The story has been so big that it has let another scandal disappear: a corporate backstory about how a group of billionaire board members from the worlds of Wall Street and entertainment let Harvey Weinstein stay in power. It features an all-star cast that included James Dolan and Dirk Ziff—and later, in cameo appearances, Paul Tudor Jones and Marc Lasry—who oversaw an almost unimaginably toxic corporate culture built and led by their friend, according to two directors who long opposed Harvey Weinstein.
In an extraordinary case of governance-gone-awry, these distinguished figures—brilliant in managing their own ventures—allowed themselves to be deceived by a charismatic mogul, whose blatant business abuses, including allegedly spending millions of dollars of TWC funds on his own personal projects, mirror his serial alleged abuse of women.
Weinstein was fired by the board of Weinstein Co. (TWC) on Oct. 8, just three days after the New York Times published a report detailing extensive allegations of abuse and harassment by the Hollywood legend; on Oct. 17, Weinstein resigned from the company’s board. (He still retains an ownership stake in the company.)
Here, Fortune reports for the first time the extent of the dysfunction of this dysfunctional corporate board—one that an insider calls “the ultimate shit show.” The board’s inaction helped Harvey Weinstein remain all-powerful for more than a decade, as directors from the vanguard of the business elite enabled him to stay atop the company.
Weinstein has admitted to some of the inappropriate behavior and has denied other allegations. He has categorically denied taking part in nonconsensual sex. He has not made public statements regarding allegations that he mismanaged the company or used its funds inappropriately.
Weinstein declined Fortune’s request to respond to critics of his management. Holly Baird, a spokesperson for Harvey Weinstein, sent Fortune an email stating that, “We are not commenting [on issues involving the board] and Mr. Weinstein is not available for interviews.” Messages requesting a response from TWC, and others seeking comment from Harvey’s brother and co-founder Bob Weinstein, were not returned.
Weinstein’s attorney David Boies did address the issue in a letter to director Lance Maerov in August of 2015. In the letter, reviewed by Fortune, Boies states that “Harvey has dedicated himself to making TWC a success.” Boies did not question Maerov’s assertion that TWC was losing money on an operating basis—according to Maerov, it had a deficit of $65 million in 2014—but argued that Maerov’s assertion that “TWC ‘never generated a profit’ ignores the hundreds of millions of dollars in asset values created by the film and television business.”
PART ONE: Buddies on the Board
None of the celebrated names that once served on its board are now engaged in salvaging the battered Weinstein Co. Hedge fund manager Jones, publishing heir and mega-investor Dirk Ziff, and Lasry, chief of distressed debt colossus Avenue Capital and co-owner of the Milwaukee Bucks, quit the board over the weekend of October 6, following the publication of the damning New York Times investigation that set the scandal in motion.
A fourth director, Tim Sarnoff, grandson of the founder of NBC and RCA, and president of production at film processing company Technicolor—described by anti-Weinstein directors as a Harvey loyalist—departed along with them. (Dolan, executive chairman of MSG, owner of the New York Knicks and New York Rangers, had left in mid-2016.) For Sarnoff, Ziff and Lasry the last official act was participating in the stormy conference call that Thursday evening, Oct. 5, when all but Jones voted to effectively fire the Hollywood titan they’d long supported.
That exodus leaves just three of the nine pre-scandal directors to rescue a once-fabled filmmaker. That cleanup crew consists of Harvey’s brother, co-founder, and longtime co-chairman Bob Weinstein, who’s running the studio, and the two directors who, they maintain, had long wanted to dump Harvey Weinstein.
The anti-Harvey survivors are Tarak Ben Ammar, a Franco-Tunisian financier who’s a leading adviser to a number of global media chiefs, including Rupert Murdoch, Silvio Berlusconi, and Vincent Bollore; and Maerov, EVP of corporate development at ad giant WPP, and a top lieutenant of its CEO, Sir Martin Sorrell.
Ben Ammar and Maerov, who’ve served on the board since TWC’s launch in 2005, assert that Weinstein for years bullied and insulted employees, directors, and his brother, squandered outside investors’ money, and ran TWC not to earn profits for its outside investors, but as a personal fiefdom that bestowed celebrity and power.
“If Harvey Weinstein had run TWC honestly and responsibly, and shown respect for the people around him and investors’ money, Tarak and I would have supported him,” Maerov tells Fortune. “But he wasn’t interested in running the studio honestly and responsibly. He was running it for his own self-aggrandizement.”
Adds Ben Ammar, “Harvey was so powerful in all circles, social, political, fashion, charity, entertainment, that he used all those tools to get what he wanted. He traded on his social currency like no one else. He began to think that he was untouchable, and that was his downfall.” (In this story, all references to a person as “Weinstein” are to Harvey Weinstein.)
