When the smoke cleared.

Few people know for sure how they'd react to a disaster. Would they panic? Or become true leaders? During the World Trade Center crisis eight months ago, one CFO discovered that an emergency can change your way of thinking.

"WE'VE BEEN HIT BY lightning!" someone yelled. The Twin Towers of New York City's World Trade Center were shaking. Within a few seconds, the tremors stopped, but the lights in the buildings were off and the computers were down. Smoke was seeping from the elevators.

Lightning? An earthquake? A misguided airplane? Everyone had a guess. But until almost two days later, no one knew for sure what happened. Now we know: At 12:18 on the afternoon of Friday, February 26, 1993, a bomb exploded in the parking area beneath the Trade Center. The blast killed six people and injured many others. As this article goes to press, several people are standing trial for planting the bomb.

Barry Weintrob, the CFO of the Port Authority of New York and New Jersey, remembers the day vividly. His company owns and operates the six buildings and one hotel that make up the World Trade Center; it also has offices in one of the Twin Towers.

At the time of the explosion, Weintrob was on the 67th floor of the 110-floor tower, heading for the elevator to go to lunch. The treasury department was in the middle of a sizable wire transfer and just two hours earlier had announced the sale of $100 million in long-term bonds scheduled for the next week. Within minutes, Weintrob had joined a band of coworkers, and thousands of other tenants, making their way down the stairs. The going was slow -- so slow that the Port Authority employees finally exited onto a floor, somewhere in the 50s, to find relief from the annoying smoke that was building up in the stairway -- and to gather any information they could about what was happening. From there, Weintrob eventually met up with his CEO and then made telephone contact with outsiders, including the press. When the smoke finally cleared, at about 4:30 p.m., the group walked to the ground floor.

As CFO, Weintrob oversees about 750 people in the areas of treasury, controllership, information services, audit, financial analysis and real estate policy. Each department has its own director and its own business resumption plan -- the tool that Weintrob credits with guiding the Port Authority through the disaster and moving tenants back into their offices weeks before outside experts had estimated. Here's his story.

Financial Executive: What happened when you finally reached the ground floor after the blast?

BARRY WEINTROB: A command center had already been established by the Port Authority's police, some of our company's executives, the New York City police, the New York City fire commissioner and police commissioner, ambulances, fire engines, and the deputy mayor, since the mayor was in Japan at the time. The center was a control point where people could go for information about what had occurred and what the damages were. The city really took control, and the response was unbelievable. By the time I got downstairs, the Salvation Army was already dispensing coffee.

From the command center, we tried to figure out what we would do over the weekend. The explosion was on a Friday, so we were at the site most of the weekend. My first priority was to determine that all my people were safe. I have about 750 people working for me directly or indirectly and we're divided among six floors in the building, so it took some time to account for everybody.

How long has your business resumption plan been in place?

As part of our annual audit in 1991, we decided we needed better business resumption planning. It was one of our internal control deficiencies at the time.

Did you use outside help to prepare the plan?

Yes. Each department prepared its own plan, based on an outline that I provided. The outline included the essential elements of effective resumption plans used by other companies, and each department modified it to meet its own requirements.

How quickly did your departments respond to the disaster?

Information services and treasury kicked off their business resumption plans right away. That primarily meant contacting every person in those departments to make sure each employee knew where to go for work on Monday. That was our focus for the weekend.

Of course, we needed remote computer locations to work. For example, we were in the middle of a major wire transfer in the treasury department when the blast occurred, and we couldn't complete it. We had to finish it Monday morning, so we needed to set up computers at an alternate site.

I also had to arrange for office locations for the Port Authority's executive staff. With the help of some very friendly neighbors, we found ample office space for an indefinite period. At that point we had no idea how long we'd need the space or how many people we'd have to house. We ultimately leased space for several hundred people for a little more than a month right across the street from the Trade Center.

Did you have any problems with your insurance?

We immediately notified our insurance carriers of the situation, of course, and offered them access to the site as soon as possible. During the days immediately following the explosion, everyone wanted to know how much insurance coverage the Port Authority had. I was the primary contact for that question, so I spent a lot of time on the phone with the press, explaining our coverage and trying to estimate the cost to rebuild the Trade Center. This was difficult because at that point we still weren't exactly sure what happened. Oddly enough, some of our estimates in the very early days are still good today.

How did you come up with those early estimates?

