Pity those poor Hunt brothers — down to their last $1.6 billion

Press, 14 March 1985, Page 13

Pity those poor Hunt brothers — down to their last $1.6 billion

From

WILLIAM SCOBIE

in Dallas, Texas

One of the grandest money-losing ventures in American economic history is approaching a longdelayed denouement this month, providing a timely reminder to United States business that even the sharpest of Texan J. R. Ewingtype billionaires can be corralled by their own greed. The deal-spinning Hunt brothers of Dallas, long famous for their ability to turn a buck faster than almost anyone in the West, are facing the lowest ebb in their fortunes since their eccentric founding father H. L. Hunt died in 1974.

One federal agency has sought to bar them from all commodity futures trading; another has demanded millions in back taxes; and the family’s once generous lender banks have closed in. No-one in Texas was placing bets on the outcome.

In four years, Nelson Bunker, W. Herbert, and Lamar Hunt — whose monstrous gamble in silver in the late 1970 s nearly caused the biggest financial disaster since 1929 — have seen their net worth tumble by a staggering ?4 billion. What once was the largest family fortune in America — some $8 billion worth of oil wells, land, silver, racehorses, art works — has been more than halved as investments soured and debts mounted.

Not that rumpled, roly-poly Bunker, aged 58, and his younger brothers are about to declare bankruptcy: hardened Hunt-watchers in the “Big D” — as Dallasites like to call their city — say the trio still have an estimated net worth of some |1.6 billion. Other members of the fued-prone clan — the old man had at least 15 children by three women, two of them his wives, before his death at 85 — maintain their nest-eggs intact.

The brothers Hunt are mortgaged to the hilt. Pursued by irate creditors and the Internal Revenue, they admit they can no longer meet their obligations. “The banks are losing patience,” says a rival Dallas oilman, with some satisfaction, “and they have the Hunts by the throat.”

Over the past month, in a dozen courthouses and government offices from the “Big D” to the “Big Apple,” new documents and charges have offered a picture of the decline, if not fall, of the Hunt empire. The latest in a series of Federal challenges come when the Commodity Futures Trading Commission sued Bunker and Herbert for allegedly manipulating the silver market in 1979-80 to send prices

sky-rocketing. The agency wants the Hunts permanently barred from trading in all commodities futures markets and seeks heavy fines — in the millions — for past violations.

The Hunts’ top lawyer, Walter Roach, called the charges “baseless" and swore the brothers would be eventually “vindicated.” Others are pounding on the ranch gates in Texas. Among them: 1 The Internal Revenue Service, in search of $255 million in taxes, the largest claim ever brought against one family in one tax year. The I.R.S. says the brothers knowingly misreported huge cash transfers to their children as “loans” when they were, in fact, taxable gifts for use in the silver market. ’ The Hunts’ main lender banks, which face whopping losses on loans to the family. Hunt International — the brothers’ chief sugar and oil-rig drilling outfit — is in default on debts of at least $390 million. Full repayment, the Securities and Exchange Commission says, is “unlikely”. ’ Companies and credit agencies around the country to whom the Hunts owe money. More than a dozen lawsuits have been filed, some charging improper shuttling of funds between various Huntbossed corporations.

In a clear warning to the Hunts, the banks, including First National of Chicago and Manufacturers Hanover Trust, refused to honour pay cheques for Hunt International, to the ire of hundreds of workers and many more recently fired with severance cheques in hand. How do the brothers, astute creative financiers all, find themselves in this fine old-fashioned mess? Setbacks in oil prices, sugar, natural gas, and other commodities over the past four years have all contributed.

Mostly, current woes stem from the great silver debacle of 1980, a crisis that has its roots in an unhappy blend of penny-pinching parsimony and wild gambling instincts in the family blood. The founding father, Haroldson Lafayette, son of a Confederate soldier, parlayed a few thousands made at the poker table into, legend has it, a 1920 s oil fortune that grew into a $2 billion empire. "H.L.” was at once a gambler who could blow $50,000 at the tables in a shot, and man of preternatural meanness and ruthlessness. He

lunched at his desk on nuts and dried prunes from a paper bag. He had his first-born son lobotomised when the young man grew mentally ill. He abhorred charity and loved a legal fight.

Bunker, head of the six children of H.L.’s first marriage (who feud continually with offspring of the other two families), inherited many of these traits. A non-drinker and non-smoker who wears cheap suits and drives an old Cadillac, he yet thinks nothing of flying to London or Paris to see one of his horses race. He shares papa’s zeal for Right-wing causes and has given millions to the John Birch Society and outfits with names like “Campus Crusade for Christ.”

It was from a Right-wing tract predicting a Red invasion of the United States followed by the devaluation of paper money and world financial chaos that the Hunts developed their plans to speculate heavily in silver. Working secretly at first, the brothers amassed over four years a fortune said to have been worth at one point nearly ?10 billion. Their aim was to corner the world market and so dictate world prices. When the Hunts had trouble meeting the bills for this vast hoard, Wall Street and foreign markets panicked and the silver boom collapsed overnight.

Some of these assets were sold — mainly silver, coal mines, and securities — to pay off part of the loan and its ?500 million a day interest. Worse, for Bunker, than all this was the brothers’ hands were now tied. With even their accounts receivable in hock, they could no longer borrow ad lib, as in the past, to finance new business capers.

Now their efforts to free themselves from the impasse are under fresh challenge from creditors, the I.R.S. and the Feds. With that incredible $4 billion gone already, many wonder if the Hunts’ days of glory are gone for good. Yet more than one Dallas commodities broker expects an eventual resurgence. “The Hunts have made or lost billions before,” says a Texan banker. “They’ll be back.” Copyright — London Observer Service.