The Last Canadian Knight

by Gordon Pitts

  At one point, Ann told him that she would go back to Nova Scotia in mid-1993, and he could choose to join her or not. “I need to be settled in a place, to have my garden, and know I have a base,” Ann told him. Ann, even more than Graham, saw herself as a Nova Scotian. Her British life had been a magnificent adventure, but it was not really her. “I am just a little girl from Dartmouth, and when I was growing up Dartmouth was six thousand people and you knew everybody. Nobody thought twice about little Ann Creighton walking down the road to the ferry with her friends, and knowing every shopkeeper along the way.” In a sense, she was returning to that freedom—her friends, her bridge games, her garden, with nary a security guard trailing behind. Nova Scotia is where she is at peace, says her son Michael. “Whereas Mum can go anywhere in Windsor or Hantsport or Halifax and she feels this is her community, I’m not sure she ever felt that in London. She had to be the wife of Sir Graham, one of the leading half-dozen industrialists in Great Britain. In Hantsport, she’s Ann. She likes being Ann. She’s always liked just being Ann.”

  Graham was more conflicted. He felt he belonged in Britain because he was part of the business community, even though, as Michael suggests, he inevitably would encounter the implied sneers that he was “NQ”—“not quite one of us, old boy.” He had amassed seven honorary degrees from British institutions, membership in a couple of London’s venerable livery companies, including the Worshipful Company of Shipwrights, and inclusion in the elite Whitehall Dining Club, whose dinners and discussions drew the top business and government leaders. “It was something which I think the Brits are very good at: providing lubrication between the upper reaches of the civil service and the upper reaches of business and industry,” Day says. That is harder to do in a geographically sprawling nation such as Canada.

  But Ann felt her husband badly needed to pull back. Certainly, he was apprehensive about returning—he had been so busy in Britain—but he was also very tired. There were opportunities in Britain, but he had to say no. He was both blessed and cursed with the reputation as a crisis manager. The UK government’s thinking was: Something bad is happening! Who have we got? Oh, right. Graham.

  In Britain, there is speculation to this day as to why he left. Ill health? Family crisis? Troubled marriage? Didn’t he miss being a player in the big leagues? Deborah Jones, writing in Financial Post Magazine in 1994, said, “The choice to leave was his, and Brits do not quite believe that their adopted dragon slayer has really gone to Canada, of all places.” Many did not understand the move. “If you’ve been a man as powerful as Graham has been in his career, and as high-profile, it must be very, very difficult just to switch out the lights and go back to whatever Nova Scotia is like,” commented George Simpson, Day’s successor as chairman of Rover Group.

  Right to the end, other jobs had presented themselves. He got a feeler about becoming a “working peer,” a government appointee to the House of Lords, someone with specialist knowledge or experience who would become a junior minister. He had no knowledge as to the authority of the person inquiring, but he said no right away. He was committed to going home. Besides, he would never have been happy in a junior minister’s role. “I consider myself to be very fortunate that I missed being seduced by politics,” he says. “I realized early enough that I would not have been either an effective or a happy politician.”

  Day certainly looked forward to some privacy. The loss of personal space was the hardest part of the Decade of Graham Day in Britain. And yet, in 2016, more than twenty years after leaving Britain, he admitted that “I miss the game, absolutely.” During the last seven years in Britain, “I performed as well as I ever had or could. It didn’t mean I was performing flawlessly, but within the limitations which we all have, I could not have performed better. I was absolutely at the best of my game.”

  What was the Graham Day legacy in Britain? He was part of a revolution. In the 1970s, when he left Britain the first time, state-owned industries accounted for 10 percent of gross domestic product. When he left again in 1993, the percentage was down to 3 percent, and he had played a big part in getting there. The Thatcher government had privatized about fifty companies, valued at about US$20 billion, and Day had had a hand in a number of them. He helped unleash the new enterprise culture in Britain, and became one of the heroes of the neo-conservative movement worldwide, although he would hate being labelled in that way. A lot of the stereotypes of radical neo-conservatism did not apply to him.

