A Conversation with Peter Newman (Part 1)

A Conversation with Peter Newman (Part 1)

What follows is the transcript of a conversation between myself and Peter C. Newman—whose story on the trial, A Great Fall,” is in the current issue of Toronto Life—regarding his reflections on Conrad Black, the trial and its aftermath.

Knowing Black as you do, what would you say is the most pronounced change in his character through the years? And how did that change affect the course of his life?

I first met Conrad Black when he was 34. He’d just come back to Toronto from Quebec City and Montreal, where he attended university and then started in the newspaper business. And he was very different; he was real. This was before he became a metaphor. This was before he took over Argus. All he had done, really, was write a really good master’s degree thesis on Maurice Duplessis, and he wanted to get it published. And that’s how we met. Because I helped him to get it published.

I was with Jack McClelland then, who was the best publisher in the country. And I thought it was really good, because nobody, at least in English Canada, had done anything as interesting on Duplessis. So I said, “You’ve got to publish this.” And he did. And it didn’t sell very well because it was a big, thick book about a French Canadian politician, in English, later in French. But that’s how we met.

I started conducting a series of interviews, and it was strange, because he really hadn’t accomplished that much. He was at a very small brokerage called Draper Dobie, and I just thought, This guy’s going to do something. I didn’t know what, whether it would be really good or really bad, but there’s kind of an existential aura to him. I thought, I’m going to follow him. So literally every month for seven years, we would meet and I would debrief him, you know, about what he had done that month. And it got more and more interesting because suddenly Bud McDougald, who’d been the head of Argus, which was the predecessor company to Hollinger, died, and everything was in play. That’s where The Establishment Man was born. I must have interviewed 100 people to get that, and it was fascinating. This was the good Conrad. He was Napoleonic in his strategy, and it worked. It worked for the takeover. He had inherited $7 million cash and suddenly he was in control of $4 billion, which were the assets that Argus controlled.

And it was a wonderful thing. This is where he made his reputation. Yes, of course, he cheated the widows, but it wasn’t direct. It was not as direct as I’ve just said. They had an advisor named Dixon Chant, and he told them to sign the documents. And lo and behold, Dixon Chant spent the rest of his life working in a very senior, executive capacity at Argus, later Hollinger, into his 90s. And that was obviously his reward. The widows really didn’t have much choice. So he got control, and that’s when it all started.

Establishment Man came out, I think it was ’82, ’83, and people said I was crazy to write about him. At the time, he was 38 and he controlled one of the biggest capital pools in the country. What was he going to do with it? I didn’t know; nobody knew. But when I reread the book now, there’s an awful lot of foreshadowing in it. His defensive greed, his very opportunistic approach to business. And it was all business. There was talk of history, but never any talk of philanthropy or of Canada, except as a place to do business. So if you read between the lines in that book, it’s all there. I would like to say I knew what was going to happen, but I didn’t. He could have gone the other way. He could have been the most interesting, constructive, creative businessman in Canadian history.

So what changed? What was it about the nature of his character that changed from the time of his extraordinary success in his late 30s, and the ascending trajectory through his 40s and 50s. What made him who he is today?

One word? Barbara. And I’m saying this very carefully, because I knew him before Barbara. I knew Shirley very well, a wonderful woman.

Shirley [now Joanna] was his first wife.

Yes. I was at their house, in fact, overnight, in Palm Beach. A very modest house, good location. But nothing, really, compared to the mansions. I was at his Toronto house, the original house, where his father and mother had died, and this was a different man when he was with Shirley. He lived well, he always lived well, but it wasn’t extravagant, not anything like later. And suddenly, he’s married to Barbara Amiel, and I believe that his character changed because of that. Because he had to keep up with her demands. And they were insatiable, as she admitted, in her famous quote. Now, that’s kind of a shallow theory, in terms of character analysis, but I truly believe it.

That her tremendous material ambition pushed him further and further toward the edge of criminality because he needed cash flow, because he needed money to pay for the stuff that she wanted?

Well, it wasn’t just material. Her ambitions went way beyond the material plane. The rumour, the apocryphal dialogue in England when she married him, was: Two socialites meet and one says to the other, “Well, I guess Barbara will be happy now—she’s married to Conrad.” And the other one says, “No, no. She wants to be queen.” Maybe it’s an exaggeration, but in my piece I refer to the image of the late Austro-Hungarian Empire, where he’s an archduke and she’s the empress. There’s a difference in ambitions, in degree. And eventually, qualitative becomes quantitative and their life changed. And he changed. That’s my theory.

Observing him in more recent years, when he became Lord Black and had a substantial house in London, started running these parties and so forth, how did he present himself? Was he presenting himself as someone who felt entitled to this? Or was it something he felt he’d earned? How did he come across in that sense?

Well, that’s a very good question, and the answer is yes, he felt a sense of entitlement. And after all, he did create it. He bought Southam, which was in terrible financial trouble. He bought the Telegraph, which had been losing money for a whole generation. The widows set a pattern. Every major property that he acquired was from a near-bankrupt, dysfunctional family. So he bought the assets cheap. It was a wonderful formula. And to his credit, he put money into those assets and the papers became better, including in Canada. The Southams ran a very independent, loosey-goosey chain where nobody knew where anybody stood and they didn’t care. You could say he controlled the thoughts of the editorial writers, and he probably did, but at least they had new printing presses, they had some freedom, and the chain was worth a lot more when he sold it to Izzy Asper than it was when he bought it from the Southams. So you have a very quickly growing empire, with Radler doing the dirty deals—small deals, I should say. But dirty in the sense that he fought for every dollar, the famous three-man newsroom, with two of them in sales, which came from a story I published in Maclean’s. Nobody could believe it. But he didn’t tell that to me as a joke.

