LORD BLACK OF CROSSHARBOUR
Greed is a motive that has not failed to move me.
Conrad Black, quoted in The National Post (Toronto), Wednesday, September 1, 2004, p. 1
A few hundred corporations, most of them global transnationals, sit uneasily atop a large percentage of the world's commerce, struggling for control.
Prominent among these is the largest media conglomerate, News Corporation. It is the worldwide media holding controlled by Australian-born American citizen Rupert Murdoch, who lives in London and is worth 20 billion dollars.
In a prominent tier -- but well below Murdoch's -- sits Canadian-born Conrad Moffat Black (b. 1944), an international newspaper presslord. In 1989 Black moved to London. He is worth, I estimate, much less than one billion dollars. (Black, unlike Murdoch, has few television and no film interests. His largest television interests, if any, probably come from his remaining shares in I.H. Asper's CanWest Global Corporation, which owns TV networks and stations in Canada and Australia.)
Black owns a "double-fronted 11-bedroom mansion in Cottesmore Gardens in Kensington," 1 west London, worth about $26 million. He also owns a 17,000-square-foot $36 million estate in Palm Beach, Florida, and a $4 million house in Toronto. He also owns a condo on Park Avenue in New York worth at least $5 million. (All sums are in American dollars.)
Until recently, with his older brother and sometime business partner Montegu (who died of cancer in January 2002), Conrad Black was a prominent centrepiece of the Canadian Establishment.
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Black was born at the top of Ontario, Canada's, upper class. His father George Montegu Black, Jr., was the president of Canadian Breweries; this was the world's largest international brewing conglomerate in the 1950s, and a centre of Canadian industrialist Edward Plunkett Taylor's vast and sprawling enterprises.
Conrad showed a surly, rebellious and unruly nature as a boy. Bright and mature beyond his years, he was bored beyond endurance.
His father George, as president of Canadian Breweries from 1951 to 1958, encountered numerous problems. There were strikes to deal with, a radical decentralization which he instituted, and enormous foreign expansions. He also had trouble with his board, especially E.P. Taylor, who was against the decentralization and eventually fired George Black. Conrad listened sympathetically to his father's problems. He decided at seven years of age he wanted someday to control huge Argus Corporation, by a great deal Canada's largest holding company. Argus embraced 17 of Canada's most important corporations. It was at that time controlled by four of Canada's most brilliant businessmen: Taylor, Colonel Eric Phillips, M. Wallace McCutcheon (later a Canadian senator) and . Conrad's father George was, as he himself called it, Argus's "fifth wheel." George owned hundreds of thousands of shares in Argus.
To pass his boyhood, however, Conrad became a student at Upper Canada College, the prestigious private secondary school of the Ontario Anglo-Canadian elite. Conrad detested UCC. He found it an uncomfortable hidebound home of jocks and privileged, cosseted conformists.
At Upper Canada College Conrad demonstrated both an unexpected entrepreneurial ability and immense contempt for UCC. He broke into its office to preview an upcoming examination, and, supposedly at the urging of his dimmer classmates, sold it to them. Conrad and his associates cleared $1500. However, one of the students was caught with answers in hand. Conrad's plan was exposed. He was expelled in 1959.
Conrad then attended a similar elite institution, Trinity College School in Port Hope, Ontario. There, too, he did not fit. He was quietly invited to leave.
From a third exclusive private secondary school, Thornton Hall in Toronto, designed to nurture and correct difficult but brilliant wealthy students, Conrad managed to graduate with apparently mediocre grades in 1962.
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Conrad enrolled as an undergraduate at Carleton University in Ottawa, one of the few colleges that would have him. He studied history and political science, but did poorly until taken in hand by a senior professor. He graduated in 1965, I assume with only a three-year degree. He had shaky grades. 2
Proceeding to Osgoode Hall law school in downtown Toronto, Conrad did poorly. At the end of one year he fled to Quebec. Between 1966 and 1974 he passed a quasi-bohemian period there.
In Quebec Conrad became bilingual, for, feeling suspicious that North American culture was insecurely founded, he decided to study French culture. He enrolled to study Quebec's civil law at Laval University, the traditional collège classique alma mater of Quebec's ruling Catholic elite. (This was an astounding move for a member of the Anglo-Canadian elite.) He graduated with honours. Then, as a graduate student at McGill University in Montreal, Black was unable to get along with his supervising professor, a distinguished Canadian historian. As his thesis Black wrote a heavy tome on the dictatorial Québec Union Nationale premier Maurice Duplessis (1890-1959). Black found Duplessis admirable, as he was later to find French emperor Napoleon Bonaparte (1769-1821).
