Shades of Black and Wrong Way

SHADES OF BLACK: CONRAD BLACK – HIS RISE AND FALL
By Richard Siklos
WRONG WAY: THE FALL OF CONRAD BLACK
By Jacquie McNish and Sinclair Stewart

When Richard Siklos’s biography of Conrad Black was first published in 1995 it had the subtitle “Conrad Black and the World’s Fastest Growing Press Empire.” Black’s press empire, which included titles like Britain’s Telegraph, the Chicago Sun-Times, and the Jerusalem Post, as well as a large stake in Southam, Canada’s largest newspaper company, was the story. In 1996 Southam would be swallowed up (giving Black control of 58 of Canada’s 104 dailies) and the empire would go public as Hollinger International.

The change in subtitles for Siklos’s new, revised and substantially expanded biography tells you what happened next. No one’s talking about Black’s press empire anymore. Now it’s on to “Conrad Black – His Rise and Fall”, and “The Fall of Conrad Black.”

And fall he did. His undoing was the result of “shareholder activism”, a post-Enron movement demanding greater transparency, stricter accounting and more responsibility out of corporate management structures that had become downright corrupt. Black considered shareholder activism a “fad” and dismissed early questions and complaints about Hollinger’s management as an “epidemic of shareholder idiocy”.

On this point, at least, he would later confess to being mistaken.

What a special audit committee discovered was that a lot of money was being drawn out of Hollinger International (the public company), and flowing up a complicated corporate pyramid to Hollinger Inc. and the directors of Black’s privately-owned Ravelston Corporation. The audit committee would later label the bizarre network of dealings a “corporate kleptocracy.” As one activist shareholder remarked, “If Hollinger had udders, it would be a sore cow indeed.”

The idea that the directors of a corporation are looking out for the shareholders is one of the illusions J. K. Galbraith dismisses in his most recent book, The Economics of Innocent Fraud. “With rare exceptions,” he writes, most directors are “reliably acquiescent”:

Given a fee and some food, the directors are routinely informed by some management on what has been decided or is already known. Approval is assumed, including for management compensation – compensation set by management itself. This, not surprisingly, can be munificent.

Not surprising at all, but Hollinger’s star-studded board of directors showed an indolence remarkable even by the lax standards of modern corporate governance in rubber-stamping management’s “compensation.”

In their defence, the food was apparently very good.

What happened, including Black’s ultimate removal as director of Hollinger and the break-up and sell-off of his newspaper empire, is easy to describe. The really interesting question is why it happened.

It didn’t have to end this way. At almost any time during the shareholder uprising Black could have easily negotiated his way out of trouble and maintained control of his company. Was arrogance his fatal undoing? Greed? His ridiculous sense of old school “Titan of Capitalism” privilege, without any corresponding notion of noblesse oblige or respect for the little guy? Surely it wasn’t the much-vilified “extravagance that knows no bounds” of his wife Barbara, a character only capable of providing moments of comic relief here.

Maybe the imp of the perverse had a hand in it.

On his 25th birthday Black wrote a long editorial in honour of former U.S. president Lyndon Johnson, describing him as a “great man much reviled.” It was a role biographer Siklos sees Black as increasingly identifying with. Not the great man, but the great man fallen on hard times. Napoleon, another hero, fits the same pattern. McNish and Stewart also notice Black’s affinity for “high-profile business and political leaders who suffered reversals”, fallen giants like Paul Reichman, Garth Drabinsky, and Alfred Taubman.

It was as though Black had spent his life preparing for his fall, the lurid imagining of which fills his defamation lawsuit against the audit committee. Here he is, in a state of voluptuous outrage, brought “into hatred, ridicule, and contempt . . . pilloried and mocked mercilessly in the media throughout the world . . . socially . . . spurned and shunned by persons who had personally accepted his hospitality in London, New York and Palm Beach . . . transformed from a successful, well-respected businessman . . . into a social leper . . . a symbol of corporate greed and misfeasance . . . mocked and reviled with impunity and without restraint . . . ”

One has the sense he wouldn’t have wanted it any other way.

Notes:
Review first published December 31, 2004.