More from year 1969
The Beatles’s business difficulties
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Feb 18, 1965
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Nemperor Holdings was the new name of Brian Epstein’s former company NEMS Enterprises, and the entity receiving all The Beatles’ earnings and passing them to Apple after a 25% deduction. Since Brian’s death in August 1967, NEMS / Nemperor was owned by Queenie Epstein, Brian’s mother, and Clive Epstein, Brian’s brother; and led by Clive. The Beatles owned 10% of NEMS at this stage.
In February 1969, after some discussions with The Beatles, John Eastman (recently appointed business advisor for The Beatles) and Allen Klein (recently appointed manager of John Lennon), Queenie and Clive Epstein decided to sell their shares to Triumph Investment Trust, headed up by merchant banker Leonard Richenberg.
On February 17, Triumph acquired the shares of NEMS and its holding Nemperor Holdings. Neil Aspinall, managing director of Apple, was made aware of this decision on February 21. The following is taken from Allen Klein’s affidavit, read out in the High Court, London in early 1971, during the hearing of Paul McCartney’s lawsuit to dissolve The Beatles’ partnership:
[…] I had not completed this aspect of my task to my satisfaction when I was called to London by an urgent telephone call on Friday 21st February 1969 from Mr. Neil Aspinall, who was then Managing Director of Apple. He told me that Clive Epstein had visited him with a Mr. Leonard Richenberg from Triumph Investment Corporation who had told him that Triumph Investment Trust Limited (“Triumph”) a subsidiary of Triumph Investment Corporation, had purchased either all the shares or a controlling interest in NEMS. I was shocked and dismayed at this turn of events and I immediately telephoned Mr. Pinsker who told me that he had not been aware of…Allen Klein – From The Beatles: Allen Klein’s Affidavit: Rockmine On-Line
The official announcement that Triumph had gained control of NEMS Enterprises was made on February 24.
On February 25, Allen Klein met with Leonard Richenberg and started to negotiate with him, explaining NEMS / Nemperor owned large sums of money to The Beatles from past live performances, but the tactic didn’t work:
I didn’t know who [Allen Klein] was. For all I knew he might have been a nasty little gangster. I only agreed to see him because Clive Epstein asked me to see him for Lennon’s sake. He said, ‘You’re very smart to have jumped in first and bought Nems, but what you didn’t know was that the Epsteins owed the Beatles huge sums of money from road shows’.
Did I tell him to get lost on that first occasion? No, I put it in slightly stronger terms. Our deal with Nems was well secured with all kinds of warranties and guarantees, so I didn’t see any point in continuing the discussion.Leonard Richenberg – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)
On February 26, Allen Klein organized a series of business meetings at Apple to determine The Beatles’ response to this situation. A decision was made to ask EMI to pay The Beatles’ royalties directly to Apple rather than paying NEMS Enterprises. The following letter, signed by the four Beatles, was then sent to EMI:
We hereby irrevocably instruct you to pay Henry Ansbacher & Co. [The Beatles’ merchant banker] all royalties payable by you directly or indirectly to Beatles and Co. or Apple Corps.
Another letter was sent to Leonard Richenberg informing him that, as Nemperor / NEMS was no longer acting as The Beatles’ manager, the royalties from EMI would be paid directly to Apple.
EMI didn’t know how to react and decided to freeze £1.3m in royalties due to be paid shortly to Nemperor / NEMS till the situation between The Beatles and NEMS Enterprises was clarified.
Klein had realized he was getting nowhere with me and had turned his attention to Lockwood [EMI chairman]. I went to see Sir Joseph. He was being advised by Mr. Len Wood and several panicky lawyers, all scared out of their wits that the Beatles might not sing anymore, or might just sing the National Anthem backwards, if EMI paid the royalties to Nems and not to Apple. I told Lockwood that our contract stated quite clearly that EMI would pay the entire royalty to Nems, which was entitled to take twenty-five percent and after deducting expenses would pay the Beatles the remainder.