Black then became a Catholic and an expert in military history.
In 1978 John A. ("Bud") McDougald, the power who controlled Argus Corporation, died. Black persuaded McDougald's elderly widow (some thought she was non compos mentis) to sell him a significant bloc of shares in Ravelston, the company that held Bud McDougald's shares of Argus. With these, and with other Ravelston shares controlled by the widow of the late Eric Phillips, who Black also persuaded to sell, 34-year-old Black got control over Canada's most important conglomerate.
Both widows later expressed regret that they had sold their shares. (At the time, the deal was a bit scandalous; a CBC Television documentary wondered pointedly how Black had prevailed upon the aging widows to sell.) But however Black got control of Argus, it was a masterly deal: he and his family took over the conglomerate for a measly 15 million Canadian dollars. But, while Black prospered running the Argus Corporation . . . the Argus Corporation did not prosper under Black.
At the time Black took it over in July 1978, Argus's major holdings were some of Canada's finest blue-chips: Dominion Stores, Canada's largest supermarket chain; Massey Ferguson, Canada's large multi-national farm machinery corporation; Hollinger Mines, an important gold-mining company in the history of Canada's goldfields in Timmins, Ontario; and Norcen Energy, an energy and pipeline concern. Dominion Stores, which had been prospering mightily a few years before, slid into big trouble with its resurging competitors. Iin the early 80s it dumped half its stores, and survived as a much smaller corporation. (In 2003 it is a subsidiary of The Great Atlantic & Pacific Tea Company -- A & P -- the 14th-largest American supermarket chain.) Massey Ferguson got into dire financial trouble in the farm-machinery collapse and international recession of the early 1980s, spun off major sections of its business, and, under its CEO Victor Rice escaped across the border ahead of the Canadian and Ontario governments (to whom it owed money and had made promises which it did not fulfill). Massey is now the much tinier Varity Corporation headquartered in Buffalo, New York. Before Varity departed, its management seems to have persuaded some of its employees to transfer to the Massey Combine Company, a spinoff it knew would rapidly go bankrupt. This got Massey out of some of its pension obligations.
From Norcen Energy, Black attempted to transfer $100,000,000 to his holding company, Ravelston. This was prevented by an outcry from Norcen shareholders.
(Please note carefully this attempted transfer of money by Black from a public company to himself. You'll see much more of this pattern as we continue . . .)
Then, after scooping millions of dollars of surplus from the Dominion Stores pension fund (and eventually being forced by a court to give $38,000,000 back), Black gradually sold off most of his interests in Argus. (Argus still exists, owned by Ravelston, as a holding company containing Black's Hollinger Inc. holding company. Just hang on: it gets more complicated, but I'll try to make everything clear.) Inspired by Conrad's legerdemain, the Canadian federal government then passed legislation more tightly controlling pension surpluses from that time forward.
At this point Black decided to go into the newspaper business in a big way.
Before his Argus takeover, when he was still attending university, Black had worked for a tiny Quebec newspaper, the Eastern Townships Advertiser, with a friend. A year or two later, in 1967, the two bought the paper, as well as the small-circulation Sherbrooke Record and eventually a few others. They formed a chain called Sterling Newspapers Limited. At the papers Black worked hard. He learned how to run newspapers efficiently and -- especially -- cheaply. Usually, he and his partners fired many production workers and writers, then hired suits who would ruthlessly follow Black's formulas of efficiency.
Having in the early 1980s gradually sold off most of the holdings of Argus for a healthy profit, Black now went into the newspaper business full tilt. For the name of two of his newspaper holding companies he and his partners adopted the name of the old Hollinger mining company. Founded by the Northern Ontario entrepreneur Benny Hollinger, Hollinger Mines had (as I have said) formerly been part of Argus. Black created Hollinger Incorporated, a holding company in Toronto, and Hollinger International Inc., a company underneath Hollinger Inc. that was ultimately located in Chicago. Hollinger Incorporated had its headquarters at 10 Toronto Street, Bud McDougald's former Roman temple headquarters in -- where else? -- Toronto. From here Black ran his budding corporate group for more than a decade.
Black invested in many Canadian and eventually many foreign newspapers. He was extremely successful. With his talented partners and subordinates, among them David Radford (you'll hear more about him), Black built Hollinger International into an organization that took over newspaper after newspaper, chain after chain. Suspicious of what he felt was a universal left-wing bias among journalists in Canada, Black hired right-wingers to be his publishers and editors-in-chief; they in turn usually hired right-wing reporters and columnists.
