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Brokering Power In Business and Politics
Buyout Firm Founder Fred Malek's Career Spans Nixon to McCain

By Michael S. Rosenwald
Washington Post Staff Writer
Monday, April 21, 2008

Three guys in suits came strolling down the hallway. Fred Malek, chairman and senior adviser of a District buyout group, waited for them in his corner office. One of the men was Scott Rued, a managing partner at Malek's firm. He was with an investment banker, who was representing the third man, an owner of a logistics company that Rued coveted.

The company's owner looked tense. Perhaps he should have been. He had started his firm in his living room, and now he was wrestling with giving it up to some men he barely knew. A few of months ago, Rued asked Malek to have breakfast with the owner to smooth the way for the man to attend the meeting that was about to happen: the initial negotiations to merge the company into one of Malek's.

Malek, by his admission, is not entirely warm and fuzzy, but he is likable and has a knack for winning people's trust. He could relax a mouse who was about to be eaten by a cat. In this case, he created a clubby, insider atmosphere, showing off photos from a lifetime of moving in and out of power. There's Malek with his former executive assistant, Gen. Colin Powell. There's Malek with his ex-boss, President Richard Nixon. There's Malek with former president Bush, after parachuting out a plane to celebrate Bush's 80th birthday. "Did Bush jump, too?" Rued asked. "Hell yeah," Malek said.

More small talk ensued. Then Rued and the banker went off to another room to start their talks, which was emblematic of a reality that Malek seems perfectly comfortable with these days: He is no longer the man making the deals. At 71, he is the elder statesman -- elder capitalist -- of Thayer Hidden Creek. Following the restructuring of the firm several years ago after some costly missteps, Malek has firmly stepped away from the day-to-day operations, functioning as an adviser, a listening post, an emissary of deals.

"He opens doors, and he knows which ones should be opened," said Norman Augustine, a former chief executive of Lockheed Martin who sits on Thayer's board.

In the weeks ahead, Malek will temporarily retreat further from Thayer. He is slipping back into the political world, where he was once, in Powell's words, Nixon's disciplinarian and later the campaign chairman for President George H.W. Bush. He has been drawn back by an affection for Sen. John McCain (Ariz.), a fellow Vietnam War veteran with unpopular positions in the Republican party who Malek says reminds him of one of his favorite credos, which he learned at West Point: Have the courage to choose the harder right vs. the easier wrong.

Malek is a co-chairman of McCain's campaign finance committee, an unusual position for him because he previously has served in more strategic roles. But it's a job that fits Malek at this time in his life, in that he has come to know a lot of people with a lot of money. Asked why he thought Malek will be successful raising money, Bill Marriott, Malek's boss when he oversaw Marriott's hotels, said: "He has an amazing Rolodex. And when he calls people, they pick up the phone."

After all these years, and despite some embarrassing controversies and a disheartening end in his bid to buy the Washington Nationals, Malek remains one of Washington's ultimate insiders. The other night he had President Bush -- the one living in the White House -- over for a fundraising dinner at his palatial home overlooking the Potomac River in McLean, where he lives with his wife of 46 years, Marlene Malek. He is not a billionaire, but he has his own plane and a house in Aspen. He has certainly come a long way from growing up the son of a Chicago beer delivery man -- a Democrat, no less.

"My parents taught me to achieve," Malek said, sitting on the couch in his living room. "And I found the wonderful gratification that comes from achievement. The motivation to achieve and the fulfillment of achievement gives me great satisfaction." His philosophy on work brings to mind his other favorite credo, from Bill Marriott: Success is never final.

Malek, who is wiry, fit and always well put together, graduated from West Point in 1959 and later was an airborne Army Ranger in Vietnam, completing a tour deep in the jungles. (His buyout firm and his hotel company are named after Brig. Gen. Sylvanus Thayer, known as the father of West Point.) After Vietnam, Malek got his MBA from Harvard Business School and eventually found his way into the Nixon administration, where he was a special assistant to the president and then deputy director of the Office of Management and Budget. One of Malek's key hires was Colin Powell.

"He had a reputation of -- I'll let you characterize it -- but within the bureaucracy he was the guy who the president looked to put discipline in the system," Powell said in an interview. "Fred was a disciplinarian. He was also seen as a political operative. That's a negative term nowadays. But it's a positive term. The president had an agenda and wanted to make sure it was being followed. OMB is the turnstile of government. Fred was very influential."

Malek was exceedingly loyal to Nixon. "I believed he was telling the truth until the very end," Malek said. And it was under Nixon that Malek made what he terms the biggest mistake of his life. At the president's order, he counted how many Jews worked in the Bureau of Labor Statistics. (Nixon was convinced that some Jewish employees of the agency weren't loyal.) Controversy surrounding his actions forced him to resign from Bush's campaign in 1988. Malek is remorseful about the episode and adamant that he is not an anti-Semite, just a guy who made a dumb mistake -- a very big dumb mistake. He sought counsel from -- and was later forgiven by -- some of the world's Jewish leaders, including Abraham Foxman, the director of the Anti-Defamation League.

"He has been very remorseful ever since," Powell said. "But it did make it difficult for him to get back into government."

Malek's private sector positions and the number of deals he has made in business are almost too long to list. He worked for McKinsey & Co. He led a buyout of Northwest Airlines and CB Richard Ellis. His longest stint at any company was 14 years at Marriott International starting in the 1970s, where he rose to become president of the company's hotel division. At Marriott, he became close with a junior executive named Lee Pillsbury, and the two later became partners in Thayer Lodging Group, an Annapolis company that owns more than a dozen hotels. Malek is still active in its day-to-day operations.

Pillsbury said that during their time at Marriott, Malek "had the most discipline of anyone I had ever met. His time management was legendary. He walked in to the office at 5 minutes to 8 and left at 5 minutes after 5, and everything was done and finished on time the way it was supposed to be."

Nearly everyone who has worked with Malek said the precision of his actions are legendary and border on the bizarre. "When Fred tells you that he will go to the bathroom at 10, it's not going to be 9:59 or 10:01. There is nothing too trivial for Fred to keep his word on," Pillsbury said.

That reputation seemed to connect the owner of the logistics company to Malek. After Rued and the investment banker chatted privately, the group made its way to a conference room not far from Malek's office. They sat at a long, shiny wooden table. Rued, the investment banker and the company's owner took off their jackets and loosened their ties. Malek stayed buttoned up, jacket on.

Rued made a presentation about how he saw the man's firm fitting into theirs. But the owner had questions. He had lots of questions. And he seemed hesitant, particularly about giving up total control. Malek said he understood how he felt: "It's like jumping out of an airplane." At one point, the man looked at Malek and said, "I want to do this with you." Malek asked what he meant. The man said he wanted to go around the country and make nice-nice with potential customers with Malek at his side. "I want you to be you, to do your thing" the man said. Again, he repeated, "I want to do this with you."

Malek said yes, he would help the owner build relationships with customers. "I do what I say I'm going to do," Malek added. "That's why I've been around so long."

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