Lockwood seemed willing at first to adhere to our agreement, but then he followed the advice of his lawyers. They had decided that EMI was not involved, that the fight was between Nems and the Beatles. They wouldn’t pay anybody until the dispute was settled. I phoned Lockwood and called him a chicken for backing down to Klein, but he’d done it anyway.Leonard Richenberg – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)
The dispute was quickly brought to court by Triumph, but Triumph lost its case, on April 1, 1969 (to put things into context, on March 28, newspapers reported that Dick James and Charles Silver had sold their Northern Songs shares to ATV, opening up another business fight for The Beatles):
In a packed courtroom, Mr. Jeremiah Harmon, counsel for Triumph Trust, told Justice Buckley that Apple appeared to have recently fallen “under the influence of a Mr. Allen Klein. He seemed to have a somewhat dubious record.” It was believed that if EMI paid the royalties to the Beatles, they might turn the money over to Klein, who might abscond with it. Klein’s threatening meeting with Richenberg was cited in court, as were other legal proceedings against him in America and England. Harmon ended up saying, “If some manipulator arrives on the scene and causes trouble between the Beatles and Nemperor, we are justifiably apprehensive.”
Sydney Templeman, counsel for EMI, protested that “such allegations were irrelevant and unfair to someone [Klein] who was not a party to the proceedings.” EMI made clear their position that after March 5, 1969, they would pay the royalties to no one. The judge, in turn, saw no reason not to freeze the funds.From “The Love You Make” by Peter Brown and Steven Gaines
A few days before the court hearing on the royalties, Klein was on the phone wanting to settle things. We made a deal, but he backed out at the last minute and the case moved into court. It was decided that the money would be paid into the nearest brand of Lloyd’s bank, pending a trial. I was satisfied with this, partly because the branch just happened to be our bank. Naturally, the manager was delighted with the deposit. I was also glad the money was now locked in. I thought, ‘Good, we’ll sit it out. I know my Klein.’Leonard Richenberg – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)
A High Court bid to freeze payment of the Beatles’ EMI royalties failed April 1st. The action was brought by Nemperor Holdings Ltd. and the Triumph Investment Trust Ltd. and it was stated in their behalf that Nemperor was entitled under various agreements to receive the royalties as agents for the Beatles. However, Apple, the company formed by the Beatles, had written early in March to EMI Records asking the company to pay all royalties direct to them which, Nemperor submitted, was a complete reversal of what had been happening for years. The situation had suddenly changed when Allen Klein, the Beatles’ business manager at Apple, had visited Triumph Investment’s managing director Jeremiah Harman, the Nemperor-Triumph QC in the case, said Klein had tried to buy Triumph’s shares in Nemperor, and when that failed, he demanded the royalties should be paid direct to Apple. For the defendants, EMI Records, S.W. Templeman QC pointed out that Nemperor had ceased to manage the Beatles on October 1st, 1967, and there was not the slightest evidence that a single penny was still outstanding. EMI did not mind to whom the money was paid, and it was unthinkable that the company would pay €1 million to anyone while the dispute existed. The idea that Klein might pressurise EMI to hand over royalties to Apple or to himself as agent for Apple and the Beatles was “laughable”. In any event, £750,000 belonged to the Beatles.From CashBox Magazine – April 19, 1969
At this point, Leonard Richenberg was really upset and decided to pay a detective service to run financial and legal checks on Allen Klein.
I commissioned a Bishop’s report on Klein, a tactic which much impressed him later, as it was the kind of move an old warrior like Klein would respect. It showed he was involved in a number of lawsuits.Leonard Richenberg – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)
Leonard Richenberg got a report within the week and decided to send it to the Sunday Times. On April 13, 1969, an article, headlined “The Toughest Wheeler-Dealer In The Pop Jungle”, was published.
[Allen Klein’s business practices are] a startling blend of bluff, sheer determination, and financial agility, together with an instinct for publicity and the ability to lie like a trooper. He is a veteran of some forty lawsuits, and dealings in one of his shares was halted by the American Stock Exchange. In one of his better known achievements he himself took over one of his own companies and saw the value of the stock go up by $15 million.From The Sunday Times, April 13, 1969
It was also revealed that Allen Klein had been involved in 40 lawsuits, that the US Securities and Exchange Commission (SEC) was investigating his affairs, and that the Rolling Stones’ North American royalties were paid directly into Klein’s own company.