Black's holdings in Canada became immense, verging on monopolistic. (At the height of his influence in the mid-1990s, Black controlled about 60% of daily newspaper circulation in Canada.) So Black began buying foreign newspapers. In 1985 Black bought 14% of the long-established and money-losing conservative Daily Telegraph of Great Britain. In 1986 he managed to buy the rest. Control cost Black about 86,000,000 American dollars. Rupert Murdoch estimated that the true value of the Telegraph group was $1.5 billion dollars.
Eventually Black put together one of the largest groups of newspapers in the world, the Hollinger group. His overall holding company, Ravelston, was privately held between Black and a few partners. Ravelston held a few minor papers and the holding company Argus (both Ravelston and Argus, you may remember, had once been controlled by Bud McDougald). Argus in turn controlled Black's Canadian newspapers through yet another holding company, this time a publicly held one, Hollinger Incorporated. Hollinger Incorporated was located first in Toronto at the old Argus headquarters at 10 Toronto Street, then later in Vancouver. (The transfer was made to get Hollinger away from the Bob Rae social-democratic government in power in Ontario 1990-1995. Black charged, falsely, that Ontario under Rae had the worst atmosphere for business investment except for North Korea.)
Okay, we're almost at the end of Black's Byzantine major holdings. There's only one more . . .
Besides his Canadian newspapers, Black's Hollinger Incorporated held his shares in American and foreign newspapers, through yet another company under it, Hollinger International, which eventually was based in Chicago.
Among Hollinger International's most famous newspapers in the 1980s and 1990s were the Daily Telegraph of London (a Conservative paper which Black turned around and made enormously profitable and influential, partly by dumping many union pressmen and writers and moving to more automated premises in the Isle of Dogs in London's Canary Wharf area); the allied Sunday Telegraph; the Spectator; the Chicago Sun-Times (bought with a number of suburban Chicago newspapers in 1994 for 180 million American dollars); the Sydney (Australia) Morning Herald (Black held for a few years and sold it again), and the Jerusalem Post. He also bought many, many small American dailies and weeklies and unsuccessfully attempted to buy the New York Daily News.
His holdings in Hollinger Incorporated and Hollinger International made Black both much more wealthy and influential. He became worth several hundred million American dollars. He enjoyed his life -- especially meeting and chatting with the rich and influential -- and appointed many of them to the boards of Hollinger International. He arranged to have about a two-thirds control of Hollinger International through issuing himself voting shares, and selling non-voting shares to others. He had Hollinger International buy two jets to carry him and his partners about. His wife Barbara bought 100 pairs of Manolo Blahnik shoes, modestly following (you might say) in the footsteps of Imelda Marcos. She accumulated diamonds. Barbara was quoted as saying she didn't believe in small diamonds, and that her extravagance "knew no limits." The Blacks bought expensive houses in London and Palm Beach, and became powers in London society for their parties replete with powerful and influential guests.
Many of the influential were invited to join the boards of Hollinger International and Hollinger Incorporated, or to be made directors of thbe Daily Telegraph.
Still a determined Canadian citizen, Black was fiercely critical of Canadian -- especially Liberal party -- public policy. By strange coincidence, all the Canadian papers in his chain agreed with him. Specifically, in all his Canadian papers he and his minions stridently campaigned for Israel, against Canadian nationalism and in favor of lower Canadian taxes. In his foreign papers, conservative views also flourished.
Never a shy person, Black was a truculent, thin-skinned and aggressive proponent of his views. He published snide, dyspeptic articles and letters-to-the-editor (usually in his own Canadian newspapers, and written in sesquipedalian verbiage) detailing his views on Canadian policy. (In general, Black wanted Canada to support much greater integration of its economy into the American economy, and to enthusiastically adopt most American domestic and foreign policies. Toward the end his Canadian papers championed Canada's abandoning its own currency and using the American dollar. (A joke went that the typical headline in a Black newspaper was as follows: "CANADA SUCKS: AUTHORITATIVE STUDY".)
Because of these actions Black was immensely controversial for twenty years. A certain percentage of those Canadians who had heard of him were suspicious and disliked him. They thought that he was an insensitive fat cat, an egregiously out-of-touch mossback conservative, an admirer of the rich and useless. Others, however, including some of the Canadian journalists he retained on his newspapers, admired his ruthless business acumen, bluntness and conservative forthrightness.
