Northern Tigers: Building Ethical Canadian Corporate Champions

University of Calgary PRISM: University of Calgary's Digital Repository University of Calgary Press University of Calgary Press Open Access Books 2017-09 Northern Tigers: Building Ethical Canadian Corporate Champions Haskayne, Dick; Grescoe, Paul University of Calgary Press http://hdl.handle.net/1880/52226 book http://creativecommons.org/licenses/by-nc-nd/4.0/ Attribution Non-Commercial No Derivatives 4.0 International Downloaded from PRISM: https://prism.ucalgary.ca NORTHERN TIGERS: Building Ethical DICK HASKAYNE WITH PAUL GRESCOE Canadian Corporate Champions With additional contributions from DEBORAH YEDLIN Dick Haskayne with Paul Grescoe With additional contributions from Deborah Yedlin ISBN 978-0-88953-406-3 BUILDING NORTHERN ETHICAL CANADIAN CORPORATE THIS BOOK IS AN OPEN ACCESS E-BOOK. 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Acknowledgement: We acknowledge the wording around open access used by Australian publisher, re.press, and thank them for giving us permission to adapt their wording to our policy http://www.re-press.org CHAPTER EIGHT HIGH FINANCES Manulife and CIBC WATCHING NOVA GROW AND MERGE with TransCanada, which continued to prosper mightily, had helped to make up for my sad ness about the loss of HBOG and Home Oil through ex- ternal forces. During the rockiest years, I also took comfort in my involvement with another company that did nothing but flourish. If any one Canadian corporation can be counted among our great Northern Tigers, it’s the financial services powerhouse Manulife, where I was a director. If any executive officer can be credited with training a Tiger to jump through the hoops on a world stage with strength and style, it’s Manulife Financial’s CEO, Dominic D’Ales- sandro. In contrast, for many of the same years I was also on the board of another enterprise, the Canadian Imperial Bank of Com- merce. Once our second-largest bank in market capitalization, it has since fallen to fifth place, after the Royal Bank, Toronto-Do- minion (TD), Scotiabank, and Bank of Montreal. Manulife hasn’t made a major misstep in its expeditions into the financial jungle of the United States. CIBC, meanwhile, has stumbled in its American forays, most seriously in having to pay out hundreds of millions of dollars because of its exposure to Enron. It’s not surprising that a few years ago the media were reporting on a possible merger of the insurance company and the bank. The grand old banking institution had roots dating back to the birth of Canada in 1867. That’s when it opened on Toron- to’s Yonge Street under its founding president, the businessman 144 and philanthropist William McMaster. Manulife was slightly younger: The Manufacturers Life Insurance Company opened in the Ontario capital in 1887 under founding president Sir John A. Macdonald, Canada’s first prime minister. And its record in the U.S., where it began operating sixteen years later, has continued to be exemplary after all this time. In Manufacturers’ first, successful year, the press was already calling it “the Young Canadian Giant,” and within five years, it had begun growing overseas, starting in Bermuda and then moving into the rest of the Caribbean, South America, China, and India. It weathered the Depression, prospered during the Second World War, and by 1961, had assets of $1 billion. Nearly a century after Manufacturers’ birth, a couple of its directors who knew me, one of them from Hiram Walker, put up my name for the board while I was Home’s president. I came on in 1983, flattered to be asked to join my first big national board—a small, influential group of advisors for one of the country’s old- est companies, which was then owned by its policyholders and hadn’t yet gone public. The headquarters were still in the same neo- Georgian limestone building on Bloor Street that it occu- pied since 1925, on grounds groomed like a putting green. Sir John A.’s portrait still hung in the handsome boardroom, along with one of his successor, George Gooderham, once Ontario’s wealthiest man. (Yep, he was a member of the original Gooderham & Worts dis- tilling family, which sold out to Harry Hatch, whose company later became part of Hiram Walker Resources.) By the time I arrived, Sydney Jackson, a veteran with Manufacturers’, had been running things for the past decade. Under his risk-taking, bottom-up style of leadership—letting employees play a major part in decision mak- ing so that they buy into any changes—it had become the nation’s second-largest insurance company; over a dozen years, its assets grew eight-fold to $16.4 billion. In 1985, Syd became chairman, and his president and CEO was Tom Di Giacomo, the first of two Ital- ian-Canadians to lead the corporation. Tom and I were soon friends—I really liked the man—though that didn’t stop me from seeing his limitations. His strengths were 8 | HIGH FINANCES 145 many. Bespectacled and balding, looking like the caricature of an insurance executive, he’d been one of the more astute investment managers in the industry, doing a good job of getting the company into real estate and equities. He didn’t much care about actuarial and administrative details, yet as president, he had to deal with any challenges to corporate morale and organizational structure. Because he was weak on human resources, our board wel- comed the arrival of Rose Patten in 1987 as head of HR. For a few years, she did a hell of a good job in beginning to streamline the organizational structure and dealing with the people problems. One of those she won over was Tom himself, who married her— after which she went to the Bank of Montreal as senior executive VP of human resources (and was named one of Canada’s one hun- dred most powerful women by the Women’s Executive Network). Meanwhile, he was moving the company deeper into Asia, from South Korea to Indonesia, buying a British bank, and taking over several Canadian trust companies to create Manulife Bank. In 1990, the year Manufacturers’ became known as Manulife Financial, he was named chairman as well as CEO after pressing the board for the title. That was the biggest mistake we ever made because, other than us directors, he didn’t have any mentor to keep watch over him. He was a dealmaker, not a natural-born leader for a corporation Manulife’s size who could inspire by his own example. In 1993, knowing he was in trouble, Tom flew from Toronto to see me as I stayed put in Calgary during Lee’s last months. “Look, I’m over twenty-one and I understand the situation. There’s a train coming down the track—initiated by a small group of directors—and it isn’t likely to stop,” he said. “But we’re good buddies, and that will continue.” I was one of those upset directors, on the audit committee that was chaired by Gail Cook-Bennett, the clever economist who’d taught at the University of Toronto as well as helping run the C.D. Howe Institute. She had sterling credentials: chair of the Crown’s Canada Pension Plan Investment Board; a director of the Bank of Canada, Manulife, and Petro-Canada; and a member of the Canadian Group of the Trilateral Commission. She and I had 146 NORTHERN TIGERS bluntly told Tom he had a problem with organization—and he had no answer when I asked how many people reported to him.

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