Heroes

by Peter C. Newman

  “Conrad is sitting there like the bloody king of England behind his desk in his pope’s chair and all the flags behind him. So I said, ‘Conrad, what the hell are you doing? Why are you depressed?’ ‘Ah,’ he said, ‘I’m having problems… . ‘ So anyway, he needed money from the bank and nobody would give him any. I said, ‘Things have a way of working out, and you’ll be okay.’ It was just a friendly visit. We had a couple of Scotches. I left there about 11:30, went back to the airport in the snow, got home.

  “The next day I talked to the prime minister and I said, ‘Brian, jeez, Conrad’s having a tough time. Why don’t you call him?’ And that was the end of it.

  “But when I read Conrad’s memoirs, he said that Mr. Desmarais came to visit me and it was quite nice of him to do that, but I resent his indiscretion in having spoken to the prime minister of Canada to tell him I was in trouble! So I called Conrad and I said, ‘Are you crazy? I’m a friend of yours. You’re making other people believe that I’m a shit that I would go and find out that you’re not doing well. Don’t you realize everybody in Canada was saying that you’re going broke, and that if I talked to the prime minister of Canada, don’t you think that he already knew, and did he not call you?’

  “‘Yes,’ he says, ‘the prime minister is the one who told me that you said I was having problems.’

  “I said, ‘You see, you’re such a negative son of a bitch, such a schemer, that you always think people are after you. Why can’t you believe that somebody is nice and wonderful and a great friend? One of these days, something is going to go wrong and there will be nobody there to do a damn thing for you.’

  “I enjoy Conrad. I like his turns of phrase. He has the most convoluted vocabulary in the world, and he loves it. I’m like an uncle to him now and we laugh a lot, though he occasionally says some nasty things. When Conrad decides that he’s going to do something, he surrounds himself with tough cookies and lets them take the rap. But he’s very tough himself, of course he is.”

  WITH A SURROGATE “nephew” like Conrad Black, you learn to appreciate a mate like Jacqueline Desmarais. She is a talented singer, plays championship bridge, has a 12 handicap in golf and is the vibrant centre of Paul’s life. (She has cut half a dozen privately distributed albums, including Back to Dry Martinis and Songs I Love to Sing, backed by a twelve-piece band. Her voice is a rhythmic mix of Ella Fitzgerald and Edith Piaf. She frequently sings live duets with Robert Charlebois.) “If I was to say, ‘Look Jackie, I’m going to start a passenger service to the moon tomorrow,’ she’d say, ‘That’s a great idea, babe, why don’t you do that?’” her husband of forty-five years proudly boasts. “She seems to think that I can do anything.” (So does he.)

  When Paul wants to surprise Jacqueline, as he did on one of her decade-marking birthdays, in 1988, it’s not a let’s-order-pizza-in affair. On that occasion, he took over Montreal’s Windsor Hotel. Guests gathered along its long, marble promenade, among its ornate mirrors and columns, with specially mounted gold trellises spilling freshly opened roses and fancily clad hussars opening the doors to a ballroom where a symphony orchestra was playing Viennese waltzes. Later in the evening, Ella Fitzgerald and Robert Charlebois sang for the crowd, which included the governor general, the prime minister and Quebec’s premier.

  When not in Palm Beach, the Desmarais family is to be found at one of three Canadian dwellings or, if in Europe, at Claridge’s in London or the Ritz in Paris. The Montreal house on Westmount’s Ramezay Road was originally decorated by Lou Edwards, E.P. Taylor’s daughter. The large living room, done in lemon and pale aqua, has a stunning Diego Rivera canvas as its centrepiece. Desmarais’s favourite pied-à-terre is La Malbaie (Murray Bay), near the mouth of the Saguenay River. It was once a prestigious resort, the home of the Cabots of Boston, the Tafts of Ohio and the Hamilton Fishes of New York. Desmarais bought the house for $60,000 from Leo Timmins, of Hollinger Mines fame. It’s on the Boulevard des Falaises, on a bluff overlooking the St. Lawrence. He has added a swimming pool, sauna and tennis court. The garage holds his 1906 Cadillac, a motorcycle and two Rolls-Royces, one of which is fitted with a horn that sounds like a steam locomotive. “This is the place we’re happiest in,” he says. Inland from La Malbaie is his château, a country estate with a hunting lodge that can accommodate forty guests, built on a wild stretch of land—a ten-thousand-acre property with fifty lakes on it—that once belonged to Canada Steamship Lines.