By the middle of the week following the explosion, we knew it was caused by a bomb. We knew what had been destroyed, and we had some idea of what it would cost to replace those things. The insurance companies also made some early estimates that have held up, too.

You mentioned dealing with the press. How specifically did you handle those communications?

The press was really an interesting part of this. People from both the national press and the local press were everywhere. For about a month we held daily press conferences in an auditorium in our temporary location to keep them informed. Our engineers handled any questions about rebuilding the Trade Center, our operations people handled questions about the workings of the Trade Center and I handled questions about our insurance coverage. It was all part of our strategy to give the public the maximum amount of information we could.

That approach worked for us in several ways: Financially, about two hours before the explosion, we announced we'd sell $100 million in long-term bonds on Wednesday of the following week. When the blast occurred, we asked ourselves whether we should go ahead with the sale. The question was critical. We decided to first call our investment bankers, the major institutional holders of our bonds and the rating agencies, telling each the details of the explosion and how our insurance coverage measured up. We explained to them that, regardless of what happened financially, we wouldn't be seriously affected because our insurance coverage would protect us. We ultimately decided to proceed with the sale on Wednesday.

Did you personally make all of the phone calls?

Members of our treasury staff made most of the calls. And several of us made personal visits during the Monday and Tuesday following the blast. We sold the bonds on Wednesday morning as we planned -- and got the best interest rate we've ever had on a Port Authority bond issue. We really were very heartened that people had such confidence in us.

On the treasury side, we frequently invest our funds and like to keep them relatively liquid. For example, on Monday, when we were in our temporary location, we executed more than $170 million of investments -- all on our newly acquired computer equipment. And we rolled over our commercial paper program in the normal way. All of these activities continued as if nothing happened; in terms of transactions, to the outside world we looked normal.

Thanks to your business resumption plan?

Yes, the plan and the dedication of the staff. People worked through the weekend to make sure we could do business the next week. I especially credit the technical people in the treasury area who understand computers. They really made the changeover possible.

Did you physically move paperwork and equipment from the World Trade Center?

We moved some things. It was very difficult to get access to the Trade Center after the bombing, but on Sunday we were allowed to go to our offices for a half-hour accompanied by guards and firemen. We brought down files and some evidence of several of the trades we were in the middle of executing so we could confirm that information on Monday.

The items we couldn't bring with us we had to buy or lease. For instance, we bought several computer terminals, and we also rented furniture over the weekend, with the help of the Port Authority's general services department. I was surprised at the number of stores you can do business with on Saturday and Sunday.

How long did it take to restore your telecommunications and computing capabilities?

Telephones in the Port Authority are under the jurisdiction of information services, which is one of my departments. While they were hooked up in many areas over the weekend, I think we found every portable cellular telephone available in New York and brought it to the Trade Center just in case we needed them. By Monday, everyone seemed to be carrying around a cellular phone. We had special wiring installed around the Trade Center so we could transmit and receive from anywhere in the Center, even though that's normally difficult to do in our type of building. Plus, we got a lot of help from the local telephone service.

The information services department itself has an extensive disaster recovery plan, particularly for our mainframe computer. We have a contract with an off-site location, in Philadelphia, and by Sunday night a group of Port Authority people were ready to move our information to that site. Because we send our nightly back-up tapes to Philadelphia once a week as part of our normal backup plan, we already had some tapes there. We did lose the data we had entered on Friday, but all the information entered up until Thursday was preserved.

We needed an entire day to get the off-site mainframe running, but by Tuesday morning we were back to full service. We met our payroll, which comes out on Wednesday, and were paying bills and handling accounts receivable, too.

It sounds like your transition was very smooth. Did you encounter any snags in the move?

Well, we weren't as prepared to move our office automation system as we were to move our mainframe applications. We took more than a week to get our electronic mail and other communications systems running. That was one of the weaknesses in our recovery plan. But I guess we put our priorities where they should be -- on meeting our payroll.

We faced one other small problem that involved paying our contractors. We were, of course, asking many of them to work extra hours, and a few requested that we accelerate payment of the bills they were submitting. Some of them were waiting to get paid for work they'd done prior to the blast, too. Because our systems were up and running, we were able to accelerate the payments without too much trouble, and the contractors could come in without worrying about their working capital. That commitment was a very important part of our recovery.

Do you believe outsiders responded so quickly because of relationships you developed before the explosion?

