Читать книгу Conrad and Lady Black: Dancing on the Edge - Tom Bower - Страница 8

ON 15 JULY 1978, the day after his wedding, Conrad Black sat with David Radler and Peter White by his swimming pool to discuss the future. Becoming a billionaire was a possibility. With hard work and astute management, Argus could evolve into a global business. Serious hurdles, Black knew, needed to be overcome. After years of exploitation, Argus was short of cash and the companies had been bled dry. Transforming the lame ducks would be exhausting. Living off dividends and expenses in Bud McDougald’s fashion was no longer possible. Black was faced with a choice: either hard work and the possibility of creating enormous wealth, or limited work and a good life. Sitting in the sunshine in the midst of his seven-acre garden, Black did not welcome the prospect of devoting mind-numbing attention to the intricate details of production, finance and markets. His ambition was to become a man of influence, enjoying the luxury of a cash machine. Getting money, not least to repay his debts, was a priority. His candid confession about ‘not gambling more than my original $500 in 1966 on the Argus project’ was largely accurate.¹ Other than his inheritance, his wealth depended upon drawing cash from the companies he controlled.

Black’s entry into the huge chairman’s office at Massey-Ferguson headquarters in Toronto was a symbolic moment. Over 131 years the corporation had symbolised Canada’s virility, although the image had become flawed. With over C$1 billion of debt, the company was on the verge of self-destruction. Poor products, strikes and a recession among American farmers jeopardised its prospects. Conrad Black had placed himself in the spotlight with the aim of saving the jobs of 48,000 employees. Although Argus owned just 16 per cent of the company, Black was empowered by the shareholders to act as the sole owner.² Within hours of his welcome, delegations of bankers, politicians, trade union representatives and journalists arrived to hear about his intentions. He compared his plans with the tactics of his military heroes. Alternately he summoned the image of Napoleon transforming a rabble into a victorious army in Italy in 1795, or he cited the British tactician Captain Basil Liddell Hart, the inventor of tank warfare after 1917. The military analogies suited his temperament. Succumbing to the vision of himself as the genius executing a brilliant victory, he spoke to the media about rescuing Canada’s jewels. All his visitors departed reporting the chairman’s optimism and his pledge to rescue Massey-Ferguson from the brink of collapse, if necessary by investing his own fortune.³ They agreed that having fought hard to take over Argus, Black was accountable for saving Massey, possibly with government help.

Simultaneously, Monte Black became responsible for Dominion Stores Ltd, which employed 25,000 employees in 376 supermarkets. Dominion was a substantial business with annual sales of C$2.4 billion, but bad management had reduced its annual profits to just $24 million. Monte Black was not the natural choice to revive a decrepit supermarket chain’s fortunes. Decent and genial, he preferred not to have to rise early in order to undertake the grinding routine of visiting each shop to improve its profit margins, ensure regular supplies of fresh food and supervise its refurbishment. Rather, he enjoyed playing around in planes and big cars, and hosting uproarious parties. ‘Monte’s idea of management,’ said a fellow director, ‘was saying, “Let’s have a good lunch,” stepping into his chauffeured car and afterwards enjoying a long snort of whiskey in the Toronto Club.’ Since Conrad rarely got out of bed before noon and was congenitally unpunctual, there was little pressure on Monte to change his own habits. Within weeks he was floundering. The pressure fell on Conrad, and he spontaneously announced his discovery of a cancer in Dominion. The company, he declared, was plagued by employees who were ‘notorious crooks’, stealing about $30 million every year and thus destroying the business. But instead of quietly recruiting good staff and improving controls, Black publicly denigrated the company’s executives.⁴ He pinpointed chief executive John Toma, describing him, without supporting evidence, as the architect of ‘murky relationships’ with suppliers and accusing him of overseeing staff whom he damned as ‘trained reptiles’ whose ‘financial ethics’ were similar to ‘the profligate corruption of looters’.⁵ Few understood how humiliating the staff could save Dominion Stores, but Black regarded ‘shock’ and the consequent ‘conspiracy of embarrassed liberal silence’ as an effective management tool.

When that failed he fired Toma, who disputed the allegation, and appointed David Radler as the chief executive. Among the bewildered observers was Galen Weston, the head of a rival retail chain. Neither Weston nor others, however, noted Black’s unannounced agenda. Unnoticed, Ravelston began levying management fees on Dominion which would total $40 million over the next seven years, denuding the company of cash. Commercially, Black’s strategy was folly, but any criticism would be a misunderstanding of Black’s purpose. He was unwilling to undertake the necessary work – he wanted cash – and in his conversations with the Almighty, his Maker agreed that as the victim of ungrateful and dishonest employees, he was entitled to reward himself with substantial fees.

By January 1980 Black was also struggling to save Massey-Ferguson from bankruptcy. He resisted undertaking fact-finding tours of the company’s plants across America and Europe to discover the cure for its inability to match its competitors. Out of his depth, he remained in Toronto, dismissing the cynics and reassuring those concerned about the future of the remaining 30,000 employees, despite the growing recession. By early May, as the company’s plight deteriorated further, Black publicly insisted that he could save it if he received help from the government and his bankers. In fact, however, he was calculating the tax advantages of abandoning Massey-Ferguson.

Black’s friend Hal Jackman, the manager of a major fund and a substantial investor in Ravelston, had become alarmed. Black’s intentions and promises to invest in Massey-Ferguson were puzzling, not least because Jackman knew Black had no real money. He was a man, Jackman realised, prone to overestimating his worth. During a ‘boozy night’s drinking’, Jackman was candid. ‘Your hubris and ego,’ he said, ‘are getting in the way of running this business.’ Black nodded. ‘Conrad,’ continued Jackman, ‘there’s nothing in this for me. I want out. Buy my Ravelston shares.’ ‘Right,’ replied Black.

