BORN: Sudbury, Ontario • 4 January 1927
For the most successful French-Canadian capitalist ever, influence can be summed up in one word: power. Because Paul Desmarais is one of the most powerful Canadians of the century, his actions and beliefs directly touch the lives of hundreds of thousands of Canadians. Yet he remains a shadowy, elusive personality, content to gain power and exercise it with minimal fanfare and only occasional controversy.
His low profile, however, belies an influence that few Canadians have been able to claim.Fittingly, Desmarais’ power rests in his control of a company called Power. But for most of its exis¬ tence, the Power Corporation of Canada has not manufactured anything. Nor does it provide a service. It does not, in fact, sell anything.
Rather, Power Corp. exists only to own and acquire other companies. By the 1990s it owned a fabulous collection of blue-chip businesses that make and sell things in almost every sector of the Canadian economy.The road to power began for Desmarais when he tried to make the buses in Sudbury run on time.
He was a student on summer break from law school in 1951 when he convinced his parents to let him run the local transit system. The family-owned bus fran¬ chise was deeply in debt, poorly run, and on the verge of going out of business. In a fashion easier related than accomplished, the twenty-four year old assumed company management, cut costs, and made the franchise profitable by 1955.
The company now belonged to him—his parents were happy to unload its debts—and Desmarais, no longer interested in finishing his degree, never looked back.These formative years in Sudbury were crucial ones for the young Franco-Ontarian: his family was comfortably well off, not rich, but the opportunity to run an enterprise wholly on his own taught him lessons that he applied repeatedly.
Chiefamong these precepts was that debt could cripple even the most efficiently run operation. Desmarais quickly poured profits from Sudbury into an intercity bus business in Quebec. That soon led to further acquisitions, and, by the early 1960s, Desmarais had built a mini-transportation empire.
As his group of companies expanded, he perfected the art of buying undervalued businesses using his own equity rather than borrowing. He never had much liquid cash, and sometimes he had to sell a stake in his holdings to finance takeovers. But by buying the right companies at the right price, Desmarais had, by 1965, become a takeover artist par excellence.
And, though he started with very little, he was also very rich.By this time he was based in Montreal and was assembling significant media holdings in Quebec, including the venerable and influential daily La Presse. In 1968 Desmarais acquired control of Power Corp., one of the leading conglomerates in Canada.
Though its roots were in hydroelectric power, Power was a vast, diversified empire by the late 1960s, with interests across the country in dozens ofeconomic sectors. Desmarais made it even bigger, adding giant financial services companies like Great West Life Co. and the Investors Group to its core of industrial and resource sector assets.
By the 1980s there was perfect capitalist symmetry to Power Corp.’s multibillion dollar web: many member companies sold products to other member companies, which in turn sold services to other member companies.
Yet despite this obvious integration, Desmarais was canny enough to keep his holdings sufficiently diversified that profits remained healthy even when one sector was in recession.The sheer size of Power, and the scope of Desmarais’ personal media holdings, often draw criticism.
Is too much corporate and media power concentrated in the hands of this one man? For the most part, Desmarais has been able to duck this question because his political connections are almost embarrassingly reliable: former prime ministers Trudeau and Mulroney were close to him, as were a wide assortment of Quebec premiers, federal Cabinet ministers, and senior civil servants.
As the only real power capable of getting in Desmarais’ way, government has consistently chosen not to do so. It helps, of course, that Desmarais main¬ tains a low profile. And his steady support of the federalist option in Quebec—often his newspapers voice the only anti¬ separatist opinion in the media there—has made him a dependable ally of Ottawa.
As he neared retirement in the 1990s, Desmarais continued to tend to Power’s growth. He built a major inter¬ national consortium to pursue opportunities in China. He acquired a major stake in Southam Inc., making himself, Conrad Black, and Pierre Peladeau virtual lords of the news¬ paper business in Canada. In short, he showed few signs of slowing down. Expansion, profit, and the acquisition of power continued to be what Paul Desmarais did.