Stalking the boy wonder
Everything Maurice Strong has touched has turned to gold, at least according to the legend
With his short, stocky build, high cheek bones and strangely drawn eyes, Maurice Strong, chairman of Petro-Canada, looks like a blue-pupiled samurai as he charges out of his office cheerfully ready to cut down anyone who might be questioning the tasteful but discreet elegance of the government-owned oil company’s Calgary headquarters. Slash! The paintings and native masks on the walls are merely borrowed from the Devonian collection. Hack! The light and subtle decor was done voluntarily by a “Scandinavian lady.” “A friend?” inquires the eviscerated visitor. Strong pauses for a second, sword upraised. “A friend of Petro-Canada’s,” he says diplomatically.
The episode says a lot about Maurice Frederick Strong. In person modest and sincere, he retains a hint of the authority that has led to speculation he might be the next leader of the Liberal Party. At 47, he is perhaps Canada’s leading example not just of the new class of capital-hopping international administrators he used to talk about in his United Nations days, but also of the native breed of entrepreneurs, operating equally adroitly in business and government. Apart from his obvious charm— “he seduces people,” says one student of his administrative methods—he is acutely sensitive to criticism. Petro-Canada is not popular in Calgary. Only protests from other tenants prevented it naming its red brick headquarters building after itself. Now a local witticism refers to it as “Red Square.” Strong knows perfectly well that the city’s tightly knit oil community is watching hungrily for evidence of extravagance, and he is far too clever to allow it to appear in the corporate symbolism of the head office. But he can’t resist a little romantic overkill, with the result that the visitor now has two versions of Petro-Canada’s decor: either it was done by a Calgary interior design company, or by Maurice Strong’s fiancée, whom he plans to marry
once his divorce from his wife of 26 years is complete.
Petro-Canada—Strong dislikes the
common abbreviation “Petrocan”—is a fruit of the uneasy liaison between the minority Liberal government and the New Democratic Party after the 1972 election. It was originally intended to be an all-Canadian state-owned integrated oil company (an integrated company is one involved in all phases of the business, from drilling to consumer sales). The other integrated oil companies in Canada, such as Imperial Oil Ltd. and Shell Canada Ltd., are all effectively owned by foreign corporations. Ottawa also intends to use Petro-Canada to boost the search for domestic oil, which has been drooping in recent years, partly because federal-provincial quarreling about tax shares left the companies feeling uncertain and exploited, and partly because the results of the last 10 years’ exploration havk been so appallingly bad.
But the official rationale for Petro-Canada has tended to shift with circumstance. There are still those who believe it will be used ultimately to swallow up in one gulp an entire integrated oil company, perhaps even Imperial Oil. Others believe its main function is to satisfy the various Third World countries now in possession of most of the world’s proven oil reserves, who characteristically prefer to deal with stateowned companies. Actually, there are limits to what Petro-Canada can do, even with its proposed $1.5 billion capitalization. The oil game is expensive. Petro-Canada’s $100 million 1976 exploration budget, for example, is only 10% of what the whole industry will spend; one well in the Beaufort Sea could cost up to $45 million.
Strong’s ow n interpretation of his role to date has been to attempt a variety of exploration ventures, or “plays” as the industry calls them, true to its gambling instincts; to eschew any refining or marketing role; and to purchase for about $335 million most of the Canadian assets of Atlantic Richfield Co., reportedly much to the Los Angeles corporation’s delight. Atlantic Richfield
gave Petro-Canada cash flow, oil and gas properties and a regiment of proven industry personnel, mainly in exploration, but it added nothing new to the overall Canadian economy, as its critics were quick to point out. Something about the way Strong has run things has irritated someone in Ottawa, because in July of this year the report was leaked to the Canadian Press that Strong was being “replaced” as PetroCanada’s chief executive. In fact, it was always intended that he would give up the presidency, which he combined with the chairmanship, as soon as the operation was underway. But reports continue to suggest that it happened more abruptly than he would have liked. “Those Petrocan people couldn’t carry on without a full-time president,” says one Ottawa observer, alluding to Strong’s little-known private business interests.