In September 1980 Black executed a dramatic stunt to avoid a costly disaster. After blaming the government for refusing to offer adequate help, he simply gave Argus’s shares in Massey-Ferguson to the employees’ pension companies and announced that he was walking away. Such acts would be characteristic of a career notable for dramatic entries and exits. Just before leaving the chairman’s office, Black removed from the wall a painting showing a gun carriage moving through a battle-scarred street in Arras, France, past a Massey dealer in 1918. Conrad Black appreciated trophies.

Canada was shocked by Black’s conduct. He was no longer a whizz kid but another Bay Street cowboy abandoning his responsibilities to thousands of families and the nation. In the media, Parliament and even among members of the Toronto Club, he was criticised as a profiteer without a social conscience, exploiting legal loopholes and manipulating companies’ assets for his personal profit. ‘I gave them no comfort at all,’ was all Black would say in his contradictory accounts of his negotiations with the government about the future of Massey-Ferguson.⁶ Arousing suspicions did not trouble Black, but he was intolerant of the consequences. In the Toronto Sun, Peter Worthington, the editor, accused ‘Conrad Tricky’ for incurring Massey-Ferguson’s horrendous debts. The criticism stung Black. His vilifiers deserved punishment for not recognising his glory. The Toronto Sun received a writ for defamation – the first of dozens which he would issue over the next twenty-five years – and a carefully crafted letter written in his unique style: ‘For the record (not that the Sun is a newspaper of record to anyone who does not suffer from severe lip-strain after half a minute of silent reading), the Sun’s theory that we should mortgage all the assets … to bail Massey out of a mess that none of us had any hand in creating, is too asinine to merit further reply’.

Reading his published letter in the Toronto Sun and contemplating the legal battle pleased Black. He had uttered, he imagined, the last word on the subject, and his critics were forever silenced. He could not imagine that his would-be peers – the Bronfmans, Westons and Thomsons – were embarrassed by his retreat at the expense of his employees and his refusal to rebuild the business. Observers noted that Victor Rice, Black’s successor at Massey, was fighting to save the company: he would succeed in increasing the share price from $1 in 1980 to $78 in 1999. They carefully considered Rice’s judgement of Black – ‘His perception of what he was doing and reality were two different things’ – and concluded that Black was ‘a flash-in-the-pan’.⁷ Conrad Black resented any disparagement. Others, he believed, were always to blame for his misfortunes. Spoilt as a child, he protected himself by accusing his critics of jealousy. ‘All those pent-up forces of envy and disbelief,’ he sneered, ‘finally showed their true colours.’⁸ To bolster his sense of his own infallibility and innocence he damned his critics for resenting his ‘unbroken string of successes’. Verbal flourishes, he believed, would cover his escape. ‘The only charge that anyone can level against us,’ he would say, ‘is one of insufficient generosity to ourselves.’⁹ Attracting envy to himself, he reasoned, confirmed his success.

Conrad Black was thirty-six-years old. His morality was as rigidly fixed as his ambition. He wanted wealth and influence. Preoccupied with manipulating his debts, his developing plan appeared to critics to transfer Argus’s real wealth from the public shareholders into Ravelston, the private company which he controlled. In his self-proclaimed ‘campaign of manoeuvre’ he initiated a bewildering succession of loans, dividends and special payments, shifting the ownership of companies and debts between Argus and Ravelston. In the process, Ravelston got richer while the price of Argus shares fell.¹⁰ ‘This policy,’ he would boast, ‘led over that time to what was probably the greatest compression of corporate dealing in Canadian history.’¹¹ Outsiders, confused and suspicious, sold their Argus shares. As the price of the shares fell, Black used the cash which Argus earned from selling its assets to finance his own purchase of the company’s shares, so increasing his personal stake in the company.¹² Pushing up prices and selling at the peak, the Bay Street cowboys were infamous for ‘pumping and dumping’ shares. Black did the opposite. As one of his managers quipped, ‘Conrad went to the dentist and ordered him to drill. When the dentist said that he could see no cavities, Conrad told him, “Drill anyway. I feel lucky today …”.’¹³ Peter Newman, Black’s first biographer, credited him with ‘taking rabbits out of apparently empty hats’.¹⁴ Others saw a magician waving an empty hat, treating employees as ‘toy soldiers’ and, for his own self-enrichment, ignoring the interests of minority shareholders. ‘We originally created wealth out of thin air,’ he boasted, ‘but in a way that was perfectly licit.’¹⁵ Legality had assumed special meaning for Black. The repercussions were immediate.

The public debate about his conduct fed Black’s ambition to buy more newspapers and to become a broker of influence. His targets were publications whose owners, he asserted, were alcoholics and incompetents who had either succumbed to damaging strikes or had failed to fund the necessary investment in new plants and buildings. Included in his wish-list for purchase were Toronto’s Globe and Mail, the Ottawa Journal, and the Montreal Star. Repeatedly, the vendors rejected his offers and preferred to deal with Roy Thomson.¹⁶ Frustrated and needing money, Black lurched in the opposite direction and agreed to sell Sterling Newspapers for $14 million. But after scrutinising the figures, the prospective purchaser withdrew, pronouncing his dissatisfaction with the accounts.¹⁷ Black’s consolation was a conference organised by the Economist Intelligence Unit in Toronto. ‘Massey-Ferguson’s former chairman has agreed to sponsor the conference,’ Andrew Knight, the Economist’s editor, told Peter Jay, the recently-retired British ambassador to Washington. ‘Can you arrange for Henry Kissinger to make a keynote speech?’ Jay succeeded, and was talking to Kissinger in the conference hall’s ante-room before his appearance. Black seized his chance. As Jay began to escort Kissinger onto the platform, he was powerfully pushed from behind. Reeling to the side, he noticed Conrad Black striding up to Kissinger. ‘This way,’ smiled Black, engineering his introduction to a relationship which would bless his career. Before he returned to Washington, Kissinger had been seduced by Black’s profound knowledge and charm. Making use of this new relationship depended upon Black increasing his wealth.