Allen Klein sued the Sunday Times, but the damage was done. By savaging Allen Klein’s reputation in the UK, the article showed Klein that Richenberg was a tough opponent ready to use the same dirty tricks as his. It also played a role in the fight with ATV for the ownership of Northern Songs, as no Northern Songs shareholder wanted Klein to have a role in the management of the company.
The Sunday Times article decided Paul McCartney’s father-in-law and business advisor Lee Eastman to come from New York to London. Upon his arrival, he directly exchanged with Leonard Richenberg to discuss how The Beatles could buy NEMS back, to no success.
Richenberg also tried to get directly in touch with The Beatles, but initially failed to reach any of them.
I knew they were hostile to strangers owning a piece of them. But I’d made it very clear to Clive Epstein that they’d got a very good offer for their remaining ten per cent share in Nems. I thought the boys were okay, but that Klein was no good, so I tried to get in touch with them. I sent each one a letter but received no replies. I wasn’t sure whether they’d been totally sold on Klein because at this time they hadn’t been paid either.Leonard Richenberg – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)
He finally found a trick to force the conversation.
[The 1969 British finance bill] contained a typical Labour government clause. It would have affected many groups in their position with heavy tax liabilities. I let it be known that despite our differences over NEMS, I wanted to strike up a friendship with them to see if we could get the clause altered. In the end, I agreed to meet them and Klein, that Robin Hood who rarely gives to the poo.Leonard Richenberg – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)
After a tough negotiation, a compromise was found and announced on April 24:
In a deal hammered out between Klein and Richenberg, NEMS surrendered its claim to 25 per cent of The Beatles royalties for the next nine years. Instead Triumph received £750,000 cash, 25 per cent of the royalties already frozen by EMI (over £300,000). Triumph received £50,000 for the 23 per cent that NEMS held in The Beatles’ film company Subafilms and received 5 per cent of the gross record royalties from 1972 until 1976. This had been a sticking point but in the end Richenberg was satisfied because he knew that Klein would next turn his attention on EMI and obtain a substantial royalty rate increase. The Beatles also received an option on the 4.5 per cent of Northern Songs shares owned by NEMS, useful in the forthcoming battle for Northern Songs, and received 266,000 shares in Triumph in exchange for The Beatles’ 10 per cent share in NEMS. Everyone was satisfied with the outcome.From “The Beatles Diary Volume 1: The Beatles Years” by Barry Miles
There was however a last-minute issue for Allen Klein to solve:
Klein had obtained McCartney’s signature on the agreements, but he then heard from Paul’s solicitors that they had been instructed to withdraw authorization to exchange documents with Triumph until Klein and his company, ABKCO, agreed to take no fee for the negotiations and settlement.
Klein stormed across to the EMI Studios at Abbey Road and buttonholed Paul. He told him what had just transpired. He claims Paul replied: “That’s ridiculous,” and left the room.
“After a few minutes he returned,” said Klein, “having evidently made a phone call. He said, ‘It’s all right. It’s good now.’ I believe he must have instructed his solicitors to agree to the exchange of documents.“From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)
The deal took time to finalize, as The Beatles finally sold their shares in NEMS Enterprises to Triumph, on August 27, 1969.
Beatles Leave NEMS In Triumph Deal
LONDON — The Beatles have left the management firm of NEMS, the company formed by their late manager, Brian Epstein. Their departure is part of a settlement with Triumph which acquired 70% of NEMS last Feb and another 20% later.
According to Allen Klein, business manager of the Beatles, “new arrangements have been made which will give the Beatles the independence they desire”. Triumph’ managing director, Leonard Richenberg, and Allen Klein, The Beatles business manager, have settled their difference out of court. Triumph will not press its entitlement to the royalties. Instead, it accepts 750,000 pounds in cash now (three years guaranteed payment on royalties). From 1972 through 1976, Triumph will receive 5% of the gross royalty revenue. Triumph will also get 25% of the royalties now frozen in court, accounting for 1968’s payments.