In the 1990s Black attempted to buy The Globe and Mail, Canada's self-proclaimed National Newspaper. (He had first tried to buy it in 1979.) The owner, Canada's richest person, declined to sell. He was the much wealthier-than-Black Lord Kenneth Thomson -- son of the late Canadian and international communications mogul-of-the-1960s Roy Thomson, Lord Thomson of Fleet. Together father and son had put together an impressive newspaper chain of their own, as well as other publishing, television and travel interests. They also bought a large piece of the oil in Britain's North Sea. For a time they owned the Times of London, but, after a few profitless years, sold it to Rupert Murdoch. (Ken Thomson is said to dislike Black -- he once referred to Black as "Genghis Khan" -- and to be worth about 14 billion American dollars. In 2002 Thomson withdrew from active management of his corporations, putting his son David in charge, and began a series of donations, involving hundreds of millions of dollars in money and art, to Toronto museums and artistic organizations.)
Black had gradually bought a good many small Canadian newspapers. He had even bought the Southam chain, a distinguished but not particularly profitable group of dailies. He had bought some Thomson papers. But he had not been able to buy the Globe. Black instead decided to transform The Financial Post, a long established Canadian financial weekly that had come into his hands, into a new Canadian national newspaper. He wrapped new sections around the financial section, which retained the old name, and christened the result The National Post. Launching the Post in October 1998 in Toronto, the overwhelmingly dominant and sophisticated financial and cultural centre of Canada, Black struggled to carve out an upscale conservative niche in a city that already boasted three major newspapers, two of which were conservative.
The results were not as satisfactory as he had hoped.
While excellently designed, expertly written, colorful and lavishly promoted, the Post did not attract enough readers or advertisers in its first two years to turn a profit. Many, many tens of thousands of copies of the Post were given away daily. Outwardly Black radiated public confidence and optimism.
But Hollinger International was heavy with over one billion American dollars of debt from Black's many newspaper purchases . . .
Hollinger International and Hollinger Inc. reached their height about 1995. Black began selling off some of his acquisitions. He sold off his Australian newspapers. He sold off many of his small-circulation American dailies and weeklies. In July 2000 Black sold the majority of his Canadian newspapers and half of the National Post to Can-West Global Communications Corp. This is the Winnipeg-based international communications conglomerate of I. H. (Izzy) Asper, a well-known Liberal-party-backing Manitoba businessman. (Asper died in 2003, leaving his empire to his sons.) Can-West has very extensive TV holdings in Canada, Britain, and Australia. Black got $3.2 billion Canadian dollars for his papers, part of which involved taking 15.4% of Can-West's shares, valued at $25.
In late 2001 Black gave up, and sold the rest of the Post to Asper. Launching and owning the Post is thought to have lost Hollinger Inc. 180 to 200 million Canadian dollars over slightly more than two years. (Under the Aspers the National Post's losses have been cut, but its circulation is stagnant and it is still losing $20 million a year in 2004.)
In 2001 Black also sold nearly all of the rest of his Canadian newspapers.
Now this is where things get interesting:
If Black could have sold the CanWest shares he received for some of his Canadian papers when he received them, instead of 14 months later in late 2001, he would have gotten about 160 million Canadian dollars more for them. (Black ultimately received $271 million or about 10 Canadian dollars a share for stock valued at 25 Canadian dollars 14 months earlier.) Selling when he did, Black received a much lower price. (Note: Because of the complexity of Hollinger's byzantine conglomerate structure, and the way it seldom breaks out figures, it's hard to be exact about this matter. I apologize for any error.)
In any case, quite a loss.
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Starting with nothing but an entré into Canadian society's highest tier and perhaps $7 millions of inherited family money, Black had been immensely successful. In fact, he had become what John Dale Davidson and Lord William Rees-Mogg call a Sovereign Individual. Freed from the constraints of poverty and lack of education that restrict so many to their own country, Black was able to pick and choose where to live, where to pay his taxes, around the world.
Beginning in 1989, that place was London, to which he moved.
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Perhaps his defining moment as a Sovereign Individual was Black's determined attempt to become a British lord. The Tony Blair New Labour government of Britain decided to make Black a lord. Why? I don't know. Maybe Blair decided to reach out and embrace a Conservative.
But surprise! The federal Liberal government in Ottawa decided to enforce a seldom employed rule, the Nickel Resolution (it dates from the late 1920s), which forbids British titles to be devolved on Canadian citizens without the approval of Canada's Parliament. Prime minister Jean Chrétien, getting wind of Black's appointment, phoned Tony Blair to protest Black's elevation to the peerage.