With the option of buying more newspapers closed to him, Black identified mining as a certain profit-maker, and resolved to expand Argus’s investments in that field. Argus owned Labrador, an iron-ore extractor. For tax reasons, Labrador could benefit by involvement in oil exploration. After careful research, Black targeted Norcen Energy Resources, an undervalued oil and gas explorer. In December 1979 he had bought 10 per cent of the company’s shares from an investment group. The following day he telephoned Ed Bovey, the company’s chairman, to discuss his investment. Black would insist that, with Bovey’s agreement, he raised his stake to 40 per cent by February 1980.¹⁸ The investment was financed by bank loans, but essentially, in a complicated, tax-efficient procedure, Black used Norcen’s own money to finance his purchase. Next, using Norcen as his vehicle, he searched for another mining company in the United States. His motives were partly financial, but they were also social. Ever since he had visited London in 1953 and Palm Beach in the 1960s, and had left Montreal in disgust with Quebec’s separatist politics, Black had been dissatisfied with Canada. The country, in his opinion, was a narrow-minded backwater, and its politics were boring. America, by contrast, was exciting. For a social adventurer, Palm Beach was a natural stage on which to launch his presence in America.

In 1980 Conrad Black took his first step towards joining America’s rich set. He bought an unimposing colonial house at 150 Canterbury Lane, on the north end of Palm Beach island. The comfortable 8,700-square-foot house did not enjoy a sea view, but it was located near the resort’s nobility. Shirley Black employed an interior designer to decorate the house in Colefax & Fowler style, and although there were grumbles among local tradesmen about Black’s ‘ungentlemanly’ quibbles over their bills – like any shrewd businessman, he carefully examined the accounts – the social rewards were gratifying. Assiduously, Black cultivated Jayne Wrightsman, a former manicurist who had married an oil billionaire. After her husband’s death Wrightsman had used her inheritance to become Palm Beach’s patrician hostess. Invited for cocktails and dinner parties, Black worked hard to establish himself as a guest guaranteed to amuse others by reciting from his encyclopaedic memory of history and politics. ‘Come for dinner in Palm Beach,’ Wrightsman said to the London merchant banker Rupert Hambro. ‘I’ve met this hugely intelligent man who is so wonderful. He’s called Conrad Black.’ Hambro knew Black from summer weekends staying at the businessman Bob Dale-Harris’s farm north-east of Toronto. Meeting him again in Florida, he noticed how Black had changed. Touched by the glamour of big money, Black was flattered that Wrightsman, a kind, generous person, was attracted to him, and that by turn he had become a subject of conversation.

The proof of Black’s social acceptance was his proposal for membership of the Everglades Club, the meeting place of Palm Beach’s elite. The obstacles were Maude McDougald and Doris Phillips, the two Argus widows. Both still resented their humiliation, and campaigned to blackball their tormentor. Their tactics were in vain. Imperceptibly, Black organised his nomination and election without any formal notification. ‘Clubs are not democratic,’ the widows were told.

Shirley Black was uninterested in the Everglades Club and her husband’s social ambitions. Politics and business provoked indifference in the modest woman who appeared to some in Palm Beach as shy and ‘childlike’, relying on her husband to book babysitters and make other domestic arrangements. While he excelled at the formal dinners, lecturing on the refinements of French furniture or the career of an obscure general, she sat awkwardly, unappreciative even of his sense of humour, which occasionally, with the help of a few glasses of wine, reduced him to tears while he hilariously mimicked characters and accents. Regardless of Shirley’s disenchantment, with Wrightsman’s patronage Black was introduced into the society he yearned to emulate.

Cultivating the right image, Black knew, was essential to acceptance. Walking into a room, he took care that his large, physical presence captured the space around himself. Gracious but also aloof, his self-assured manner left onlookers in no doubt of his attitude: ‘I’m Conrad Black, take it or leave it.’ His quiet voice and gentle movements suggested that he was neither bombastic nor nasty. With studied stateliness suggesting coiled energy, he intimidated some, but never succumbed to an intemperate outburst. Speaking quietly, his big, intelligent, slightly oriental grey eyes fixed in an immobile face, he aroused curiosity whether his fluent, verbose language was expressing anger or pleasure, never using a short word if a longer one was appropriate. His new friends were impressed by his seamless prose and his prodigious memory.

Black’s next step was to accumulate the level of wealth so abundantly evident on the island. During his first holiday in Palm Beach he attended a rousing election speech by the Republican presidential candidate Ronald Reagan, whom he supported against President Jimmy Carter, a politician he loathed. Black’s enduring memory, besides Reagan’s appearance, was of the limousines parked outside the Breakers Hotel. As far as the eye could see were the biggest Mercedes and the most expensive Rolls-Royces, some lengthened, Black noted, ‘in proof of their owners’ ingenuity at devising methods of spending an additional $100,000 on a $200,000 automobile’.¹⁹ He himself had begun indulging his appetite to join the high-spending class. As well as his small yacht he had already accumulated several cars, including a Cadillac, a Mercedes and McDougald’s Rolls-Royce in London. On some of the bonnets he mounted a gold-plated eagle killing a snake. The symbol matched his goal.

