The accountant who fooled the Beatles and the Rolling Stones

January 26, 1969. John Lennon and Yoko Ono visit Allen Klein in his suite at London’s Dorchester Hotel. They have been longing to meet the abrasive New Yorker who has worked financial miracles for the Rolling Stones. That evening, Klein is compassionate and pulls all the right strings: he grew up an orphan (like John), knows the Beatles’ discography inside out, is respectfully curious about Yoko’s art, and is willing to stick his neck out for their interests. Within hours, the couple is seduced: John begs him to manage their affairs; Yoko even lends herself to typing the document certifying the agreement.

A great salesman, Klein has detected the weak points in his visitors: he has been honing this instinct for years. An accountant by training, he began working for Bobby Darin, Bobby Vinton and other singers who were unhappy with the settlements of their record labels. During his audits, he found that the music industry was an expert at sleight of hand. It paid whatever it felt like paying, even though it hardly needed such tricks: legally, with the standard contracts, full of deductions, the artists only received crumbs.

This has to change, Klein decided. He first tried with Sam Cooke, the sublime voice of soul. In 1963, Klein warned the RCA label that Cooke would not record again unless his contract was renegotiated. It smelled like blackmail but it worked: RCA agreed to sign a production company, Tracey Ltd. (named after Cooke’s daughter), to deliver Sam’s next songs, while also recovering the rights to everything he had previously recorded; no one imagined at the time that those tapes would be worth millions.

In reality, Tracey Ltd. belonged to Klein and Cooke would eventually become his employee. The latter never found out: he was murdered at the end of 1964 after an encounter with a prostitute who specialized in robbing her clients. Klein turned to the singer’s family and persuaded the beleaguered widow to sell him the publishing rights to Cooke’s compositions; again, diamonds at a bargain rate.

The following year, Klein repeated the maneuver with the Rolling Stones. Their representatives, Eric Easton and Andrew Loog Oldham, had exploited them badly. But there were escape routes: the contract contained irregularities. Klein went on the warpath with Decca Records, which could not afford to lose the Stones: to its eternal dismay, in 1962 the company had rejected the Beatles. Klein copied the strategy at London Records, Decca’s American subsidiary. It was a double victory: he managed to improve the quintet’s conditions and extract advances worth several million dollars.

And here Klein’s dark arts came to light. If they cashed in that amount all at once, the Stones would be subjected to the punitive taxes of the UK’s Labour government of the time. It would be better, Klein explained, to break it up into annual payments. To this end, he set up an American company, Nanker Phelge (a pseudonym used by the Stones for their collective compositions). As the years progressed, once Easton and Loog Oldham had disappeared, Klein took over all the recording and publishing rights: in 1970, when the Stones parted company with their business manager, they discovered that their names were not on the Nanker Phelge statutes. Klein was relentless: he even claimed as his own several songs included on the albums Sticky Fingers and Exile on Main St., the first releases from the Rolling Stones label.

The millions generated by the group did not sit idle: Klein played hard on the stock market and even tried to take control of Metro-Goldwyn-Mayer, the historic Hollywood studio. He dreamed of getting into the movies: he invested in B-movies and in an expensive production entitled The Golden Greek, about Aristotle Onassis and Jackie Kennedy. He acquired the distribution rights for El Topo and another film by Alejandro Jodorowsky.

But let’s go back to 1969. With Lennon’s backing, Klein believes he has a clear path to the Beatles. He is wrong: Ringo Starr and George Harrison follow John’s lead, but Paul McCartney is betting on his wife’s family, the Eastmans, who have grim references about Klein’s management. McCartney, accustomed in recent times to piloting the Beatles’ ship, swears that he will never work with Klein and, surprisingly, announces the break-up of the band. Over the following years, battalions of lawyers will fight over the group’s treasure trove.

And Klein? In his own style, he continued to scare big corporations. In 1984, he discovered that a key scene in Witness features Harrison Ford and Kelly McGillis dancing to Sam Cooke’s Wonderful World. Paramount had forgotten to ask permission to use the track; Allen received a six-figure check and told his kids: the music business is big business.

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