It's very easy to look at large corporations as impersonal monoliths, but often the business they transact is very personal. Take the relationship between AOL's Steve Case and Bertelsmann's Thomas Middelhoff:

Mr. Case, 44, who formally departs next month as the company's chairman, still communicates often by e-mail and instant messaging with his old friend Thomas Middelhoff, 49, a fellow fallen mogul who resigned as the chairman of the German media giant Bertelsmann last summer, colleagues of both men said.

It is impossible to know just what the two men discuss, but their communications have recently become the subject of renewed curiosity, partly because of federal investigations of possible financial fraud at AOL Time Warner. The company recently disclosed that the Securities and Exchange Commission was contending that AOL Time Warner improperly inflated the AOL division's sales and earnings by effectively overpaying Bertelsmann in a deal in order to get back $400 million in online advertising sales - a potential restatement that could seriously undermine AOL Time Warner's efforts to quell the continuing lawsuits, criminal investigations and shareholder anger following AOL's disappointing acquisition of Time Warner in January 2001.

....By the beginning of 2000, both Mr. Case and Mr. Middelhoff began amicable discussions to break up their European partnership. In March, three months after AOL agreed to acquire Time Warner, Mr. Case reached an agreement with Mr. Middelhoff for AOL to pay Bertelsmann more than $8 billion for its stake in AOL Europe. The bill was due in two stages during 2002, in cash or stock at AOL's discretion.

The deal under criticism from the S.E.C. arose later, in early 2001. For AOL Time Warner, the original agreement had provided a cut in its payments to Bertelsmann by $1.5 billion, to roughly $6.7 billion, if Bertelsmann asked for it early.

In early 2001, teams of executives from AOL Time Warner and Bertelsmann met several times in Virginia and in New York to revise the original terms. The companies' motivations during those negotiations are now at the center of the dispute with the S.E.C. Bertelsmann executives wanted a cash payment as soon as possible to spend elsewhere, rather than take chances on AOL Time Warner stock. AOL Time Warner also wanted a cash deal but the company now says it held out the possibility of paying in stock in order to bluff a better deal out of Bertelsmann. AOL Time Warner "viewed it as essentially costless to forgo the option to settle with Bertelsmann in stock," the company said in a recent filing. But it "sought to persuade Bertelsmann that a contractual agreement guaranteeing Bertelsmann cash for its interest in AOL Europe had significant value to Bertelsmann (in an estimated range of between $400 to $800 million)" as a bargaining chip to get Bertelsmann to commit to buy some advertising.

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