Ben Ammar and Maerov have discussed their concerns about Weinstein in other recent interviews, including with Fortune. But they’ve revealed little about the boardroom infighting, until now. Neither Weinstein nor the company has made any previous comment on boardroom issues during Harvey Weinstein’s tenure as co-chairman.
A missed opportunity
The critical standoff came in 2015. Weinstein’s offenses, say Ben Ammar and Maerov, had escalated into misdeeds so damaging that the board and investors had ample cause to terminate the film mogul.
Early that year, the board suspected that Weinstein had been misusing company funds, according to Ben Ammar and Maerov. Weinstein hasn’t commented on this allegation. But through his attorney in 2015, Weinstein agreed to repay more than $7 million in company funds that, as his lawyer acknowledged in documents Fortune has reviewed, he had used for personal projects. And in April, news that an Italian model had accused him of groping her in his Tribeca office made headlines worldwide. “At that point, Lance and I pushed to refuse him a new contract,” says Ben Ammar. “But we were blocked by his allies, who held the swing votes, and who were really acting more like his buddies than representing the best interests of TWC.”
The two long-time dissidents insist that TWC wouldn’t be verging on collapse if the group they describe as Weinstein’s loyalists—Dolan, Ziff, Sarnoff, as well as prominent investors—had joined in their effort to dump him two years ago. (Lasry and Jones joined the board after Weinstein won a new contract.) None of the recently departed directors have spoken out on this issue, either to Fortune or elsewhere. “The tragedy is that if we’d removed Harvey two years ago, we’d still have issues, but the talent would have stayed, because Harvey would have been long gone as CEO. We’d look a lot cleaner and less damaged than we do today,” says Ben Ammar.
Fortune reached out to seven former directors who served since 2015, as well as to the Weinsteins. Technicolor, where Sarnoff serves as deputy CEO, did not respond to emails requesting comment. Ziff did not respond to messages left at his office. A source provided a statement from Jones explaining why he declined to sign a press release calling for Harvey’s departure, but Jones made no further comment. Dolan offered the following statement via a spokesperson: “We’re not interested in discussing these matters at this time. Information discussed in a boardroom should remain in the boardroom.”
TWC is now seeking to either sell itself in its entirety, or shed individual assets such as its TV unit and film library. A potential deal with the private equity arm of real estate investor Colony NorthStar failed to materialize. Still, say the two directors, TWC is already benefiting from sales of its movie assets. In mid-November, Warner Bros. agreed to pay around $32 million for the distribution rights to TWC’s Paddington 2, a sequel to a box office smash starring an endearing toy bear.
It’s especially galling to Ben Ammar and Maerov that the directors they consider Weinstein loyalists bolted from the board when the scandal broke, and that Ziff, Jones and Sarnoff didn’t sign the press release issued on Oct. 6 that condemned Weinstein’s alleged sexual abuse and effectively fired him. “I’m disappointed that his friends didn’t stay on the board at that critical time, so we could make a united statement,” says Ben Ammar. “Bob [Weinstein] deserves a lot of credit for standing with us. But the others split, and gave us no help in navigating today’s tough waters.” When the press release was issued, Ziff and Sarnoff had already left the board. A source provided Fortune with an email that Jones sent to Maerov explaining that he was not signing the release because of possible legal issues in effectively firing Weinstein.
Most of all, Ben Ammar says, the departed directors missed a crucial opportunity to take a stand at a turning point in cultural history. “This became the biggest scandal in the world,” says Ben Ammar. “There was a sexual harassment regime before the Harvey Weinstein scandal, and a sexual harassment regime in the post-Harvey Weinstein world. They should have stayed to do their duty and denounce him. Instead, they ran for the hills.” Ziff, Jones, and Sarnoff have not provided comment on why the left the board, either to Fortune or in public statements.
Partying with the board
According to Ben Ammar and Maerov, the ex-directors were overly swayed by their personal friendships with Weinstein. They assert that Dolan, Ziff and Jones all had close social ties to the famous producer. “Weinstein traded on those friendships, on his social currency,” says Maerov. “He spun a kind of spiderweb,” says Ben Ammar. “He had three tables at the Oscars, he had Emmy parties, he hosted bankers, investors and politicians at glamorous events. He could be so charming. He was Mr. Charming and Mr. Bully all in one. Lots of prominent people, including TWC directors, got caught in the spiderweb.”
Maerov is somewhat sympathetic to the bygone directors. “These are people who were used by Harvey,” he says. “Lasry and Jones weren’t even there for the vote on his contract. They didn’t have the benefit of the historical facts. Directors who supported Harvey were betrayed just as we were.” Ben Ammar is more adamant. “Sure, Harvey is a great salesman. I was friendly with Harvey. But you have a special duty to tell a friend when he’s wrong, and they didn’t. These are highly successful, sophisticated people. What comes first isn’t friendship, but your duty as a director.”
By going public, Ben Ammar and Maerov are taking a highly unusual step: Exposing the anatomy of a boardroom brawl. And Fortune‘s reporting, along with other press accounts over the years, support their assertion that half-a-dozen key directors, most of them billionaires, were close friends of Weinstein’s, and in one case did business with TWC.
