Barbara and I had dinner and I enjoyed the better part of a good bottle of claret. The sale of Ravelston and Argus corporations’ 78 per cent of Hollinger Inc. to the Barclays was concluded shortly after midnight. Reciprocating the plentiful courteous notice of important events that our enemies traditionally gave us, Sullivan & Cromwell sent a faxed notice of the impending sale to Breeden’s office at about nine o’clock that evening.
While I was right to resist the corporate governance fanatics as I did, am proud to have done so, and am sure I will eventually be vindicated, and at the time of writing, I substantially have been, I had underestimated their strength and identified my own contempt for the movement too strongly with the corporate interest. If the motion to remove me had been presented for the correct reasons and in acceptable terms, I would have abstained. Of course, under any scenario, I intended to return, as Gordon Paris couldn’t run a two-car funeral, and it shortly became clear that it was precisely toward just such a fate that Paris, with the help of Breeden and Seitz, was driving the company. But for me to cling on to an impotent position, fronting for the usurpatory acting (in each sense of the word) management, was an intolerable state of affairs.
Most important, I did not want to be associated in any way with the vandals now in control, with Paris acting in Breeden’s name, as chairman, president, and chairman of the Special Committee. The events of the last few days made the distinction clear between those who built, largely owned, and would normally control the company and those complicit in their overthrow and in the subsequent destruction of the Hollinger companies. The Hollinger International shareholders would pay a terrible price for the fact that their fate was to be entrusted to Breeden.
Breeden and I had both crossed the Rubicon in opposite directions. I assume that he was accustomed to, and had achieved, in his corporate governance role, the complete submission of his targets, and was even addicted to it. Certainly, that was what he had effortlessly extracted from Radler, Atkinson, and the independent directors, except, up to a point, Perle. And that is how his operatives behaved, from his law firm down through the people who appeared at our offices to take our hard drives (with a peremptoriness usually reserved to bill collectors or minibar inspectors).
In making a Swiss cheese of our Restructuring Agreement, and a farce of our “substantive discussions,” and then launching a legal onslaught while we were supposedly in constructive negotiation, he had escalated our disputes to a war which had to result in one of us being completely crushed. He had seized, and for a (long) time, would retain the high ground, and I was severely defeated at the outset and repeatedly. But my weakness was my strength. I had little left to lose, and I was, after all, innocent of wrong doing, if not of misjudgment.
I had just demonstrated an ability to continue the fight that startled the other side. The more the war escalated, the greater the danger to Breeden would become. With each new overreaching act of belligerence, Breeden would risk more; we were locked in a death struggle on a runaway train. He had to finish me off as the crook he falsely claimed I was, or fail.
No matter how often and noisily I was pronounced dead, it wouldn’t happen if Breeden, to borrow what has become an American political expression, couldn’t close the deal, by destroying me. He took the task upon himself, and kept raising the stakes. He has sown, and he shall reap.
* I eventually had a very congenial correspondence with Elinor, and she accepted my invitation to dinner when I return to London. I look forward to it.
* This was the fear that if my finances collapsed, the Royal Bank could be accused of advancing the interests of one creditor over others by monopolizing, for security purposes, a principal asset, to the exclusion of other creditors. Five years later, Canadians would be grateful for such caution in their bankers, but it wasn’t really caution here; it was an infelicitous fusion of terror and animosity, and was absurd in practical terms.
Looking out at Crossharbour and Greenwich from the fifteenth-floor office of the chairman of the Daily Telegraph in the Canary Wharf tower in 1993. I commissioned the bust of Cardinal Newman (from Marcelle Quinton). The watercolour on the wall is of World War II Japanese battleships, all of which were sunk shortly after the date they were sketched.