Now the Nickel Resolution has little status in law. It has been inconsistently applied over the years to prevent Canadians from adopting foreign honors. But Jean Chrétien, the Liberal prime minister, is suspected of invoking it specifically to prevent Black from becoming a British lord. Why? A cynical mind might say, Because of the opposition of all Black's newspapers to every act of the Liberals.
Well, what do rich people do when their life plans are frustrated? They sue. So Black sued the Canadian government for interfering with his right to become a lord. Through his newspapers, and especially the National Post, Black also raised (or, much more exactly, attempted to raise) a storm of controversy about the impropriety of the government of Canada's refusal to allow him his title.
To no avail. The masses did not arise and storm Ottawa, compelling it to let Conrad be a lord. And the Supreme Court of Canada threw out his case.
Black quickly reacted. He renounced his Canadian citizenship for British citizenship. He issued a sad statement lamenting in high-toned fashion the ingratitude of the Canadian government. It seems that in terms of being able to honor him appropriately, Canadian citizenship "was no longer competitive." Black was photographed with his decorous trophy wife, the physically delectable and very bright conservative newspaper columnist Barbara Amiel, and two of his buds, former U.S. secretary of state Henry Kissinger 3 (!) and former British prime minister Lady Margaret Thatcher 4, taking his seat in the House of Lords in September 2001 in splendid red-and-ermine lordly array.
So there you have it. The man cared so much about being a British lord that he gave up his Canadian citizenship for a peerage.
The Canadian people reacted with restraint to Black's actions. Collectively, they shrugged. There were a few snide remarks parodying Black's chosen title (Lord Conrad of Crossdressing, Lord Black of the Isle of Dogs were a few feeble attempts at humour). But they did not wax indignant at Chrétien's horrible mistreatment of Black. Some Canadians -- those who have heard of Black -- have long regarded him as an overly publicized loquacious and porcine mogul, having little in common with them. For the most part, only his stable of kept journalists (is the phrase "hired flacks" appropriate here?) sing his praises.
I suppose it is wicked of me to mention it, but at the time he became noble Black granted a very (unintentionally) funny interview to his former newspaper ('No one should shed tears for me', National Post, Saturday, November 10, 2001). If that doesn't make you laugh cynically, you have no soul.
Lord Black has taken the name "Crossharbour" to honor himself. It is a subway station in London, named after the region near it, where the Daily Telegraph keeps its Canary Wharf headquarters in the Isle of Dogs.
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Meanwhile, while this was playing out, former president of South Africa Nelson Mandela (b. 1918) arrived in Ottawa in late 2001 to be honoured by the government and Parliament of Canada. The honour involved had previously been granted only to British prime minister Winston Churchill (1874-1965) and the late Raoul Wallenberg (1912-1947?), Swedish saviour of thousands of Jews from the Nazis.
Mandela smiled graciously and shook hands with little children in the crowd. He encouraged the children to follow their highest dreams. When a little black girl faltered in her speech to him, and began to weep uncontrollably, Mandela put his arm around her and comforted her. He tried earnestly and unsuccessfully to get in touch with a Canadian Alliance party member of Parliament from Calgary who had, before Mandela came, labelled him a "communist" and "terrorist" and refused to attend.
With tears in his eyes, Mandela gratefully and thankfully accepted honorary Canadian citizenship.
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I wish there were more people like Conrad Black. Political compromise is anathema to him.
former British prime minister Margaret Thatcher
UPDATES: On October 19, 2002 the Toronto Star ran an excerpt from a book about to be published on Conrad Black. Editor is by Black's former chief of the Daily Telegraph, Max Hastings. Just as a cynic might suspect, the book shows Black constantly calling up Hastings questioning whether some story he has heard about will likely appear or whether some item that was printed should have been. Hastings describes Lord Black, whom he seems to like, as concerned to protect, first, the wealthy and powerful, and second, his own business dealings.
For example, when a Telegraph writer named William Cash wrote a story investigating "the increasing influence and success of Hollywood's new Jewish Establishment," this was so controversial that Tom Cruise, Steven Spielberg, Barbra Streisand and Kevin Costner wrote letters denouncing Hastings. The row "caught the imagination of the North American media, and then ricocheted into Israel, where Conrad Black was immensely vulnerable through his ownership of The Jerusalem Post." Black did not buckle. But he said to Hastings, "You don't understand, Max. My entire interests in the United States and internationally could be seriously damaged by this." 5
In early 2003 I found a photo of Black and Amiel chatting in a friendly way with the late American president Richard Milhous Nixon. Like meets like.
