Conrad and Lady Black: Dancing on the Edge. Tom Bower
pension funds. Simultaneously, Don Fullerton, the head of the Canadian Imperial Bank of Commerce, told Black, his friend and a fellow director, to repay a C$40 million loan. After selling his 41 per cent stake in Norcen for C$300 million to repay his debts, Black once again reassessed his business. Eight years after the Argus grab, everything had been sold except the collection of small newspapers. Some of Argus’s shareholders complained about the fate of the company’s assets, although Black denied any wrongdoing. Posing as the great capitalist entrepreneur, he had accomplished a vanishing trick, and everyone appeared to have lost money.
During 1985, with Radler and Boultbee’s help, Black again restructured his business. In discussions between them, Boultbee offered ‘scenarios’ to produce profits and avoid taxes. Each one was offered to lawyers and accountants with a request: ‘Will it play?’ If approved, there was a professional’s letter – a ‘good housekeeping certificate’ – giving the trio approval to proceed to the edge of legality. In the succession of complicated transactions, Black once again appeared to his critics to have legitimately profited from asset stripping and insider dealing.6 Sterling, the company controlling his newspapers in Canada, was sold to Hollinger, also owned by Black, for $37 million, which he took in Hollinger shares. Most of the cash ended up as management fees in Ravelston, his private company.
Those events had spurred the Globe and Mail to finally publish their investigation, under the headline ‘Citizen Black: Can a Right-Wing Tycoon Buy his Way into the Press?’. Black did not appreciate the criticism. He blamed the ‘Canadian spirit of envy’ for failing to glorify tycoons like himself. With delight, he announced that he would sue the Globe to ‘painfully punish’ his critics by forcing them to prove that his dealings were dishonest. That hurdle, as the newspaper’s lawyers soon discovered, would be more than difficult to surmount.
Black drew strength for his battle from the like-minded supporters of raw capitalism gathering in May 1985 for the Bilderberg Conference at Arrowhead, near New York. He regarded his fellow guests as close friends, akin to his family. Among them was Andrew Knight, the editor of the Economist. Knight was more than an intelligent, genial, successful editor. As a global networker, he was entrusted with indiscretions and secrets. ‘Let’s have another fiery Armagnac,’ Black suggested. Over several drinks after midnight, Black confided his frustration at having failed to buy a major Canadian newspaper. Naturally, he omitted mentioning the distrust of himself in his own country. ‘Canada’s a backwater,’ he complained. ‘I sometimes wish I was an American and could own the Washington Post.’ ‘If you’re looking for a big newspaper, Conrad,’ replied Knight, in what would undoubtedly be the most decisive sentence ever uttered in Black’s career, ‘the Daily Telegraph might be a possible target.’ Too much Armagnac had flowed for Knight to notice Black’s reaction.
The Telegraph was among the world’s most successful broadsheets, selling 1.2 million copies daily, 750,000 more than the London Times and 300,000 less than the New York Times. But the headline success disguised dire problems. The Telegraph’s sales were 300,000 lower than five years earlier, and the company was losing about £1 million a month. The reasons were painful. Compared to its rivals, the Telegraph’s advertising revenues had fallen steeply, and the trade unions were effectively blackmailing the company. Every year the employees hired to compose, print and distribute the newspaper were illicitly pocketing millions of pounds, either by threatening to strike just before the paper was due to be printed, or by signing on under names like ‘Mickey Mouse’ and disappearing to work in another newspaper or as taxi drivers. Within its decrepit headquarters in Fleet Street, the Telegraph’s ageing executives appeared helpless, and refused to recruit younger experts to stem the haemorrhage of money.
Isolating himself in a sanctum on the top floor of the Telegraph’s building was Lord Hartwell, formerly Michael Berry, the newspaper’s seventy-five-year-old chairman and editor-in-chief. Abstemious and shy, Hartwell cared passionately about journalism, reading every word he published. His solution to the trade unions’ theft was radical. Two modern printing plants were under construction in London’s Docklands area and in Manchester. By using computers rather than traditional printing craftsmen, he could expel his dishonest employees from the industry forever. Hartwell’s experts had estimated the modernisation would cost £130 million.