The Daily Telegraph newsroom, 1992. I almost never interfered directly with journalists, and always supported my editors, as long as we were generally in agreement on our overall perspectives. Apart from promotions, I only changed editors I had engaged once, and that was a sideways move. (photo credit 1.2)
With the formidable and often volcanic editor of the Daily Telegraph, Max Hastings, one of Britain’s greatest journalists, and a strong leader of the department who greatly improved the newspaper. My relations with him were cordial, though he was to the left of most of the readers and me on almost everything except taxes and unions. (photo credit 1.3)
With the Queen and Prince Philip on the first royal tour of the redeveloped London Docklands, as the Duke of Edinburgh signs the Daily Telegraph visitors’ book. Because of my position at the newspaper, I often met them, and they were always very gracious and extremely well-informed. They seemed to know everything about all Commonwealth countries and vividly recalled Canadian and American leaders of the last sixty years. Most of our journalists reacted to the move to the Docklands as if they had been assigned to the far side of the moon. (My first wife, Joanna, is on the far left.) (photo credit 1.4)
Barbara, at our wedding dinner at Annabel’s, July 21, 1992, holding up a hilarious mock front page written by Max Hastings. It was as happy an occasion as it appears, and so have been the married years that have followed. We are looking forward to our twentieth anniversary, finally free of the travails of the last eight years, through all of which Barbara has been magnificent. She was then a prominent columnist of the Sunday Times, which explains the headline.
Left to right, reading Max’s special wedding edition: Margaret Thatcher, CB, the Duchess of York, distinguished publisher George (Lord) Weidenfeld, Tessa Keswick, former U.S. assistant secretary of Defense Richard Perle, and Barbara. It was a very jolly evening and most of those who attended, though not all, have remained friends through all the years and events since.
Nancy and Henry Kissinger and Lady Thatcher and Lord Carrington, with Barbara and me after my installation as a member of the House of Lords, November 2001. It was a great honour to have as my sponsor and co-sponsor Peter Carrington, Britain’s greatest nobleman and ultimate contemporary Whig, and the greatest prime minister since Mr. Churchill, without whose revitalization of the United Kingdom, I never would have lived or seriously done business in that country.
With Henry Kissinger and then Prime Minister Margaret Thatcher, at the Hollinger annual dinner in Toronto, June 1988, at the end of the G-7 Summit meeting. At the height of her powers and prestige, Margaret Thatcher was a tremendous personality, and always, including in more recent difficulties, very considerate of Barbara and me.
With the always delightful Nancy Kissinger at the Hollinger annual dinner, Spencer House, London, in May 1995. Elegant, statuesque, and indomitable, she too could have written the playbook for the supportive spouse. Henry often claimed that Nancy and Barbara were a great deal fiercer than we were. He was probably correct.
With Barbara and Princess Diana, also at the Hollinger dinner in 1995. Though temperamental and not formally well educated, the Princess was extremely witty and vivacious, as well as startlingly beautiful and stylish. After her marriage came unstuck, she ran a parallel monarchy beside the real royals, with considerable public relations success. She was as great a star up close, at least on casual acquaintance, as to her vast, admiring public.
By 2000, I feared newspapers were a beleaguered industry and was exiting the business through a series of large, very profitable, asset sales. A couple of these that were not completely documented were exploited to seize control of the companies, fire, indict, and imprison me, and my court-appointed successors then destroyed the companies to their
own great profit. The painting is of my father, George M. Black. (photo credit 1.11)
Our home in Palm Beach, which became a contentious issue with U.S. prosecutors, who tried unsuccessfully to force its sale for three years. This house easily covered over $15 million of invoices from avaricious American lawyers. I sold it in April 2011 at a satisfactory price. After the economic debacle of 2008, I lost most of the respect for American capitalism that had attracted me to Palm Beach thirty years ago.