Ziff and Weinstein were renowned in show biz circles for partying together. In a 2012 interview on CNN, Weinstein boasted that he and Ziff had had a blast when years earlier they’d chaperoned a young Chelsea Clinton to a rock club on Martha’s Vineyard. Harvey publicly praised Dolan as “one of my and Bob’s best friends” when Dolan left the board in June of 2016. Lasry and Weinstein were neighbors in Westport, Conn., and according to a source familiar with the situation, they and their families regularly socialized together. They also shared a bond as major fundraisers for the Democratic Party.
TWC was also, as are many studios, a customer of Technicolor, where director Sarnoff is an executive, for its 3D projection system, and post-production services. In 2011, Technicolor chose TWC’s The King’s Speech to launch its new “MediaEcho,” an app for viewing movies on tablet devices. (A Dow Jones story on October 11 reported that Technicolor had stopped extending credit on services it’s providing to the Weinstein Co., and that CEO Frederic Rose, a former TWC director, had sent an email to executives weighing whether to end all business with the studio.)
Richard Koenigsberg, a partner in an accounting firm with a prominent entertainment practice—one that did not do business with the Weinstein Co—stayed to sign the Oct. 6 press release condemning Weinstein’s alleged harassment but left the board in mid-October. He did not respond to a message from Fortune. Marc Lasry and Jeff Sackman, a Canadian movie producer who resigned as a director in late 2015, also declined to comment.
Fortune was able to obtain some not-for-attribution observations from people familiar with the thinking of former directors whom Ben Ammar and Maerov viewed as Harvey Weinstein’s allies. Weinstein’s backers had what they considered sound reasons to take his side. According to people familiar with their viewpoints, Weinstein’s allies reckoned that Harvey epitomized the Weinstein brand, and that without him there would be no Weinstein Co. He’d also recently launched a highly successful television franchise that attracted lucrative bids, and they believed that losing Harvey might jeopardize a future sale. Former directors, according to people familiar with their point of view, also strongly object to the perception that Weinstein controlled the board.
Both the dissidents, and the Weinsteins in previous public statements, credit former directors with substantial contributions to the business. Bob and Harvey Weinstein praised Dolan for helping TWC develop a lucrative TV franchise. Ziff brought valuable expertise in distressed debt. And Ben Ammar and Maerov praise Sarnoff for joining an unsuccessful attempt to obtain Weinstein’s personnel file, in 2015.
It’s important to note that when the face-off occurred in 2015, according to both Weinstein’s loyalists and opponents, evidence of alleged sexual abuse was still too sketchy to clearly merit firing him. Though both camps were deeply troubled by the groping scandal and other revelations, Ben Ammar, Maerov maintain that they and his other opponents wanted to dump him for business reasons rather than sexual abuses. “Tarak and I never bought the Harvey Weinstein myth like a lot of other directors,” says Maerov. “We watched the guy for 10 years, and he totally mismanaged the company.”
PART TWO: A Contract Showdown
To fathom how Harvey Weinstein survived so long, it’s important to examine the board structure that granted immense power to The Weinstein Co.’s co-founders, Harvey and his brother Bob.
In 2005, TWC debuted with $950 billion in capitalization, consisting of $500 million in equity and $450 million in debt. The equity holders fell into two categories. Bob and Harvey Weinstein initially held 50% of the shares in a class called the “W series.”
The balance was owned by a large syndicate. Goldman Sachs was the lead investment banker in the financing of TWC, an equity investor, and provided debt financing as well. To this day, the roster of “A series” investors encompasses many marquee names in finance, media, and fashion: Goldman, Japan’s SoftBank, Fidelity Investments, Wellington Management Group, Eton Park, French luxury conglomerate LVMH and TV network TF1, and WPP, the global advertising firm.
The “W” and “A” shares had equal voting rights. It was the rules governing the board, and an ironclad “operating agreement,” that favored the Weinsteins. The board consisted of nine members; the Weinsteins had two seats, and the charter granted them the rights to name a third director to represent the W shares. Koenigsberg occupied that seat from the launch in 2005 until his departure in mid-October.
In addition, the operating agreement granted the W shareholders, meaning the Weinsteins, full control over all decisions involved in running the studio.
The A shares were also allocated three seats, representing the outside investors. Ben Ammar and Maerov filled two of them. The third seat remained vacant for several years until Ziff—a Harvey supporter, according to Maerov and Ben Ammar—was installed over their objections in the fall of 2015. That, as we’ll see, was a turning point in the war over whether to grant Weinstein a new contract.