Strong’s career has been so astonishing that nothing he does at this point is likely to surprise anyone. According to admiring versions of his life which have appeared in publications as varied as Weekend Magazine and The New Yorker, he was born in the Prairie town of Oak Lake, Manitoba, the eldest of four children, in 1929. His father was unemployed, and the family lived in poverty. In 1943, his senior year in high school, he attempted to enlist, then spent some time as a cabin boy on the Great Lakes and. according to some accounts, on the Pacific. He still managed to graduate
early, and for at least a year served as an apprentice fur trader with the Hudson’s Bay Company in Chesterfield Inlet. Through prospectors he met there, he got involved in the promotion of a mining company called New Horizons Explorations Ltd. in Toronto. In 1947, “an influential friend” got him a menial job at the United Nations, then organizing itself at Lake Success in New York State. In 1948, he joined James Richardson & Sons, the Winnipeg stockbrokers. Security analysis, the art of predicting a company’s earnings and its stock market performance,was then in its infancy. However. Richardson’s, although a family-owned firm and according to Strong somewhat Byzantine, was remarkably innovative in the field. Strong began to follow the oil stocks, which were just beginning to jump following Imperial Oil’s historic discovery at Leduc, Alberta. In 1951. he joined one of the most promising exploration companies. Dome Petroleum Ltd. (it seems to have been the first job he got without lying about his age), and stayed there, except for a two-year trip to Africa, until 1959, when he formed his own consulting firm and reorganized and developed Canadian Industrial Gas & Oil Ltd., now Norcen Energy Resources Ltd. In 1962, he joined Power Corporation of Canada Ltd., the giant old-line Montrealbased holding company, becoming president two years later. He was 35. It was an unsurpassable corporate apotheosis. Then.
in 1966, he quite unexpectedly translated into government as head of the Canadian foreign aid program, later rechristened the Canadian International Development Agency. In 1971, he went international, becoming United Nations undersecretary general with responsibility for the environment and head of the Nairobi-based United Nations Environment Program. Finally, in October 1975, he returned to Canada to take over Petro-Canada, which had just emerged from a bitter two-year birth in parliament, opposed by the Tories because its powers were too sweeping and by the New Democrats because it didn’t guarantee the expropriation of the U.S. oil companies.
Thirty years of boom (more or less) has attracted a diverse and colorful community of oilmen to Calgary. Its members have the confidence that comes with being at the centre of dynamic activity, a vantage point from which the rest of Canada appears provincial and unimportant. What looms large in their mental universe are oilfields and exploration camps from the Gulf to the vast muskeg swamps of the Canadian North. (“They’ve never been there, they don’t know how big it is,” says one disconsolately into his beer, discussing the strange breed of environmentalists who inhabit central Canada.) Everyone knows each other—and has for years. Knowledge, in fact, is a salable commodity: until recently “oil scouts” flourished, retailing
information on, for example, drilling results, which they gathered by such sophisticated methods as taking secretaries to lunch.
Calgary’s oilmen follow Strong’s career with the incredulous amusement of a circus crowd watching one of their number who has suddenly taken to the flying trapeze. One oil company in the city’s all-concrete heart actually keeps a file of newspaper clippings about him, over which its executives pore with fascinated delight, pointing out to a visitor the apparent inconsistencies in the public record. Even apart from his hyperactive adolescence, for example. Strong is often said to have been earning $50,000 a year at Dome when he was 23, and to have risen to be the company’s second-in-command: both facts are disputed by people who were there, although they continue to turn up in biographies, including the one in Who’s Who. In 1971, Strong was quoted by Alan Phillips in Maclean’s as saying he had forfeited a $200,000 salary and $250,000 in unexpired options when he left Power Corporation to enter government service. This inspired Peter Thomson, who had been the majority shareholder and is now deputy chairman of Power, to write an acid letter pointing out, among other things, that Strong had been earningjust $35,000 when he left and had taken full advantage of his stock options, which the board of directors specially extended in his case. “Well, Maurice talks quickly, it’s easy to misunderstand him,” one of his partisans suggests hopefully. Phillips has no doubt he heard Strong correctly, but interestingly enough regards it as unimportant in the context of the valuable environmental work Strong was doing at the UN. Strong has always had a good press. “I’ve never sought personal publicity,” he says. “You’ll notice our press releases don’t start ‘Maurice Strong announces ...’ ” But he has a puckish sense of what the press will print. His 1972 profile in The New Yorker, which began by suggesting that upon Strong depended “the survival of civilization in something like its present form,” concluded by speculating solemnly that after the UN “he may spend a year or two in contemplation, perhaps in India . . .”
