Conrad and Lady Black: Dancing on the Edge. Tom Bower
His cultivated performance, concealing a burning ambition to become a media tycoon, suggested a gentle knight coming to the rescue. ‘All I have to worry about is which pocket the money’s coming from,’ he told Hartwell as he described his achievements and his limitless cash flow.7 There was no hint that his bankers in Toronto were demanding the repayment of loans, or that he was being publicly described in some quarters as dishonest. Nor did he reveal that he would need to borrow the £10 million he was offering Hartwell. Before committing himself, however, he wanted to tilt the odds in his favour. He and Hambro excused themselves and went for a walk, despite the heat and humidity, in the hotel garden. Hartwell, they agreed, was clearly on his last legs. The question was how to use the loan to capture ownership of the Telegraph. Knight had suggested that Black should only agree to invest £10 million in exchange for one strict condition: if Hartwell needed more money, he would be contractually bound to first ask Black, who would then become the Telegraph’s majority shareholder. ‘It could take five years before he needs the money and you get the newspaper,’ Hambro cautioned. There was, he explained, uncertainty about Britain’s newspaper industry. Eddie Shah, a printer, had provoked a bitter battle outside his premises at Warrington in Lancashire by using non-union labour. If Shah won, the trade unions’ grip over the Telegraph might be weakened, but nothing more. Neither Hambro nor Black knew that Rupert Murdoch, owner of The Times and the Sun, was building a new printing plant in Wapping, near Tower Bridge, and was secretly planning to destroy the print unions by printing all his newspapers with non-union labour. Better-informed than Hambro, Knight had estimated Hartwell’s eventual downfall within two years. Either way, the two men agreed as they returned to the suite, the opportunity was astonishing. ‘It’s a wonderful entrée,’ concluded Hambro. Black nodded. He scented blood.
Hiding his excitement in a performance that would have been worthy of an Oscar, Black formally made his offer of £10 million for 14 per cent of the Telegraph’s shares, on condition that if Hartwell needed to raise more money, Black should have the right of first refusal, and that any investment would give Black a majority shareholding in the company. At that moment Michael Richardson ought to have intervened to warn his client about the possible consequences. Instead, he remained silent. Hartwell, he had decided, was beyond saving. ‘My role,’ he would later say, ‘was to ensure the successful placement of the loan, not to care for the Berry family’s interests.’ Unprotected by Rothschild’s, Hartwell replied without fully understanding the implications of Black’s condition, ‘I don’t think, Mr Black, we can resist that.’ Convinced that he would not need more money, Hartwell agreed to gamble his empire for just £10 million.
As Black watched Concorde take off for London carrying Hartwell and his entourage, he understood the astonishing opportunity organised by Andrew Knight. He had cast the bait, the reel was running, and once the pressure slackened he would jerk the rod and wind in the line. There was a risk, but it was limited. As he returned to his plane he could reflect that only six years after the turmoil and aggression following Bud McDougald’s death, he might be about to become a legitimate media tycoon in London. The outstanding hurdle was whether Hartwell would honour his verbal agreement within a formal contract. Black entrusted the final negotiations and drafting to Dan Colson, a friend from McGill University who was now working as a lawyer in London. Colson was to ensure that the pre-emption clauses giving Black an irrefutable right to the company were watertight.
If anyone in the City or the British establishment had wanted to protect the Telegraph from a foreign predator, there was still time to do so. Black was not entirely unknown in London. In the early 1980s he had appeared at a dinner held by Charles Price III, the American ambassador, and was introduced to Tim Bell, the famous publicist who had been at the heart of organising Margaret Thatcher’s first election victory. Bell, well connected and liked, was among those needed by Black if he was to persuade the establishment in London of his wealth and honesty. Gratifyingly for Black, that was unnecessary in 1985. Although Knight was aware of Black’s reputation, he remained silent, while others did not bother to attempt to discover the truth from contacts in Canada. Unlike the protests that had greeted Rupert Murdoch’s purchase of The Times in 1981, no one in London understood or even cared about Hartwell’s fate, least of all his financial advisers. ‘Rothschild’s,’ the banker David Montagu would say, ‘handed the Berry family’s balls to Black on a silver platter.’