The three additional directors were in the “independent” group. The rub is that the bylaws granted the Weinsteins authority to recommend the “independents.” “Goldman Sachs had the right to approve the choice, but under the bylaws, their approval couldn’t be ‘unreasonably withheld,’” says Maerov. (Goldman declined to comment.) And according to Ben Ammar and Maerov, it was Harvey who, in most cases, handpicked the three supposedly non-affiliated directors. When the scandal erupted in early October, the independent directors were Lasry, Sarnoff and Jones, all seen by Ben Ammar and Maerov as Weinstein loyalists. “That’s how he controlled at least six out of nine seats,” says Maerov. “It was a structure that was incredibly investor-unfriendly.”
Two directors grow anxious
So why did Ben Ammar and Maerov keep serving on a dysfunctional board that by its very design severely curtailed their influence, and augmented Harvey Weinstein’s power? Maerov explains that although he held a seat from 2005 to 2013, he was a non-voting observer in that period. “Then in 2013, I was appointed to the former Goldman ‘A’ seat, and I had more potential influence as a voting member. My marching orders were to protect the investors and get as much of their money back as possible.” Ben Ammar tells Fortune that he also remained to protect the interests of the outside investors.
The rules contained another provision that thwarted the board’s efforts to control costs, according to Ben Ammar and Maerov. Each Weinstein brother had the right to veto expenditures for the other sibling’s projects, but no other board member had that power. According to Maerov, what seemed like a clever design to protect shareholders in theory turned out to be counterproductive in practice.
“Each brother was supposed to be a check on each other’s expenditures. That’s how they were tied together,” says Ben Ammar. “But even though they each claimed the other’s movies would always lose money, Harvey also said yes to Bob’s spending, and vice versa. If Harvey blocked Bob’s new project or expenditure, Bob would block Harvey’s next project or expenditure. So nothing got blocked, and the spending was excessive.”
Maerov adds that although the board approved the annual budgets, that authority was almost meaningless. “We’d approve and they’d never adhere to it,” he recalls. “The approval process was almost a joke. If they missed the budget, there was no recourse.”
The company consistently lost money, according to Maerov, Ben Ammar and other former directors. In his August 2015, letter to Maerov, Boies, Harvey Weinstein’s attorney does not dispute that TWC was taking losses, but insisted that the studio had created substantial wealth via its library and TV businesses. A couple of years after the launch, say Maerov and Ben Ammar, Ziff extended TWC a lifeline in the form of a loan worth tens of millions of dollars. (Ziff has not publicly confirmed doing so.) In 2009, TWC underwent a major restructuring in which the lenders exchanged debt for a large portion of the equity. Ziff’s loan was partly turned into equity, which enhanced his candidacy for an “A” series board seat. The Weinsteins’ holdings were diluted, but they kept tight control through their effective hold over six of the nine board seats.
Harvey’s contract: An impregnable fortress
According to Ben Ammar and Maerov, Harvey’s first five-year contract, granted in 2005, mandated that all subsequent employment agreements incorporate at least “equal or better terms.” Hence, when the initial agreement expired in 2010, it was essentially renewed through 2015 containing the same remarkably favorable safeguards.
Like its predecessors, the 2010 contract stipulated that Weinstein could be terminated only for two types of offenses, according to Maerov. The first was a conviction for a felony involving “moral turpitude,” a category that would obviously encompass sexual assault. “But being accused with convincing evidence wasn’t enough,” says Maerov. “He had to be convicted of a felony, and not just any felony, only one involving moral turpitude. If we’d had documentary evidence of sexual harassment, the absurdity of his old contract still would have prevented us from terminating him.”
Second, he could be terminated for a major misuse of TWC funds. But that condition contained a major loophole. Here’s the escape hatch: If Weinstein were caught misappropriating funds, he would be granted a “cure period” in which to refund the money. In other words, misusing company cash wasn’t sufficient to terminate him. As long as Weinstein paid TWC back, he’d remain employed under the same highly advantageous contract as if he’d done nothing wrong. “He had the right to put the genie back in the bottle,” says Maerov.
In late 2014, Maerov says, a TWC executive secretly reported to him that Harvey was allegedly misusing company funds. “He was appalled by what Harvey was doing,” declares Maerov. According to Maerov and Ben Ammar, Weinstein had tapped the company’s credit facility to advance himself funds against future receipts from movies he owned personally, and paid Marchesa, his wife Georgina Chapman’s fashion brand, $75,000 for dresses that he’d given to a business acquaintance in Qatar. “We were shocked he was making gifts with company money,” says Ben Ammar.
The board put Weinstein on notice that he needed to return the money, or risked being terminated, according to Maerov and Ben Ammar. He complied: In a letter reviewed by Fortune from February of 2015, a lawyer for Weinstein did not state that Weinstein had misappropriated funds. The letter, however, lists over $7 million in TWC funds that Weinstein was pledging to refund to TWC––and did refund as promised. A later letter from Boies, who was also representing Weinstein, to Maerov in late July of 2015, also alludes to the issue, referring to “instances in which Weinstein assertedly used company funds for personal purposes without compensating the company.” Boies goes on to write, that Weinstein wants to resolve the issue “in a cooperative manner.”