The Beatles will buy NEMS 23% stake in Subafilms for some 50,000 pounds, they will also have an option on the 237,000 (around 4.5%) Northern Songs owned by Triumph. The option is for a year and the call price is 38 shillings a share, 10 shillings a share cheaper than the price originally negotiated by Richenberg some weeks ago.
If exercised, the option will bring The Beatles’ stake in Northern Songs almost to a par with that held by Sir Lew Grade’s Associated Television Corporation although Sr. Lew has a one-year ‘alliance’ with a consortium of brokers owning 40% and thus currently has effective control of Northern Songs with Four ATV representatives and five votes on a six-man board.
Triumph will also buy the 10% in NEMS it does not already own from The Beatles for 266,000 of its ownFrom CashBox Magazine, July 19, 1969
shares valued at 422,275 pounds.
The Beatles have resolved their legal wrangles with Nems Enterprises, the company founded by the late Brian Epstein, their first manager. In a deal involving £460,000, the foursome have exchanged their 10% stake in Nems for shares in the Triumph Investment Trust, the majority shareholder in Nems. The Beatles have also terminated their contract with Nems as a management agency, paying Nems £750,000 in settlement of royalty commission up till 1972. From 1972 until 1976 the group will pay Nems 5% of their royalties instead of the 25% stipulated in the original agreement. The outstanding £1,300,000 record royalties, frozen during litigation moves, will now be divided with 75£ going to the Beatles. The new deal also gives them the option until July 10th, 1970, of purchasing the 237,000 Northern Songs shares held by Triumph. These shares would give the Beatles a 35% slice of Northern and parity with Associated TeleVision’s current majority holding. The Beatles have paid also £50.000 to Nems in exchange for the company’s 22% interest in Subafilms, and thus in total with this deal and all its terms achieve their professed ambition of controlling their own business affairs.From CashBox Magazine, July 26, 1969
Once the deal was announced, Allen Klein claimed that he turned defeat into victory, as Nemperor had no further control over The Beatles and The Beatles had become shareholders of Triumph. John Eastman felt obliged to send a letter to the four Beatles:
Before memories become too short, I want to remind everybody that we could have settled the Nems affairs for very little. Klein killed my deal by claiming all sorts of improper acts of Nems, which his investigation would disclose and promising to get you Nems for nothing. We all know that no improper acts were found by Klein if, in fact, Klein made an investigation at all.
We do know, however, the NEMS tied up £1,400,000 of Beatles phonograph recording royalties which Klein has been unable to free. Klein has no defenses against Nems’ retention of your royalties.
The present proposed settlement (which will cost you more than £1,500,000 pounds) was forced upon Klein, not induced by him.
These are the facts. I shall be more than pleased to give you chapter and verse if you desire…John Eastman – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)
Klein was the fly in the ointment. I didn’t like the man’s reputation and didn’t like the way he operated. He isn’t my style. But Lennon liked him and he talked the others into liking him. True, I wanted Nems to assume complete liability for taxes, but that wasn’t important. Klein showed up in the meantime and said, ‘Forget it, I’ll get you Nems for nothing because the Epsteins owe you money.’ It was because of Klein that the deal fell through.John Eastman – From “Apple to the Core: The Unmaking of the Beatles” by Peter McCabe and Robert D. Schonfeld (1972)
Part of my reason for not wishing to have Klein as manager was based on what he failed to do between the beginning of that year  and May. Klein told us, ‘We’ll get it [NEMS] for nothing.’ This is a typical example of the exaggerated way Klein expressed himself to us at the time, and it was because of moments like this, that I gradually became more and more determined that Klein was not the right man to be appointed manager.Paul McCartney – From “The Beatles: Off the Record” by Keith Badman
Last updated on March 6, 2022
"With greatly expanded text, this is the most revealing and frank personal 30-year chronicle of the group ever written. Insider Barry Miles covers the Beatles story from childhood to the break-up of the group."
We owe a lot to Barry Miles for the creation of those pages, but you really have to buy this book to get all the details - a day to day chronology of what happened to the four Beatles during the Beatles years!