COVER

THE ROOTS OF POWER

PAUL REICHMANN COMMENTS ON THE REASONS BEHIND THE LIBEL ACTION

TOM FENNELL October 24 1988
COVER

THE ROOTS OF POWER

PAUL REICHMANN COMMENTS ON THE REASONS BEHIND THE LIBEL ACTION

TOM FENNELL October 24 1988

THE ROOTS OF POWER

PAUL REICHMANN COMMENTS ON THE REASONS BEHIND THE LIBEL ACTION

COVER

Nineteen members of the billionaire Reichmann family mingled under the towering palms and arching glass ceiling-but they were hard to find. The Reichmanns were on hand to

officially open their World Financial Centre in New York City last week—a spectacular $ 1.5billion development in the Battery Park area of Manhattan Island—but rather than flaunt their wealth, the family hosted a charity dinner for almost 700 celebrity guests. While television cameras focused on such well-known personalities as violinist Isaac Stem, producer Merv Griffin, New York City Mayor Edward Koch, oil tycoon Armand Hammer and television personality Barbara Walters, most of the Reichmanns managed to remain fairly anonymous—only Albert Reichmann reluctantly stepped forward to formally represent the family. Meanwhile, the publicity-shy family pressed ahead in Toronto with a very public— and controversial—$ 102-million lawsuit over

a magazine article that investigates the foundation of their fortune.

If successful, the suit could end in an injunction that prevents publication of a book containing the same information. Last week, in an exclusive interview with Maclean’s, Paul Reichmann, 58, described how members of his family escaped from Hitler’s armies, how they became so incredibly wealthy

and why he is fighting so hard to stop the repetition of a story that he says insinuates that his family made a “fortune out of misery” during the Second World War.

Illicit: Reichmann said that the Toronto Life article, “The Mysterious Reichmanns: The Untold Story,” by Toronto journalist Elaine Dewar, implies that his family’s wealth has “illicit origins” and that the record must be

set right in court. On Jan. 13,1987, three of the five Reichmann brothers, Albert, Ralph and Paul, along with their 89-year-old mother, Renée, and their private company, Olympia & York Developments Ltd. of Toronto, filed the libel suit against Dewar, Toronto Life's, managing editor, its publisher and the magazine’s

corporate owners. Then the Reichmanns sued The Toronto Sun—which is 62-per-cent owned by Maclean’s owner Maclean Hunter Ltd.—and columnist Diane Francis for printing references to Dewar’s 45,000-word article. And they also sued The Globe and Mail, Canada’s national newspaper, for suggesting that the Reichmanns’ suit was unfair. In a statement of defence filed in the Ontario Supreme Court on April 5,

1988, Dewar and the other defendants maintain that the article accurately pictures the family and that they believe the Reichmanns have always acted honorably.

Dewar’s journalistically acclaimed story, which won two National Magazine Awards, traces the Reichmanns’ roots through war-ravaged Europe

to the northern Moroccan port city of Tangiers. But the court case may, in fact, prevent Dewar’s publisher, Random House of Canada Ltd., from bringing out the book because the final ruling may contain an injunction against repeating Dewar’s work on the wealthy family. And some members of the Canadian Jewish

community say that the launching of the lawsuit is a clear statement to Canadian and world Jewry that the wealthy family did not profit from what Reichmann said was “illicit” money.

Fabulously: Paul Reichmann says that Dewar’s tale of how he and his close relatives became so fabulously wealthy is at odds with his abiding belief in the virtue of his family. He added that it could not go unchallenged.

The Reichmanns, according to Fortune magazine, the U.S. business biweekly, are the seventh-richest family in the world. And their wealth continues to grow. Last week, as they celebrated the opening of Battery Park, they were erecting the foundations under Canary Wharf—a 24-building, two-phase proj-

ect that will renovate London’s dilapidated dock area (page 46). At the same time, the family’s personal holding company, Olympia & York, is continuing to diversify through share purchases in other companies.

Paul Reichmann’s own description of how the members of his family fled from the advancing Nazi army and their circuitous route to Canada in the mid-1950s mirrors that of many postwar refugees. And like many refugee families, they prospered in their adopted country. But few Canadian immigrant families have ever acquired so much wealth, so quickly (page 45). They now control some of the nation’s largest companies with assets that are estimated to be between $7 billion and $10 billion, making them one of the richest families in the world.