Our home in Toronto, as viewed by the countless helicopters that overflew it very distractingly for years during my legal problems. Though I built more than 90 per cent of what is visible here, the original part of it was my parents’ house. It has been my address for sixty years, and I hope it long remains so. (photo credit 1.13)
Speaking to Barbara at the end of the 2003 annual meeting of Hollinger Inc. in Toronto. Barbara was a very conscientious director, and as a very successful editor of the Toronto Sun and leading columnist in Toronto and London was a capable and well-qualified editorial vice president, and helped to improve many of our Canadian newspapers. (photo credit 1.14)
[CHAPTER SIX]
WE DREADED FRIDAYS. The pattern established by International early on was for a week of skirmishing ending with the minimally required twenty-four-hour notice given either Thursday or Friday of a board meeting – no agenda. The new management would convene to issue another Breeden Bull, guaranteeing us a weekend of gloom as we scrambled to devise some reply to his latest manoeuvre.
For once, we had roared back and left the enemy scrambling like asphyxiated cockroaches. With the sale to the Barclays, Breeden and his committee had the rug pulled out from under them. The media, now accustomed to me as a completely passive and deposed figure, were startled by this turn of events. Sunday headlines of “BLACK SUED FOR $200 MILLION AND SACKED” were followed by Monday’s and Tuesday’s headlines of “BLACK’S BUSY WEEKEND” and “BARCLAYS: HOLLINGER BID ‘DONE DEAL.’” There was great excitement among worried Hollinger Inc. shareholders that they would now see money, as all classes of stock would be taken out at good prices by the Barclays. Once these counter-attacks were launched, Jesse Finkelstein and Sullivan & Cromwell reconfirmed that this sale was legally invulnerable. I allowed my infant but precociously growing wariness about the operation of the U.S. legal system to be overborne by their confident assurances. It would all be part of a most expensive and painful education.
This time International did not have the luxury of waiting for Friday. A Hollinger International board meeting was called for Monday, January 20. It was probably the most disagreeable directors meeting I have ever attended. (From then on, all Hollinger International board attendances by me, except one, were by telephone.) Gordon Paris was elected chairman. Barbara and I voted against; I pointed out that he was completely unqualified and in a clear conflict of interest as chairman of the Special Committee. Then a Corporate Review Committee (CRC) was established, comprising all the directors except Barbara, Dan Colson, and me, to review the Barclays’ transaction and any other matters. All powers of that committee could be delegated to a subcommittee of two, to be called on minimal verbal notice.
It was designed to be the completion of our marginalization, prior to our completely unforeseen counter-stroke. Henry Kissinger, in his chivalrous confusion, objected (only) to Barbara’s exclusion. Obviously, one had either to reject the concept of the committee entirely or agree to the proposed composition, which, as Barbara pointed out, excluded the only three people on the board who knew anything about the business the company was in. Dan Colson was ostensibly the chief operating officer but was being ceaselessly and ignorantly interfered with by Paris.
Then came approval of the $200-million lawsuit. (It would shortly be escalated to over $1 billion by adding new, even more fantastic counts, and the peculiarly American flourish of the civil version of the Racketeer Influenced and Corrupt Organizations Act, RICO; yes, civil racketeering. I asked myself if the crime of civility could be far behind.) Richard Breeden gave a rambling pastiche of accusations about the original problems of unauthorized payments, which I rebutted in a calm, low voice – so calm it was not entirely understood by some on the call. I reaffirmed the contents of a letter I had sent the directors over the weekend debunking the unauthorized payments theory and referred to the letter the Barclays also sent to the directors in which they objected to the “vendetta” against my associates and me and promised full support for the Strategic (Lazard) Process.
The lawsuit was approved. Dan Colson had to abstain; Richard Perle was not yet on the call. Barbara and I were the sole votes against. I asked Henry Kissinger if he had voted for the suit, since I had not heard him. He replied that he had. I said, after a brief pause: “Et tu, Brute?” This hung heavily in the air for a few moments. Then Henry said that he wasn’t approving the contents of the lawsuit, only upholding the right of the company to take it, and asserted his standard comment that I had “been one of [his] best friends in the world for decades.”