A diabetic, he is nonetheless notoriously hardworking. His intellect is brilliant. The technical excellence of some of his early work is still remembered. He apparently has the distinction of being one of the few people ever to learn French successfully while in the civil service. But beyond this. Strong has a rare and unmistakable gift of timing. It has served him equally well in the markets—junior oil stocks, real estate, commodities—and in public life, where he has happened into foreign aid, the environment and energy fields just as each moved into the public eye. The business community, by and large, takes a tolerant view of frailty. The insecurities, particularly about his education, the compulsive embellishment, the restless ambition, the
occasional insensitivity as to means and other flashes of corporate Realpolitik, all are accepted. “After all, we might be partners with him tomorrow.” Strong, they add, is also unvindictive, and he can be loyal—allegedly a factor in some PetroCanada appointments. It’s in Ottawa, where perhaps a grander self-image prevails, that you hear disillusioned complaints about Strong’s voracious ego, a refusal to delegate or build up an administrative machine and his lack of fundamental philosophy—“a curious amorality.” Actually, Strong’s philosophy has been pretty consistent, if alarmingly naive. He has been saying for years that “it is no longer feasible or even desirable for us to adhere to the old-fashioned doctrinaire approach to free enterprise.” He has remarked that the Depression left him “frankly very radical,” and he now seems to equate the Third World with the unemployed of the Thirties. He has limitless faith, as a consequence, in the efficiency of education and of an automatic transfer of wealth from the advanced to the less advanced countries, to be administered by an international authority and yet more taxfree international bureaucrats. Because he employs the familiar rhetorical device of identifying and agreeing with the obvious counter of his argument (“World government is neither feasible nor necessary. But a world system of governance is indispensable”) it is hard to tell if he realizes the authoritarian implications of his position. Likewise, his advocacy of a “managed society” for Canada, with planning at all levels to be democratized by “consensus-generating vehicles,” such as the Berger Commission, is hard to reconcile with dissent. It’s the sort of elite corporate liberalism associated with the Rockefellers; Strong is a Rockefeller Foundation trustee. He is also particularly interested in the process of decision making in Russia, and speculates that it may be easier to “loosen up” the Soviet system than to move the West in the opposite direction. Certainly, Strong’s remarkable knack of making and using personal contacts would be essential in such a society, but his obsession with control is odd. It is hard to detect any restraining values in his nondenominational Christianity, which appears to centre on the YMCA where he met Harold Rea, now chairman of Great Canadian Oil Sands Ltd., who introduced him to Power Corporation, and Bill Turner, who became one of his lieutenants at Power and more recently president of Consolidated-Bathurst Ltd.
The employees of Canadian Oil Companies rose to their feet and applauded Harold Rea when in August, 1962, he assured them over a telephone hookup linking Montreal, Sarnia, Moncton, Winnipeg and Calgary, that as president he and his board intended to fight a take-over offer from Shell Oil Co. of Canada. For nearly 30 years, Rea had been building the only Canadian-owned integrated oil company.
He had brought expensive Canadian crude oil into his refinery at an additional cost of hundreds of thousands of dollars solely to maintain the all-Canadian nature of his operation. Now Canadian Oil was fighting for its life.