Other documents state that in February of 2015, Weinstein refunded $6.86 million for use of TWC’s credit facility, and go on to affirm that he repaid the $75,000 for the dresses. They also address a third issue: Weinstein’s use of TWC personnel for his personal projects. The documents state that Weinstein agreed to provide a $700,000 payment to TWC as compensation for time and services that TWC employees spent on ventures that he owned exclusively, independently of the company.
A fight over files
Weinstein’s existing five-year contract was expiring at the end of 2015. The main role in the negotiations fell to Maerov, who was one of two directors serving on the compensation committee. The other director, Jeff Sackman, resigned in the midst of the acrimonious talks, leaving Maerov as the comp committee’s sole member.
“It was about the shortest straw you could ever draw at TWC,” he says. “You’re opposing Harvey Weinstein, Hollywood’s 800-pound gorilla, and his famous lawyer, David Boies.” The board was under no requirement to renew Weinstein; Maerov and Ben Ammar favored pushing him out, principally for what they regarded as the misuse of funds and all around poor management.
For Ben Ammar and Maerov, the contract’s expiration offered a big opening. “It was clear that this opening was the only opportunity we would ever have of changing the governance of the company and creating protection against Harvey,” says Maerov. They recognized, however, that denying him a renewed employment agreement could still leave him with enormous influence over TWC. “Because of the operating agreement, Harvey’s “W” shares gave him the right to keep running the company even if he wasn’t an official employee,” says Maerov. As a result, he says, he and Ben Ammar needed to press the shareholders to amend the bylaws so that at the same time Weinstein was denied a new contract, he would also lose the operating control that went with the “W” shares.
A new threat was shadowing the negotiations. Shortly after Weinstein repaid TWC, tabloid headlines trumpeted the first public accusations of sexual abuse leveled at Harvey Weinstein. On March 26, 2015, Ambra Battilana Gutierrez, an 22-year old Italian model, reported to New York City police that Weinstein had groped her at a meeting in his office. “It appeared he was going to be arrested,” says Ben Ammar.” As it turned out, Batillana’s complaint did not result in criminal charges. “Tarak and I were still highly disturbed,” adds Maerov. “We pushed to get the facts.”
According to Ben Ammar and Maerov, Weinstein told the board that the whole incident “was a setup by a shakedown artist.” The proof, he said, was that he wasn’t arrested, and that Gutierrez had signed an affidavit swearing that the alleged groping never occurred. Weinstein told the board that the reason Gutierrez had signed the affidavit was that he’d threatened a defamation suit, showing that her whole story was a sham, say the two directors. “The truth was that he’d paid a settlement to make her go away,” says Ben Ammar. “But neither he nor his lawyers told us.” (Weinstein’s settlement with Battilana has been reported elsewhere, including in the New York Times.)
Maerov says that the Gutierrez bombshell aside, he’d been hearing anonymously from employees about complaints from both male and female employees. As part of due diligence in the contract negotiations, Maerov asked Weinstein to see his personnel file. “We requested the files from all the senior executives,” says Maerov. In Weinstein’s case, he wanted to ascertain if Harvey showed a pattern of sexual harassment of women, or had paid settlements to make harassment charges disappear. He was also concerned, he says, about possible settlements or workplace complaints from male or female employees who’d been threatened or bullied by Weinstein.
Enter the lawyers
It’s highly unusual for a board to have to ask permission to see an executive’s personnel file in the first place. But Weinstein refused to allow his company’s directors to see the file, according to Maerov and Ben Ammar, and he engaged Boies to support his position. (Some elements of the following account have previously been reported by the Financial Times [subscription required].)
Maerov says that he specifically asked Boies if Weinstein had paid any settlements. Boies, Maerov recalls, said something along the lines of “Settlements may have been paid.” “But I wanted the specific information,” continues Maerov, “I believed it was crucial to see the file, but also asked Boies for specifics whether they were in the file or not. Through counsel, we asked Boies for full disclosure on the nature of the settlements.” He was able to ascertain from the finance people at TWC that no company funds had been spent on settlements for Weinstein.
Maerov says he demanded detailed accounts on the number of settlements, the identities of the women or men who filed complaints, the amounts paid, and abuses alleged against TWC’s co-chairman. According to Maerov, Boies declined to provide any specifics. “We were fighting to get documentary evidence of his rumored misconduct, and Boies was fighting very hard to keep documentary evidence out of our hands,” Maerov asserts. “He just said no. He just kept hiding the ball, and creating chaos.”
In a seven-page letter to Maerov reviewed by Fortune, Boies argued that Weinstein wanted to keep the file confidential because its contents could be leaked if made available to the directors, and especially Maerov. “Sensitive information provided to you has been repeatedly leaked, and I know you understand the undesirability of providing confidential personnel information to individuals who have proven themselves unable to maintain confidentiality,” wrote Boies. “That, of course, is particularly true where someone bears an obvious personal animus towards the person whose personal information is being requested.” Boies also condemns what he regards as a Maerov vendetta, stating Maerov’s “clear intention” was to “force Harvey Weinstein from the company.”
