Closeup / Corporations

The Young Lion

How Conrad Black made Argus his own

Roderick McQueen June 26 1978
Closeup / Corporations

The Young Lion

How Conrad Black made Argus his own

Roderick McQueen June 26 1978

The Young Lion

How Conrad Black made Argus his own

Closeup / Corporations

Roderick McQueen

The pink telephone message slips littered Conrad Black’s desk like fallen apples, some to be picked up and polished, others to lie untouched. Someone’s wise words or pet project bruised, not making it through to the fertile brain and basketfuls of cash manoeuvring during the 90 days up to mid-June. In the best battle tradition where the only strategy needed is surprise, Black had, with one sure shot, gained control of giant Argus Corporation, which in turn controls Dominion Stores, Hollinger Mines, Massey-Ferguson, Standard Broadcasting and Domtar, combined assets of the five roughly $4 billion.

At 33, Montreal-born Conrad Black, articulate historian and author, self-described man of the people, bachelor with a published net worth of $50 million, had finally demonstrated he alone is heir rampant to John Angus (Bud) McDougald, the former Argus chairman, and self-proclaimed dean of the Canadian Establishment, who died March 15. In his 12-by18-foot downtown Toronto office in Dominion Securities, Black is surrounded by the minimum of memorabilia, but numerous cardboard cartons. He looks like a man ready to move out.

At the moment, the chair he has been battling all day is of more interest than any future chair he will occupy at Argus. His arm extended, finger waggling, he announces: “This chair is a death trap.” A grey lump behind the desk lurches backward at a precarious angle, ready to tip any occupant out with whimsical vengeance. Scrunching his three-piece pin-stripe suit down behind the desk, he retrieves an errant caster, makes a vague attempt to replace it and gives up muttering: “I'm not very good at simulating Mr. Fix-It.”

He drags another chair into place, plunks himself down in it and quips: “I guess you want to talk about Duplessis.” A smile splits his face, a face not unlike actor Richard Dreyfuss! The subject of all those telephone calls is not Duplessis, the former Quebec premier about whom Black wrote a 743-page biography, it is Ravelston Corporation, through which Black, along with his brother, George Montegu (Monty) Black III. 37, have grabbed control of Argus from Colonel Maxwell Meighen, 70, appointed chairman following McDougald’s death. It is a take-over involving pieces of an even better story than any of Dreyfuss’ movies: wealthy widows. Scottish executors, ancien régimes, young blood, inherited wealth and, of course, power.

News of the grab came earlier this

month in a letter to the shareholders of Canadian General Investments signed by chairman Meighen, son of former Conservative prime minister Arthur Meighen, and Alex Barron, 59, president, but the whole thing may well have been preordained at the birth of the Black boys, because their father, George Montegu Black, owned Western Breweries of Winnipeg, was bought out by E.P. Taylor’s Canadian

Breweries, later becoming president. Black senior was also buying into Argus at the time and possessed a major share in Ravelston, the parent company. But if it was preordained at their birth by the passage of that interest into the hands of the boys, the laying-on-of-hands occurred eight days after their father’s funeral.

It was on July 10, 1976, when they met with Bud McDougald at his house to set a timetable. In the two years since, Monty, a vice-president at Dominion Securities where McDougald held his first job, has


also joined the boards of Dominion Stores and Standard Broadcasting; Conrad has become an Argus director and a member of its executive committee. While McDougald’s blessing was on both, Conrad was to dominate the future of the Black family interests, although Monty was appointed to the Argus board in June.

“We are not,” Black maintains today, “doing anything significantly at variance with what we agreed upon with McDougald at the time.” What the Black brothers have done, in concert with Maude (Jimmy) McDougald, widow of Bud, Doris Phillips, widow of former Argus chairman Lt.-Col. W. Eric Phillips, along with Crown Trust, executors of both widows’ estates, is serve notice on Meighen, the other near-equal partner with the three in Ravelston Corporation,* that he must, under an unusual compulsory sale clause, sell his holdings to Western Dominion Investment, the Black brothers’ company. With Maj.-;Gen. A. Bruce Matthews, 68, president and chief executive officer of Argus, on the side of the Blacks, the brothers now have total control of Ravelston. Ravelston’s only significant asset is 61.7 per cent of the common shares of Argus, giving it voting control of Argus and effective control of the five companies in which Argus has a dominant interest.