  For a man who could talk tough with unions, he was regarded with grudging respect by many labour people. “He came with a Canadian reputation as a tough, clear-minded manager,” says Lord Monks, a Labour peer who, as John Monks, had been a moderate official in the union movement in the 1980s. And, Monks says, he retained that reputation even through difficult assignments. “He was respected as a manager. He did not have a huge personality or a great leadership aura about him, but he was calm, and he knew what he was supposed to do, which was get costs down and get these things efficient in a way they weren’t.”

  Monks, like many labour leaders, saw Day as essentially a technocrat who did Thatcher’s bidding, but who was fair in his approach and generally not ideological. His most damning indictment was that Day left little lasting imprint on British life, when all was said and done. He just moved assets around. He was viewed as better than most of the rest of Thatcher’s people. Coming from a unionist, it was probably high praise.

  Yet it contrasts with the perspective inside the companies Day ran, among the management teams who worked with him. There, the image is more of a leader who was honest, warm, strategic—and inspirational—in how he approached his job. Day’s most effective management tools—humour, persuasion, the human touch—worked best at close quarters. His supporters say his legacy was keeping companies whole and giving them a chance to survive and succeed. And, above all, he could recognize great people and bring them along.

  For Roger Vaughan, his old shipyard colleague, Day was the best mentor he ever had, with good values and a dry sense of humour. “In Lancashire, we would say there is no ‘side’ to him. During my career, there was a little voice at the back of my head: ‘Would Graham have done it that way?’” Just as Day himself had said about Les Smith. From the outside, it might be hard to see Day’s impact. “He didn’t seek a great public presence,” says Vaughan, who would help lead a management buyout of one of the privatized shipyards and was later instrumental in developing the business school at the University of Newcastle. “He was charismatic, but he did not put himself out there—he just got on with the job.”

  Which is very Canadian.

  John Gardiner credits Day, in many of his jobs, with being very good at managing industrial decline—at being realistic about goals, saving what was salvageable, and discarding what had no future. That is not a flashy description, but it is a rare talent, Gardiner says. Day was also skilled in navigating the vagaries of government policy and bureaucracy, which Gardiner likens to scaling the most treacherous Alpine peak: “He was the man who could climb the Eiger in the winter with ice on its face.”

  So the Days returned to their Cape Cod home on the Avon River in Hantsport, which they had built in the 1970s. That was the pact, after all, they had made a decade earlier. Deborah Jones, in her Financial Post Magazine article, said Day became a Canadian taxpayer on July 27, 1993—“at 3:10 in the afternoon,” he noted, unhappy that he now had to pay income tax at a 55 percent rate, up from Britain’s 40 percent. He marvelled that, in Hantsport, “he recently stayed put for three whole days, never once put on a shirt and tie, and dined on a bean supper at the local fire hall.”

  But he did not, as George Simpson remarked, just switch off the lights. He re-enlisted in that coterie of company founders, entrepreneurs, and professionals that form the so-called Maritime Mafia. There are many ways in which the Maritimes are disadvantaged in the global marketplace: a small and dramatically aging population, a declining resource
base in fisheries and forestry, a meagre immigrant inflow. But collectively, the three provinces have a major competitive advantage: a business elite that is tight, collegial, and with a shared sense of a duty to serve the region. In 1993, the elite was led by a group of powerful directors and executives, including Toronto superdirector Purdy Crawford (now deceased), members of the Sobey family, New Brunswick premier Frank McKenna, blueberry and broadband supplier John Bragg, entrepreneur-investor John Risley, and the french fry–making McCain family. Graham Day settled into that milieu.