In another letter, also seen by Fortune, Boies had recommended a compromise. An independent party, Rodgin Cohen, senior chairman of Sullivan & Cromwell, would exclusively review the file to determine if TWC faced any liability for Weinstein’s past conduct. “If Mr. Cohen advises the board that the company does not face any such liability, there will be no further requests by the board or its representatives for Mr. Weinstein’s personnel file [and] any issues relating to Mr. Weinstein’s past conduct will be deemed resolved,” Boies wrote in the July 28 letter.
Maerov bridled at the proposal. “Our counsel reviewed the files of all the other senior managers,” he says. “Having Cohen review his file amounted to special treatment for Harvey. And then once he reviewed it, we were blocked from asking any more questions!” But Maerov concluded that he had no choice but to accept Boies’ recommendation. “It was my job as head of the comp committee demand the file, but the effort failed,” he says. “My only option, after consulting with other board members, was to sue the company to for access to the file, which could have been very damaging to the company.”
On September 4, Cohen issued a four-sentence letter. The entirety of the portion dealing with his review of the personnel file is the following: “Based on our review, there are no unresolved claims that could result in liability to TWC or its directors. Moreover, the file reveals no pending or threatened litigation. Furthermore, it is my understanding that Mr. Weinstein has agreed to hold TWC and its directors harmless from any claim, liability, loss, or expense resulting from any incident, resolved or unresolved, disclosed in his personnel file.”
The Cohen letter didn’t satisfy Maerov and Ben Ammar. “I wanted to see if there was a pattern of misconduct, but the letter only addressed potential liability,” says Maerov. “Boies and Cohen obstructed our seeing what was in that personnel file, when we had a total right to see it.” Ben Ammar and Maerov insist that Boies and Weinstein denied them sensational information that could have influenced crucial shareholder decisions that in turn could have transformed TWC’s governance.
For his part, Boies provided the following statement to Fortune: “The Board controlled the company and had access to whatever company records it chose to require. The Board did not review the file in 2015, deciding instead to have it reviewed by Mr. Cohen; that was the Board’s decision after listening to my articulation of Mr. Weinstein’s position and the advice of the Board’s own large law firm. The Board now has the file and has not identified anything in it of which the Board was not aware in 2015.”
In a letter to the Financial Times on Oct. 24, Boies stated that “[The assertion] that Messrs. Maerov and Ben Ammar did not know about Mr. Weinstein’s settlements with women when they approved his 2015 contract…is simply false.”
Says Ben Ammar, “David Boies quite clearly lost perspective in his dealings with Harvey Weinstein and TWC, and that the consequences of that are obvious.”
Part Three: The Weinstein Co. Endgame
Even after their defeat in the battle over the personnel file, Maerov and Ben Ammar kept pushing to remove Harvey Weinstein. They had growing ranks of allies among the company’s investors.
Martin Sorrell, Maerov’s boss at WPP and a fierce opponent of squandering shareholder money, was especially incensed by Weinstein’s behavior. One person interviewed by Fortune recalls that Sorrell expressed disapproval and disbelief while attending Weinstein’s sumptuous annual pre-Oscars party, this one in February 2016. “Martin gets up from the dinner table and says, ‘What the hell is going on here! This is a joke! He shouldn’t be spending company money this way!” A second source familiar with the incident confirms the essentials of the account.
In late 2014, the third “A” share seat was vacant, and the dissidents sought to fill it with an ally in an effort to shift the board’s balance in their favor. Maerov and Ben Ammar wanted to recruit Eugene I. Davis, head of Pirinate Consulting Group, a turnaround-specialist firm that had rescued the likes of Atlas Iron and U.S. Concrete. “Davis had been through many bruising proxy battles,” says Maerov. “If we’d gotten him onboard it would have changed the dynamics, and maybe the outcome. At best he would have been a constructive influence, at worst he would have been another witness to the madness.”
In late September, Maerov and Ben Ammar launched the equivalent of a proxy contest. They arranged a meeting, via conference call, assembling TWC outside shareholders. Their goal: First, naming Davis to the open seat. And second, persuading the shareholders to both deny Weinstein a new contract, and also amend the bylaws so that his authority to continue running the company, granted under the “W” shares, would be terminated. “I argued, ‘Given the performance, to proceed under the old bylaws and expect a different result defied logic. We need to change this company’s governance,’” says Maerov. His campaign won support from Fidelity Investments, which had recommended Davis to the dissidents, as well as from other dissatisfied shareholders. (In an email, a Fidelity spokesperson wrote, “As a practice, we do not comment on individual companies.”)
