Detroit Free Press
April 9, 2005, Saturday
Billionaire targeted money from GM suit for charity
By Sarah A. Webster
Kirk Kerkorian, the billionaire casino magnate who on Thursday lost
his lawsuit challenging the merger between Daimler-Benz AG and the old
Chrysler Corp., had taken steps to give away any award he might have
won in the case to charity.
Kerkorian, who Forbes magazine estimates is worth $ 8.9 billion, had
asked for as much as $ 3 billion in damages in his lawsuit, which was
filed in 2000 in the U.S. District Court for the District of Delaware.
Last year, Kerkorian received a special ruling from the Internal
Revenue Service that any potential winnings in the case could go
directly to charity and not be taxed, Terry Christensen, Kerkorian’s
lawyer, said in an interview on Friday.
During a trial that ended in early 2004, DaimlerChrysler AG had
alleged Kerkorian’s motive for the lawsuit was greed. But outside the
courthouse one day, Kerkorian insisted otherwise to a throng of
journalists.
“This is not about the money,” Kerkorian said. “It’s about deceit and
fraud.”
Christensen said that Kerkorian spent “six figures” to hire a
Washington, D.C. law firm to work to get the special IRS ruling, which
was delivered on Dec. 15, 2004. Christensen said the ruling declared
that the entirety of any award could be given to a qualifying
nonprofit charity without taxation.
“That’s consistent with him saying it was about doing the right
thing,” Christensen said of his client.
DaimlerChrysler spokesman Han Tjan said the automaker had no comment
about Kerkorian’s intentions.
Kerkorian’s lawsuit had accused DaimlerChrysler CEO Juergen Schrempp,
the former chief executive officer of Daimler-Benz, of masking with
Chrysler as a “merger of equals” when it was really a takeover. The
motive behind the alleged deception, Kerkorian charged, was to avoid
paying Chrysler Corp. investors an acquisition premium.
One expert testified that the premium would have been worth an extra $
6.4 billion to Chrysler investors, including $ 856 million more for
Kerkorian.
Kerkorian, who was the largest Chrysler shareholder at the time of the
deal, has said he never would have voted the shares owned by his
company, Tracinda Corp. , in favor of the merger, or encouraged other
investors to go along, had he known the German executives planned to
take control of the company.
On Thursday, Judge Joseph Farnan Jr. ruled in favor of DaimlerChrysler
on all counts. He said the automaker followed the terms of the deal
that it laid out for investors at the time of the merger.
Christensen said he was not certain to which charity Kerkorian had
planned to donate.
Kerkorian is a well-known philantropist. In 1989, he founded the Lincy
Foundation — which, like his corporation, is named after his
daughters Linda and Tracy.
The Lincy Foundation is a private non-profit foundation based in
Beverly Hills, according to the California Secretary of State’s
office. It makes contributions to other nonprofit organizations that
support humanitarian efforts around the world, especially in Armenia.
Kerkorian is Armenian.
The foundation’s president is listed as James Aljian, a longtime
Kerkorian insider.
Aljian had served on the old Chrysler Corp. board, as a representative
of Kerkorian’s Tracinda Corp. at the time of the merger. He was later
a member of DaimlerChrysler’s shareholder committee.
Because of Aljian, Kerkorian was privy to intimate details of the
negotiations between Daimler and Chrysler, and Judge Farnan referred
to that fact in his opinion as a reason why Kerkorian was fully
informed about the terms of the deal and not duped, as he had alleged
in the case.
“As a member of the Chrysler board of directors,” Farnan wrote,
“Aljian was briefed on discussions between Schrempp and Eaton …
Aljian kept Tracinda apprised of developments regarding the merger.”
Aljian was not in the Lincy offices on Friday afternoon and could not
be reached for comment.
Christensen said Kerkorian is disappointed with the court’s Thursday
ruling in favor of DaimlerChrysler but is still considering whether to
appeal.