Houses reflect their owners’ characters, and Black’s plans for the demolition and reconstruction of his parents’ home in Toronto confirmed his taste for grandeur. The Bridle Path had become the city’s ‘Millionaires’ Row’. Black’s architect produced plans to match his client’s aspirations. The mansion’s new entrance hall would be two storeys high, and a distinctive, high-domed rotunda modelled on the roof of St Peter’s Cathedral in the Vatican was to be erected over a library that would house at least 20,000 books. The story was spread that Black intended to repose on an eighteenth-century cardinal’s chair while reading about Napoleon in the midst of a palace that could host Toronto’s biggest parties. Others suggested that the chair was the one Napoleon sat on when signing treaties. Black’s illustriousness was confirmed when he persuaded Archbishop Carter of Toronto and Bishop Aloysius Ambrozic, both future cardinals, to formally bless the new library. Black was not a Catholic, and since he was not noticeably religious, outsiders believed that the prelates were invited as props in his developing plan to present himself as a serious player. Those cynics did not appreciate his dependence on conversations with God to justify the realisation of his entitlement. The priests’ presence validated his relationship with his Creator.

Black’s growing self-confidence of his ranking among the elect was enhanced in 1981 when he accepted an invitation to attend the Bilderberg Conference, an annual gathering of over a hundred of the world’s rich, famous and influential personalities. Dubbed by critics as the ‘Burnt-Outs club’, the conference was created in the mid-1950s by Prince Bernhard of the Netherlands to improve relations among members of NATO. As a representative of Canada, Black flew to Holland, where he began a series of special intellectual and personal relationships. Among those with whom he eventually bonded were Gianni Agnelli of Fiat, the newly appointed US Assistant Defense Secretary Richard Perle, the conservative American columnist George Will and Andrew Knight, the British editor of the Economist. He also renewed his acquaintance with Henry Kissinger. The participants at the conference were impressed by the studiously casual Canadian businessman, sauntering into meetings to regale his audience with his remarkable memory. ‘I’m a fatalist,’ he explained in one conversation. ‘I believe that people’s destinies are always more fascinating than their day-to-day reactions.’ His heroes, he continued, were common men whose dreams of greatness materialised after they had overcome huge adversity – Napoleon, de Gaulle, Abraham Lincoln, Marshal Foch, Lyndon Johnson and Franklin Delano Roosevelt. Whatever their personal faults, they were vindicated by their success. Historic acclaim, he argued, excused treachery. Eventual vindication after widespread hatred was the qualification for his worship. He preferred to forget that the rest of mankind lived by other rules – namely contemporaneous judgement.

Mixing with multi-millionaires and power-brokers fed Black’s fantasies. Bilderberg was a magnet for romantics, social climbers and conservatives, and like his new associates Black was aghast that America had surrendered in Vietnam rather than staying on to secure total victory. Their common Saviour was Ronald Reagan, the restorer of conviction to political life. As Black spoke, endlessly reciting juicy historic details, he visualised the prospect of becoming celebrated himself, providing quotations for later generations to savour. That surely was his destiny.

The following year Black invited Kissinger to address a group of Canada’s elite in Toronto. The former US Secretary of State, attracted to expensive meal tickets, was easily flattered by Black’s material generosity and scholarly praise. That Christmas Fred Eaton would give a copy of Kissinger’s memoirs to Black, and thereafter he would often hear from his friend, ‘I’ve just had lunch/dinner with Henry, and he says …’ Having gained an entrée to both the Bilderberg cast and Palm Beach’s aristocrats, Black sensed his opportunity to join the American establishment. Stepping up would require his own fortune.

Expanding into American mining seemed the perfect way to realise his financial and social ambitions. In January 1979 he had identified Hanna Mining, the world’s second-largest iron-ore producer, based in Cleveland, Ohio, as an ideal target. After secret discussions with Fred Eaton and Edward Battle, another director of Norcen, they agreed to accumulate enough shares covertly to buy Hanna at a bargain price.

Hanna was owned and managed by the Humphreys, a long-established family which was embroiled in numerous feuds. Argus and Hanna both owned an interest in the Iron Ore Company of Canada, which was run by Hanna with a 26.5 per cent stake, compared to Argus’s 10.5 per cent. That connection provided Black with the opportunity in June 1980 to initiate a conversation with George Humphrey, Hanna’s vice president. Humphrey, Black knew, was disgruntled by the Hanna board’s refusal to appoint him as chief executive. Instead, the family had selected Bob Anderson, a professional mining expert. Humphrey’s mother, a widow, shared her son’s anger. As a master of exploiting dissatisfaction, Black called on George Humphrey, offering his condolences and help. Seducing dissatisfied shareholders, Black knew from the capture of Argus, was an ideal tactic in take-over battles. With that chore completed, Black made use of repeated opportunities to meet other vulnerable members of the Humphrey family across America – in country clubs, boardrooms, restaurants and at a society ball. In August 1981, believing that his credentials were established, he sought the family’s approval to buy shares in Hanna. He would claim that both George Humphrey and Bob Anderson had offered no objections to his purchase of ‘some shares’,²⁰ but the family and the company’s directors would insist that his proposal was firmly rejected.²¹ Events would bear out the family’s version.