Hartwell’s fate was inescapably sealed on 13 June 1985. After the agreement was signed, Black’s behaviour was orchestrated by Knight. ‘Don’t say a word when the announcement is made,’ he ordered, ‘and stay in Toronto, out of sight.’ Without protest, Black obeyed. If his reputation was discussed in London, he knew, there could still be problems once Hartwell’s plight became terminal.
In anticipation of the crisis, Andrew Knight organised a group of advisers to represent Black on the Telegraph’s board. Besides Rupert Hambro and David Montagu, employed by Jacob Rothschild’s small merchant bank after his family bank had been sold to Merrill Lynch, Knight selected Frank Rogers, an experienced newspaper executive, and Lord Rawlinson, a former Conservative MP and law officer. If anyone in London could have understood Black’s pedigree it was Jacob Rothschild. Renowned for combining his serious patronage of the arts with partnerships alongside buccaneers like James Goldsmith and Lord Hanson, Rothschild had in 1969 advised Saul Steinberg, a rising New York tycoon, during the takeover of the Labour MP Robert Maxwell’s publishing business. In the course of the negotiations Rothschild had publicly exposed Maxwell as a crook, causing his downfall and disgrace. Yet in 1985 neither Rothschild nor David Montagu appears to have considered asking about Black’s reputation in Canada, or to have looked at old newspaper cuttings. Even among the City’s most honest scions there was a laissez-faire response to the foreign incomers passing through the capital, even to someone who had landed a remarkable deal at the Telegraph.
At Knight’s suggestion, David Montagu was appointed chairman of the Telegraph’s audit committee. Within weeks he unearthed Coopers Lybrand’s negligence. The prospectus issued by Evelyn de Rothschild’s bank to raise the original £80 million had stated that during the following six months the Telegraph would earn £5.5 million. Instead, it had lost £14.4 million. ‘An unutterable shambles,’ Montagu told Black, confirming that the Telegraph’s financial problems were worse than anyone imagined.
Black arrived quietly in London in early September 1985. Over the following days, with Knight as his guide, he was introduced to his new team. In an interlude, he telephoned the Telegraph’s classified sales department from his hotel room. ‘I want to place an advertisement,’ he told the saleswoman. Her reply was staggering. The newspaper, she announced, was full for several weeks. She advised him to try the Guardian or The Times. This was better than Black had imagined. On 24 September Black set out for dinner at Lord Hartwell’s house in Westminster, where at Richardson’s suggestion Hartwell was hosting a celebration to mark the completion of the financing arrangements. ‘There’s a need to tiptoe,’ Knight warned Black, ‘so the deal doesn’t get busted.’ Black was seated next to Nicholas Berry, Hartwell’s forty-three-year-old younger son. He intended to present himself as a family man offering help to another family in unfortunate distress.
The dinner was Nicholas Berry’s introduction to the fate of his inheritance. Until then, Lord Hartwell had excluded his two sons from the family business. During his conversation with Black, Berry concluded that the Canadian had ‘taken advantage of an old man’, and was untrustworthy. Looking across the table at Richardson, he was equally shocked. Not only had Rothschild’s issued a misleading prospectus and failed to protect his father in New York, but Richardson appeared to be courting Black as a potential new client. ‘Anyone but Black,’ he told his father. ‘We’ve got to find an alternative source of money.’ Reports of Berry’s renewed hunt for money soon reached Black. Lord Hanson, the Australian tycoon Robert Holmes à Court and representatives of the Australian Fairfax group were regaled with disparaging comments about Black, and all announced their interest in financing the Telegraph. To their dismay, they all discovered that the contract was watertight. Berry was powerless, but was also angry about N.M. Rothschild’s original failure to introduce these more suitable investors. ‘Sour grapes,’ said Richardson