  In this environment, the director jobs found him, and he could pick and choose—everything from Jacques Whitford, a Halifax-based environmental engineering firm, to a couple of Norwegian shipping companies. He enjoyed the work. He also found pockets of enterprise that he would support and encourage, and where his sense of justice would come into play. After the Nova Scotia Power offering, Day felt that CEO Louis Comeau was never paid adequately and that his contributions were undervalued by the board. It angered Day, who respected Comeau as a capable, underrated manager. When it was clear that Comeau would be leaving, Day said he would leave the board the same day.

  Day and Comeau remained friends. Day soon got a call from headhunters charged with finding directors for NAV Canada, the company than runs Canada’s air traffic control system. He said Comeau would be their guy: he understood regulation, he was bilingual, and he had been an MP. He got along well with everyone, including unions. Comeau went on the NAV Canada board and ultimately became chair. In turn, Comeau was helping put together an advisory board for a company called Acadian Seaplants, owned by the Deveau family of Halifax. The company was a leader in the science and processing of seaweed for all kinds of purposes, from human to animal food, fertilizer, and pharmaceuticals. It was international in scope, and Day agreed to join the board.

  He also plugged into a thriving subsection of the Maritime Mafia, the Acadian connection. Friends saw how enthusiastically he supported a group of people who had survived conquest, expulsion, and treatment as second-class citizens, only to emerge with a resilient culture and a vibrant entrepreneurial spirit. Aldéa Landry, a high-profile New Brunswick Acadian—and former deputy premier in McKenna’s Liberal government—found herself sitting on boards with this very impressive guy from London. She was intimidated by his CV, but he disarmed her with his down-to-earth ease, and they became fast friends. Asked to explain Day’s connection with Acadian institutions, Landry says, “I think it is his sense of fairness.”

  Day himself says it is impossible to live in the Annapolis Valley without being reminded of the cruel expulsion of the Acadians by the British in the 1700s. So he has stepped up with support. Aldéa Landry has served as chancellor of Université Sainte-Anne, a francophone institution on the northwest shore of Nova Scotia, and Ann and Graham Day have backed a scholarship for young women in her name at the university. When Day, in his seventies, was diagnosed with prostate cancer, he received very skilled treatment at an Acadian hospital in Moncton, the Dr. Georges-L.-Dumont University Hospital Centre. It cemented his sense of connection with the Acadian population of the Maritimes.

  At first, Ann felt guilty she had dragged him away from the bright lights of London, but when he got home, he was so busy it didn’t matter. “He said the timing was right. He wasn’t really sure at the time, but it turned out he was right,” Ann says. As Graham would tell a reporter, in the years ahead, “I was determined to wear out rather than rust out.”

  It meant reuniting with families he had known or had heard of as a young man. In the Acadian connection and other projects he took on he also found a new mission: preparing the next generation of Canadian leaders.

  Chapter 16

  The Bank Job

  Over most of Canadian business history, directors of major public companies were like celibates at an orgy. Interesting things were happening all around them, but they could not participate. They might nod and agree to what was taking place, but play no significant part in influencing the action. It was a position with theoretical power—after all, the board represents the actual owners—but hollow in its impotence.

  Graham Day would never be that kind of director. He was never the passive kind who was just there for the fancy title or the canapés. What’s more, he joined the Bank of Nova Scotia board during the transition to meaningful corporate governance. This is no coincidence. The governance of Canadian companies is not perfect now, but it is markedly better, and Day played his part.

  The bank that he joined as director in 1988 could trace its origins to a meeting of Halifax business people in a coffee house on New Year’s Eve 1831. The group was concerned about the monopoly of the private bank that dominated the city’s commerce, and sought an alternative option. Three months later, the Bank of Nova Scotia was born. The bank spread geographically, and in the twentieth century its operating centre would move to Toronto. But Maritimers were always well represented among the bank’s leadership. These leaders pushed the bank south to the Caribbean, where traditional trading ties led to banking connections. In 1889, the bank opened a branch in Kingston, Jamaica, to allow the trading of sugar, rum, and fish, the underpinnings of the triangular trade with Atlantic Canada and Britain. Scotiabank evolved into the Canadian bank—indeed, the Canadian company—most engaged in Latin America. Successive leaders would cement and extend those ties. Despite this broad hemispheric vision, Scotiabank also became the most conservative of the Big Five Canadian banks in its management and public profile.

