“Yes, but David — no company is going to risk a controlling amount of its stock.”
“No,” he agreed. “But they might risk enough to cut their share of it down — that is, if they were sure the other major stockholders wouldn’t doublecross them.”
“Ugh.” She made a face. “Wait a minute — you may be right. I think only 36 percent of Stellar-American Technology ever reached the open market.”
“How do you know that?”
“It was in a report I had to process. In order to get the original rights to produce hyper-state units, they had to trade a certain number of shares to the man who owns the patents.”
“Krofft? Dr. Krofft?”
“I don’t know — if that’s his name, then he’s the one. Anyway, I know for a fact that the inventor owns something like 24 percent of Stellar-American voting stock. He’s a company all by himself — Stellar-American had to trade the stock for exclusive rights to the process.”
Auberson whistled. “That Krofft—” He began thinking out loud. “Let’s see, the holding company owns 51 percent of Stellar-American. They could take out a loan on a 24-percent piece, and figure that Krofft will stick with them so they would still control 51 percent.”
“But obviously he didn’t.”
“I wonder what Dome and Elzer promised him,” said Auberson. “He’s director of research over there—”
“Whatever he was promised,” said Annie, “it must have been something. With so much at stake, it’d have to be.”
“He’s probably securely in their pocket,” Auberson said. “But that’s it — they must have taken over the company from the inside. Dome and Elzer have been involved with Stellar-American for a long time. It must have been a matter of waiting for the right opportunity. Krofft’s share of stock, plus the over-extended condition of the holding company, probably gave it to them. I’d guess that the holding company has been left with a minority share of Stellar-American Technology and Research.”
They paused then while the waitress set out their food. As soon as she was gone, Annie said, “Okay, Dome and Elzer have got the holding company — what happens now?”
“Well, actually they’ve got five companies. They’ve got Stellar-American and the other four: Hyper-State Visual, Hyper-State Stereo, Hyper-State Modules, and Hyper-State Computer, that’s us. Each of these companies has a certain value — if you liquidate their assets and mortgage them to the hilt, you can use that money to buy another company. It happens all the time.”
“I don’t like it,” she said. “It’s ugly.”
“Oh, not necessarily. A company that lets itself get into such a position that it can be taken over is obviously in need of new management. Usually, a person who can take over an ailing company through a shrewd stock maneuver is also smart enough to know how to trim away its fat and put it back on its feet.”
“You’re not defending them, are you?”
He shook his head. “Uh uh — I think Elzer is a vampire. He doesn’t understand the difference between saving a company for future potential and milking it of its resources now. To him, exploitation is exploitation, pure and simple. Unless he’s careful, sooner or later fate will catch up with him. It’s a very slippery paper empire they’ve built, and it can collapse easily. All you need is a serious reversal. Hmm, Elzer wouldn’t be hurt by it in his own pocketbook — but the companies would. All he’d lose would be a little control.”
“Do you think that’s what they’re up to now — milking the company?”
“Seems like it That’s probably why they’re down on HARLIE. If he can’t make a lot of money for them very fast, then they’ll want to discontinue him. I know Elzer’s been eyeing his appropriation for some time. If they do cut HARLIE off, they can profit three different ways. One, write him off as a tax loss — oh, yes, what a beaut that would be. Two, sell his components to junk dealers — computer company jackals. And three, pocket his maintenance costs — his appropriated budget for the next three years. There are other ways to milk a company too — skip a few dividend payments to the stockholders and funnel the money into your own pocket.”
“How would you do that?”
“Vote yourself a raise; pay yourself for special services; invest it in a company that you own 100 percent of, or lend it to that company.” He shrugged. “Let that company declare the dividends. You collect it all.”
She frowned. “Is there any way we could prove this?”
“You’re in a better position than I am to do that.”
She shook her head. “They’re awfully secretive. I haven’t seen any evidence of anything.”
“Then they’re probably not trying it — yet.” Auberson toyed with his food. “Anyway, it seems to me that it’s mostly Elzer we have to worry about. As far as I can tell, Dome is seriously interested in running this company. Elzer’s the greedy one.”
“But they’re both in the same group of looters.”
“Um, yes and no. I think it’s a marriage of convenience. Elzer wants the money, Dome wants the company — so they work together. Apparently, Dome had the pull to accomplish his goals, but not the money — Elzer had the money, but not the position. At the moment, Dome is in control — but that could change. HARLIE’s continued existence depends on Dome’s good will. If he gets pressured too heavily by the rest — pffft! — he may have to throw them HARLIE in order to protect himself. That’s probably why he’s let us continue this long — so he’ll have a bone to throw them if he needs one.”
There was nothing to say to that. They ate in silence for a while.
Abruptly, Auberson looked at her. “The annual report — how have they doctored it? What do they say about HARLIE?”
“Not much—”
“How’s he listed?”
“That’s just it — he isn’t. He should be considered part of the research budget, but he doesn’t show up there. He doesn’t show up anywhere.”
“Part of the research budget? He is the research budget. Two thirds of it anyway.”
“I know — but it isn’t listed that way. His cost has been — spread out — listed as ‘Inplant Improvements’ and things like that.”
“Now why the hell—?”
“I think it must be Carl Elzer again. If they say they’re spending that much on research, they’re going to have to show some results for it. And admitting HARLIE’s existence is the last thing they’d want to do — once they admit he exists, they can’t erase him as casually as they’d like. People will ask embarrassing questions.”
“They’re covering their tracks before they even make them,” said Auberson. “And that sounds like they’ve already made up their minds about HARLIE.” Remembering some of his earlier conversations with Dome, he added, “You’re probably right. That explains why they’re afraid of publicity — for either HARLIE or this kind of research. It would risk their precious profits. I thought it was merely his schematics they were protecting. It isn’t. It’s the whole HARLIE concept. Or maybe I shouldn’t say •protecting — afraid of might be better. Damn them anyway.”
“The best thing now would be for HARLIE to come up with some surefire method of making money.”
“That’s what we’re working on — only I hadn’t realized just how tight the pressure was getting. Thanks for clueing me in.”
“Don’t thank me — you’re the one who worked it out All I did was tell you about my problems with the annual report.”
“You haven’t even done that yet What is the problem? You said the wrong figures keep coming out?”
“No — it’s the right figures that do. We set up the final drafts of the report three weeks ago.”
“And all the figures were from the second set of books? The phony ones?”
She nodded. “But the report printed out with all its figures corrected — taken from the real books. At first we thought someone had changed it on the copy; you know, someone not in on the secret might have double-checked the figures and changed them — but it wasn’t that. Those reports had been fed into the typers exactly as we had composed them.”