During August 1981 Black’s company Norcen secretly bought 4.9 per cent of Hanna’s shares. The purchase was entirely financed by a C$20 million loan from CIBC. In securing that loan, Black, a director of the bank, demanded special treatment, stipulating that ‘secrecy was paramount’. No statements regarding the loan and the purchase were to be delivered by the bank to Norcen’s office; and Hanna’s shares were to be bought by the bank, using an undisclosed numbered account. On 9 September, after the shares had been bought, Black summoned a board meeting of Norcen directors in Toronto. Fred Eaton, Edward Battle and others were in no doubt about his intention. ‘We want a friendly take-over,’ Black agreed with his directors. Bill Kilbourne, the company’s secretary, accurately recorded in the minutes of the meeting that the purchase of shares in ‘the target company’ was completed, ‘with the ultimate purpose of acquiring a 51 per cent interest at a later date’.²² Black signed those minutes.

Having secretly agreed his company’s objective, Black took a decision which could have increased his personal wealth. If the take-over of Hanna was successful, the value of Norcen’s shares would rise. To benefit personally from that increase, Black offered to buy back Norcen shares from his own shareholders. By law, he and his directors were required to tell their shareholders the full truth about their intentions regarding Hanna. Yet their letter, sent on 16 October 1981, did not reveal their secret purchase of Hanna’s shares or their resolution on 9 September to mount a take-over bid.

During October, again in secrecy, Black increased his stake in Hanna to 8.8 per cent. As soon as the second purchase was detected, Bob Anderson telephoned Black and accused him of breaking the rules. Black was prepared for the onslaught. Conjuring a performance as a helpful, innocent and sincere intellectual, he sought to smooth-talk the American into believing that his intention was simply cooperation. Only Black could have feigned surprise that Anderson’s response was, in Black’s own description, ‘an antagonistic, hostile and even frenetic reaction’.²³ A meeting was summoned in Cleveland. Black flew south, to be told by Anderson to retreat and to sell off his shares. He ignored the warning. To enhance the impression of his virtue, he expressed his ‘hurt’ and ‘outrage’ that Anderson, a ‘rather underwhelming’ person, treated him with disdain and condescension.²⁴ Undeterred and eager to raise his interest to 20 per cent, Black approached other Hanna shareholders, including old female members of the Humphrey family. He offered them all ‘an alliance’ against Hanna’s directors. War had been declared.

In Black’s opinion, his secrecy was consistent with normal trading in Toronto. Bud McDougald and the other Bay Street players had never considered behaving in any other fashion. In the heat of battle, he said, companies often misrepresented their intentions. Such tactics were aided by Canada’s weak regulators. Toronto’s stock market was supervised by the Ontario Securities Commission (OSC), which had never, in Black’s experience, so much as slapped a reprobate’s wrist in punishment for a crime. Reared in that wild-west monoculture, the aspiring tycoon did not understand that the stakes and rules for playing in the United States were different from those in his own crude backwater.

The investment by Norcen required Black to disclose his intentions to America’s all-powerful Securities and Exchange Commission, the SEC. In his submission, he described the purchase of nearly 13 per cent of Hanna’s shares as ‘an investment position’, concealing his intention to mount a take-over bid. Convinced that his cultivated performance, combining his eloquent vocabulary, benign demeanour and forceful personality, would steamroll the opposition, he flew on 2 April 1982 to Palm Beach with Rupert Hambro on Black’s Challenger, the private plane he had inherited after the Argus coup. At the same time, Monte Black was dispatched to Cleveland to deliver a threat. Unless, said Monte, Bob Anderson and the Humphreys agreed to Norcen owning 30 per cent of the company and acquiring an influential position on the board of directors, Norcen intended to launch a take-over bid for 51 per cent of Hanna on 5 April. This was the Blacks playing hardball. Anderson’s response to the ultimatum was emphatic. Amid raised voices and papers flung on the table, Monte’s offer was rejected. Twisting the screw, Anderson applied to the Cleveland court for an order preventing the bid. Black was so exposed, Anderson reasoned, that any shot was guaranteed a hit. In his claim, Black was accused of ‘fraud and racketeering’ because he and Norcen had submitted false information to the SEC.

The counterattack surprised Black. Lawyers representing Hanna unexpectedly invaded Norcen’s headquarters. Their trawl of documents produced the board minutes of 9 September 1981, describing Black’s ‘ultimate purpose’ to take over Hanna. Anderson’s lawyers were thrilled. It was ‘like a grenade with the pin pulled’, admitted Black.²⁵ Black’s deception broke the US Securities Act and exposed him to prosecution. Hanna’s share price plummeted from $74 to $26.

Black’s cabal had been caught red-handed. ‘Bill, you dumb idiot,’ Black screamed at Kilbourne, Norcen’s company secretary, at an emergency meeting of his fellow directors. ‘Why did you put that in the minutes?’ ‘Horseshit,’ replied Kilbourne. ‘That’s what you said at the meeting. You signed it. You should have read it.’ Black calmed down. The thrill for his partners was watching ‘such a bright guy at work’. After some thought, Black fashioned his response: ‘I’ll say, “I’m innocent. This is ridiculous. This is a misunderstanding, a technicality.”’ His audience were impressed by his apparent calm under fire. Black the performer always conjured up a mask of sublime assurance of success.

The threat from America coincided with mixed fortunes in Canada. The shuffling of assets at Argus had not ceased. To avoid tax and to marginalise the minority shareholders, Black was constantly reorganising his companies. The complexity of the changes provoked fears among shareholders that Argus’s money was disappearing into other companies in which the group had an interest, including Hollinger, a mining company, or that Argus was heading for bankruptcy.²⁶ Those fears were compounded by Black’s self-aggrandisement. In 1982 Argus earned profits of C$7.6 million, but nearly C$2 million was spent on the directors and their expenses. The generosity to himself and his associates was part of Black’s calculated plan to ensure that everyone would ‘remain friends’.²⁷ Protestors found their voices drowned out. The company’s annual general meeting on 26 May 1982 lasted fourteen minutes – one minute longer, Black was disappointed to note, than Bud McDougald’s record.