  It is hard to change a large Canadian bank. These are huge ships that cannot be turned by a single director, especially in the era of the rubber-stamp board presided over by an all-dominant chairman-CEO. But Graham Day would be part of the group that guided Scotiabank through expanded internationalization, a stronger consumer loan offering, and a new governance relationship between the board and the management team. And he worked with people to make them better.

  His primary contact at the beginning was chairman and CEO Cedric Ritchie. Ritchie, whose low-key style belied his absolute mastery of the bank’s politics and machinery, didn’t need mentoring—he, in fact, taught Day a lot about banking and leadership. Ritchie was an old-style banker who became a rural branch teller in 1945 and stayed with the bank for fifty years. When he reached the top, he combined the jobs of CEO and chairman, as was typical. He was the personification of the prudent, hard-working banker; the institution reflected the man at the top.

  “Cedric was very capable and steadfast, not an outward guy, not great in speech-making,” says Rick Waugh, a Winnipeg boy whom Ritchie helped promote in the bank. Ritchie had a high school education, and came up through the bank as an internal auditor, travelling the country examining the branches’ books. He got to know his craft better than the slick communicators. As a twenty-something analyst working for the department handling the bank pension fund, Waugh came before the senior bankers, including Ritchie, to discuss a potential investment. He explained that companies such as the one being discussed were valued according to cash flow, including one variation: earnings before interest, taxes, depreciation, and amortization, or EBITDA. Today, any punter on the street can talk about EBITDA, but this was the early 1970s. Ritchie, then general manager, asked: “What is EBITDA?” Waugh was dumbstruck, not by Ritchie’s gap in learning, but by the courage to ask the question. That was his great talent. Waugh observes that “the banks were very hierarchical, very vertical, and very centralized. The position [of chairman and CEO] had a lot of power, and Ritchie had that position a long time.”

  Faced with an imperial CEO—even one with a non-imperial manner—the bank’s board was relatively toothless. It sported as many as forty directors, representing provinces and territories, which made it unwieldy for effective decision making. The role was further diminished by the volumes of data dumped on directors at the beginning of meetings. The most meaningful discussion was held by the handful of powerful directors, including the chair
man-CEO, who constituted the executive committee. Long-time Scotiabank director Allan Shaw remembers that, as they entered board meetings, directors would be handed a thick book of “credits” or bank loans. They were expected to wade through all the information, comment, and ask questions—and all within a couple of hours. It was impossible. It was a similar story with the audit committee: Shaw and his colleagues found there was simply too much to get through to make informed decisions. Shaw approached Ritchie with trepidation, asking that the directors be given packages of information in advance. The compromise solution was a “lockup” for an hour or two before the meeting. Similarly, smaller credits were dealt with elsewhere by staff, leaving the big loans for board members to peruse. It doesn’t sound revolutionary, but it was a start.

  The Maritime provinces were well represented on the Scotiabank board. Annapolis valley industrialist Roy Jodrey was a director for years, and then his son John. Also prominent were Shaw, of the eponymous Halifax construction materials concern, and frozen-food titan Harrison McCain. Then along came Graham Day, who, in the late 1980s, was still in England and preparing to re-enter the Maritime universe. He was a new breed: a professional corporate director with broad governance experience, but almost exclusively in Britain.

  Day joined the bank’s board knowing there were two kinds of directors: the ones who took up space and were wise to keep quiet, and the ones who “busted their asses to know the business.” He would be the latter, but he had to relearn the Canadian way of business. The accounting terminology, processes, regulation, approvals processes, and risk factors were all new. His first committee appointment was as a member of the audit committee, because Ritchie—a master of audit—had told him this was the quickest way to learn about the bank. Day found he was right.