The events that precipitated Black’s surprise move go back to March 16, the day after McDougald’s death at age 70. The Black brothers invited Alex Barron to dinner at Conrad’s residence, a massive stone mansion set on eight manicured acres. There were, according to Black, some understandings reached with Barron at that dinner about the future of Argus, particularly the Blacks’ prospects.

Precisely at 10 a.m. on March 22. the executive committee of Argus met at its 10 Toronto Street headquarters to choose officers for recommendation to the full Argus board meeting the following week. Meighen was proposed as chairman (a titular head, he doesn’t have an office at Argus headquarters) and Bruce Matthews (operating head of Argus through the several months of McDougald’s illness prior to his death) was proposed as president and chief executive officer. That taken care of, the executive committee was moving on to the second item on the agenda when, at 10:04 a.m., Conrad Black arrived late, delayed by traffic. During the remainder of the meeting, the seeds were sown for policy and personnel disagreements that led to the take-over.

Says Black: “My disagreement wasn’t with the nomination [of Meighen and Matthews], it was the logical choice. I said that at the time, and I do not stand down from that. During the executive committee meeting I raised the suggestion that Chant [Dixon Chant, chairman and president of Duplate Canada and an Argus director] and I should be officers [of Argus].” Colonel Meighen replied in equestrian phraseology: “That would be rushing the

fences.” Which to Black meant: You’re trying to move too quickly.

From that point on, communications between himself, the two widows and Crown Trust on the one hand, and the Meighen interests on the other, began breaking down. Alex Barron disagrees, saying it was a complete surprise a few weeks later when the compulsory transfer notice that will bring control was served: “There have been no policy differences. Relations were excellent. That’s why things came as such a surprise. I’ve been at every meeting of the boards of Argus and Ravelston in recent years and Conrad has been present, too. He voted in favor of Colonel Meighen’s appointment with no dissenting opinion. We find it difficult to understand his suggestion that there was

no communication."

ing in January 1979 will not be himself. It

Black agrees that Barron is technically correct on the Meighen appointment but points to his late arrival the day the names were proposed. “But for Alex to say there was no policy difference is not in accord with demonstrable facts. There were substantial policy differences. Unless Alex has succumbed to a massive attack of amnesia, he should be able to recall some of them.” But it wasn’t just policy issues. Black bridled at being seen to ask for too much, too soon. He knows he hasn’t served his full business apprenticeship, and the new chairman of Argus at its next annual meet-

will most probably be Nelson Davis, 72, chairman and president of N. M. Davis Corp., old family friend and adviser to the Blacks, father and sons. Davis was Bud McDougald’s best friend and the key to the widows’ support of Black’s recent move. Matthews will most likely remain.

Black says: “I want to lay to rest the idea that the sole explanation is some overweening ambition for corporate dominance on my part. Nothing could be further from the truth. Now, I don’t want to be precious, but we should have an augmentation of status. I think my brother would join with me in agreeing that any suggestion wc are callow youths who must wait is wrong. We are in a position to say we don’t have to accept that.”

Either Conrad or Monty will assume the presidencyof Ravelston;Conrad m also chair the Argus executive committee. Young blood to be brought in to Ravelston will include Eredrik Eaton, 40-year-ol president of Eaton’s of Canada, and H.

N. R. (Hal) Jackman, 46, chairman of Empire Life. It is through this younger blood that the Blacks intend to revitalize Argus from what analysts have seen as a rather sluggish recent past.

Comments Black: “I’m reasonably upwardly mobile, but I’m not the ravening megalomaniac you read in the press. 1 fancy myself as something of a historian and continuity is important. We have here an institution [Argus] that has become justly prominent in Canada. The last thing I would want to do would be to engineer a hasty exit for certain of the people around here.”