  The Desmarais offices in Montreal are like nothing else in Canada (except perhaps Peter Munk’s private study in his new Forest Hill mansion). On first impression, Power Corporation’s building resembles one of the minor, outlying pavilions at Versailles; on closer inspection, it resembles Versailles itself— but with the patina of good taste. Done in a classic Louis XIV style, its creamy pillars and long, marble corridors with arching, ten-metre ceilings, and the richness of its plush velvet drapes, scattered sculptures and weathered woods, lend the place a solemn, almost churchly resonance. The walls are crowded with the most valuable corporate collection of Canadian art in the country—dozens of canvasses by A.Y Jackson, Clarence Gagnon, Maurice Cullen, Goodridge Roberts, Frederick Varley, James Wilson Morrice (a whole wall of them), David Milne, Tom Thomson, Homer Watson, Jean-Paul Lemieux, Franz Johnston, Arthur Lismer and Jean-Paul Riopelle. The boardroom has forty-five exquisitely mounted Cornelius Krieghoffs.

  All of this is a lifetime and a world away from the pool halls of Sudbury, certainly, but the popular myth that Desmarais’s success was totally self-made is a bit of a stretch. He did grow up with certain privileges. The Desmarais family was well respected and relatively well heeled. Paul’s grandfather had helped found the local Sacred Heart College, formed the first local Caisse Desjardins co-op and helped finance the St. Joseph Oratory in Montreal. He became a prosperous lumberman through his wooden-tie contracts for building CP and CN from North Bay to Winnipeg. His uncle was mayor of Sudbury in 1939—the only year it mattered, because that was when the king and queen came to town, so the family had their pictures taken with the royal pair. Paul’s father was a prominent Sudbury lawyer who helped found Laurentian University. Out of that background, plus his own success, came the self-confidence that allowed Desmarais to grow personally and professionally without having to overcome the deference that marked his generation.

  “I had no trouble going and sitting at the Mount Royal Club and telling the chairman of the Royal Bank or anybody else, ‘What the hell is wrong with you that you keep complaining about “those damn French Canadians’’?’” Diehard members of English Canada’s Establishment regard him as a welcome ambassador from Quebec, a part of the country most of them view with only slightly more comprehension than some distant Transylvania.

  With the current Liberal administration in Ottawa, Desmarais enjoys his usual gold-plated access. Apart from the fact that Jean Chrétien’s daughter France is married to Desmarais’s son André, he is extremely close to Finance Minister Paul Martin, who spent most of his working life at Power Corporation, running Canada Steamship Lines. (In a classic reverse takeover, Desmarais allowed Martin to buy CSL from him and even signed a bank note on his behalf to help cover the $195 million purchase price.) One of Power Corporation’s senior vice-presidents is John Rae, who served as executive assistant to Jean Chrétien in Indian Affairs and managed his triumphant 1993 and 1997 election campaigns.

  “Paul is a master manager of the political process,” says Michael Pitfield, clerk of the Privy Council during the Trudeau years, whom Desmarais tagged to be deputy chairman of Power Corporation in 1984. The scion of a wealthy and influential Montreal family, Pitfield was a public servant most of his life, but once freed of his responsibilities (and wafted off to the Senate), he began to appreciate the private sector’s role. “It never ceases to amaze me that so few people recognize that businessmen are responsible for shaping the whole country’s infrastructure. The easy thing to think about Paul is that he has the politicians in his pocket, that he’s a sort of master
of marionettes. But he’s not. He’s a player. He never disengages; he never withdraws from the arena. He made an enormous fortune by age thirty-five and has ever since been engaged in the active governance of this country. Most people automatically assume that Paul’s policy involvements are designed to make him richer, that he tries to control people and events to get some desired, selfish result. In fact, he’s an active participant, using his power base to press for what he thinks are desirable policies. It’s very important to understand that distinction. “