One aspect of the Telegraph’s poor management was the inaccurate accounts prepared by Coopers Lybrand, the auditors. Consistently, the company’s costs were underestimated. The Telegraph’s drift towards insolvency had remained unnoticed until, halfway into the Docklands plant’s construction, Hartwell was told that the building costs had increased by £89 million. Unperturbed, he asked his old friend Evelyn de Rothschild, the chairman of the merchant bank N.M. Rothschild, to find lenders on the market. Trusting the famous bankers to care for his interests, Hartwell approved Rothschild’s prospectus to raise the money. The result was disappointing. A group of banks agreed to lend £50 million only if Hartwell provided a further £30 million. To Hartwell’s surprise, by May 1985 he had found only £20 million. A further £10 million was needed before the loan could be secured. Sketchy rumours about Hartwell’s plight had reached Andrew Knight before he flew to America for the Bilderberg Conference. He returned to London with the news of Black’s enthusiastic interest.
Travelling on the Tube from Heathrow airport to London, Knight was surprised to read a Times report of the Telegraph’s failure to find sufficient money. He immediately telephoned Evelyn de Rothschild. ‘I think Michael Richardson must have leaked it,’ said Rothschild. Richardson was the bank’s director responsible for raising the loan. Greedy and sly, Richardson would in later years find it difficult to prove his integrity, but in 1985 he was still trusted. ‘We need another £10 million,’ continued Rothschild, ‘and can’t find anyone.’ ‘Would any money be welcome?’ asked Knight. ‘Even from a North American?’ ‘I would see no problem,’ replied Rothschild. By the next day, Knight had received the prospectus and other reports. ‘Horrendous,’ he muttered. At the outset, Richardson had failed to warn Hartwell that £130 million would be insufficient to build the new printing plants, and had subsequently refused to seek out other reputable investors.
Excited by the news, Knight telephoned Black. The time in Toronto was 8 a.m. on Monday, 20 May, and it was Victoria Day, a public holiday. Black was asleep, and to Knight’s surprise refused to take the call until lunchtime. Knight interpreted that rebuff as an amusing idiosyncrasy rather than the lazy arrogance he would later perceive. For a fleeting moment he considered telephoning Katharine Graham, the impeccable owner of the Washington Post who would make an ideal proprietor of the Telegraph. The thought soon evaporated.
Once awake, Black rapidly understood his latest chance of taking advantage of another’s distress. ‘I’ll fax you Rothschild’s papers,’ said Knight. ‘I don’t have a fax machine here,’ replied Black. Noting his casualness, Knight sped to meet Lord Hartwell. ‘Would you be prepared to accept a Canadian investor?’ asked Knight. Trusting the emissary, Hartwell agreed to meet Black in New York. Knight was doubly delighted: first by Hartwell’s eagerness, and second by Rothschild’s failure to undertake any enquiries about Conrad Black’s reputation and probity. Unbriefed, Hartwell flew by Concorde to New York on 28 May, under the mistaken assumption that the money was being offered by Conrad Ritblat, a London property developer. Behind him in the aircraft sat his directors and Michael Richardson, uncertain of his loyalties.
Conrad Black had not yet arrived when the group entered a scruffy suite in the Hilton Hotel at Kennedy airport. Twenty minutes later, he appeared. He was struck by the Dickensian eccentricity of Hartwell and his entourage, seemingly carrying the dust and smells of olde London from which they had reluctantly taken a day’s leave. Hartwell resembled the battered Ford Cortina car in which he daily drove himself to Fleet Street. The others looked like characters from The Pickwick Papers. Sitting next to Hartwell was Black’s old friend Rupert Hambro, who had been in the plane from London. Frustratingly, Hartwell had spent the entire flight scrutinising every word of that day’s Telegraph, which prevented the banker from initiating a probing conversation. His misfortune was rectified by Richardson’s opening remarks: ‘Lord Hartwell needs an investor