FURTHER UPDATE! On November 17, 2003, Conrad Black resigned as chief executive officer of Hollinger International.
Hollinger International lost over 200 million American dollars in 2001, $238 million in 2002. Despite this, Black, his Number Two David Radler and several fellow Hollinger International executives since 1995 charged Hollinger International $225,000,000 (U.S.) in fees for their skillful management services.
Since 2002 New York-based hedge fund Tweedy Browne Inc., a minority shareholder in Hollinger International, has been raising awkward questions about Black's apparently exorbitant compensation. It would be one thing if Hollinger International had made much money; but it did not. (Buying all those newspapers around the world at expensive prices, then selling them to reduce Hollinger's debt left Hollinger naked in the recession that followed 9/11.)
Black also appropriated for himself and his associates $32,100,000 (U.S.) in non-compete fees from the sale of Hollinger International's small-circulation American newspapers to a company called Horizon in 1999 and 2001. In the opinion of some, including Tweedy Browne, these non-compete fees should have been paid to Hollinger International, not to Black and his fellow executives. (Other non-compete fees were paid to Black and friends by Osprey Media, a company which bought Canadian papers.) The alternative looks like improper self-dealing, involving a conflict of interest between Black and friends and the shareholders of Hollinger International.
In addition, whatever their legality, these non-compete arrangements were apparently not reported to the board of Hollinger International. (Black said in mid-November this was an error committed by "underlings.")
However, there is the grave possibility in these doings that Black and his fellow Hollinger International executives may have violated the U.S. Sarbanes-Oxley law.
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Congress passed the Sarbanes-Oxley law in 2002, in the wake of the Enron and other scandals. It requires chief executives of American corporations to certify the financial statements of American corporations. They must literally sign off as to the accuracy of the company's books.
Since Hollinger International is based in Chicago, it is an American corporation subject to Sarbanes-Oxley.
Therefore the U.S. Securities and Exchange Commission (S.E.C.) has launched an investigation into the affairs of Hollinger International and its Canadian parent Hollinger Inc. The Ontario Securities Commission (O.S.C.) is pursuing its own investigation of Hollinger Inc.
For one thing, there is the matter of additional non-compete fees that seem to have been paid by CanWest Global Communications when Black sold most of his Canadian newspapers to that company. These funds also seem to have been paid directly to Black and his associates, not to publicly-traded Hollinger Inc.
Additional investigation continues into Black's fees and accounting by a select committee of the board of Hollinger International.
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Under pressure from minority shareholders, it appears that Hollinger International will be sold or broken up. Black seems certain to lose control of his favorite properties (including the London Daily Telegraph) and to be forced entirely out of Hollinger International by the midst of next year.
He currently remains "non-executive chairman" and a policy adviser to the board.
Black is also in at least some serious financial difficulty. Black has agreed to return his part of the 32.1 million dollars (U.S.) to Hollinger International, namely 7 million dollars, with interest, by the midst of 2004. He must also find a several millions to make a payment on the debt of Hollinger Inc. by March 1, 2004. If that payment is not made, Hollinger Inc. would default on its debt on April 1. (Hollinger Inc. holds Black's 72% of the voting shares of Hollinger International.)
In addition, there is the possibility of a multitude of expensive civil suits being launched against Black and his executives by disgruntled Hollinger International shareholders.
Black continues to insist that he has done nothing wrong. The information about the 32.1 million dollar non-compete payment, he says, was not divulged to the board of Hollinger International because of errors by "underlings." Black says his name has suffered only "temporary tarnish" and that those reporters expecting his fall may be mistaken.
It turns out that Black has been spending much of his time for several years working with five assistants and an editor writing a 1200-page biography of U.S. president Franklin Delano Roosevelt. This was published in November 2003 to good reviews. Apparently Black's interest in the corporate world has been diminishing, and his lust to be a successful, respected author and historian has been increasing.
These developments have caused a whirlwind of publicity. Black's story exploded across the front pages of all Toronto newspapers, with further analysis in the business sections. According to the Globe and Mail (most of which was sold by Ken Thomson to Bell Canada Enterprises some time after Black's takeover attempt), "Defiant Black huffs and puffs through questions over payments in cash-strapped Hollinger empire."
Further developments seem imminent.