The Shell bid came three weeks after Maurice Strong became executive vice president of Power Corporation. Rea was on Power’s board because it held 28% of his company’s stock. Because the rest of the stock was spread so thinly among more than 12.000 individual shareholders, this 28% was enough to give Power Corporation control, so when Power accepted the offer Shell won and merged Canadian Oil into its own operation. Rea, who regards Power’s decision as the blow that ended the career of Canada’s “natural Petrocan,” also says that “Maurice was in an awful position.” The deal dramatically increased the value of Power’s stock, in which Strong and the other directors had options. Strong maintains Shell would have won anyway (although contemporary press clippings all treat the Power bloc as crucial) and that Power would have been left with a minority interest, which would have been unwise. From an investment standpoint, the deal made a lot of sense: integrated oil stocks were headed into one of their periodic slumps. In one of the neater ironies of Canadian business history. Strong found himself involved in eliminating not only the man who had introduced him to Power Corporation, but also the company—the absence of which he would later return to Canada, amid fanfares, to rectify.
Strong’s record at Power has attracted various reviews. His position there was awkward, because the controlling shareholder was Peter Thomson, heir to the brokerage house, Nesbitt Thomson, which originally put the conglomerate together to repatriate some hydro companies, although the unanimity of the other directors apparently kept him at bay. There was so much friction between them that Strong unsuccessfully attempted to devise a means of seizing control.
Before he arrived, some of Power’s utility holdings had been expropriated, and Strong’s basic task was redeploying the proceeds. His strategy was to aim at Canada’s resource and transportation industries. According to one account, “the value of [Power’s] shares rose from $42 to $110 and its assets increased to nearly $300 million” under his stewardship. Both of these figures must be seen in the context of the long stock market boom of the period. There were setbacks. Power was defeated when it offered to buy control of the aptly named McIntyre Porcupine Mines Ltd., which had powerful allies in the shape of Canadian Imperial Bank of Commerce and National Trust Company. However, Strong says that Power made money on its stock position. When John Labatt Limited was taken overby Jos. Schlitz& Co.of Milwaukee. Power briefly attempted to contact the far-flung Labatt clan and rally re-
sistance. But Power’s executives were apparently divided, and Strong now says he was never interested: “I don’t like profitability based on inducing people to do things that are bad for them.”
Power Corporation ran into trouble as soon as Strong left. By late 1967, the stock was less than half the 1966 peak, and by 1968 the new management was selling off some of Power’s rather sprawling acquisitions for cash to pay the dividend. One major problem was Power’s forest product investment in a predecessor of today’s Consolidated-Bathurst. There seems to be a consensus that Strong was simply not around long enough to force planned management changes. Ultimately Paul Desmarais took over Power and eliminated many of the further-flung holdings in a program of rationalization.
“It always annoys me,” Strong told The New Yorker, “to read of the alleged sacrifices that men make when they go into public service. The real sacrifices are made by those who go straight into public service from high school, and who, unlike me, never get a chance to accumulate any capital.” This puts a rather modest value on Strong’s business activities while in public service. Apart from an investment in the Ottawa Rough Riders, which enabled him to make gifts of free tickets, he became very active in real estate, in collaboration with the group that eventually went public in 1969, at the height of the real estate boom, as Y & R Properties Ltd. Currently, his main vehicle seems to be Stronat Investments Ltd. His partner is Paul Nathanson, 61, whose father was president of the Famous Players Canadian Corp., and who himself developed the Odeon Theatres chain. Nathanson is said to be in poor health, and has avoided publicity all his life except during the war, when he was treasurer of the Canadian-Soviet Friendship Committee. Recently, Strong told an interviewer that he was working on two “billion dollar deals,” but Stronat’s most obvious move has been to acquire a holding in Commerce Capital Corp., which has real estate interests and controls Fanners & Merchants Trust Co. of Calgary (total assets are $315 million). Strong and Nathanson were involved in the company some years earlier with, among others, Paul Martin and his son, who is president of Canada Steamship Lines, Ltd., a Power Corporation subsidiary, William Teron, now president of Central Mortgage and Housing, and Jack Austin, ex-principal secretary to Pierre Trudeau and former deputy minister for energy. (Paradoxically, the appointment of Austin to the Senate was a reason the creation of PetroCanada appeared to stall late last year. Austin had done much of the preliminary work and was campaigning to be its first president, but his contribution was lost when the then energy minister, Donald Macdonald, stipulated that industry experience was required.)