Weinstein adamantly opposed naming Davis. He lobbied investors to appoint his close friend Ziff instead—a choice that would bolster his position in the contract negotiations, according to the dissidents. “Because Harvey was endorsing him,” says Maerov, “clearly certain shareholders felt that they should appoint Ziff.” The dissidents’ campaign failed; when the investors voted, instead of Davis, it was Ziff who won the third “A” share seat. Around the same time, Weinstein named James Dolan to the chair vacated by Sackman.
After that loss, it was clear to Ben Ammar and Maerov that they couldn’t rally the votes to deny Weinstein a new contract. He had the backing of his brother, of “W” shares director Koenigsberg, and Sarnoff and Dolan, plus support from the newly-appointed Ziff. That gave Weinstein an unbreakable majority.
Maerov did succeed in rebuffing Weinstein’s demands for even richer terms. The mogul wanted to be paid a percentage of the company’s profits, from dollar one, before the payment of any dividends to the outside shareholders—who had never received any return on their investments over TWC’s history, according to Maerov and Ben Ammar, who occupied two of the three seats representing outside investors. “His demands were unconnected from reality,” says Maerov. “He even wanted TWC to repay his legal expenses for his own misuse of funds, legal fees for his defense when he got caught! That didn’t come close to flying even with his supporters.”
The dissidents had a higher goal: Effectively foiling the new contract—which under the charter, had to be just as ironclad as the old one—by imposing new restrictions on Weinstein. Those conditions could get him fired in the future for things he’d done in the past. Although they’d lost their campaign to appoint Davis and change the bylaws, the dissidents now had newfound power on the board, because the controversies of 2015 had substantially weakened Weinstein’s standing. And his problems didn’t end with the alleged financial misdeeds and the groping scandal. The dissidents suspected that his behavior may have cost TWC an extremely lucrative deal.
A deal falls through, and Weinstein stumbles
In early 2014, Weinstein steered TWC into a successful new venture: television production. “He apologized to the board, saying that he recognized that he’d run the company poorly, that he didn’t deliver on his promises, and that the investors were disappointed,” says Ben Ammar. “Then he said that he was starting a venture that could get all our money back.”
From the start, the new venture was so successful that it promised to revive TWC’s sagging fortunes. Late in 2014, the British network ITV was reportedly bidding to buy Weinstein’s TV unit for as much as $950 million, including an upfront payment of $300 million to $400 million. “The attitude of most of the directors was, ‘We need Harvey, he’s about to do this big fat deal with ITV,’” says Ben Ammar.
But in 2015, just when Weinstein appeared close to clinching the deal, the Gutierrez headlines erupted. Shortly thereafter, ITV walked. It’s impossible to know for sure, but Maerov, Ben Ammar and other directors suspected that the scandal killed the sale. “A serious public company in the U.K. that’s facing a scandal in America that’s heavily in the press was not going to pursue conversations,” says Ben Ammar. (In an email to Fortune, an ITV spokesperson said, “We never comment on speculation relating to M&A.”)
In late 2015, Maerov and Ben Ammar exploited Weinstein’s bungling as leverage to rein him in. Their brainchild was a “Code of Conduct and Ethics” that would apply to all senior officers and board members. Fortune has seen the five-page document, dated September 2, 2015. It lists a number of seemingly standard violations, including “sexual harassment,” “intimidating or threatening behavior,” and receiving “a personal benefit as a result of the employee’s position with TWC.” Neither Weinstein nor the company made public statements about the ITV negotiations at the time, though the talks were reported in the press.
Weinstein hated the proposed code. “He wanted an exception created only for himself, stating that an accusation wasn’t enough, and that he could only be fired for a conviction, as under his old contract,” says Maerov. But Maerov prevailed. “Given what happened in 2015, none of the directors objected to the code, nor did anyone support giving Harvey special privileges,” he says.
On October 21, the board voted to give Weinstein a new contract. “We didn’t win our Hail Mary pass to get a turnaround specialist on the board, and change the governance, but it was a big deal to get the code of conduct,” says Ben Ammar. Denying him a new deal was essentially meaningless, since they’d lost their campaign to change TWC’s bylaws. So, the dissidents say, the best remaining option was to attach the code to the new contract.
TWC begins to implode
After Weinstein secured his new contract, long-simmering tension between the co-founders escalated into a brother-to-brother war so ferocious that it threatened to destroy TWC, say Maerov and Ben Ammar.
The Weinsteins specialized in different genres: Harvey made highbrow Oscar contenders and winners, while Bob focused on horror and action films through his Dimension division. “Bob and Harvey hated each other,” says a former director. “Bob would simply say, ‘Harvey is trying to screw me.’ Harvey was better at it, he would say, ‘Bob is trying to screw the company.’ Whenever we talked about financing a new movie, Bob would claim that Harvey’s project would lose tons of money, and Harvey would claim that Bob’s movie was a loser.” The board meetings, recall Ben Ammar and Maerov, frequently resembled combative therapy sessions. “Harvey and Bob would be screaming at each other,” says Ben Ammar. “It was like sitting through a dysfunctional family dinner.”