Inspired by Napoleon, Black’s doctrine – kill or be killed – was deployed in self-justification and self-defence. Contemptuous of his critics, he had been flattered by featuring in a television series as a member of the Canadian establishment; and by Andy Warhol’s visit to Toronto, where Black had commissioned him to paint his portrait. The decisive accolade was his coronation as Canada’s ‘Establishment Man’ by Peter Newman, the editor of the weekly Maclean’s magazine, who promoted ‘Canada’s leading capitalist’ as the personification of the Conservatives’ rebirth, with brains. Others reflected that Newman could more accurately have pronounced Black as the anti-establishment man.

Emboldened by his glorification in Toronto, Black repelled the questions hurled by American lawyers and SEC officials with stubborn denials of any blame. ‘I relied,’ he told his questioners, ‘on Norcen’s overworked company secretary to record accurate minutes of the board meeting, and he made a complete mistake because he had wrongly surmised that a take-over was intended.’ The directors’ discussion, he continued, was ‘hypothetical’. Challenged that he signed the board minutes as accurate, Black replied, ‘I signed the minutes without reading that part of it.’²⁸ To outwit his accusers he relied on his confident mastery of English, a parade of the power of his memory and a loquacious reinterpretation of the facts. To friends, however, he expressed terror. ‘They’re out to get me,’ he railed to Peter White. Black was humiliated by what he conceded was ‘a mess’.²⁹ To his good fortune, the Americans did not interview Fred Eaton. ‘I was at the meeting,’ he told Black, ‘and the minutes were accurate.’ ‘Well,’ replied Black, ‘we’d better watch ourselves in the future.’

In the weeks before the trial was due to begin in Cleveland, Bob Anderson’s lawyers were publicly vilifying Black, with wild allegations – which he robustly denied – that he was a criminal, a racketeer and more besides. Over four days of cross-examination in a packed court in early May 1982, he defiantly denied his accusers’ explanation of all the events. At the end of his testimony he returned to Toronto convinced that Judge John Manos would accept his interpretation. Denying the truth and rewriting history had been a tool of the world’s greatest leaders – dictators and democrats alike. To survive and succeed, Black adopted their doctrine.

On 13 May Black was entertaining Toronto’s establishment at Hollinger’s annual dinner. Judge Manos’s judgement was still awaited. In the middle of the evening a messenger whispered to Black that Canadian police had started a criminal investigation of himself and his lawyers for conspiring to defraud Argus’s shareholders. Black knew precisely what had aroused police suspicion: Norcen’s inaccurate offer on 16 October 1980 to buy back its own shares. The circular to shareholders, signed by Black, stated that he could not envisage any new circumstances which could influence the share price. At that precise moment, he had been planning his bid for Hanna. Issuing misinformation could be a criminal offence. By the end of the dinner Black had formulated his defence. He had become, he would claim, the target of a conspiracy between his rivals, Canadian politicians and the police. He would denigrate the investigation as an ‘Orwellian drama’ and ‘a charade’, because the legal case was ‘too fatuous and preposterous’ to merit any discussion.³⁰ Finally, he would castigate the familiar motives of his critics: the police investigation, he would say, reflected ‘the destructive complex of envy at its most ignorant and visceral’; his enemies were ‘manipulating’ the system by ‘a smear job’. Creating an aura of aloofness, he walked from the dinner telling those enquiring about his fate, ‘There is no evidence. There is absolutely nothing.’ His forceful indignation was intended to suffocate doubters and to confirm his admirers in their belief of his innocence. His last word, he persuaded himself, had silenced his questioners.

Unlike in America, Black personally knew those involved in the investigations in Toronto, and understood the regulators’ frailties. ‘I’ll talk to the Attorney General,’ he announced. Just hours after the dinner he was sitting in the office of Roy McMurtry, Ontario’s Attorney General. The politician met Black without any officials, even those directing the investigation. In his quiet, mellifluous manner, Black cast blame on a range of people, including even the future Prime Minister Brian Mulroney, at that time a rising politician in Ottawa and a director of Hanna. ‘The powder trail from this trumped-up charade of an investigation leads straight to Brian’s door,’ Black told the Attorney General.³¹ ‘He was far enough along in the chain that generated the Norcen investigation that his fingerprints wouldn’t be on the knife.’³² In his quiet tirade, Black made a series of allegations against politicians, law officers and the police – which they in turn would describe as figments of his fertile imagination. Over the next days, McMurtry and the police resisted Black’s pressure to stop the investigation.

The reality check was Judge Manos’s decision. On 11 June 1982 he found against Black, declaring that Norcen had committed ‘manipulative violations’. ‘[Black’s] construction of the record,’ declared the judge, ‘is strained and unpersuasive.’ The evidence, he continued, ‘established conclusively’ that the take-over had been contemplated at the board meeting on 9 September 1981, ‘if not earlier’. Black was tarred as unreliable. Inevitably, he was terrified. There could be severe repercussions in Canada, including a photograph of him being arrested in handcuffs. He regularly called his lawyer Peter Atkinson to ask for reassurance. Hal Jackman had no doubt that Black was the architect of his own misfortune. ‘Conrad’s a poseur,’ he sighed. ‘He’s always pushing the envelope to get away with it. Pushing beyond reasonable bounds.’³³ Black’s terror was concealed from public view. To journalists he coolly returned Jackman’s criticism, characteristically describing him as drunkenly playing war games in his library. ‘Not an easy partner,’ said Black, with the air of reluctant wisdom. While Jackman posed as a great businessman, continued Black, he had sold his Ravelston shares ‘risibly cheap’.³⁴

