One of the near universal characteristics of rich guys who stay rich is that they are notorious skinflints. Nothing wrong with that. Frugality is a virtue. Greed and miserliness, on the other hand, are not virtues. When greed and miserliness are combined with a very wealthy and narcissistic bully you have Donald Trump. Several reports today indicate that Donald Trump has a policy of not paying his bills in full and routinely gouges smaller vendors, in many cases putting them out of business, while caving to larger businesses that have the wherewithal to fight Trump in court:
During the Atlantic City casino boom in the 1980s, Philadelphia cabinet-builder Edward Friel Jr. landed a $400,000 contract to build the bases for slot machines, registration desks, bars and other cabinets at Harrah’s at Trump Plaza.
The family cabinetry business, founded in the 1940s by Edward’s father, finished its work in 1984 and submitted its final bill to the general contractor for the Trump Organization, the resort’s builder.
Edward’s son, Paul, who was the firm’s accountant, still remembers the amount of that bill more than 30 years later: $83,600. The reason: the money never came. “That began the demise of the Edward J. Friel Company… which has been around since my grandfather,” he said.
In this case the work was performed and approved by the general contractor. At some point, Trump and his brother decided that Friel was small enough to stiff, made a claim that the work was “inferior” and refused to pay the full amount. The Wall Street Journal (paywall) has a laundry list of companies that provided services to Trump after which he decided their services were not up to standards or “too high.”
(Let me digress for a moment. During my “starving student” phase of life, I worked a morning shift at a Jack-in-the-Box fast food place. One day (one day only) they tried to train me as a cashier. The restaurant policy was that if you didn’t like your food you got your money back. The number of people who would eat 90% of a burger and then demand a refund was incredible. And, apparently, asking “at what point did you decide you didn’t like the food” was not a question that should be asked. I don’t know how you can contract for services and, after receiving the service, decide that the price is “too high.”)
Payment disputes aren’t unusual in the construction industry, where aggressive developers sometimes leave behind dissatisfied vendors and contractors. Billionaire casino magnate Sheldon Adelson, chief of Las Vegas Sands Corp., for example, has been involved in payment disputes with contractors concerning his Venetian casino on the Las Vegas Strip. Sands declined to comment.
Yet Mr. Trump’s withholding of payments stood out as particularly aggressive in the industry and in the broader business world, said some vendors who had trouble getting paid.
It is “a strong-arm tactic that is frowned on,” said Wayne Rivers, a small-business consultant in construction. The tactic is more common in Northeast construction than in other regions, he said, and is abnormal in much of American business.
Mr. Trump pushed the approach beyond construction and into day-to-day casino operations, said Jack O’Donnell, president of Mr. Trump’s Plaza casino in Atlantic City in the late 1980s. “Part of how he did business as a philosophy was to negotiate the best price he could. And then when it came time to pay the bills,” he said, Mr. Trump would say that “ ‘I’m going to pay you but I’m going to pay you 75% of what we agreed to.’ ”
“In our business it’s very difficult to operate that way. You’re dealing with people on an ongoing basis. Every time you order with them you can’t screw them because they won’t be your suppliers anymore,” Mr. O’Donnell said. Executives at the casino paid vendors fully despite Mr. Trump’s directives, he said, and “it used to infuriate him.”