  Desmarais’s most profoundly personal friendship with any politician is with Brian Mulroney, who, after he left office, was appointed to several important European boards within the Power Corporation empire and resumed his function as one of its chief legal advisers. “He may turn out to have been a great prime minister. We need more time to assess his record,” says Desmarais. “If you look at the big things—Meech, free trade, our relationship with the U.S.—all that was much improved by him. The trouble is that he was too loyal to his friends, and some of his friends—people he shouldn’t have been too loyal to—took advantage of him. He should have told them, ‘Look, this is where you get off; I’m prime minister of Canada, so look after your interests but don’t come to me.’ Still, it’s been a great advantage to be able to say, ‘Well, I know the prime minister of Canada, and I know what he’s thinking.’”

  Desmarais has formed business connections between his homeland and China. He was one of the first Canadian businessmen officially to visit that country, setting up the Canada China Business Council, ably run by Jack Austin. Desmarais is in partnership with Peter Munk to develop China’s gold mines and with Laurent Beaudoin to sell railway cars to the Chinese. First among Canadian businessmen, he has managed to attract major Chinese capital into Canada: $50 million to build a pulp mill in Castlegar, B.C., in partnership with one of his companies.

  In Winnipeg he controls the Manitoba capital’s Investors Group, the country’s largest and most successful mutual fund operation (assets of $34 billion), run by Sandy Riley, which will be a major investor in London Life. Winnipeg is also the home of Great-West Life, which has assets of more than $53 billion after its London Life acquisition. A tipoff to Great-West’s significance within the Power group is that Desmarais usually assigns two or three of the holding company’s directors to serve on the board of each subsidiary, but the Great-West board includes nearly the whole Power house—not only Desmarais and his two sons, but also Power CEO Robert Gratton; vice-and deputy chairmen Michael Pitfield and Jim Burns; and chief financial officer Michel Plessis-Bélair, as well as Power director Don Mazankowski.

  WE HAVE BEEN TALKING for most of two days. The Desmarais household is reclaiming the living room, which was our debriefing chamber. Desmarais is in his summing-up mood.

  “I’ve been like a fisherman who goes out and puts out a net, and if he’s lucky, he gets a good catch. But sometimes, even if he’s a good fisherman, he gets nothing. Well, I spent a lot of time putting out nets and finally, over a long period of time, I’ve been lucky. But it’s not just luck; it’s hard work. You’ve got to expose yourself to the fish precisely when circumstances are favourable … We have a lot of capital now, much more than I ever dreamed possible, really. There are a lot of things I’d like to accomplish still. I sometimes ask myself, Why don’t you stop? With everything you have, there is a corresponding responsibility—and after a while, it becomes a heavy burden. But the fascination to go on never stops …”

  He trails off and I notice that night has fallen. There is no wedge of light remaining between the ocean and the horizon. “My enemy now is time,” he says as we part.

  There will never be another titan quite like this one. He was the forerunner. Long before the Canadian Establishment came along, he showed them the way. He demonstrated that you could outwit and out-harm and, if necessary, out-bully your competitors—annihilate them, have fun doing it and never feel a moment’s guilt. His peers watch him, study him, try to copy him—like apprentice Sioux learning to shadow the great buffaloes—but his essence remains elusive and inviolate. In a world filled with corporate honchos who act like constipated eagles, Paul Desmarais is a refreshing exception.

  I climb into my rented car and drive back to my hotel, past the darkened Palm Beach mansions. It was an interview to remember.

  — 1998

  The Golden Couple: Gerry Schwartz and Heather Reisman

  WHEN THE LIST of Canada’s highest-paid executives for 1997 was published, I noticed Gerry Schwartz’s name and felt momentary sympathy for the man. True, his compensation of $18,775,640 was up 124 percent from the year before. Yes, he did manage to pay himself three times as much as, say, Conrad Black, even though the Hollinger chief had more than doubled his own pay. True, Schwartz was well ahead of Jean Monty, who runs Canada’s largest corporation, BCE Inc., and Laurent Beaudoin, who masterminds the world-class aircraft and everything-else-that-moves company, Bombardier Inc.