Absolutely. In some cases, we knew the home phone numbers of our contractors. When something like this happens on a weekend, that's invaluable. Remember, during the first couple of days we didn't know how long we'd be out of the Trade Center. As late as Sunday night, some of us thought we'd be able to return to the building sometime that week. But on Monday morning, I inspected the site of the blast, and I was truly shaken. At that point, there was no question in my mind that someone had tried to topple the building. The ruination was unreal.

You actually examined the parking area below the street?

Yes. It was an experience to see the FBI literally combing for clues. I had never before witnessed FBI agents on their hands and knees sifting through sand and debris with a comb. That kind of thoroughness helped them understand what happened.

Of course, some of that debris fell on our air conditioning. Since it was February, nobody was too worried. But after thinking it through, we figured the equipment may not be ready for the summer. After all, it was buried under the debris, so we had no idea how damaged it was.

We decided to rent temporary air conditioning equipment. We actually closed some of the streets around the World Trade Center so we could erect a "city" of air conditioning equipment on the street, just in case our air conditioning didn't work for the summer. My department's role in this was quite simple: Get the insurance companies to cover the expenditure. We convinced our insurers that air conditioning was essential for us because, without it, we'd have to empty the building on a hot day and losses would multiply. We were planning all of this and arranging for the equipment rental in early March. In the spring, we installed it.

When we finally did uncover the air conditioning equipment in the basement, much of it worked sooner than we'd expected. We still needed the extra air conditioning, but for only a few days during the summer. In September, we started dismantling it, and by the time this article is published the streets will have been restored.

What sort of control mechanisms did you have in place during the recovery?

That was interesting. The controller's department didn't miss a beat in preparing, collecting and paying bills or in meeting the payroll. Port Authority employees knew they could count on the controller's department to fulfill our obligations. But the auditors were pretty critical. For instance, some contractors were working almost on a handshake. In the heat of the battle, you take some shortcuts. So it was important that the auditors be there to make sure we didn't get carried away. They insisted we do business in as controlled a way as possible given the circumstances.

Another example is, when we finally reopened, all the retail stores in the World Trade Center ran special sales that the Port Authority underwrote. For a week, we gave all shoppers one-third off the merchandise. Although the promotion was extremely successful and brought customers back into the shopping areas of the World Trade Center, we had to ensure that each store was fair in its dealings with customers and was accurately reporting its sales, so that we could reimburse the store for the discount. This is where our internal audit staff really shone. Also, our estimate of the Port Authority's subsidy of this event was unbelievably accurate. Truly a win-win-win situation.

How did you monitor your employees during the recovery?

Right after the explosion, we asked all the departments to tell us, in report form, what they were doing, what problems they were encountering and where they were heading. For example, some departments had people they weren't using, and we needed those people to perform different tasks. One example: The World Trade Center desperately needed representatives to talk to tenants. And auditors make great people to talk to tenants! So we loaned a few Port Authority auditors to the Trade Center to act as contacts with building tenants. Likewise, several people from our controller staff served as guides to bring people through the building. Anyone who wasn't fully occupied or whose work could be postponed was pressed into service in other areas. That's one of the reasons we needed these reports.

Another reason was to determine if any job wasn't being accomplished that senior management thought should be. We asked for these reports as early as the first week in March, just as a check. As part of the communication process, we also got together, at various levels of the organization, as often as possible to talk through any problems in performing our normal work.

Did any of your staff ever work at home?

Yes, we did allow some people to work at home. We also had employees assigned to several different remote locations, primarily Port Authority facilities. The treasury department already has personnel working in New Jersey, so the New York employees moved in with them. Unfortunately, the other departments didn't have that luxury, so we leased vacant office space in or near our other facilities.

What about training before the explosion? While many companies have disaster recovery plans, they're on paper. Sometimes they circulate the plan, and sometimes people read it, but then it's filed away.

Our information services department had visited the Philadelphia data processing site several times before the bombing. And although members of the treasury staff hadn't actually rehearsed their reaction to a disaster, I'm sure they had discussed their recovery plan. The rest of us had concentrated on keeping our telephone contact sheets up to date, so we knew where we could reach everybody, at home or elsewhere, without too much difficulty. All of these precautions worked.