The great Metternichian was befuddled by this sudden agitation in the balance of forces in a small matter, like a coup d’état in the Balkans or, in our times, even in Central Africa. He got it wrong as the passage of years would show.
The final motion of the telephone meeting called for adherence to the Restructuring Agreement. I detailed the company’s violation of six of the eight provisions of that agreement and explained why I believed that the Barclay transaction, supported by the letter the Barclays had sent the directors and the letter I had sent, conformed to the agreement. Richard Perle had now joined the call and supported the position I was taking that the Restructuring Agreement had to be upheld by all parties. The motion passed and the meeting adjourned. Dan Colson, who attended by telephone from London, was so disgusted by the meeting that as soon as it ended, he went to his washroom and vomited.
In the U.S., a controlling corporation can adopt a consent motion that alters the board and the committees of a subsidiary. We used this at Hollinger Inc. and gutted all the Hollinger International committees, required unanimous approval of various categories of motions, and required one week’s notice of any meeting rather than the twenty-four-hour specials International favoured. We were, after all, still the controlling shareholders of the companies we had built. Both Jesse Finkelstein and Sullivan & Cromwell again assured us this was a legally unassailable step.
Our right to sell to the Barclays would now be challenged by International in the chancery courts of Delaware – which was where International was incorporated. I continued my cheerful daily conversations and fax exchanges with the Barclays, a rather pleasant interlude with two intelligent and humorous businessmen, among the more agreeable people I have dealt with. They issued a 13D (a public SEC filing, which Tweedy Browne had used to call for the appointment of a special committee) in early February that indicated they were prepared to offer $18 a share for all Hollinger International shares but stated that Wasserstein had been instructed by Paris, who was supposed to consult with me about the Strategic Process (and who had told me in the “substantive discussions” two weeks before that the stock wasn’t worth more than $15), to insist on a higher price. I urged the Barclays to stop the tease and make the offer.
They were confident based on advice from their lawyers, Skadden Arps (who had ignored any possible conflict in that they were also acting for both Tweedy Browne and Lazard), which was that we would win the case in Delaware and that they could buy the Telegraph from International via Hollinger Inc.’s controlling interest in that company without having to bid for all the International shares. My plan was to sell Hollinger Inc. and with it International at the best possible price. It didn’t take a genius to see that Breeden and Co. would never be able to run a newspaper company profitably and their animus to me was so clear that co-existence was never an option, though I gave it a try. Nor, from his conduct, was it ever intended to be an option. Only Greenspan, our Canadian lawyer, had seen immediately what we were
up against.
In ordinary times we should have been able to get the Ontario Securities Commission (OSC) to intervene to protect the rights of the Hollinger Inc. shareholders from being hog-tied by a putschist faction in the U.S. subsidiary. But a little research confirmed that the OSC saw Hollinger Inc. as me (as my associates and I owned 78 per cent of it), and didn’t approve of multiple-voting shares (with which the parent controlled the subsidiary). Some of the OSC staff remembered being cuffed around by Breeden when he was at the SEC, and importantly, as it turned out, didn’t want to go through it again.
Now came the first of many trials in this saga, in which Hollinger International sought to block the sale of Hollinger Inc. to the Barclays. We were quickly into depositions for the trial in Wilmington, Delaware. The first inkling that there might be greater problems than I had been warned about was Finkelstein’s statement to me that the designated Chancery Court judge, Leo Strine, was flaky, controversial, and unpredictable. Barbara did some research and found him to be an intelligent judge with a creative view of his role, a shareholders’ rights activist, and a left-liberal Democrat whose elevation to the bench had been closely contested in the Delaware State Senate. It wasn’t clear in this case which side a shareholders’ rights advocate ought to be on, but given the public relations debacle, I was unlikely to be the beneficiary of that current of opinion. Though a shareholder myself, I belonged to a category out of favour with the governance movement and one being hunted into extinction: the controlling shareholder with dual-class stockholdings.
Conrad Black Page 23