Organizations and Markets

Gulf & Western and the Mob

14 May 2011 at 11:21 pm Peter G. Klein 4 comments

| Peter Klein |

As a fan of the Godfather films, and a student of conglomerate diversification in the 1960s and 1970s, I’m surprised that I didn’t know, until today, about the connections between Gulf & Western CEO Charles Bluhdorn and the mafia. Paramount, the studio that made Godfather I and II, was at that time a Gulf & Western subsidiary (along with dozens of companies in industries ranging from auto parts to clothing, books, financial services, mining, sugar, cigars — you name it). Gulf and Western was at that time organized as a holding company, or what Williamson calls an “H-form” firm, not a more tightly integrated “M-form,” or multidivisional organization. H-form subsidiaries are operated as highly autonomous units, with little interference from company headquarters, so one wouldn’t expect Bluhdorn to have had much day-to-day contact with Paramount executives.

But apparently he intervened quite a lot. Today’s WSJ featured a piece on Hollywood in the late 1960s and early 1970s, what some regard as a Golden Age of American cinema (besides Godfather, think Chinatown, Nashville, The Conversation, Rosemary’s Baby, etc. — all Paramount films). Evidently Bluhdorn was substantially involved with the production of Godfather, helping make casting decisions and even firing (and re-hiring) producer Al Ruddy. Why such close concern? Paramount executive Peter Bart thought that Bluhdorn had “the mind of a criminal” and was involved with “financiers who had close ties to the mob community.” One of these, I learn from a 2009 Vanity Fair article, was Michele Sindona, a mob-connected banker who died (by poisoning) in an Italian prison. Initially, the Mafia wanted the film scrubbed — unwanted attention and all that — but then relented and helped with production. Several mobsters acted as extras while others helped behind the scenes. A few of the major players, such as Al Lettieri, who played Sollozzo, and Gianni Russo, who played Carlo, were mob connected. Here’s how Russo described getting his part: “Charlie Bluhdorn had a lot of good friends. So I had some people call him and say, ‘You know, this guy Gianni Russo is a very close friend of ours.’”

Entry filed under: - Klein -, Business/Economic History, Theory of the Firm.