak, Germany's Eighth Army crossed unopposed into Austria. A few hours later, 200 of the Reichmanns' friends and relatives gathered at the little synagogue in Beled and listened as Edward delivered his Talmudic discourse in a clear, strong voice. It would have qualified as a manfully defiant performance had he given the German taking of Vienna a second thought. ''To me, the big thing was that the rebbe didn't come from Papa,'' Edward recalls.
While the Reichmanns and their guests were at the bar mitzvah reception, a pogrom raged back in Vienna. Crowds gathered to jeer as even the most infirm and elderly Jews were forced to use toothbrushes or their bare hands to scrub anti-Nazi graffiti from sidewalks and buildings. On Saturday evening, the Gestapo began rounding up Vienna's richest Jewish businessmen. The next morning, Samuel Reichmann dialed his own number in Vienna.
''What's new?'' he asked the nanny.
''Oh, nothing,'' Trudy replied. ''Only some men from the Gestapo were here.'' She was not being droll. Young and gentile, she did not perceive the menace in a knock on the door and an inquiry as to her employer's whereabouts.
Samuel Reichmann would never again set foot in Vienna. He was loath even to remain in Hungary, for he was convinced that an apocalyptic war was at hand and that his homeland would choose the wrong side. Faced now with an unbroken phalanx of fascism--Germany, Austria, Italy--that extended through the heart of Europe, Hungary had no alternative to alliance with Hitler, he believed. Why wait until the bond was sealed in blood? The next day, Reichmann hired a car and crossed alone into Czechoslovakia, then flew to London seeking refuge for his family.
Had David Reichmann not suffered his stroke when he did, and had Samuel not placed such importance on his father's presence at Edward's bar mitzvah, the Gestapo almost certainly would have arrested Samuel on Mar. 12. To be spared the ordeal of Nazi imprisonment through the instrument of religious ceremony was a deliverance from evil that the Reichmanns considered an act of God in the most literal sense. In the ultra-Orthodox view, as journalist David Landau noted in his book Piety and Power, God ''did not merely create [the world] and then leave it to run itself by rules of Nature which He had previously ordained....He is constantly and directly involved--both in the affairs of Man and in the operation of nature.''
Embellished in the retelling over the years at countless bar mitzvahs and weddings, the story of the bar mitzvah in Beled became a cornerstone of family identity--Exhibit A in the Reichmanns' seldom articulated but deeply held sense of themselves as a family of exalted destiny.

Exile in Tangier
The Reichmanns settled in Paris and remained in the French capital even after it came under air attack. Ten-year-old Paul horrified his parents by venturing out of a bomb shelter to sneak a look at the sky. ''In the child's mind,'' as he later put it, ''the adventure stands out, not the fear.'' In mid-June, 1940, with the German army closing in from the north, the family fled south in a rented flatbed truck, joining 2 million people in history's largest traffic jam.
The family made its way to Biarritz, crossed through Spain, and took refuge in the International Zone of Tangier, which Spain had recently occupied. In Tangier's incomparably freewheeling commercial markets, Samuel made a second fortune as a currency trader and banker. His profits helped underwrite one of the most distinctive homegrown rescue and relief campaigns of the Holocaust. At a time when much of Spain itself was desperately hungry, Renee and Eva Reichmann employed an artful mix of indomitability, feminine charm, homespun diplomacy, and bribery to maneuver the fascist government of Francisco Franco into sponsoring the shipment of tens of thousands of food parcels to inmates of Nazi concentration camps.
Until 1944, when Mrs. Reichmann succeeded in raising funds in the U.S., the parcel program was financed solely by the Reichmanns and a few other refugee families. Labor, though, was never in short supply. A revolving cast of two dozen volunteers, mostly Orthodox mothers and their children, gathered in the Reichmanns' apartment daily to assemble the five-pound packages. ''I remember the excitement of staying home from school certain days to help pack or packing through the night and being able to sleep late,'' Paul recalled in the late 1980s.
A series of black-and-white snapshots showing the brothers at these labors conveys not excitement but an almost ceremonial solemnity. With their angular frames draped identically in white dress shirts, skinny ties, and fedoras, the brothers project a European formality eerily at odds with their rough-hewn Arabian surroundings.
