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.