But Black wanted in, feeling that his position as co-founder and chairman of Sterling Newspapers demonstrated his business acumen as he acquired and turned around ailing daily and weekly newspapers in British Columbia, Quebec and Prince Edward Island, beginning when he was 21. Using bank loans and profits, no family money, Sterling now owns 19 newspapers and 10 printing plants. During the same period, he received a BA in history at Carleton, a law degree at Laval and an MA in history from McGill. In addition, he has collected directorships that include Eaton’s of Canada, Canadian Imperial Bank of Commerce, Confederation Life, Carling O’Keefe, CAE Industries, MasseyFerguson and Argus. He is chairman of Dominion Malting and on May 15 purchased 24.8 per cent of Crown Trust. Black maintains the position in Crown Trust is irrelevant to the recent take-over, even though Crown Trust is executor to the estates of both widows. He describes William Ritchie, a Crown Trust vice-president and executor to both estates, as “a ferocious wee Scot,” adding: “Even if we owned 100 per cent and wanted to do something marginally against what he thought best, he’d tell us to go to hell—or stronger.”

The shot Black fired involves a clause in the Ravelston agreement saying any three

partners can get rid of the fourth at a share price to be set by independent auditors. The firm of Peat, Marwick, Mitchell will set the price, the buyers must buy, the sellers must sell—all within six months of the transfer notice last month.

The last time Ravelston bought Argus shares it paid $30; current market is around $35. The Meighen interests want “a premium over the stock exchange quotation.” Even at $40 a share, that’s about $10 million for the Meighen group’s share

of the 1,043,579 Argus shares Ravelston holds. In a day when corporate take-over can cost hundreds of millions, it’s bargainbasement. Power Corporation’s Paul Desmarais must be watching with envious interest. Power held 10 per cent for years, increasing its holdings to 26 per cent through purchases from former Argus chairman E. P. Taylor and the open market in 1975 and since. It was that failed bid that prompted the establishment of the recently released report by the Royal Commission of Corporate Concentration.

Even with the widows in his pocket. Black wanted Meighen’s holdings to gain

“a decisive end to factionalism and political manoeuvring.” Translation: He felt left out. Another reason he gives is more mystifying. “There were certain apprehended events—it sounds like the War Measures Act, but I won’t call them insurrections— certain apprehended events that meant we were required to move quickly.”

Black says he won’t hang out any dirty linen about the disputes with the Meighen interests, but Nelson Davis is more than willing to sling choice phrases: “You’d think they [the Meighen group] owned the whole company. Without consulting anyone, they put themselves in all the important posts. The women are pretty smart and the trust company pretty mad. The Black boys called me right after McDougald died. I told them bide your time, bite your lips and these guys will dig their own graves.”

While all the players and their places are not sorted out, Black will be ready for changes. Yet, at the shank end of a long day, he’s hard pressed to explain his motivation for it all. Clutching a fistful of those pink telephone messages, he searches his mind carefully for words to describe himself. He shuns the easy phrases—financier, industrialist, Metro mogul, Canada’s most eligible bachelor (“that’s bullshit”).

He brightens and says: “I’m a man of the people.” Immediately realizing that’s not quite right, he quips: “One is tempted to make a Meyer Lansky comment: ‘I’m a retired pensioner living on my investments.’ ’’Another try: “Avocationally, I’m a historian and a publisher. Fundamentally, I’m an ideologist.” He says it with the slightest smile that suggests he doesn’t take any easy label too seriously.

He starts again: “I’m motivated by . . .” and his voice trails away again, uncharacteristically at a loss for words. “It’s difficult. One doesn’t want to sound pretentious or superficial. I am perplexed at the erosion of conviction and the gradual descent of our society into a moral torpor. There is a great deal of hand-wringing going on; I’m reduced to reading Spengler. His theme is that the decline of civilization is as likely as the turning of autumn leaves. I have this semi-romantic notion about ideological questions. I guess there’s a bit of the missionary in all of us.” Whether or not he will be a successful missionary, his recent mission was a success.

A friend of Black’s, knowing him to be a devotee of the Napoleonic period, asked, when the news first broke, whether he felt like Wellington before Waterloo. Replied Black: “No, I feel like Wellington after Waterloo.”^

* Ravelston, a private partnership, is owned by: the McDougald estate, 2 3.6 per cent; the Phillips estate, 23.6 per cent; Western Dominion Investment (the Black brothers), 22.4 percent; Third Canadian General Investment Trust Limited and Canadian General Investments (the Meighen interests), 26.5 per cent; A. Bruce Matthews, 3.9 per cent. Argus holds 23.5 per cent of Dominion Stores, 16.9 per cent of Domtar, 23.1 per cent of Hoilinger Mines, 16.4 percent of Massev-Ferguson, and 47.7 per cent of Standard Broadcasting.