Allen Klein - Beatles and Rolling Stones

Currently reading the memoir of Prince Rupert Loewenstein who served as a financial consultant and accountant to the Rolling Stones for 37 years. He first met Mick Jagger in 1968 through a mutual friend, Christopher Gibbs.

According to the book Mick was very concerned about the bands finances and realized they had made a mistake using Allen Klein.

"But it was now clear to Mick that something was wrong. He knew the group was doing well and had a good contract with Decca. Their singles and albums were selling strongly and they were playing to enthusiastic crowds. He couldn't understand why they weren't seeing a penny. By and large they had no money. They were all overdrawn."

Loewenstein immersed himself into the tangled web of financial documents to free the Stones of Klein and get them on a proper course financially.

Very interesting passage about Mick's initial recommendation of Klein to John Lennon:

"It was Mick who had introduced Klein to John Lennon a few weeks before I met Mick. After we had spoken he rang Lennon back and said "I've rethought it and I've gone to this other person. I think you should do the same because I'm not happy about my introduction of Klein." But it was too late. "

Loewenstein had initially met Mick Jagger in the Fall of 1968. If this comment is true it would have been interesting to see how the removal of Allen Klein could have affected the Beatles relationships with each other. I'm not sure what the author exactly means by "too late".

Also should note that the book details many of his financial dealings with the Stones over the years. Supposedly they had litigation going with Klein for approximately 18 years. In any event this guy really had their back and did wonders for them to maximize their earning capacity via touring, sponsorship, merchandising, changing residences abroad to mitigate their tax liabilities to England, etc... Some interesting stories of his dealings with Billy Graham and Ahmet Ertegun are detailed too. information which I wasn't aware of until reading the book.

 

I'm currently in the middle of the new Allen Klein biography. Haven't gotten that far yet, but it sounds like the memoir you're reading would make an interesting companion piece.

Mark

 

You're right. I'd be interested in reading another perspective. What's the name of the new Allen Klein biography?

 

The Wikipedia entry for Klein suggests Mick's dissatisfaction with Klein had more to do with the manager's focus on running the Beatles in 1969 and being too preoccupied with that than any shady dealings Klein conducted against the Stones. The Stones were going through a rough time in 1969, with Brian Jones' death and Altamont, and I could see where an absentee manager would be a problem. Is Klein even in Gimme Shelter?

It seems like Klein actually helped the Stones a lot more than he did the Beatles, by negotiating a band-friendly contract with Decca. Mick's problems with Klein are described as having to do with Klein working his way into a profit partnership with the Stones and squeezing out Andrew Loog Oldham, who had actually brought Klein in to help squeeze out another member of the Stones' management team.

 

Interesting. Thanks for the input. From what I've read Klein did a good job initially renegotiating their record contracts but he definitely played around with the money funneling it through his companies. Of which the Stones allegedly received very little. Additionally this book seems to suggest that in 1969 the Stones were unhappy with Decca. Furthermore Klein had his hand in the copyrights of most of the Stones catalog. I'm sure I'll read more about this in the book and I know his Abko company has profited very well over the years.

 

Ok, here is the Skinny on this and it's actually Business Genius and not complicated at all.
I'm going to paraphrase here a bit, so if I get some names a bit wrong forgive me.

Andrew started a Publishing company with all the Stones called, I believe, 'Nanker Phelge Ltd'. That company managed the rights of the Stones and Mick and Keith as songwriters. Klein convinced Mick and Keith to allow him (Klein) to start a new company in the United States and that THAT company wouldn't be dinged tax wise, like NP was being dinged in the UK. Klein named the new company 'Nanker Phelge INC' or something like that. That company was completely owned by Abkco Corp, and Klein was written in as the SOLE owner of ALL rights of the holdings of the company. Mick and Keith and the others thought that Klein was just transferring the company Nanker Phelge LTD in the UK to Nanker Phelge US and just signed on the dotted line. When the UK Nanker was shut down, everything that company was holding rights wise was now solely owned by Allen Klein and the others owned nothing. NOTHING. It was indeed a coup de ta the likes no one had seen. And the Boys totally signed off on it so there was no coersion involved. But because Mick and Keith didn't have any independent lawyer go through the details of the 'Move' of Nanker from the UK to the USA, Klein pulled off the sweetest con in the world.
And got away with it. And that kiddies, is how it went down. Three little letters Killed the Stones rights.......... 'LTD' went away, and with it all the Stones rights to their music.
the beave

 

But didn't Andrew's company Nanker Phelge (or whatever it was called) for The Stones/Mick/Keith still give Andrew actual ownership? My understanding is that Andrew sold his management assets to Klein, and that is ultimately how Klein acquired ownership of the music/publishing. The Stones were essentially screwed out of ownership by Andrew without knowing it prior to Klein's involvement.

 

Yes, he sold his Management INTERESTS to Klein, but the Actual screwing wasn't until 'Nanker Phelge LTD' 'moved' to New York. Once that happened Klein became the Stones legally, they signed to HIM, thinking they Were still the company. When they signed off on it, they pretty much gave him everything. They had no idea that HIS Nanker was a totally New company solely owned by him. Quite brilliant if indeed totally uncool.
but that's how he got them to sign off without looking into it, Mick and Keith knew how much they were paying tax wise in England, and since the company had the same name..........well almost the same name.........

Brilliant move....no wonder people hate the man............
the beave

 

I hear you. But Andrew's management interests included his publishing. So, there has been the argument that the Andrew already had control of the band's publishing, and when Klein bought out Andrew's interests, he acquired the band's publishing.