The civil judgement in Cleveland threatened to spiral into a criminal prosecution. The SEC charged Black with having ‘made untrue statements of material facts’ to both Hanna and the SEC, and to having ‘engaged in fraudulent, deceptive and manipulative acts and practices’. Black was on the edge. To prevent a prosecution he agreed with the SEC to formally sign a ‘consent decree’, promising to abide by American laws in the future. The process required no admission of wrongdoing by Black, but there was a sting: if he broke American laws again, the SEC could reactivate the criminal prosecution.³⁵

Once it was agreed and signed, Black had no intention of allowing the verdict to remain unchallenged. Those who asked Black about the saga were regaled by tales of his victory as a witness against Anderson’s lawyers. Later, going further into fantasy, he described in his autobiography how, at the end of his testimony, Judge Manos had invited him into his chambers and gushed, ‘In twenty years as a judge, you are the finest witness I’ve ever had in my court. Whatever my verdict, from what I’ve seen this week, it won’t reflect unfavourably on you as a witness.’³⁶ Not surprisingly, Manos had no recollection of such a bizarre encounter, but seeing the story in print convinced Black that his critics had been silenced.

The settlement in America was a relief. In Canada, however, the process continued. The investigators, Black knew, were considering charges, and were determined to send him to prison.³⁷ Assiduously, he began working among Toronto’s establishment to terminate the embarrassment. He prided himself on smooth-talking the regulators into accepting that he was blameless, and shoving newspaper critics aside with the brash, self-confident quip: ‘These people are demagogues of the marketplace without a stake in anything.’³⁸ But his oratory was unexpectedly ineffective.

Black had become a target of hate among a section of Toronto society. The ‘Black Factor’ mentioned by a critical analyst was cited as evidence that Black was merely a manipulator of shares, rather than a master of management.³⁹ Bankers distrusted his restructuring of the share ownership of his companies, which gave him control without a majority of shares; some institutions questioned whether he had any motives other than self-enrichment, which he barely denied; antagonistic politicians were suspicious of his assumption of special influence among power-brokers; some journalists suspected his assertion of his own special position; others criticised his complete lack of managerial experience, including at the Sherbrooke Record, which was actually run by Radler; and journalists repeated the government’s announcement that the police investigation was ‘ongoing’. In reply, Black categorised some of his critics as the hard, political left, and others as the ‘grumbling detritus of the Establishment Old Guard in the billiard room of the Toronto Club’, due for an early appointment with the undertaker.

Fighting for his reputation, he hired Eddie Greenspan, a criminal lawyer, and accused his critics of waging a vendetta against him. He conjured up conspiracies between the American regulators, the prosecutors, the police and all his critics. Convinced that his telephones were being illegally bugged, he approached Paul Godfrey, a senior member of Toronto’s Police Commission, and demanded that the investigators should be investigated, rather than himself. No bugs were discovered. He then told Roy McMurtry, the Attorney General, to stop the feud against him, but to his surprise he was ignored.

The investigation, Black decided, could only be defeated by using the media. Summoning journalists, he explained that he was fighting not for himself but for the poor underdogs who lacked the money to defend themselves against similar ‘injustice’. His refusal to cower and hide, he repeated, was provoking the investigators’ conviction of his guilt. ‘It’s the fascistic mentality of an element of the police,’ he opined. The police, he continued, were behaving like ‘Kafkaesque, Orwellian, Koestlerian thugs’.⁴⁰ The imagery of ‘Conrad Black – The People’s Champion’ attracted some publicity: and then came the stunt.

In the midst of the investigation Black invited John Fraser, his old school friend, for lunch at Winston’s, Toronto’s best restaurant. As the two men entered, Black saw a slew of the city’s power-brokers – politicians, newspaper publishers and bankers – scattered across the room. ‘Half this restaurant already imagines me wearing a prison suit,’ he growled to Fraser. Sitting with his back to the crowd, he spotted a cockroach above Fraser’s head. ‘Ariana!’ he bellowed, calling the manager. ‘Look at that cockroach! I told you that if you let McMurtry in here I wouldn’t give you my business.’ The whole restaurant burst out laughing.⁴¹ Black was a master of theatrics. As the laughter died away, he quietly confessed to Fraser, ‘The whole trauma sometimes stops me getting out of bed.’

The police were unimpressed. Nine criminal charges were drawn up against Black, endorsed by the Attorney General. Until the last moment it seemed that Black would be indicted and tried. He was perilously balanced on the brink. But, literally at the last minute, during a midnight meeting on 9 July 1982, the charges were dropped. The reasons were never explained. Black was ecstatic. ‘I have been absolutely exonerated,’ he exclaimed the following morning, adding, ‘There’s not one shred of evidence of any kind.’ Overnight, he resumed his stance as the master of cool. ‘The jackals and piranhas smelled blood,’ he quipped. ‘They thought they had me, that I was about to go up the chimney in a puff of smoke. [But] I never had any fears how it was going to end up. It’s all atmospherics in the United States. They never believed a goddamn word of all that bunk about racketeering.’⁴² Behind the reasonableness was real anger towards those who refused to accept his distortions. In particular, he accused Roy McMurtry of being ‘malicious as well as pusillanimous and incompetent’,⁴³ and he damned Linda McQuaig, a Canadian journalist who had revealed details of the police investigation. ‘I thought McQuaig should have been horsewhipped,’ he commented, ‘but I don’t do those things myself and the statutes don’t provide for it.’⁴⁴ Losing the battle in Cleveland had furnished him with a lesson. ‘For years,’ he later told a Canadian, ‘I wondered what the difference between Canada and the United States really was – apart from the French Canadians and the monarchy. Now I know. This is a gentle place, and that’s a real hardball league down there.’⁴⁵ As the heat diminished, his self-confidence returned. ‘Tittle tattle,’ he told questioners dismissively. ‘It’s all unimportant.’