The Tangier volunteers mailed parcels to a half-dozen different camps, but by far the most went to Theresienstadt and Auschwitz-Birkenau. As the centerpiece of a brazen campaign to disguise the purpose of the concentration camps, Theresienstadt had been given the facade of a prosperous prewar village. In reality, its inmates died en masse of starvation and disease while awaiting shipment to Auschwitz to be gassed. Even so, the Germans couldn't keep up the fiction of a ''model Jewish settlement'' while denying its inhabitants the right to receive food parcels from home. Mrs. Reichmann was quick to exploit the camp's liberal food parcel policy.
Theresienstadt prisoners were required to acknowledge each parcel by signing a postcard that was mailed back to the senders. In and of themselves, these cards proved nothing. But the postwar testimony of survivors demonstrated that a large number of parcels sent to Theresienstadt were in fact delivered. The Reichmanns saved hundreds of such postcards sent to Tangier, as well as scores of letters received after the war from grateful survivors.
The Nazis never intended the Auschwitz-Birkenau complex as a model of anything but assembly-line murder. Not only were parcels sent there routinely confiscated by the SS, but guards often stole even the prisoners' paltry camp-issued rations. However, Mrs. Reichmann, who heard indirectly from an ultra-Orthodox woman inside the camp who had been chosen to work as an SS secretary, was able to tell U.S. diplomats in Tangier that she ''had definite knowledge that the Birkenau packages...are being received safely.''
Because Spain was the only avowedly pro-German regime among the nominally neutral nations, food parcels arriving at concentration camps under the Spanish Red Cross label were the least likely to be confiscated, especially when they came labeled ''For Prisoners of War.'' This designation was Mrs. Reichmann's bluff, since neither Spain nor the International Red Cross had designated concentration-camp inmates POWs.
After German forces occupied Hungary in 1944, the Reichmann women outdid themselves in orchestrating an intricate diplomatic ballet that led to the Spanish government's taking at least 1,200 Jews under its protection in Budapest. Scores of people in cities from Washington to Montreaux shared the credit, but the essence of the rescue project was this: What Mrs. Reichmann proposed, Generalissimo Franco disposed. For the Reichmanns, this triumph was the silver lining of overwhelming personal tragedy, for dozens upon dozens of the relatives they'd left behind in Hungary perished.
Strictly speaking, Paul and his brothers were not themselves Holocaust survivors, having been spared the agonies of the concentration camp. But by settling in Tangier rather than some safely distant land, the Reichmanns passed the Holocaust in the very shadow of occupied Europe. The Nazi menace was a fact of daily life that left a deep imprint in the soft clay of the brothers' adolescent consciousnesses yet did not warp mind, body, or soul. To the contrary, their experience was on balance constructive, for they were clasped to the bosom of an exceptionally tight-knit family that achieved mightily in their people's hour of greatest need. ''The Reichmann boys never had that feeling inside, that inner fear holding them back,'' says an Auschwitz survivor who achieved more modest if more enduring success in Toronto real estate. ''I kept telling them to slow down, take their time. But their outlook is different....They see only opportunity.''

The Master Builder
After World War II, Tangier was roiled by an Islamic nationalist movement that culminated in the city's absorption into an independent Morocco in 1959. Over a period of years, the brothers and their parents emigrated to Canada, while Eva moved to London. Edward settled in Canada first, in Montreal, where in 1955 he founded Olympia Trading Co. to import tiles from Spain.
In naming this, the predecessor to one of history's greatest private corporations, Edward put the Olympia in Olympia & York by purest happenstance. He was in his hotel room one afternoon when his lawyer called from the corporate registry to say that all of Edward's choices were already taken. Idly examining the contents of his suitcase while he spoke, Edward came across two new pairs of socks. One carried the brand name Panther, the other Olympia. ''How about Olympia?'' he asked. And so, Olympia it was.
During the family's first decade in Canada, Edward and Louis set the pace in Montreal, expanding rapidly in tiles and branching into real estate development. In Toronto, Albert, Paul, and Ralph more methodically built their own tile importing and development company. In the mid-1960s, the elder brothers faltered, and their siblings rescued them from impending bankruptcy by merging the Montreal businesses with their own. At the same time, after a decade's self-tutoring in the fundamentals of business, Paul stepped to the fore and began to distinguish himself as the most gifted, driven, and quietly idiosyncratic property developer of the postwar era.
