Film mogul withstands scandal

By Robert Lindsey

"New York Times

BURBANK, Calif. Three months after David Begelman was ousted as chief of Columbia Pictures here and one month after his reinstatement in one of Hollywood's most powerful jobs, controversy and mystery continue to surround the flamboyant film mogul.

Amid assertions of a coverup that has immunized Begelman from criminal prosecution, details have emerged of a sharp split between directors of Columbia Pictures Industries Inc. and its presi-dent, A.J. Hirschfield. His handling of the Begelman matter, one director asserted, had jeopardized the chances of renewal of his contract this year

The Begelman affair became a public matter on Oct. 3 when Columbia announced that the 56year-old Yale-educated former talent agent had resigned as a director and senior executive vice president and had taken a leave as head of its motion picture and television divisions here.

Columbia said it was investigating "certain unauthorized financial transactions between David Begelman and the company."

On Dec. 19, Columbia announced that Begelman had been reinstated in his operational duties. An investigation had established that between January 1975 and May 1977, Begelman "obtained through improper means corporate funds in the amount of $61,000 for his personal benefit," it said but added:

"The emotional problems which prompted these, acts, coupled with ongoing therapy, will not impair his continuing effectiveness as an executive."

Columbia executives at the company's New York headquarters had hoped the statement would settle the affair.

*** Sources in the Securities and Exchange Commission said the agency was investigating certain aspects of the case, particularly the timeliness of Columbia's disclosure of the incidents.

Cliff Robertson, the film actor, whose name allegedly was forged on a $10,000 check by Bégelman, accused Columbia and legal authorities in Los Angeles and news organizations of "covering up" the case with the effect of permitting Begelman to escape criminal prosecution for forgery.

Burbank police authorities, who said they first notified Columbia of possible improprieties last June, three months before Columbia publicly disclosed the affair, said the department was prepared to seek prosecution of Begelman but that it could not because Columbia had not pressed charges.

Begelman, in an interview, while refusing to discuss other aspects of the case, said he bore no grudge against Robertson, whose public complaints of legal inaction had revived interest in the case.

"He is entitled, in my opinion, to be as indignant or as angry as he cares to be because of the unfortunate use of his name," Begelman said. when asked if he thought Robertson was making. an issue of the matter because of past differences between the two men.

"Cliff Robertson is a consummate gentleman," he said, adding that there, had not been any past differences. "The name could have been, should have been, would have been John J. Jones," Begelman said. He had no animus toward the actor, he asserted.

"I'm an understandable victim, by my own hand, and it doesn't sound well to plead that I'm a victim," he said.

The Begelman case has caused considerable embarrassment for Columbia, which is in the third year of a strong recovery after years of. financial trouble. Its science fiction picture, "Close Encounters of the Third Kind," has been drawing large crowds across the country and is helping lift Columbia's stock price.

Asked why no criminal charges had been brought against the film executive, Robert Elias, a Burbank detective, denied there had been a coverup.

"When I first learned about this last June, I felt it was my duty to go to the board of directors of Columbia in New York, which I did," he said. But, he added, the company had declined to press charges and virtually ignored him.

But controversy taints entire movie business

"The case still is open, still under investigation, but you can't have a crime without a victim," he added, noting that the department would be willing to pursue the matter if Robertson pressed charges.

How to deal with the affair, especially whether Begelman should be reinstated, also proved a problem within Columbia, sources said.

After its investigation was completed in early December, Hirschfield, according to accounts, firmly opposed Begelman's return, although there have been conflicting reports on his motives.

Some industry sources have asserted thet Hirschfield, with deputies of Begelman, attempted to use the incident to remove a rival in a corportate power struggle.

Although Hirschfield refused to be interviewed, an associate denied this, asserting that he had opposed reinstatement of Begelman on moral grounds because he believed it was improper to

return executive reins to a man who had admitted misappropriating corporate funds.

Matthew B. Rosenhaus, a Columbia director and its largest shareholder, said in a telephone interview that a majority of directors opposed Hirschfield's initial reaction opposing his return. Based on a psychiatrist's report on Begelman's behavior, he and the directors felt it was "good business judgment" to give him another chance. "We were disappointed in the way he handled it, but we backed him," he said.

It was Hirschfield himself, Rosenhaus continued, who made the decision to bring back Begelman. He said that during an all-day meeting between the two men in December to negotiate a contract under which Begelman would have acted as an independent producer for Columbia, Hirschfield invited him back to head the film and television operations. "It was a surprise to all of us," Rosenhaus said.

Although Rosenhaus said he did not expect the incident to cause Hirschfield's ouster as Columbia's president, he said that directors would be paying extra attention to his performance before negotiating a new contract starting this

summer.

The head of a rival Hollywood studio, criticizing the lack of prosecution of Begelman, summed up his view in these words:

"The reason David is back is because he's got a hit in Close Encounters;' he gambled a lot of money on that picture, and he won, and that gamble also kept him his job."

Thus, some of the threads of the Begelman affair seem to be merely part of the general fabric of American business. At the same time, the incident has begun to bring into the open at least to encourage people to talk about certain other practices in show business that normally do not get talked about.

According to knowledgeable people in the film industry, bribes, payoffs and other financial

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improprieties almost certainly run into millions of dollars annually. The dealings are said to take a variety of forms, and include the following:

• Bribes paid by independent motion picture. and television producers to studio executives who are in a position to approve a project or to approve an improperly inflated budget for a film or television production. Such payments are said to be usually made in cash, and have been concealed in production budgets, but also include expensive gifts.

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• Bribes made by independent television producers after a television pilot is made to: members of network programming departments whose influence is important in winning approval for a proposed television series, or other program.

• Loans made to studio executives in at least one case heavy gambling losses by a movie executive prompted the need for cash loans by independent producers or agents who, because of the debt, can virtually call the shots in negotiating deals with the studio.

•The practice of studio executives about to be dismissed by a film company of negotiating a high-cost independent production deal with themselves before departing. The deal contains extra money that, in effect, is stolen from the company.

Besides these practices, industry sources say there are other forms of corruption. They range from payoffs by production companies to union officials for favorable arrangements on a movie project to expenditures of large amounts of company funds to underwrite personal living expenses.

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Expense accounts at one major studio here are said to be routinely include funds to help support the mistress of a film executive. Another major film company is said to have financed an expensive party for homosexuals held by a senior studio executive who is homosexual.

In an interview, Robertson said he believed the revelations of Begelman's alleged dealings represented "only the tip of the iceberg."

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Saying that he had elected to speak publicly of his own experience in the case because he felt he had a responsibility to do so, Robertson said that many film and television people had been fearful of discussing such malpractices because of the influence on their careers of powerful studio executives.

I'm an understandable victim, by my own hand, and it doesn't sound well to plead

that I'm abs victim,'... David Begelman.