  Still, no matter how impressive, the size of Gerry’s pay packet placed him behind Robert Gratton, CEO of Montreal’s Power Financial Corporation, who won the year’s crown with a tidy $27,395,123 stuffed into his piggy bank. There was no way to disguise it: Gerry Schwartz had come in second. I could visualize the poor guy trying to explain to his father what had gone wrong. Hence my sympathy.

  The previous year, when Onex Corporation, Schwartz’s conglomerate, made it to number 14 in the Financial Post list of Canada’s top 500 companies, the CEO allowed himself to feel happy—excited even. After all, in the FP’s listings, Onex had come in just behind Imperial Oil, the biggest of the energy majors, and just ahead of Canadian Pacific, the country’s defining corporation.

  Now, no one has ever mistaken Gerry Schwartz for a soul without ambition, but he does not show his feelings easily. At moments of stress, joy, sorrow or excitement, he can appear stiff, holding himself with what a friend describes as “the impeccable posture of a hand puppet.” Not that morning. If he hadn’t been in his Bay Street office forty-nine floors above ground, he might have done a little cakewalkin’ in the spring sunshine, so exhilarated did he feel. He couldn’t resist calling his father in Winnipeg to share the thrill.

  When Andy Schwartz came on the line and Gerry announced the great news, the phone went silent for a split second or three. Then his father issued rather subdued congratulations, and they talked of family things. The younger Schwartz knew only too well what that hesitation meant. He had come in fourteenth, and fourteenth wasn’t first, which is what every Jewish father expects of his son.

  Now, to make things worse, he had come in second in his pay packet, stuck at a lousy $18 mil. “There’s an apocryphal story of the kid who comes home after he gets 98 in his exams,” Gerry Schwartz says. “Of course his Jewish father says, ‘Why didn’t you bother to think about the area where you lost those two marks? Why didn’t you study that? At least for the next exam, prepare yourself.’ The kid goes back, studies like crazy, comes home after the next exam and says, ‘Pop, I got 100.’ ‘So,’ the father replies, ‘don’t rest on your laurels.’

  “The morning that FP list came out was a very defining moment for me,” Schwartz vividly recalls. His father’s “sort-of-lukewarm” voice on the phone caused all the other sort-of-lukewarm moments to well up in his memory, like the time “when I was going to law school in Manitoba. I stood first for a while, and then in the final year, I was fifth or something because I was engrossed in a couple of business deals.

  “My father didn’t come to my graduation or talk to me for a couple of months. He kept saying, ‘You could have been first. All you had to do was work hard enough. You knew how to do it—you already proved you were smarter than the others.’”

  No wonder Gerry Schwartz is so mysterious a package to contemplate from without. He’s a man who honed his skills in the nastiest of shark pools, the junk-bond frenzy of the 1980s, the leveraged-buyout game that Harper’s editor Lewis Lapham called “the capitalist system at its worst.
” He’s a man who has been accused of outlandish greed at the expense of his own shareholders, a charge easy to level at any CEO who pays himself $75,000 every working day. He’s a man ardently loved by his formidable wife, Heather Reisman, and revered for his Zen calm by his business partners. He’s a man who has pulled off some of Canada’s most lucrative megadeals. He’s the same man who hesitated and let slip away what might have been the best deal of all.

  “There is a buffed Schwartzian veneer that envelops the small tight figure within it,” wrote Jennifer Wells in the Globe and Mail’s Report on Business. “It must be kept intact, and so an orchestration of the corporate and personal tableaux must be conducted.” He is, in short, a Jew burdened with a Presbyterian conscience, which is a tough burden to carry for any man.

  STARTING OUT IN WINNIPEG after graduating in law, Schwartz found himself articling with one firm while being attracted to the style and expertise of Izzy Asper, already a well-known tax lawyer and destined to become a broadcasting titan.

  “One day Gerry just showed up on my doorstep, introduced himself, told me he was going to article with me, learn everything I knew, practise law with me and we would do beautiful things together,” Asper recalls. “A bit pushy, I thought, but his determination intrigued me. I didn’t have any openings, so I sent him on his way. He kept coming back until I finally caved in, and he did article and graduate with me. Then, in 1968, he decided to leave for the Harvard Business School.”