FURTHER UPDATES! On December 23, 2003, Conrad Black declined to testify before the United States Securites and Exchange Commission, taking his Fifth Amendment right. The next day Hollinger Inc.'s accounting firm KPMG resigned.
On January 5, 2004, Lord Black failed to make an initial payment of about $800,000 that he had agreed in November to make, in partial repayment of the $7.1 million (U.S.) he allegedly owes Hollinger International in unauthorized non-compete payments. The board of Hollinger gave him an additional two weeks.
On Friday, January 16, 2004, Conrad Black announced that he would not pay that $800,000 (U.S.). Black then announced that his study of Hollinger International's records indicated the Hollinger board had previously approved his non-compete payments. Therefore he didn't owe Hollinger International any money.
On Saturday, January 17, 2004, the executive committe of the board of Hollinger International, led by its interim chief executive Gordon Paris, voted out Conrad Black as non-executive chairman of Hollinger International.
Hollinger also immediately launched a suit against Lord Black and his team for over $200 million (U.S.), alleging that it had found evidence of malfeasance, fraud and dereliction of fiduciary duty in the records of Hollinger International.
Lord Black responded the next day. He accepted an offer from two reclusive British businessmen, the Barclay brothers, to sell his 73% interest in Hollinger Inc., his Canadian holding company. This purchase, if approved, would give the Barclays effective control of at most of Lord Black's significant assets, including, I think, the Daily Telegraph, the Sunday Telegraph, the Chicago Sun-Times group, and the Jerusalem Post.
Black had said for months he would never sell these shares.
But, according to Peter C. Newman, author of an admiring Canadian book on Black, this is both a fire-sale price for these papers and unlikely to be approved.
According to Newman, Black told him two years ago Black's holding in the Telegraph group was worth two billion dollars (presumably, Canadian dollars). So for Black to sell this for 606.5 million dollars is selling it at Wal-Mart prices.
And, though Newman did not say this, it may be impossible for Lord Black to sell his Hollinger Inc. shares. Lord Black signed some sort of standstill agreement not to sell them; he says this has expired. It is unclear to me whether the Barclay sale will go through.
In late January Black was appointing new members to the board of Hollinger Inc. (Most had resigned a week earlier.) He was suing to prevent the S.E.C. from freezing the board of Hollinger International, saying it was hampering his control of Hollinger and his ability to defend himself.
The Wall Street Journal of January 30, 2004, reported several deals in which Black had had Hollinger International buy small American papers. Black later reported to the board of Hollinger International that the papers were losing money and had no potential buyers. He then had Hollinger International sell the papers to another of his companies, Ravelston, for $1. But, apparently, the papers were making money. One of these newspapers was bought by Hollinger International for $1.75 million, only to be sold to Ravelston one year later for $1. Can one say self-dealing, or, possibly, conflict of interest?
Of course, Lord Black may very well be able to escape both legal charges for his actions and the many lawsuits that seem likely to annoy him. Perhaps he can settle his problems for a few million dollars. But it is difficult to see how his reputation can ever recover.
Return to this Web site for later developments!
FURTHER UPDATE on September 30, 2004. In the spring of 2004 Black took his case to a court in Delaware (apparently Hollinger International is chartered as a Delaware corporation; Delaware is a jurisdiction very sympathetic to corporate managements). Black seems to have been confident that the court would find for him. Instead, the judge issued a devastating judgement. The judge struck down Black's private sale of his interest in Hollinger Inc. to the Barclay brothers. He further ruled that Black had acted in flagrant abuse (my words, not quite the judge's) of his responsibility to Hollinger International stockholders. In fact, so far as I can see, Black lost every single point of law he was contesting before the judge. The ruling was devastating to Black's legal position.
Many colourful stories have been published about Lord and Lady Black's imperial and aristocratic fascination with and absorption in their riches. Lord Black was stripped of his Hollinger International corporate jets, and was reported patiently taking an airplane with ordinary travellers.
The Hollinger International board committee looking into Black's accounting peccadillos issued a damning report in late summer repeating and clarifying their charges against Black. Meanwhile they sold the Telegraph properties to the Barclay brothers.
NOTE: In November 2003, as Lord Black was being forced from his enterprises and investigation was beginning into his affairs, the Globe and Mail opined that Black's true failure was his failure, while taking care of himself and his friends, to make money for his stockholders.