 

True, the only thing I can think of is that the 5 members of the Stones were 'co owners' in Nanker Phelge. When Klein 'relocated' the company the Stones were no longer co owners, they signed their interests over to Klein's new Company, thinking that they were still co owners. But Klein now owned ALL the rights because he was the sole owner of the 'new' Nanker Phelge Inc.
Messy but it seems to have gone down that way as Abkco still totally controls the Decca era stuff. So the 'trickery' in the name 'change' really did fool the Stones into thinking it was still the same company, just changing address's that's all.
the beave

 

Pretty interesting stuff. Thanks Beave. It's amazing how greedy Allen Klein was. I read the wikipedia entry for him. Obviously someone who really likes him for the most part every thing is in a positive slant.

 

This is from the other Klein book thread:

 

Yes, in the scenes in SF where they are planning the concert.

 

I have read both books. I highly recommend that Stones fans read both. They have some differing takes on some of the business dealings.

One that sticks in my mind is the Nanker Phledge USA deal. Lowenstein has the Stones "tricked" in signing the deal thinking that it is Nanker Phledge UK. The Klein book has the Stones knowing that the NP USA was a tax dodge from the punitive English tax laws. To get the Tax break The Stones could have personal control of the funds.

What The Stones didn't figure on that Allen Klein would keep a tight reign on doling our the money, would use money as collateral in his business dealings, charge them management fees on the money and I think keep the interest.

I wish Lowenstein would have been more specific on the dates on some of the business dealings.

 

Yes. Oldham screwed Eric Easton out of the original management. When the Stones hit the money jackpot with their hit Satifaction, their original Decca deal was winding down. Oldham was out of his depth business wise and called in Klein to help him out. As a smart business man he was ready to pounce as the Stones original business structure was fracturing. And he slowly picked up the pieces. Aledgedly Brian Jones and Bill Wyman wanted to side with Easton, but Mick & Keith sided with Oldham at the first break.

The Stones and Oldham learned from Phil Spector the value of owning your mastering and publishing. Too bad they didn't have the sense to keep owning it.

As an aside. There has been much discussion on Brian Jones lack of being able to complete a song. The early Jagger Richards songs are not all the great out of the box, plus they had the rest of the band helping to flesh them out. I have often wonder if some of the early publishing deals made it easier for Oldham to keep his focus and encouragement on Jagger and Richards songwriting.

 

From the Allen Klein new biography, I learned that ABKCO manufactured all the Stones LPs. They then sold them to the Record companies who sold them to us. Advantange to the Stones, there was always a direct account as to how many LPs, we're really sold. Never saw any Stones cutouts have you? Disadvantage to the Stones and a plus for Klein, is that he not the Stones, made money on the manufacturing of the releases. Plus he got his commission as the Stones agent on their sales. The question is how truthful was he on reporting to the Stones on how many records were really sold?

 

Allen Klein isn't in "Gimme Shelter." The scenes in San Francisco are the office of attorney Melvin Belli, and various public figures. There is a guy who looks a bit like Klein, but he's the owner of the land at the Altamont site.

 

This was suppose to read like this: "To get the Tax break The Stones couldn't have personal control of the funds."

Allegedly, Mick and Keith knew about the difference between the UK vs the US version of Nanker Phledge. I think Mick acknowledged this in a deposition. I don't have the book handy to give the correct order of events.

But when you think how Mick and Keith have consistently marginalized Brian Jones contributions to the early version of the band, it not surprising they would paint the dealing with Nanker Phledge the way they do.

 

I thought he was present at the press conference in the film, where they announce the free concert?

EDIT: Just checked, there seems to be a very brief glimpse of Klein at the press conference:

(freeze the video at 15:55 - he's the guy just to the right above Bill Wyman, side profile)

 

From "Allen Klein by Fred Goodman". Page 201

Under the original management agreement, Easton and Oldham owned the Rolling Stones' master recordings and leased them to Decca. In the United States, those rights were leased to Decca's America subsidiary London Records. When Klein came into the picture, he created an American Company, Nanker Phelge Music, to house those rights, which were leased by Nanker Phelge to London Records for the term of the contract. The American company was supposed to allow the Stones to repatriate their U.S. income without paying the ruinous British taxes on foreign income by taking it out through a similarly named British company, Nanker Phelge Ltd. - although that company had a completely different function and nothing to do with the master recordings. Ultimately, Klein's scheme failed to impress the Inland Revenue, who said it would still tax the money at the foreign rate of approximately 90 percent - disastrous for the band, since they were guaranteed at least $1.25 million dollars from London Records. Klein came up with paying the musicians' American guarantee through Nanker Phelge in twenty annual statements in order to refuse the taxes. As he done with Sam Cooke, Klein explained to Oldham and the Stones that this would be recognized as a legitimate arrangement only if it was an outside corporation; if it wasn't, they would be taxed at once. Though the Stones would later claim they had no idea that they didn't own the company, this dosen't appear to be the case. In a 1968 letter to a record company, Jagger referred to Nanker Phelge Music as a firm owned by Allen Klein.


And so it goes....

 

That's definitely Klein, in a blink and you'll miss him moment. Wonder what he thought about what Mick was saying at that moment, about whether he was "satisfied." "Financially dissatisfied, sexually satisfied, philosophically trying."

 

Yes, the reason I thought he would be in the film is because I remember a book (Stanley Booth's, I think) recounting the press conference, and saying that Mick - knowing Klein was behind him - intentionally said the bit about 'financially dissatisfied'.

 

It's post Klein but I used to have a cut out copy of Black and Blue.

Chad

 

Off topic, but this was a really busy time for Mel Belli. He was getting letters and even telephone calls from the Zodiac Killer during the same time he was involved with Altamont.