Power: Most of their wealth and power is controlled through their private holding company Olympia & York, which Reichmann says was created with just over $100,000—a $70,000 fine of credit and a $40,000 loan from his father. And according to Paul Reichmann, their giant empire is founded on eggshells and not in the intrigue of the black market in Tangiers. Prior to the Second World War, family patriarch Samuel Reichmann had a thriving egg-exporting business in Vienna. Reichmann said that as he watched Adolf Hitler come to power in Germany, his father became increasingly worried. As prewar tensions mounted, Reichmann said that his father had his Vienna accounts paid into a London bank

THEY FLED WAR-TORN EUROPE AND SAVED HUNDREDS OF JEWS

and later used that money to purchase gold in England. It was the gold that the family would use to finance their escape from the Nazis.

Bombing: Samuel Reichmann moved his family from Vienna to Paris in the late 1930s, but in 1940, when France fell before the advancing German blitzkrieg, they were suddenly on the move again. Paul Reichmann, who was then 8, said that his “father decided to try

and cross the Spanish frontier—I think they were just going, not in a certain direction, just going.” As he fled, Reichmann recalled, “most of Paris was on the highway; there was bombing overhead.” Added Reichmann: “We were old enough to see our parents’ concern.”

From Spain, the family made its way to Tangiers, then a French colony teeming with Allied and Axis spies and refugees from across Europe and North Africa. Samuel Reichmann’s first concern was the welfare of his family and earning a living. But, as Reichmann recalled, he was also preoccupied with developing a business that could be quickly turned to cash should the war suddenly reach into Tangiers. Said Reichmann: “My parents were looking for a business that would not tie them down—something that would let them go on—to be able to run the next night. And so he was involved in currency dealings.” With goods and people from around the world moving in and out of Tangiers, currency trading provided a good living.

Infamous: The Reichmanns’ home in Tangiers quickly became a centre for other Jewish refugees fleeing the war. Renée Reichmann provided meals, offered advice and nursed the ill. But as reports leaked out of Germany that European Jews were being systematically ex-

terminated, Reichmann says that his mother dedicated herself to helping Europe’s desperate Jewry. Soon the Reichmann children were spending hours packaging food, including chocolate rations, for the inmates of infamous concentration camps in Europe.

Renée Reichmann, according to her son, persuaded the Spanish Red Cross to accept European Jews as prisoners of war, while the

other branches of the relief organization would not. That led to the saving of hundreds of lives. And she even managed to bring 500 young people out of the Bergen-Belsen camp, situated in West Germany. Paul Reichmann, whose sister-in-law is a Bergen-Belsen survivor, said that “a lot of people that came to Tangiers were totally broken, without any spirit left— and they were so desolate.” He added: “They

were not interested in life—period. And those that were interested in life had no trust.” In many cases, he said, his mother rehabilitated the tortured victims, and she did that by providing an environment that occasionally led to marriages.

It is another side of Renée Reichmann’s benevolence that is at the heart of the clash between the wealthy, powerful and influential Reichmanns and Dewar, a highly respected journalist. According to Paul Reichmann, his mother packaged hundreds of pounds of chocolate and sent it to prisoners in Nazi death camps. In some cases, said Reichmann, the rations of sweets kept the inmates alive and allowed them to barter with their captors. “There are books from former inmates in the camps who say that they had chocolate and it helped to save their lives,” he said.

Underpins: But according to Reichmann, Dewar’s article poses another purpose behind the hundreds of pounds of chocolate that Renée Reichmann shipped into Europe. According to Reichmann, Dewar said that the genesis of the wealth that now underpins Olympia & York was, as he described it, “illicit,” because Renée Reichmann somehow may have profited from the shipments of chocolate. Said Reichmann: “So one can take these kinds of people and describe them as making a fortune out of misery and so on. The story says several times that Olympia & York has illicit origins.” Reichmann said that people could interpret the story negatively. He added that one Israeli newspaper story even carried a picture of First Canadian Place, a prominent Toronto office tower, with a caption that Reichmann said implied that its construction was financed by his mother’s chocolate shipments. Although Reichmann said that he found the caption funny, he said that it amounted to a clear implication that Olympia & York was built on “illicit” cash.

