BUSINESSWEEK ONLINE : FEBRUARY 28, 2000 ISSUE
COVER STORY 'Just Going About His Business' While eating breakfast last year at the ritzy Berkley Hotel in London, Cendant (CD) Vice-Chairman Stephen P. Holmes spotted a familiar face across the dining room. It belonged to Walter A. Forbes, the former Cendant Corp. chairman who resigned under pressure in 1998 amid an explosive accounting scandal. Before Holmes could go over and say hello, Forbes was gone. ''It's a shame. I really wanted to ask him what he's been up to,'' says Holmes. Quite a bit, as it turns out. Forbes, 57, is pursuing investment opportunities, seemingly undeterred by investigations that are under way by the U.S. Attorney in Newark, N.J., and the Securities & Exchange Commission. Authorities are trying to determine the role played by top executives in Cendant's accounting irregularities, say sources familiar with the probes. NOT TALKING. Forbes seems determined to stay out of the spotlight that followed him two summers ago when a Cendant audit committee report found that he and his senior executives ''must bear responsibility'' for the scandal. To handle matters related to the investigations, Forbes has hired Washington (D.C.) defense lawyer Brendan V. Sullivan Jr., whose clients have included Oliver North and former Housing & Urban Development Secretary Henry Cisneros. After the audit committee released its report, Forbes released a statement saying: ''There is and was no way I could or should have known about the fraud.'' After repeated requests for interviews and the submission of written questions to his attorney, Forbes declined to comment for this story. Friends say Forbes has remained focused on his passions--technology startups and golf. He has the resources to devote to them, having walked away from Cendant with a severance package that included $35 million in cash and $12.5 million worth of stock options. ''He's maintaining an equilibrium. He doesn't talk much about [the investigation],'' says Edmund A. Hajim, chairman of ING Barings LLC and a Forbes friend and business partner. ''He's just going about his business.'' That business includes backing an Internet-related venture--not surprising for Forbes, who was touting the idea of ''electronic shopping'' as far back as the '70s. Forbes is an investor in venture-capital firm FG II, which is among the early backers of LivePerson Inc., a provider of e-commerce customer service and sales support. The company, which hopes to raise up to $57.5 million in a public offering soon, also counts Goldman, Sachs & Co., Allen & Co., and Henry Kravis among its investors. E. Kirk Shelton, 45, a key Forbes ally and a former vice-chairman of Cendant, whom the company says it terminated in August, 1998, acted as LivePerson's chief operating officer on a consulting basis. Through his lawyer, Shelton said he did not participate in and had no knowledge of Cendant's accounting problems. Forbes also is developing the new Queenwood Golf Club, an exclusive country club in Ottershaw, a small town west of London, says course designer David McLay Kidd. Forbes is teaming up with Frederick Green, the former chairman of Cendant's audit committee. It's not the first time the pair has worked together. They previously built a golf course in Vail, Colo., and along with Hajim, one on Nantucket in Massachusetts. Green did not return phone calls. Meanwhile, the Cendant probe, directed by Newark U.S. Attorney Robert J. Cleary, is gaining momentum. Sources say prosecutors are in discussions with lawyers for several former CUC and Cendant executives, including Vice-President Casper Sabatino, 47, and Senior Vice-Presidents Cosmo Corigiliano, 40, and Anne M. Pember, 40. Lawyers for Corigiliano and Pember declined comment. Sabatino's lawyer did not return calls. Former CUC controller Steven Speaks has been cooperating with prosecutors, says his lawyer, James A. Plaisted. THE GOOD LIFE. Current Cendant execs declined to comment on the probe. And CEO Henry Silverman won't talk about Forbes. But sources close to Cendant say he is irked by Forbes's apparent enjoyment of the good life. Silverman says he has spent the past two years ''cleaning up somebody else's mess.'' At least one more showdown between Forbes and Silverman is likely. U.S. District Court Judge Jed S. Rakoff is expected to rule in coming weeks on whether Forbes must pay back $2.1 million of travel and entertainment expenses that Cendant says he improperly filed. The disputed expenses include stays at swank hotels and rides on a leased jet. Forbes, through an attorney, said in 1998 those expenses were above-board. If Forbes loses, Cendant execs hope they can rescind his resignation, fire him for cause, and recover his severance package. Such a blow could give Forbes a whole new reason to focus on his entrepreneurial side. By Tom Lowry, with Amy Barrett, in New York _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP					RELATED ITEMS Henry Silverman's Long Road Back COVER IMAGE: The Long Road Back TABLE: Silverman's Three-Step Plan TABLE: The Cendant Saga CHART: Cendant's Wild Ride TABLE: Cendant's Brand Portfolio RESUME: Henry R. Silverman ``Just Going About His Business'' ONLINE ORIGINAL: Silverman: "The Scars Will Be with Me ONLINE ORIGINAL: Is It Safe Yet to Buy Cendant? INTERACT E-Mail to Business Week Online

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