High finance gives way to espionage Change: In what he RTC calls his final interview,'Buzzy' Krongard explains why moving from Alex. Brown to the CIA isn't such a long step.

Tomorrow morning, Buzzy Krongard disappears.

"Take good notes, 'cause this is the last interview I'm ever gonna give," the 61-year-old investment banker said last week, reclining in an easy chair, Cuban cigar pointed straight at the ceiling.


The Baltimore native has walked away from a lucrative job as vice chairman of Bankers Trust New York Corp., the parent of BT Alex. Brown Inc. and the seventh-largest bank in the country.

At an age when most executives contemplate retirement, Krongard is headed into the darkness, trading the cordial world of high finance for the intrigue of the Central Intelligence Agency.


Wait until the CIA gets a load of Buzzy Krongard.

The son of a middle-class suit-maker, Krongard once punched a great white shark in the jaw. He teased a moray eel with his fingers and has a cruel scar to prove it.

He is an accomplished martial artist who could kill a man as easily as he can break boards with his hands. He has dangerous fish in his basement, a meat carving set made from the shin bones of a boar, a shooting range on his 90-acre estate.

He collects only guns that he can use, and he has a small arsenal. He spends the occasional weekend training with a police SWAT team.

"The joke around here," said Alex. Brown colleague Richard Franyo, "is that he never really worked here all along. It was just a front."

Few at the company were all that surprised when Krongard announced Jan. 21 that he was leaving to take a newly created position as counselor to George Tenet, the director of the CIA.

Colleagues said Krongard has skills well-suited for the unique demands of the agency -- leadership, decisiveness, a sharp analytical mind, a bedrock sense of loyalty.

"If you were in trouble and you only had one phone call to make, Buzzy is the guy who you'd want to call," said Marc E. Lackritz, president of the Securities Industry Association in Washington.


What's more, Krongard has an unabashed patriotic fervor.

"He will do one heck of a job for the CIA," said Robert I. H. Hammerman, chief judge of the Circuit Court for Baltimore City, who grew up with Krongard.

"He is a brilliant person, a brilliant organizer. It is the kind of thing Buzzy has been interested in all of his life."

As part of that interest, Krongard has cultivated a circle of friends in the upper reaches of the military and intelligence communities -- including, he says, Defense Secretary William S. Cohen and Tenet.

Krongard is guarded about how he met Tenet and how long he has known him: For "centuries," he deadpanned. He said it is not unusual for them to have lunch together, either at CIA headquarters in Langley, Va., or in Washington.

It was about three months ago at a Washington restaurant, he said, that Tenet broached the subject of Krongard's coming aboard.


"We were talking," Krongard said. "It started as a lark, almost: 'Well, why don't you come down here and fix it?' "

Joining the agency was something Krongard had fantasized about, but never seriously thought he should bring up. He drew an analogy: "It's like high school, you want to ask the girl to the prom but you're afraid to ask."

But then it turns out, he said, she wanted you to ask all along.

Middle-class upbringing

There wasn't much in Krongard's family background to predict that he would travel this path.

Alvin Bernard Krongard was born on Oct. 25, 1936, and raised in a rowhouse in the middle-class neighborhood of Ashburton.


From his bedroom window, he watched the big steam engines rumble past, and he could hear the screams from the roller coaster at Carlin's Park.

He was the middle of three children, though his older sister died of kidney disease at 14 when Krongard was 10. Their father, Raphael Harris Krongard, operated a small tailoring shop that made men's suits, and their mother, Rita, was a homemaker.

Hammerman, whose family lived several doors down, remembered the Krongards as quiet, pleasant and hard-working. But Buzzy was a lightning rod. From an early age, he always seemed out to prove himself.

"I don't think I can attribute it to anything at all," Hammerman said. "I don't think his father had that type of personality. His mother didn't. I just think it was inborn in him."

Day after day, the 10-year-old Krongard and the 17-year-old future judge would practice lacrosse at Carlin's Park. With Hammerman standing in the goal, Krongard would fire shots at him for hours.

He was an "extraordinary competitor," Hammerman said. "At the age of 10 he had the relentless pursuit of perfection."


It wasn't just a raw urge to compete; Krongard already had the instinct to organize and lead. In 1946, he and two friends enlisted Hammerman to help them form the Corsairs boys club, which still exists as the Lancers.

Krongard went to public high school, and his father put him and his younger brother, Howard, through Princeton University, where both played lacrosse. After graduating with honors in 1958, Krongard was commissioned in the Marine Corps.

He served only three years, until 1961, but to this day identifies strongly with the culture of the Corps. He didn't pursue a military career, he said, partly because "there was no war going on. It just didn't look like anything was going to happen."

