EXECUTIVES: Clive’s Fall

The record industry is a $3 billion-a-year casino that attracts an odd mixture of highly talented people, some hyperthyroid promoters, freaks and sharp-eyed businessmen, all with a single goal: to find out where popular music is going and be there first. Confidently astride that fracas was Clive J. Davis, 41, whose uncanny knack for being there first had made Columbia Records the dominant label in the business. But last week Davis fell fast and hard: Columbia’s parent CBS dismissed him from his $350,000-a-year records-group presidency and sued him for at least $87,000 in company money that he allegedly misused.

A Watergate. Davis’ demise was foreshadowed by the firing in April of David Wynshaw, Columbia’s director of artist relations, after a company investigation of his extracurricular financial dealings. CBS executives say that Wynshaw was padding bills from outside contractors and keeping the excess for himself. The findings led CBS to examine his boss’s expense records. The company’s suit charges that Davis hit CBS for $54,000 to redecorate his Manhattan apartment, $20,000 to throw a bar mitzvah last fall for a son and about $13,000 to rent a house last summer in Beverly Hills. Said Senior Vice President Goddard Lieberson, Davis’ early mentor and the man named last week to succeed him as head of the records group: “What if something came out in six months about this and CBS had done nothing? To cover it up would be a Watergate, don’t you see?”

Others in the record business, where expense money is thrown around, doubted that the CBS charges against Davis could be the full explanation. To them, the action against Davis seems unduly harsh in an industry that abounds in stories of much worse transgressions, chiefly the providing of drugs to rock groups and disk jockeys. “If we had somebody really important who wanted dope, we would probably give it to him,” says a vice president of one of CBS’s biggest competitors. “I think Davis is taking the rap for everybody.”

Whatever the reason, firing Davis was a painful move for CBS directors. A Harvard law school graduate, the Brooklyn-born executive joined the company’s legal staff in 1960, and replaced Lieberson as head of CBS’s domestic record operation in 1967. That year he attended the Monterey, Calif., pop-music festival, realized that a new era was dawning for rock music and quickly started signing up future big-name performers. Among them: the late Janis Joplin; Sly and the Family Stone; Santana; and Blood, Sweat & Tears.

Since then, rock has moved from only 15% of Columbia’s volume to more than 50%, and CBS record sales have risen from $170 million to $340 million each year. Davis was able to win over top talent by paying well ($4.5 million to Neil Diamond for ten albums) and offering considerable artistic freedom. Says John Phillips of The Mamas and the Papas: “He always sent the limousines and the flowers at the right time.”

Davis has retreated into the silence of his redecorated apartment and has retained a criminal lawyer. There is speculation in the industry that the CBS suit could touch off another version of the 1950s payola scandal if the activities of other freewheeling record executives are investigated. “I think this firing could lead to another Watergate,” says Singer Tony Bennett. “There are a lot of crooks in there. This is only the beginning.”