Still, Dewar’s investigation into the powerful Toronto family was the most exhaustive ever conducted into the Reichmanns by a journalist. She travelled to Hungary, Austria, Israel, New York City and Tangiers. She interviewed Albert and Edward, two of the five brothers— there is also a deceased sister—and people

who knew the family, both in Tangiers and earlier in Vienna. Her search for the original Reichmann home even took her to the tiny Hungarian village of Gyor. But Reichmann accused her of misinterpreting or mistranslating some of what she found. Said Reichmann: “The article is very clearly pointed in a certain direction. As a result, someone well-intentioned reading it would not find any great issue in it. But someone reading it carefully might find something negative.”

Dewar, who has been ordered by her lawyers to remain silent about the case,

declined to comment on Reichmann’s sudden decision to attack the article publicly. But a statement of defence filed in the Supreme Court of Ontario states that she did not libel the Reichmann family. Instead, Dewar and her publishers and editors claim that they actually wrote a glowing tribute to the Toronto magnates (page 49).

Moral: Their defence against the Reichmanns’ charge is partially linked to the premise that under Jewish religious law, almost anything, with the exception of murder, adultery and idolatry, can be undertaken to save lives. And any act, short of the three unbreachable sins, could be considered moral. According to the statement of defence, “The Mysterious Reichmanns” does “not reveal a despicable side to the Reichmann family.” In fact, it is the defendants’ position “that the thrust of the story taken in its whole context is that the Reichmanns acted nobly and were motivated by duty—the noble concept of Jewish law that there is an absolute duty to save an endangered life—(pikku’ah nefesh).” As well, they say that the Reichmanns worked with other groups and individuals who shared “this brave and moral notion.”

The defendants also say in their statement that the Reichmann family opposed Nazi Germany with all the “ingenuity imaginable and that Renée Reichmann carried a halo of courage.” As for the parcels that were sent to death camps, the defendants say that Dewar’s article did not conclude that the shipments “were sent for some purpose other than to give succor, relief and hope, as well as a means to bribe their Nazi captors.” And they say that Renée Reichmann may actually have “found a brilliant method of giving people in the camps the wherewithal to bribe their captors.” As well, the statement says that Renée Reichmann is clearly a heroine and was not involved in an “evil and unsavory scheme.”

Questions: A unique element of the case turns on the unusual style of the Dewar article. It is written in the first person, and questions about the Reichmann family are raised in a rhetorical sense by the author, and then are either answered with more questions, with an anecdote, a quote from a document or a statement from someone who knew the family

during the war. But she does

not always reach a conclusion. In many cases, Reichmann said, the anecdotes and statements can lead people to conclude that there is “something negative” and that there may have been something else besides benevolence motivating their efforts to save as many Jews as possible.

Part of the controversy, said Reichmann, is that Dewar found people who claimed to have evidence that Samuel and Renée Reichmann grew “wealthy” after the war. Said Reichmann: “The person

said that they were happy to see that my parents had moved to a huge apartment and that they made parties. But we lived in the same walk-up apartment that we moved into in 1940 when we got to Tangiers.” In fact,

Reichmann said that they

lived in the same apartment throughout their stay in Tangiers.

Reichmann added that he was also angered by suggestions that his family entertained lavishly during the war while their Jewish brothers and sisters were being starved, tortured and murdered. There were parties, he said, but they were celebrations to help escaping Jews regain their spirit. And in many cases, Reichmann said, the celebrations were actually weddings between the Bergen-Belsen refugees.

Added Reichmann: “The reference to parties? Party to you means an image of what? Well, there were a lot of parties—a lot of parties where my mother brought a number of orphan girls from the Bergen-Belsen concentration camp, and then young boys and young men, refugees, and married them.” The celebrations did not signify wealth, said Reichmann; they were attempts to rebuild shattered Uves. “She considered it her duty, to create families, to rebuild a lost generation. Those were the big parties referred to,” he said. But how, said Reichmann, could anyone “describe them as making a fortune out of such misery.” Attacks: In the final analysis, declared Reichmann, he had “no choice” but to go ahead with the lawsuit because the story “attacks people who were among the most extraordinary of the last generation.” Andrew Sarlos, a Bay Street investment dealer who knows the Reichmanns and has worked with the family, says that another reason may be behind the Reichmanns’ anger. “Their father and their mother are the most precious things in the

REICHMANN SAYS MONEY ALONE DOES NOT MOTIVATE HIS FAMILY

world to them,” he said. “And anything that would cast a shadow on the father and mother is more important than $5 billion. Money is no longer important to them, but character is.”

