During August 1981 Black’s company Norcen secretly bought 4.9 per cent of Hanna’s shares. The purchase was entirely financed by a C$20 million loan from CIBC. In securing that loan, Black, a director of the bank, demanded special treatment, stipulating that ‘secrecy was paramount’. No statements regarding the loan and the purchase were to be delivered by the bank to Norcen’s office; and Hanna’s shares were to be bought by the bank, using an undisclosed numbered account. On 9 September, after the shares had been bought, Black summoned a board meeting of Norcen directors in Toronto. Fred Eaton, Edward Battle and others were in no doubt about his intention. ‘We want a friendly take-over,’ Black agreed with his directors. Bill Kilbourne, the company’s secretary, accurately recorded in the minutes of the meeting that the purchase of shares in ‘the target company’ was completed, ‘with the ultimate purpose of acquiring a 51 per cent interest at a later date’.22 Black signed those minutes.
Having secretly agreed his company’s objective, Black took a decision which could have increased his personal wealth. If the take-over of Hanna was successful, the value of Norcen’s shares would rise. To benefit personally from that increase, Black offered to buy back Norcen shares from his own shareholders. By law, he and his directors were required to tell their shareholders the full truth about their intentions regarding Hanna. Yet their letter, sent on 16 October 1981, did not reveal their secret purchase of Hanna’s shares or their resolution on 9 September to mount a take-over bid.
During October, again in secrecy, Black increased his stake in Hanna to 8.8 per cent. As soon as the second purchase was detected, Bob Anderson telephoned Black and accused him of breaking the rules. Black was prepared for the onslaught. Conjuring a performance as a helpful, innocent and sincere intellectual, he sought to smooth-talk the American into believing that his intention was simply cooperation. Only Black could have feigned surprise that Anderson’s response was, in Black’s own description, ‘an antagonistic, hostile and even frenetic reaction’.23 A meeting was summoned in Cleveland. Black flew south, to be told by Anderson to retreat and to sell off his shares. He ignored the warning. To enhance the impression of his virtue, he expressed his ‘hurt’ and ‘outrage’ that Anderson, a ‘rather underwhelming’ person, treated him with disdain and condescension.24 Undeterred and eager to raise his interest to 20 per cent, Black approached other Hanna shareholders, including old female members of the Humphrey family. He offered them all ‘an alliance’ against Hanna’s directors. War had been declared.
In Black’s opinion, his secrecy was consistent with normal trading in Toronto. Bud McDougald and the other Bay Street players had never considered behaving in any other fashion. In the heat of battle, he said, companies often misrepresented their intentions. Such tactics were aided by Canada’s weak regulators. Toronto’s stock market was supervised by the Ontario Securities Commission (OSC), which had never, in Black’s experience, so much as slapped a reprobate’s wrist in punishment for a crime. Reared in that wild-west monoculture, the aspiring tycoon did not understand that the stakes and rules for playing in the United States were different from those in his own crude backwater.
The investment by Norcen required Black to disclose his intentions to America’s all-powerful Securities and Exchange Commission, the SEC. In his submission, he described the purchase of nearly 13 per cent of Hanna’s shares as ‘an investment position’, concealing his intention to mount a take-over bid. Convinced that his cultivated performance, combining his eloquent vocabulary, benign demeanour and forceful personality, would steamroll the opposition, he flew on 2 April 1982 to Palm Beach with Rupert Hambro on Black’s Challenger, the private plane he had inherited after the Argus coup. At the same time, Monte Black was dispatched to Cleveland to deliver a threat. Unless, said Monte, Bob Anderson and the Humphreys agreed to Norcen owning 30 per cent of the company and acquiring an influential position on the board of directors, Norcen intended to launch a take-over bid for 51 per cent of Hanna on 5 April. This was the Blacks playing hardball. Anderson’s response to the ultimatum was emphatic. Amid raised voices and papers flung on the table, Monte’s offer was rejected. Twisting the screw, Anderson applied to the Cleveland court for an order preventing the bid. Black was so exposed, Anderson reasoned, that any shot was guaranteed a hit. In his claim, Black was accused of ‘fraud and racketeering’ because he and Norcen had submitted false information to the SEC.
The counterattack surprised Black. Lawyers representing Hanna unexpectedly invaded Norcen’s headquarters. Their trawl of documents produced the board minutes of 9 September 1981, describing Black’s ‘ultimate purpose’ to take over Hanna. Anderson’s lawyers were thrilled. It was ‘like a grenade with the pin pulled’, admitted Black.25 Black’s deception broke the US Securities Act and exposed him to prosecution. Hanna’s share price plummeted from $74 to $26.
Black’s cabal had been caught red-handed. ‘Bill, you dumb idiot,’ Black screamed at Kilbourne, Norcen’s company secretary, at an emergency meeting of his fellow directors. ‘Why did you put that in the minutes?’ ‘Horseshit,’ replied Kilbourne. ‘That’s what you said at the meeting. You signed it. You should have read it.’ Black calmed down. The thrill for his partners was watching ‘such a bright guy at work’. After some thought, Black fashioned his response: ‘I’ll say, “I’m innocent. This is ridiculous. This is a misunderstanding, a technicality.”’ His audience were impressed by his apparent calm under fire. Black the performer always conjured up a mask of sublime assurance of success.
The threat from America coincided with mixed fortunes in Canada. The shuffling of assets at Argus had not ceased. To avoid tax and to marginalise the minority shareholders, Black was constantly reorganising his companies. The complexity of the changes provoked fears among shareholders that Argus’s money was disappearing into other companies in which the group had an interest, including Hollinger, a mining company, or that Argus was heading for bankruptcy.26 Those fears were compounded by Black’s self-aggrandisement. In 1982 Argus earned profits of C$7.6 million, but nearly C$2 million was spent on the directors and their expenses. The generosity to himself and his associates was part of Black’s calculated plan to ensure that everyone would ‘remain friends’.27 Protestors found their voices drowned out. The company’s annual general meeting on 26 May 1982 lasted fourteen minutes – one minute longer, Black was disappointed to note, than Bud McDougald’s record.
Inspired by Napoleon, Black’s doctrine – kill or be killed – was deployed in self-justification and self-defence. Contemptuous of his critics, he had been flattered by featuring in a television series as a member of the Canadian establishment; and by Andy Warhol’s visit to Toronto, where Black had commissioned him to paint his portrait. The decisive accolade was his coronation as Canada’s ‘Establishment Man’ by Peter Newman, the editor of the weekly Maclean’s magazine, who promoted ‘Canada’s leading capitalist’ as the personification of the Conservatives’ rebirth, with brains. Others reflected that Newman could more accurately have pronounced Black as the anti-establishment man.
Emboldened