Conrad and Lady Black: Dancing on the Edge. Tom Bower
Black suggested that he drew pertinent lessons from the criticism he had received then for the remainder of his career. ‘The lesson of June is to be wary of setting out in the most cynical way to use people you have underestimated. The pickpocket whose pocket is picked receives, and deserves, little sympathy … In finance, only proprietors can consistently act like proprietors.’49 That statement exposed a confusion in Black’s attitude towards business. He was suggesting that only a ‘proprietor’ – someone who owned 100 per cent of a company – could behave selfishly, regardless of others. ‘My natural sympathies are with the proprietors whose own money is at stake,’ he said, admiring the personal control of companies enjoyed by Galen Weston, Fred Eaton, Ken Thomson, Hal Jackman and the American moguls. With their substantial control of their businesses, they shone in Black’s eyes compared to mere professional managers. Black’s misfortune was that he was not a proprietor. He lacked the money to buy out Argus’s other shareholders. Yet, as a raw capitalist, he was emphatic that proprietors and investors were bound to live by the laws of the jungle. ‘There is not,’ he emphasised at this critical moment in his career, ‘and should not be, any safety net for the rich.’
Amid the excitement, on 14 July 1978 Conrad Black married Shirley Walters. Considering his aspirations, Black did not arrange the society wedding some had expected. His old friends understood the socially insecure groom’s desire to be certain of a loyal, unstrident wife who would provide him with a domestic refuge. After the small ceremony, witnessed by a handful of friends, twenty people gathered at Black’s house for dinner. At 10 p.m., exhausted by the takeover battle, he left his guests and bride and went to bed. On the wedding certificate he listed his profession as ‘historian’. That was a critical claim for what would follow.50
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.’