Within the Jewish community, Martin Lockshin, 37, director of the Hebrew program at York University and an Orthodox Jew who has known the Reichmann family since he was a

boy, said that there is no reason to believe the entire article. Added Gunther Plaut, a renowned Jewish scholar living in Toronto: “Their practice of preserving as much privacy as possible leads to a slight air of mystery, but never, before or since the article, have I heard anything untoward about the family.”

Criticism: But it is the mystery surrounding their strict Orthodoxy that clearly interested Dewar. That same Orthodoxy draws criticism from some Jews who say that the Reichmanns remain outside of the Jewish mainstream and do not give enough support to the Jewish population as a whole —including the mainstream.

Maurice Lucow, editor of Canadian Jewish News of Toronto, a popular Jewish newspaper with a circulation of 33,000 in Ontario, said that the Reichmanns should be more involved in the general Jewish population. He said that they rarely, if ever, par-

ticipate in the Canadian Jewish Congress or the Toronto Jewish Congress. Said Lucow: “I do not have time to worry about the Reichmanns, and I think the rest of the community feels the same way.”

Millions: Others in the Jewish community are solidly behind the Reichmanns. Meyer Nurenberger, owner and editor of the smaller Jewish Times, a newspaper catering to Toronto’s Orthodox Jews, says that he is an admirer of the Reichmanns. And he is highly critical of Jews who say that the wealthy family should be more supportive of the entire Jewish community. Said Nurenberger: “They are supporting hundreds of Jewish organizations throughout the world.” And he said he believed that the Reichmanns are spending millions in Israel and that they recently sent a cheque for $100,000 to Rabbi Hoffman, leader of the Orthodox synagogue in Budapest.

But Michael Brown, co-ordinator of religious studies for York University’s Hebrew program, said that there is a broader reason for

Paul Reichmann’s anger. He added, “The whole community is proud when The New York Times describes the Reichmanns as ‘models of probity.’ ” He said that the world tends not to deal with Jews individually but as a group. Said Brown: “So whatever the Reichmanns do, other Jews will gain or be hurt by it. Therefore, they have a responsibility to the whole commu-

nity.” As a result, the Reichmanns’ suit can be interpreted as a message to the entire Jewish community that there is no foundation to claims that the family could have made what Reichmann termed a “fortune out of misery.” There is another side to the Dewar article that appears to bother Reichmann deeply—a side that is at odds with his deep religious convictions. If given the choice, Reichmann said that he might have chosen a different occupation—one that would have perhaps involved teaching or charity. An article that suggested his family had been untrue to the Jewish holy book, the Talmud—which contains laws that are binding on every Jew—would be unacceptable. And any suggestion that the Reichmanns had violated such laws would run up against Paul Reichmann’s deeply held beliefs. Said Reichmann: “If someone asked me what my greatest achievement in life was, I would not point to Canary Wharf. I feel that study is more important than what I’m doing here.” In fact, Reichmann said that he may

have been happier deepening himself in Talmudic studies than building Olympia & York. Said Reichmann: “I’m not developing my intellect at all with the company. I simply spend most of my waking hours in my business matters. If I found a way to develop my intellect, it would be much more interesting.”

Reichmann also appears to be concerned about the effect of the article on the new generation of Reichmanns, the children who are now rising to find a place in the family business. Reichmann said that before his children are allowed to pursue wealth at the pace that their parents have, they must have a solid “intellectual” grounding in their faith. Said

Reichmann: “They have their total freedom to choose, but we want our children to find something together. If they have a good education and strong minds, they will be unified. We’re trying to encourage them to be hardworking.”

Wealth: Reichmann suggested that “people can use wealth to become very popular,” but, he added, it is dangerous to “expose your children to this way of life. It is not healthy for their spiritual well-being.” And Reichmann said that to ensure that his children remain true to their beliefs, his family has “created the proper spiritual climate in our homes.” To guarantee that the new generation working at Olympia & York have a corresponding faith in the honest foundations of their company, Reichmann appears determined to set the record straight. Concluded Reichmann: “People will realize that we were right.”

TOM FENNELL

D’ARCY JENISH

SHONA McKAY