David Olive, business columnist for the Toronto Star, wrote on January 20, 2004, that "at its zenith in the mid-1990s the sun never set on the Black empire of more than 500 prestigious dailies in Britain and Australia, quaint rural weeklies in the U.S. heartland, more than half of Canada's major metropolitan newspapers and a clutch of opinion-shaping journals like Britain's Spectator and the Jerusalem Post. . . . But by 1999, when Black-controlled papers were generating a peak $2.1 billion (U.S.) in revenue, the press baron was already racing to keep ahead of his creditors. And he kept falling behind."
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1 National Post, January 31, 2004, p. RB5.
2 Newman, The Establishment Man, p. 42 (paperback).
3 Kissinger was savaged in Christopher Hitchens' account accusing him of war crimes, The Trial of Henry Kissinger (2001). A detailed account of Kissinger's Cambodian actions is in Sideshow by William Shawcross.
4 Lady Thatcher's most recent notable act was her stalwart defence of the egregious Chilean dictator (1973-1990) and murderer of five or six thousand Augusto Pinochet Ugarte (b.1915). Using her influence, Thatcher sheltered him in Britain and attempted (1998-1999) to keep Pinochet from being extradited and brought to justice in Spain or Chile, apparently for his 1982 usefulness to Britain in its Falklands War with Argentina.
5 National Post, January 31, 2004, p. RB5.
Sources and Related Material
Black, Conrad. Duplessis. Toronto: McClelland & Stewart, 1976.
In this 700-page tome Black paints an exhaustively detailed picture of Duplessis as both a modernizer and a frugal popular leader, in touch with the opinions of the Quebec populace. Black's view is in contrast with predominant intellectual opinion, then and now, which holds Duplessis to have been a dictatorial, somewhat bigoted obstacle to Quebec's social progress. Could he have been all of these things? In 1988 Black updated his biography of the Quebec premier with a new and fascinating introduction; the book is now named Render Unto Caesar.
-------. Conrad Black: A Life in Progress. Toronto: Key Porter Books, 1993.
Black's version of his own life up to the early 1990s.
Coleridge, Nicholas. Paper Tigers: The Latest, Greatest Newspaper Tycoons and How They Won the World. London: William Heinemann Ltd. 1993.
Has an admiring section on Black.
Damsell, Keith. "Hollinger dumps CanWest stake, buys into N.Y. daily". Pg. B1, The (Toronto) Globe and Mail, October-December 2001 (have lost exact date; sorry).
Davidson, James Dale; and Rees-Mogg, Lord William. The Sovereign Individual: How to Survive and Thrive During the Collapse of the Welfare State. New York: Simon & Schuster Inc. 1997.
In successive bestsellers Davidson and Rees-Mogg have described a fascinating and plausible historical worldview; from this they have plausibly predicted the last several depressions that didn't happen. Succeeding books praise their accuracy in preceding volumes. This book concerns the growth in number of "sovereign individuals," rich persons who have learned how to escape taxes and the burdens of nationality. Read it, and learn how to be like them!
Hastings, Max. Editor: An Inside Story of Newspapers. London: Macmillan, 2002.
Hastings was Black's editor at the Daily Telegraph. Prior to this post, he was the author of two books, one on D-Day in Normandy and the other on the Falklands War.
McNish, Jacquie and Sinclair Stewart. Wrong Way: The Fall of Conrad Black. Toronto: Penguin, 2004.
The magazine Canadian Business (November 8-21, 2004) calls this a "nuanced account" which wastes little time rehashing Black's early days, but instead explores "behind-the-scenes struggles that have either been under-reported or missed entirely by ongoing media coverage."
Newman, Peter C. The Canadian Establishment. Toronto: McClelland and Stewart.
Newman is one of Canada's best-known journalists and non-fiction writers. Generally, he admires businessmen. This was the second of Newman's books about the Canadian business class, the first in which he attempted to be systematic. The book concerns the 1960s-1970s old-boy network of Toronto moguls, that then dominated Canadian business; the book featured Bud McDougald, Black's predecessor as the laird of Argus Corporation.
--------. The Establishment Man: A Portrait of Power. Toronto: McClelland and Stewart, 1982.
This book follows the rise of Black up to 1981. Conrad receives a fairly thorough, but respectful, kid-glove treatment.
Siklos, Richard. Shades of Black. Toronto: McClelland & Stewart, 1995.
A biography of Black that captures his life at its apex. An updated version with 11 new chapters was released in mid-2004. Canadian Business calls it the definitive biography.
Tombs, George. Lord Black: The Biography. BT Publishing Inc., 2004.
Tombs is a former editorial writer for The Gazette in Montreal.
Last modified: 4:35 PM 30/09/2004