So there he sits on the other side of a
light-colored Petro-Canada conference table, eyes wide with sincerity or downcast injudicious consideration of a questioner’s point, displaying an earnest eloquence on a remarkably wide range of subjects. As the pressure of debate mounts, Strong’s sentences are punctuated by almost inaudible rapid gasps, as if of physical effort— the samurai wielding a heavy sword. The friendly chuckles, the penetrating gaze and the helpful willingness to reinterpret a questioner’s premise so that both sides might think themselves in agreement are almost convincing. “I try to look at myself objectively,” says Strong. But it is hard not to sense a certain inner drive, some past wound that impels him to subscribe, apparently genuinely, to the various Third World dogmas coined at the United Nations, even to making a speech congratulating the oil producing nations on the generosity of their foreign aid. “I’m a socialist in ideology, a capitalist in methodology,” Strong remarks. “That's an oversimplification, of course.”
It seems unlikely that Petro-Canada can hold Strong much longer. He has already said that he intends to spend half his time on his private investments, and Petro-Canada’s new president, Wilbert (“Bill”) Hopper, a second-generation Ottawa mandarin and onetime consultant, makes it clear he will run the operation. The corporation will probably continue its policy of drilling areas with which the oil companies are disillusioned, such as the East Coast and the Arctic Islands, which is not as perverse as it sounds: the search for oil is an art where mavericks sometimes succeed, and Hopper emphasizes that Petro-Canada’s drilling is supposed to be in addition to that undertaken by industry. He rejects completely the industry’s contention that the way to encourage exploration is to allow the oil companies to retain more profit. That would just benefit current producers, he says, who might still refuse to explore. The oil companies knew Strong, and were variously hopeful that his operation might prove a source of new, long-term capital, a learning experience for the government, or even a guarantee that prices must be allowed up to subsidize what they confidently anticipate will be the state organization’s inevitable inefficiency. But they are less sanguine with Hopper of change in the rule that Petro-Canada can muscle in without compensation when any likelylooking drilling area comes up for permit renewal. There are rumors, hotly denied, that soldiers of the Atlantic Richfield regiment are demoralized.
Strong remains an enigma. He is certainly conscious that now is the time to return from the wilderness and lead the Liberal Party back into the promised land of business confidence and electoral victory, assuming the Prime Minister is agreeable. But he could have entered politics years ago (he’s been invited by the Tories too, for that matter). He looks too much like a moustached bank clerk, his public speak-
ing is poor, his ideas intangible, his style personal. And there is the suspicion that he was happier gamboling in the uncritical press he got on a motherhood issue like the environment. A return to some form of international civil service is possible. Perhaps he will settle for just being a financial Napoleon. There are predictions he will set up an international merchant bank, perhaps specializing in intergovernment and aid finance; he has both the qualifications and the contacts to do it, and the international area delights him. Perhaps at the heart of all the new ideas, the changing of jobs, the ceaseless traveling, lies a secret, wild love of anarchy and change for its
own sake. “He’s the most premeditated man I’ve ever known,” says one colleague, “but I don’t think even Maurice knows what he wants to do ultimately. You remember that book Fame Is The Spurl Maybe he wants to be God—he’s already walked on water.”
“Maurice Strong,” repeats another thoughtfully. “Well, he’s not as great as he’s made out to be—but he’s not as bad either.”
Strong stands in the door. The interview has consumed a crowded morning, but he shows no impatience. He muses on his improving control of his temper. “I don’t think anything can hurt me now,” he says. v>