Besides, Krongard already had a family to support, and he wanted to go to business school. His father-in-law suggested that he wait and get some real-world experience first.

He gave the young ex-captain a job at his Baltimore company, which made emblems and patches for organizations such as the Boy Scouts and the National Football League.

Eighteen months later, in 1963, Krongard's in-laws were killed in a plane crash in Egypt. "My whole world was turned upside down," he said.


Krongard became one of four executives who took over operation of the emblem company. After about six years, the executives decided to sell, and Krongard got caught up in negotiating the deal.

He was smitten. Buying and selling companies, raising money through stock offerings, cooking up corporate strategy -- the elements of investment banking seemed like where his future lay.

In 1971, Krongard joined Alex. Brown as a corporate finance associate.

Storming the job

Colleagues say he ripped into the job like a jarhead storming the beach.

He got to work at 6: 30 a.m. and refused to go to bed at night until every phone call was returned. He pored over complicated financial documents to understand every detail of the companies he was working with. And he developed a self-denying approach that would one day result in the official Brown mantra: "Client first, firm second, individual third."


"He had total loyalty from his clients, because they always knew that he put their interests first," said Franyo, head of investment banking at Brown.

Even as Krongard advanced, he held fast to that practice. When raising money for a company, for instance, Krongard would spend all night shepherding the prospectus through the printer's shop.

"A senior banker does not go to the printer's to make sure the prospectus is done right," said Tim Schweizer Jr., a managing director at Brown. "He was dotting all the i's and making sure all the t's were crossed."

When the firm's investment bankers were crammed into a maze of cubicles, Krongard decided a new colleague should have his own space. He surrendered his cubicle and doubled up with Franyo.

For two years, they were on top of each other, chairs only a foot apart, papers in a hopeless pile.

"We heard everything each other said, so we were constantly commenting on what each other were telling our clients," Franyo recalled. "The thing is, he didn't care, you know?"


The single-minded drive for the company paid off. In 1987, Krongard was named chief administrative officer, and a year later he became chief operating officer.

By 1989, with the company's fortunes stumbling, Brown's directors appointed a triumvirate of executives to run the firm. Krongard was one of the three.

But when the board later decided to seek an individual leader, Krongard was not the immediate choice. Only after an exhaustive outside search did he get the offer. Krongard felt bruised.

"I was devoted to Alex. Brown. I was doing the best job I could, and the fact that they went to 5-plus billion people first -- I guess I wasn't all that happy about it. But I managed to live," he said.

Once Krongard became chief executive, he held the firm to his own uncompromising standards. They could be harsh. A colleague recounts how a trader who had gone over his stock-trading limit admitted it to Krongard.

Krongard is said to have responded, "If you would like to be employed, you better be under your limit in 24 hours." The trader somehow did it.


Another time, Krongard wrote up his "client first" motto and decided that every employee should sign it as a pledge. A handful balked, saying they were insulted. Krongard insisted.

"You mean it's that important to you?" the rebels responded.

"It may be more important to you," Krongard countered, "because I've signed it, which means I'm going to keep working here and you're not."

The holdouts signed.

"He doesn't have great tolerance for stupidity," said Mayo A. Shattuck III, co-vice chairman and co-chief executive of BT Alex. Brown. "I can tell within 20 seconds whether he respects the person or not."

If Krongard's generalissimo style could be jarring, there was no questioning his leadership of the company. Alex. Brown's finances improved significantly under Krongard -- though even he points out that the soaring stock market helped.


Just as he had sold his father-in-law's emblem making company a quarter-century before, though, Krongard had no reservations about unloading Brown when the time was right.

The company had been a Baltimore institution almost 200 years and was the oldest investment banking firm in the country, but Krongard didn't let that cloud his judgment.

He saw shortcomings in Brown, despite its profitability. With the larger Bankers Trust, Krongard concluded, clients would be better off and shareholders would be rewarded with a huge premium.

He pulled the trigger, selling the company last fall for about $2.5 billion.

Krongard liked his new job at Bankers Trust and could have stayed on, collecting a $4 million annual salary and bonus. But then came the lunch with CIA director Tenet.

A trek into the dark world


Tenet's offer appealed to what Shattuck called Krongard's "dark world."

Throughout his career in banking, Krongard made no secret of his interest in the military and its hard-core fringes.

"He would subscribe to these magazines which basically sold armaments," said Richard Franyo. "If you wanted to get a shoulder-fired ground-to-air missile, you could order them through these magazines. I don't think he ever bought them, but who knows? I wouldn't want to break into his house."

Krongard's reading list goes a little further than gun magazines; he's a voracious consumer of everything from spy novels to philosophy. His liberal quoting of Plato, Socrates, Spinoza and the like hints at a passion to organize the mind and blends into Krongard's fascination with the martial arts.