Black’s poise was vindicated by Bob Anderson’s agreement in late July 1982 to a settlement. Wiping away the blood, Black thought that he emerged the victor. He paid a further $90 million to become Hanna’s dominant shareholder, bringing the total price to $130 million.^* Anderson became a director of Norcen and Black became a director of Hanna. Pertinently, the investment would prove to be disastrous. Hanna did not fulfil Black’s expectations, and the company’s share price tumbled. The Humphreys had the last laugh. By then, Black’s bandwagon had moved on.

Conrad Black emerged having perfected an infallible method for removing the stains on his reputation. As a prolific student of biography, he knew that general impressions were more important than unfavourable details. The trick was to offer reasonable explanations, persuasively interpreting the worst in a more positive light. Over dinner with old friends, he spoke of rewriting his father’s failings, boasted about his theft of the school exam papers as ‘my first true act of capitalism, but no big deal’, and praised Radler’s ruthlessness in sacking newspaper employees. ‘The lobsters don’t get up and walk out of the tank,’ he laughed, enjoying a quip he would use many times thereafter. To propel his self-promotion he had given regular access over the previous years to Peter Newman, the editor of Maclean’s. Every Dr Johnson, thought Black, requires a Boswell. Newman, he recognised, was intelligent but awestruck. The resulting biography, called The Establishment Man, published in October 1982, suited Black’s purpose, not least because it was well written and favourably reviewed. ‘The biggest blow job in Canadian history,’ commented Larry Zolf, a television presenter.

Newman had been encouraged to cast his subject as an intellectual and a philosopher. ‘Every act must have its consequences,’ Black told Newman, posing as the profound historian who did not believe in redemption or atonement.⁴⁶ ‘Hal Jackman and I agree,’ he continued, ‘that we’re basically more Nietzschean than Hegelian.’ Black ‘revealed’ his sympathy with the ‘exquisitely sad comment by the seventeenth-century French satiric moralist Jean de la Bruyère that “Life is a tragedy for those who feel, and a comedy for those who think.”’⁴⁷ Newman was encouraged to conclude, ‘He has trouble working out any form of understandable motivation for himself.’ Blessed with that smokescreen, Black’s disarming confession, ‘I may make mistakes, but at the moment I can’t think of any,’ was recorded without comment.⁴⁸ Despite Newman’s talent, several of Black’s fundamental flaws remained concealed. The cosmetics were impenetrable.

Initially, Black was delighted by the book. Reading his own interpretation of himself fed the conviction that journalists were easily beguiled. Self-interest, however, dictated that he maintain a chasm between himself and potential critics. The publication in Newman’s own Maclean’s of articles describing his Norcen troubles justified that caution. In 1983, fearing further allegations of dishonesty, he issued a writ for defamation against Newman and the magazine. His prosperity depended upon suppressing any objective examination of his fortune-hunting and perpetuating the myth of his being self-made, unblessed by any inheritance: ‘I’m rich and I’m not ashamed of being wealthy. Why should I be? I made all my money fairly.’⁴⁹

In 1983 Black was, by the scale of his own ambitions, neither rich nor powerful. His gross wealth was about C$200 million, but most of that was used as collateral against loans. His debt was increasing, and he decided that he would sell Argcen’s (Argus’s successor) stake in Standard Broadcasting and Dominion Stores Ltd. Just as he had failed in mining and oil, so he had proved ineffectual at Standard Broadcasting, the owner of several radio stations, and Radler’s attempts to save Dominion had proved dismal. Newspapers, he agreed with Radler, were their best option. By slashing costs they could make profits, and newspaper ownership would satisfy his craving for political influence. His passion was to own the Washington Post, but more realistically he wanted Southam, Canada’s biggest newspaper chain. The owners, Radler spotted, had borrowed large sums to modernise and expand, but the business was deemed to be unprofitable. Only by making massive cuts would the group earn satisfactory profits. Black and Radler bought a small stake in the company, and made an offer wrapped around an uncongenial pronouncement. Southam, Black sneered outrageously, was run by long-haired, dope-smoking freaks left over from the 1970s. His offer to buy the company was rejected. Black was stuck. Frustrated by Canada’s politics and concerned about his image, he was aware of his shortcomings. ‘I’m a great believer,’ he had told Peter Newman, ‘in not becoming hypnotised by the rhythm of one’s own advancement. I have always felt it was the compulsive element in Napoleon that drew him into greater and greater undertakings, until he was bound to fail.’⁵⁰

The ‘compulsive element’ was a characteristic Conrad Black shared with Barbara Amiel. Another common quality was living behind a mask. A third similarity was incompatibility with their spouses. After seven years of marriage the Blacks were irreconcilable, but were in mutual denial about their inevitable fate. Similarly, on 26 January 1985, Barbara Amiel also denied the obvious. Like Conrad Black, she had hoped that happiness would follow her marriage vows to the multi-millionaire David Graham. The expensive wedding party on the thirty-third floor of the Sutton Place Hotel, with a spectacular panoramic view of Toronto, was intended to seal her bliss. Instead, her itinerant search for permanence was doomed. Fate determined that Conrad Black should witness the beginning of her predicted disappointment.

* In an agreed swap of shares, Norcen bought 20 per cent of Hanna shares while Hanna sold its shares in Labrador.