Mystery Man Revealed

It's been a long time since Harry Merlo wielded any real power in this town.

For more than 20 years, Merlo, the CEO of timber giant Louisiana-Pacific, lived the kind of imperial lifestyle Portland's present corporate chieftains can only dream about. 

Merlo—sporting a Clark Gable mustache and often photographed in a white dinner jacket—entertained on L-P's 107-foot yacht and lived on a company-owned West Hills estate complete with a helipad and chef. He traveled the world on company jets and regularly squired statuesque blondes to social events.

All the while, Merlo called in favors from politicians and laid waste to forests like the timber baron he was.

“He’s a throwback to a different era,” says Bob Ames,  president of First Interstate Bank of Oregon during Merlo’s reign at L-P. “As a CEO, he was the ultimate cowboy.”

Today, Merlo is 88 and avoids the public spotlight. But records and interviews show Merlo is staging a comeback as a power broker: He is the money behind Portland's fight over control of water from the Bull Run Reservoir.

Portland is facing a ratepayers' crusade against the alleged misuse of public money by the city's Water Bureau, from publicly funded elections to a $940,000 "water house" demonstration project to $1.5 million spent bailing out the Rose Festival.

A group called Portlanders for Water Reform is trying to get a measure on the May 2014 ballot that would wrest control of the Water Bureau from the city and give it to an independent public utility board.

The campaign has been pushed by industrial users of city water unhappy about rising rates. But who exactly was fueling the campaign wasn't clear—until now.

Portlanders for Water Reform reported its first contribution Sept. 6: $25,000 from the Portland Bottling Company, the 27th-largest user of the city's water.

But few people know Merlo controls Portland Bottling.

Merlo did not respond to requests for comment, but  public records and interviews reveal that he is the money behind the company, which bottles soft drinks. 

“He is the majority shareholder,” says Samuel Allen, owner of the Monarch Hotel and an investor in Portland Bottling. 

"Having Harry Merlo involved is a big deal," says veteran lobbyist Len Bergstein, who is part of a City Club panel studying the water ballot measure. "Having a large bankroll brings more weight to an issue that otherwise could be seen as grievance politics."

Merlo's stealthy return to city politics aligns the man whose company was a voracious clear-cutter with strange allies—the Friends of the Reservoirs, who are also part of Portlanders for Water Reform.

That group's leader, Floy Jones, says she doesn't know much about Merlo but that doesn't matter. "When it comes to equitable rates and transparency, different groups can come together," Jones says.

Merlo took the helm of L-P after federal anti-trust officials ordered the company be split off from Georgia Pacific in 1973. L-P changed the lumber business by developing a way to make plywood from smaller, faster-growing trees, putting the company in a strong position as timber shortages increased in the 1980s.

For 22 years, Merlo ran the publicly traded L-P like  a fiefdom. But in 1995, a confluence of events prompted its board of directors to abruptly boot Merlo. The feds charged the company with environmental crimes and fraud, and a female subordinate of Merlo's sued for sexual harassment, alleging women were hired as assistants only if they were stunning, young and "likely to acquiesce to sexual advances by the CEO,” according to a 1995 story in Business Week. 

L-P's most famous disaster was its exterior siding, which within a few years discolored, rotted and grew mushrooms. The company would eventually pay out more than $500 million to compensate property owners who used the L-P siding. (The company later moved its headquarters from Portland to Nashville, Tenn.)

Merlo left L-P a wealthy man—his 2 million shares were then worth nearly $50 million.

Merlo has other interests. Under Merlo, L-P in 1979 bought the Portland Timbers, then of the North American Soccer League, and kept the team going until 1982 before shutting it down amid financial losses. During those years, Merlo established a friendship with Timbers defender Clive Charles, who went on to build the University of Portland into a soccer powerhouse. Charles persuaded the former timber exec to pay for the UP soccer stadium known as Merlo Field.

After exiting corporate life, Merlo focused on his Sonoma County, Calif., winery, Lago di Merlo; two Portland wine distribution companies; a 12,000-acre ranch near LaGrande; and Portland Bottling. 

Since 2006, records show, Merlo has contributed $92,000 to Oregon politics. He donated most heavily to the 2010 GOP nominee for governor, Chris Dudley. Merlo gave the former Trail Blazer $30,000, much of it in-kind contributions for the use of Merlo's airplane.

It's not yet clear how much money Merlo's bottling company is willing to sink into the water campaign—or into subsequent elections for an independent water board.

Bob Sallinger, conservation director for the Audubon Society of Portland, says Merlo's record at Louisiana-Pacific doesn't suggest he'd favor the transparency or accountability the measure's advocates say they want.

"Merlo has the capacity to bankroll an initiative like this and the capacity to buy elections as well," Sallinger says. "If you are worried about corporate influence and accountability, ask yourself if Merlo's a person you'd trust to fundamentally reshape city government.” 

WWeek 2015