That was actually the way he did business.

The thing about it is that it makes sense, in a weird sort of way. You’re buying a small newspaper, you don’t know how it works, you don’t know how efficient it is, so you go in and count the desks and you figure, circulation is 20,000, do they really need 99 people? I have some sympathy for Radler, because I got to know him almost as well as Conrad. At one stage we both lived in Vancouver and he would ask me over to headquarters. The reason he moved to Vancouver was because Conrad swore he wouldn’t have a company in Ontario while Bob Rae, a socialist, was premier. Anyway, Radler and I would drive out every month to Fort Langley and we’d talk on the wa
y there and the way back. Radler may have been a rat, and in my story I say that he was the wrong kind of rat, because if he was a pack rat he would have kept records of all those calls and he didn’t. But he also had some conscience, I mean, his first job was to set up marketing organizations for First Nations reserves for their souvenir business, and he really helped them. He did this on 30 reserves, so it wasn’t just a casual thing.

But then he and Conrad got on the money train, and when you think about the time that we’re talking about, they had to do something. And I’m not justifying what they did, but from their perspective, they had all these big bills and Radler was trying to start his own empire, and they were selling everything off because Conrad believed that the newspaper business was not going to flourish. And secondly, he had built up huge debts that were expanding, so they had to sell. But the more they sold, the less revenue they would see. And even though they had very generous, selfish arrangements with management fees—this was before the non-competes—those fees had been going on for 20 years. Huge money in that, and the mystery remains: where is that money? But that’s another story. They had to replace that revenue. How were they going to get the cash they needed for their lifestyle? Non-competes. That’s where the non-competes came in.

How did Radler feel about all this? It strikes me as interesting that where Black saw it as his entitlement, Radler, faced with the consequences of the same actions, turned state’s evidence. What’s the difference between the two men, where one sees himself as entitled and the other is willing to come clean, as it were?

Well, that is the key issue, and I would suggest that that’s the difference between them. Neither of them had the kind of character you want in someone who’s investing your money. But Radler was much more honest with himself, and realized he’d been caught. And you know the transaction that I’m talking about. He knew it was 71 months in jail if he’d been found guilty of stealing money in that transaction.

This was the Horizon deal.

Yeah, and on his terms, he comes out the victor, because he said, “Yeah, I was wrong and I’m guilty. I lied, I cheated.” And so he writes cheques for $92 million, pleads guilty, makes the deal, and now he’s going to be on top of the world. He’ll do his six months, and he’s got this empire waiting for him, being run by his daughter. And Conrad, unless he wins his appeal, is going to be rotting in jail. And it’s pride, it’s hubris. We call it entitlement, but it’s really delusional, it’s really somebody who’s lost contact with reality. He thinks he’s going to win his appeal. Well, I’ve looked into it, as I’m sure you have. Winning an appeal, in Illinois, against that judge is just about impossible. I mean, the judge, first of all, was a very good judge, and Black made the mistake of describing the judge as being very fair in that interview with [someone from] the Post. Secondly, this judge is very ambitious, she wants to go the Supreme Court of the U.S., and she’s not going to allow a black mark on her record by admitting that the trial was unfair. And I don’t think it was unfair. I think the jury, God bless them, did exactly the right thing. They didn’t fall for the prosecution parading all these luxuries, because that’s not a crime. It’s very difficult to prove because every executive does that—maybe on a smaller scale, but they all do it. So how can you send him to jail for that, or the big non-competes, which Izzy Asper said he wanted? So they picked the most brazen examples of self-dealing.

It’s pretty certain he’s going to be incarcerated for some period of time. Most people seem to suggest he’ll be sentenced to somewhere between eight and 12 years.

I think it will be 10.

How do you think he will respond to incarceration?

I think he’ll be very brave, initially. He’ll think, having a romantic streak in him, that there’s a great tradition of innocent men going to jail, using the opportunity to write great books, but I don’t think that will last. American jails are not like Canadian jails. First of all, you have to serve 85 per cent of your sentence, and he’s going to be there with some pretty tough hombres.

In the face of that, do you think that when he stands before the court on the day of his sentencing, he will make a statement asserting his innocence? Or do you think he’ll speak at all?

Well, I hope he does. As I said in my article, that was a dumb move not to have him take the stand. Because he is very persuasive, never more so than when he’s talking about himself and his accomplishments, which were real. I think he’ll want to have his statement on the record. And he should have it. I think it’s late; I think it’s too late. But he should be heard and I think it will be very impressive. The problem he has is that his defence lawyers attacked all kinds of people—Radler, the audit committee—but they never tried to prove his innocence. And by not proving his innocence, they proved his guilt.

You mention the audit committee. Do you think the performance of that committee—their complete lack of responsibility and accountability for what they had signed—constituted criminal behaviour?

Absolutely. Conrad talks about a miscarriage of justice, and there was a miscarriage of justice during the trial. These three members of the audit committee, having made a deal with the SEC, got away with total non-performance of their duty. And I’m not talking about a moral issue; I’m talking about those things that they were sworn to uphold. They just didn’t read the documents. Well, they read them but they just ignored what was in them. I think that’s where the miscarriage of justice is. And you know, these are not amateurs; these are people with a million miles on their meters, very experienced, especially the chairman, Jim Thompson, the former Governor of Illinois. He runs one of the biggest business law practices in Chicago.

Part two of this conversation will appear tomorrow.