Krongard began studying martial arts while in the Marines. He practices several disciplines, including Chinese kung fu, and fights at least once a week.

In the basement of his 15,000-square-foot Georgian home, Krongard has a training room complete with floor mats, a spring-mounted board on the wall for kicking, several types of punching bags and a rubber torso on a stand. In one corner is a plastic bucket full of dry rice; Krongard repeatedly thrusts his hands into the rice to toughen them.


During a recent nighttime session with Grand Master Huang Chien-Liang, Krongard -- barefoot, dressed in black pants, gray T-shirt and blue fleece pullover with the Alex. Brown logo -- went through the motions of disabling a knife-wielding opponent.

At one point, Krongard asked for advice in getting out of a hold. The master grabbed him by the head and started to twist.

"Break the neck," Krongard said.

"Twist a head is most danger because of neck, but you have to do it slowly," the master replied.

After the session, Krongard pulled off his shirt and instructed a visitor to pick up a 12-pound medicine ball.

"Throw it at my stomach as hard as you possibly can," he ordered. "Harder!" he barked after the first throw. After a dozen blows, his skin was a vivid pink.


The rigors of martial arts not only help Krongard stay fit, he said, but they also develop qualities essential to successful deal-making: stamina, concentration, patience, confidence.

The discipline also speaks to Krongard's notions of honor, a virtue he has celebrated extravagantly.

The French artist Jacques Louis David painted a Revolution-era picture called "The Oath of the Horatii," which shows a Roman father handing swords to his three heroic sons as they prepare to sacrifice themselves for their country.

A few years ago, Krongard paid "five figures" to a convicted art forger to create a duplicate that substitutes the faces of his own sons for the Roman soldiers, and himself for the father. His wife, ++ Pat, is among the women weeping in the background.

Krongard's sons have indeed followed in their father's footsteps: One is a grade school and martial arts teacher, one is a businessman and the third is a Navy SEAL.

They say that despite his busy life, Krongard was an attentive father who made time for football and lacrosse games, even taking notes on ways they could improve their performance.


Krongard said his sons are his favorite companions -- that reading to them as children left him with a lifelong soft spot for Dr. Seuss -- but he does have several circles of high-powered friends.

He hunts turkeys and pheasants with Baltimore Police Commissioner Thomas C. Frazier, and he dives with a group that includes Herb Fried, chairman of W. B. Doner & Co. advertising agency.

The diving trips are never simple affairs. Krongard likes to swim in the company of whales and sharks and to tempt moray eels to wrap themselves around his arms.

"He's a very strong diver and certainly a macho guy," Fried said. During one trip, Fried plunged backward into the water and accidentally landed on Krongard's head. The investment banker was nearly knocked unconscious, "but he punched that off and we continued diving," Fried said.

Krongard got Fried and several other friends involved in an education fund for the dependents of special operations soldiers who are killed in training or the line of duty. The contributors tour military bases and meet troops.

Such contact clearly energizes Krongard. Special operations forces are the ones who do the dirtiest, most dangerous jobs, and Krongard said he is captivated by the idea of small, highly motivated units setting goals and accomplishing a mission. He sees little difference in the way investment bankers, special operations units or CIA employees do their jobs.


"Think about the process of recommending a stock," he said. "What information do I have to know? How do I obtain that information?"

If you want to learn about a particular business, he said, "you can put a sweater on, go to a bar around the corner" and listen to gossip.

"How is that different from what intelligence is all about? You can't tap phones, but otherwise. "

Krongard is not going to be a special agent at the CIA, but exactly what his role will be seems unclear.

John Pike, who monitors the agency for the Federation of American Scientists, said Krongard's best value may lie in helping the intelligence community adopt efficient management practices from commercial business.

Krongard said that he is not going in with the attitude that he knows what's wrong and how to fix it, and that he intends to keep his eyes open and his mouth shut.


Sitting in his smoking room at home, puffing on his Cuban cigar -- pre-Castro, he said -- Krongard said that what he brings to the CIA is an outside view.

"I come with no baggage, no history, no pre-conceived opinions or biases. I can extract the essence of a problem, get out of it and move on," he said.

His son Tim, who joined him in the smoking room, took his own cigar out of his mouth. "Like 'Pale Rider,' " he said -- the mysterious drifter hero of one of his father's favorite Clint Eastwood movies.

Krongard smiled. The phone rang; Tim answered. "Agency teleconference," he told his father.

Krongard asked the caller to wait 15 minutes for him to wrap up an interview. When it was over, he vanished behind closed doors.

Pub Date: 2/01/98