I think one of the most important parts of a plan is a mechanism that allows you to reach people. You can't anticipate every conceivable disaster, so you simply have to be able to contact your employees. If you can do that, either by phone or face to face, you can assess the damage together and make decisions. Then you can give the entire department instructions so everyone can understand the direction you're heading in. Sure, some areas, like information services, need off-site locations to operate, and you have to decide that in advance. But, for most of the financial functions, you just need to know how to reach the right people.

How did you estimate all of your losses during the recovery?

Working with engineers and economists, within a month after the explosion we put together an estimate of the Port Authority's cost to rebuild the Trade Center; the cost of the blast to our tenants; and the impact on the region. That report was very well-received by the press.

Strangely enough, the economic impact on the region was positive from a financial point of view. The explosion put people to work restoring the World Trade Center and the tenant area. Much of the funding for this work came from insurance payments from outside the region, so it became a net plus for the New York City region. Few people think of that.

On the investor relations side, what specifically did you do to calm your investors?

We visited the major institutional holders of Port Authority bonds to make sure they understood what we were doing. We also paid a lot of attention to the rating agencies, because in our business, the rating agencies mean a lot. If they sense there's a problem, that feeling spreads quickly. We wanted to make sure that the Port Authority's treasurer, the assistant treasurer or I, as the CFO, directly addressed any questions they had. For instance, throughout the recovery process, we were visiting the mutual fund families, our major institutional holders. And we were manning the telephones. We wouldn't refuse to talk to anyone about anything at anytime. We were totally open.

You told them everything you knew?

Everything we knew. And people were very reasonable. We told them this is what we know and this is what we guess. Whenever it was a guess, we told them it was a guess. We were very clear about the facts. Fortunately, we had more than enough insurance coverage to state with certainty that the Port Authority would take no major financial hit. That was very important.

How has your personal work schedule been affected by the upheaval?

I took on some different roles temporarily. Before the explosion, my contact with the press wasn't extensive. After the explosion, that changed. I remember spending one day almost exclusively on the phone with the press explaining our insurance coverage.

But I think it's interesting to do different things. You know, it's funny how benefits come from tragedies. The general feeling at the Port Authority was we had all pulled together. We all worked very hard, harder than we'd worked in a long time -- in hours and in intensity. In fact, our CEO eventually had to make a rule that no one could work more than 12 hours a day. But we all felt we had contributed to a remarkable experience. The Port Authority got a lot of credit for reopening the buildings as quickly as we did, and it felt good to be part of that winning effort.

So would you say everything is back to normal at the World Trade Center?

Well, our definition of normal has changed. We have a vastly improved security system at the Trade Center. No one can just walk in or take the elevator upstairs anymore. You must go through a clearance procedure at the front desk, where you get an ID card for the day. If you have a permanent ID, you can use that to go upstairs.

There will never again be public parking in the basement of the Center, although we expect to reopen the parking area for tenants and some government offices.

What surprised you most during the recovery process?

The discovery that sometimes work is done more efficiently with fewer checks and balances. Obviously, the Port Authority's hierarchy was nonexistent during much of this time. It was a very flat organization. We had to make decisions quickly, and they turned out to be very good decisions. Now we're questioning whether we should be a flatter organization. How can we use some of the lessons we learned from the decision-making process that went on in the aftermath of the bombing? Can we transfer some of that process to our typical work environment?

I think all of us appreciated the benefits of making decisions by bringing together all the people involved and saying, "This is the problem, everybody is here, let's decide," and that's it -- rather than going through all the drafts and approvals. That's cumbersome, and you don't necessarily end up with a better answer.

Did you find that people who don't usually make the decisions were making decisions?

Absolutely. This was our typical day: The top staff of the Port Authority met every morning at 7:00 and every evening at 6:00. In the morning, we found out what happened the night before and what we'd be doing the rest of that day. In the evening, we discussed any problems that occurred during the day and laid out tasks for people who were working that night. As we discussed the problems, the manager or another employee involved in that area would be there -- with the very top people at the Port Authority. If that person did a good job, everybody would stand up and cheer. That's instant feedback, and that will hold that person for a long time. He knows he's being supported. And our CEO was on site seven days a week walking around telling people he appreciated what they were doing. It drew us all closer.

In hindsight, why do you think the Port Authority has so successfully recovered from the devastation of the bombing?

We were prepared. We had plans, especially in the key areas, that guided us through the disaster. And the resourcefulness of the people working in the financial area, their dedication and their intelligence in approaching the task were just remarkable. We're very proud of everything they did. That combination, I think, really pulled us through.