All Washington, or at least the fashionable part of it, is wondering about that transaction, as the result of a suit filed by heirs of the late Averell Harriman, charging that $23 million of their inheritance was squandered. Among the defendants are Harriman’s widow, Pamela, the doyenne of the Democratic Party and now U.S. ambassador to France, and his lawyer Clifford, the ultimate Washington insider until his fall from grace in the BCCI banking scandal. What makes the story even juicier is that Pamela, 74, has allegedly been feuding for years with her two former stepdaughters, both of them slightly older than her–and one of whom may face financial difficulties. And Clifford, 87, whose ill health got him out of a BCCI trial, is using the same defense he presented in that case: ignorance.
Calling himself “a victim of BCCI,” Clifford claimed then to have been duped but said he was not a wrongdoer. Last week, in a lengthy interview with NEWSWEEK, he said he had not known whom he was dealing with when Harriman trust money–overseen by Pamela Harriman and Clifford, among others–was sunk into a troubled real-estate development in New Jersey. The suit filed by Harriman’s descendants claims they lost $21 million when their money was invested in a former Playboy Club resort hotel owned principally by Mulvihill and Brennan. Both men had received conspicuously unfavorable publicity. Mulvihill was fined in a felony-insurance-fraud case. Brennan starred in nationwide TV ads for his First Jersey Securities firm before being sued by the Securities and Exchange Commission; he subsequently got out of the retail brokerage business. But last week Clifford said he had known nothing about them; he said the actual investment was recommended by another family lawyer. “I never heard of Mr. Mulvihill at the time,” he declared. (Mulvihill and Brennan couldn’t be reached for comment.) “There’s no fraud,” Clifford said. “I’ve served honorably.”
When Averell Harriman died in 1986 at the age of 94, he left only $4,000 each to his daughters Mary Fisk, now 77, and Kathleen Mortimer, 76. The former diplomat and New York governor, the heir to the Union Pacific Railroad fortune, had already provided for them and their children in a web of trusts worth $25 million by 1989. Then those investments, including the one in the New Jersey hotel, began to go sour. As general partners in the family investment company, Pamela Harriman and Clifford are blamed for those losses; the heirs’ suit also accuses her of engineering transactions with other family companies in such a way as to support her “lavish lifestyle … at the expense of Averell Harriman’s grandchildren.” A source close to the family says one daughter, Fisk, has lost her entire trust-fund income on which she had come to depend as a major source of cash.
For months lawyers tried to work out a settlement in the case. After the suit was filed, Pamela Harriman’s lawyer issued a statement maintaining that “she did not have responsibility for the alleged losses. And she will defend this case vigorously.” Clifford told NEWSWEEK that in the late ’80s the heirs began to demand more income from the trusts. “In order to diversify, we had the idea to get into real estate,” he said. “We did not know that in 1990-91 we would go through a total collapse of the real-estate market.” Clifford charges that the heirs themselves forced the hotel into bankruptcy last August.
Pamela Harriman, the daughter of an English baron, has frequently had her differences with the children of former husbands (she was divorced from Randolph Churchill, Sir Winston’s son, and widowed by producer Leland Hayward). Clifford, a longtime friend of Averell Harriman’s, claims that the elder statesman’s family felt “deep disappointment” over his marriage to Pamela in 1971, when he was 79 and she was 51. Harriman’s other heirs were upset at his generosity to Pamela; he left her four homes, a valuable art collection and about $44 million. But Clifford insists that Pamela was worth it to Averell. “Those were the happiest years of his life,” says Clifford. The hurt feelings and allegedly damaged interests of other family members will have to be assuaged, if at all, in court.