Bob wasn’t the only director whom Harvey treated harshly. According to Maerov, Harvey Weinstein pelted the director with abusive language. “He’d say in front of his own lawyers, ‘I’m going to destroy you,’” recalls Maerov. “He’d make crazy statements about what famous people I’d never met were saying about me, all negative.” Maerov recounts that Weinstein would harangue him in the morning, and send him flowers in the afternoon, attached with notes declaring something like, “I went to my therapist and he says I need to get over my anger issues.” Ben Ammar and another company insider told Fortune that Maerov told them about the threats at the time.
The infighting was so destructive that in the months before the sexual assault scandal went public, the board weighed splitting TWC into two separate, independent studios, one run by Bob and the other by Harvey. “We wanted to do anything that meant they couldn’t interfere anymore with each others’ movies,” says Ben Ammar. He and Maerov thought it also made sense to sell off its two best assets, the 700-film library and the TV division that was forecast to earn $40 million a year, so that the shareholders could recoup some of their investment. Adds Ben Ammar, “Splitting into two studios would ALSO mean that we didn’t have to be Harvey’s head shrink.”
It was the deluge following The New York Times story that drove one brother from the company, and left the other running an imperiled studio.
A speedy collapse
Since the 2015 contract vote, the roster of directors witnessing these battles had changed significantly. Two more billionaire friends of Harvey’s had joined the board. In December 2015, Harvey chose Paul Tudor Jones, like him a director of the Robin Hood Foundation, to fill an empty seat; he named Marc Lasry to replace Dolan in mid-2016.
For Harvey, the end came during an emergency call on the evening of October 5, hours after the Times story appeared. All nine directors were on the line, including a combative Weinstein. According to several current and former directors, Harvey insisted that the charges in the Times piece weren’t true, and that the scandal would blow over. He stated that he’d send the directors friendly photos of himself with his accusers at awards events, taken long after they’d claimed he’d harassed them. Those festive shots, he maintained, would prove his innocence. He did, however, agree to temporary leave of absence.
Most of all, he declared that the call didn’t qualify as an official board meeting under the company’s charter and that the directors therefore had no right to effectively sideline him. His brother, Harvey charged, was using the uproar as an excuse to mount a coup and take over TWC, a goal Harvey accused Bob of long harboring. According to Harvey, the board had no legal authority to remove him.
Jones also expressed doubts on whether the board could legally act to remove Harvey at that juncture. According to a source familiar with his thinking, Jones told the other directors on the call that effectively firing Harvey, and handing control of the company to Bob, could be viewed by lenders as a “material event,” and trigger a crippling default on TWC’s debt.
By the following day, Ziff, Lasry and Sarnoff had resigned from the board. That left just five directors, excluding Harvey. That evening, the board issued a scalding press release stating that Harvey Weinstein was taking “an indefinite leave of absence,” adding that “It’s important for him to get the professional help for the problems he has acknowledged.” The board announced an independent investigation headed by a team including two former prosecutors, one of whom had specialized in sex crimes.
Jones was the only remaining director not to sign the release. According to the source familiar with his thinking, he supported the release’s condemnation of Weinstein’s alleged behavior, and advocated denouncing sexual misconduct in the strongest possible terms. But his misgivings on the legality of firing Weinstein put him at odds with his fellow directors.
A source provided Fortune with this email, sent by Jones on Oct. 6 to Lance Maerov: “At this time I would prefer NOT to sign it as the last paragraph about Bob taking control implies levels of legality and board authority that I don’t fully comprehend or understand. Respectfully, Paul.”
The official firing came at a board meeting that Sunday, Oct. 8. By then, Jones had also quit, leaving the four directors who’d signed the email condemning Harvey’s alleged behavior on Friday. Surprisingly, it was the code of conduct, not anything allowed under his contract, that provided the authority to terminate the mogul, according to Maerov and Ben Ammar. “Under the old contract, we couldn’t fire him until he was convicted of sexual assault,” says Ben Ammar.
Ben Ammar and Maerov both swear that if it hadn’t been for the code, Harvey Weinstein would still be running TWC today. “He was that crazy,” says Maerov. “Once he was out, the women he’d abused knew there was no way he could harm them professionally. Firing him was crucial to opening the floodgates. If the floodgates hadn’t opened, who knows how long this maniac would be scrambling to stay in power?”
Still, it seems unlikely that Weinstein would have survived long given the sensational and horrifying allegations already crowding the headlines. It’s a measure of Harvey Weinstein’s immense power that it took one of the worst sexual-assault scandals in Hollywood or business history to repel his loyalists and end his reign. It was that scandal—not the alleged business abuses that could have skewered him long ago—that ultimately handed his opponents a sword.
This article originally appeared on Fortune.com