Campeau Affair Drawing Mixed Reviews in Canada : Retailing: The beleaguered magnate was praised by his countrymen when he was flying high. But many now blame his recent problems on greed.
At a time when he could probably use some sympathy from his fellow Canadians, beleaguered retail magnate Robert Campeau isn’t likely to get much.
The general public here admired Campeau back when he was a high-flier: After he took control of Federated Department Stores in 1988, one poll showed that 62% of Canadians were glad, “because he shows that a Canadian can successfully take the U.S. head-on.” When he spoke at the Canadian Club of Montreal that year, business leaders gave him a standing ovation.
Now that Campeau’s vast department store empire has filed for court protection from its creditors, however, Canadian reaction runs from total apathy to gleeful I-told-you-so’s. Some are even calling for changes in this country’s investment laws in the wake of the filing.
“To me, Campeau epitomizes what’s gone wrong with North American capitalism,” said John Crispo, a professor of management at the University of Toronto. “I am ready to shoot the man.”
To Canadian observers such as Crispo, the Campeau affair represents a kind of wasteful, paper-chase capitalism they would rather associate with Wall Street than Bay Street, Toronto’s financial center. “Everybody’s playing games, pushing pieces of paper, and along the way doing a lot of industrial carnage,” Crispo complained. “I’m so upset about it that I now find myself advocating a very high tax on short-term capital gains, despite all the problems it would create.”
Crispo added that his Canadian students all too often seem to be taking what he perceives as the Campeau route, concentrating on high-powered finance and shunning production. The contention is an ironic one, for Campeau himself started out as the ultimate production man--an eighth-grade drop-out with a hammer in his hands--not a fast-track financier with an MBA.
“You don’t have the savings-and-loan mentality up here,” economist Carl Beigie said, likening the Campeau affair to America’s wave of savings and loans institutions that grew too fast and then foundered. Beigie, a former U.S. citizen who has become a Canadian, is now chief economist at McLean McCarthy Ltd., a Toronto securities firm owned by Deutschebank.
“You’re really touching at a core differentiation between Canadians and Americans,” in the Campeau affair, Beigie said. “We don’t disclaim Campeau--he is a Canadian. But he’s a Canadian who became too greedy.”
In addition to raising ire about perceived U.S. mentalities creeping over the border, reaction to the Campeau affair shows that in Canada, as in the United States, a newcomer can arouse powerful antagonism when he tries to outrun the Establishment.
“Many of us in the senior financial community come from a strict Scottish heritage,” Beigie said. Campeau, by contrast, hails from the grubby mining town of Sudbury, Ontario, and is part French-Canadian. Anglo-Saxon Canadians in Toronto tend to look down their noses at French-Canadian financial prowess, citing as evidence the 1976 Summer Olympic Games, which were held in Montreal at great cost and left the public sector deep in debt.
“There’s a feeling here in Toronto that this guy got what he deserved,” Beigie said.
Indeed, other aspects of Campeau’s background indicate that he is not a natural player in the world of high finance. He is largely self-taught, having dropped out of school at 15, trained as a machinist and gone to work as a builder.
In his carpentry days, he noticed that his bosses used inefficient building methods and became convinced that he could do better. In 1949, on a one-shot gamble, he bought a lot, built a house by himself and sold it at a profit that dwarfed his pay as a carpenter. Campeau went into business for himself and, in the decade that followed, became the most successful home builder in Ottawa, the Canadian capital.
Controversy followed Campeau as his business took off, however. As he diversified out of homes and into office complexes, he took darts from Canadian conservatives for getting rich by renting pricey office space to officials of the Liberal Party government that was then in power.
When he tried to diversify out of real estate and get into finance, he found himself under fire again, unwelcome among old-line Toronto bankers. In a celebrated 1980 battle, he tried to seize control of a large, venerable trust company called Royal Trustco Ltd.
As press accounts had it at the time, Campeau went calling on Royal Trustco Chairman Kenneth White at his country retreat and was told: “I don’t like you, Campeau. . . . I’m going to call my friends and lock up 50% of the (Royal Trustco) stock before you can turn around.”
Next, Toronto-Dominion Bank Chairman Richard Thomson got on the phone and lined up control of Royal Trustco by a group of established businessmen. Campeau was frozen out. (White was later slapped on the wrist by the Ontario Securities Commission for his handling of the takeover bid.)
“It was viewed as a sociological thing,” recalled William Watson, professor of economics at McGill University in Montreal. “Campeau was new money. That was the problem. And I think he was flamboyant, as new money tends to be.”
Aversion to Campeau’s rags-to-riches scramble may help explain some of Canada’s harsh reaction to his predicament now. But, says Watson, so does simple economic logic. “This is good,” he said. “People should be punished when they make lousy decisions.”
Campeau, embittered by the Royal Trustco incident, dropped his business for several months and traveled through Europe and the United States. After he returned, he began looking for expansion opportunities in the United States.
When he took control of Allied Stores Corp., he told the press: “It’s such a refreshing atmosphere (in the United States), compared with Canada.
“It doesn’t matter what your name is down there,” he added. “It can be Italian, it can be whatever it is.”