At first, Paul had seemed the Reichmann least likely to devote himself to commerce. In 1947, at 16, he had left Tangier for five years of Talmudic instruction in Britain and Israel. He returned qualified to practice as a rabbi but followed instead in the activist footsteps of his mother. From 1953 to 1956, he worked without pay as educational director of a philanthropy that ran religious schools for Morocco's impoverished native Jews. Based in Casablanca, he traversed the vast Moroccan hinterland. ''Paul was a tremendous idealist,'' says Moses Lasry, Reichmann's closest associate in those years. ''A great fire burned within him.''
Reichmann didn't so much abandon the cause as it abandoned him. By the time he left for Canada in 1956, most of the poorest Moroccan Jews had already emigrated, mainly to Israel and France. In Toronto, he gradually refocused the zeal he had brought to missionary work on the altogether less selfless calling of property development. As he tells it, his fierce business drive was a byproduct of Olympia & York's early success, not its fuel: ''I never set out to build a giant company.''
For the strictly observant Jew, commercial ambition is a touchy subject. As Reichmann himself concedes: ''Personal drive is supposed to be devoted more to matters of the mind than to business.'' Yet by all accounts but his own, Reichmann devoted himself so intensely to his new vocation that he had little time to continue studying the Talmud and would struggle to make sufficient time for his wife and five children.
Reichmann shrugs off questions about his motives with a tight half-smile and polite change of subject. When pressed, he implies that he was compelled to fill empty lots by the same impulse that drives a painter to fill empty canvases: ''There is the purely mathematical approach, and there is the creative part of building. One can get carried away with the creative part. It became exciting to me to do different kinds of developments. My ambitions grew in terms of the size and scope and creativity of the projects. There is an enjoyment in being able to do something that others consider difficult if not impossible.''
Aside from a taste for luxurious home furnishings, inherited from their mother, Paul and his brothers had no use for wealth's material trappings. It is often said of moguls who aren't extravagant consumers that for them, money is just a way of keeping score. For any son of Renee Reichmann, however, money never could be merely the currency of ego. One of the fundamental lessons of the Reichmanns' Holocaust odyssey was that wealth could mean the difference between self-reliance and self-betrayal, freedom and captivity, and, ultimately, life and death.
In postwar North America, the threat the family perceived was symbolized not by the concentration camp but by the Reform temple, the public school, and the TV set. The brothers founded O&Y with the goal not merely of making a living but also of generating the surplus needed to finance a self-contained local infrastructure of parochial schools, synagogues, and other institutions required to project the family's religious identity into succeeding generations. Long before they became billionaires, they set aside a heaping portion of O&Y's income for charity. All told, the brothers would give away more than $1 billion, almost all of it to ultra-Orthodox causes.
But Paul's ambition also had a deeply rooted secular aspect. In Casablanca, he had supported himself by moonlighting as a textile merchant with Lasry. From the start, ''Paul's priority [in business] was always building a reputation of the highest quality,'' Lasry recalls. ''For him, it was a mission with a capital 'M.''' As the scion of a family admired for its muscular brand of piety, it was only natural that Paul should want to prove himself a worthy heir. But his precocious stress on reputation also appears to have been a reaction against the less honorable aspects of the family's Tangier legacy.
Both during and after the war, Tangier thrived as a smuggler's paradise. ''For a true comprehension of the activities of this [currency] market, the fact must be borne in mind that almost all transactions are based on contraband,'' the U.S. charge d'affaires in Tangier observed in a 1943 dispatch. There is no evidence that Samuel Reichmann directly engaged in smuggling. But as an important currency dealer, he was a cog in Tangier's black-market economy and thus fell well short of the standard of irreproachability to which Paul would later aspire.
In a 1988 newspaper interview, Paul said he had ''refused to go into business'' in Tangier because he ''wanted to do something for the world.'' Later, he disavowed the comment: '''Refused' is not the right word. I was not antibusiness.'' Perhaps not, but a young man emerging from a five-year immersion in Torah studies would not have had to be opposed to business per se to be repulsed by Tangier's famously sleazy brand of commerce.
(continued in part two)
By ANTHONY BIANCO