End Game for Slater?

Of all the audacious entrepreneurs who built conglomerate empires from scratch in the 1960s, James Derrick Slater endured the longest. Americans like James Ling (Ling-Temco-Vought), Bernie Cornfeld (Investors Overseas Services) and John King (King Resources) saw their corporate houses of cards collapse around them, but England's merger lord and his mammoth Slater, Walker Securities Ltd. seemed to grow more prosperous every year. Now Slater, 46, has also had his comeuppance, His company's role in alleged fiscal improprieties is under investigation in Hong Kong and Singapore; he has resigned as chairman of Slater, Walker and gone into seclusion. Last week the Bank of England and several powerful merchant banks moved in to prevent collapse of Slater, Walker and the further weakening of an already shaky British financial establishment.

Slater's immediate troubles stem from some complex, freewheeling transactions in the Far East. Authorities in Singapore and Hong Kong are investigating the operations of Spydar, a company that was set up three years ago in Hong Kong and is apparently related to Slater, Walker. According to the Sunday Times of London, Spydar acquired low-priced shares of two companies purchased by a Slater subsidiary in Singapore. After the acquisitions were announced and their stock soared in a bullish Hong Kong market, Spydar sold their bargain-bought shares for a handsome profit. Local investigators are trying to determine if securities laws were broken and by whom.

Even before the inquiry brought about Slater's resignation, it was clear that he and his conglomerate were in trouble. Profits were down: from a 1972 total of $25 million, Slater, Walker's income dwindled to $2.3 million for the first half of 1975. At the same time the company's stock, which had reached an all-time high of $6.70 a share in 1971, dipped to 720 a share. That left Slater without enough capital to finance the acquisitions that had made his business so successful in the first place. The recession also hit some subsidiaries hard, and Slater was forced to sell off assets to keep the rest of his operation afloat. That task now falls to an old associate and friend, Financier Jimmy Goldsmith, who was named to replace Slater.

For years Slater had known only success. Trained as an accountant, he got his first break when he answered a newspaper ad placed by a Danish businessman whose English companies were struggling. Slater straightened them out and moved on, eventually becoming the right-hand man of Lord Stokes, then head of Leyland Motors. There Slater developed a keen eye for companies whose assets were worth more than the value of their issued stock.

Asset Stripping. With a personal stake of $120,000--accumulated by playing the stock market--and some borrowed capital, he bought his first such company in 1964. He quickly sold its principal asset (an office building) for a profit--a practice known as asset stripping--and used the money to finance his next acquisition. By 1968 the Slater, Walker pyramid had grown to 500 firms and Slater's personal fortune had risen to an estimated $10 million. He bought a lavish manor in Surrey and spent long weekends there indulging his passion for chess. In 1972 he provided $125,000 of his own cash as a prize for the world chess championship, luring a reluctant Bobby Fischer into his celebrated match with Boris Spassky.

The next year Slater masterminded a potential merger between Slater, Walker and Hill Samuel, an old-line London banking firm with ties round the globe. The merged companies would have become one of the most powerful financial forces in the world, but Hill Samuel backed off at the last minute. Shortly thereafter, Slater began the downhill slide that ended with his resignation last month.

There may well be no winning moves left in Chess Player Slater's repertory. His personal fortune has dwindled, and he has retired to his home in Surrey, contemplating an end game that could result in financial checkmate.

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