When former Hudson’s Bay Co. president George Kosich retired last spring after 37 years with the retailer, he did not stay idle for long. A day later, he became president of cash-strapped rival T. Eaton Co. Ltd., which was hunting for a new leader to oversee its restructuring. Now, the Bay has launched a $22-million lawsuit against Eaton’s, Kosich and four other former Hudson’s Bay executives who left to join the competition.
The suit alleges that Kosich breached his fiduciary duties by recruiting former colleagues and taking advantage of confidential information he acquired while working at the Bay. In its statement of claim, the Bay accused Kosich of “blatantly and repeatedly” soliciting Bay executives. Legal analysts said the Bay— which under the terms of Kosich’s departure is still paying him $1 million a year plus benefits until he turns 65 in 1999—may have filed the suit to discourage other staff from jumping
ship. But Kosich was quick to deny any wrongdoing. He added that on the same day it filed the lawsuit, the Bay hired a senior manager away from Eaton’s. “Many of our management team have told us they have recently been approached by consultants retained by the Bay,” Kosich said. “The reality is that retailing is a very small yet competitive industry in Canada.”
The BCE shuffle
John McLennan, who oversaw a wave of downsizing at Bell Canada, has been replaced as the company’s chief executive amid growing concern over Bell’s losses in the critical long-distance market. He will be replaced by former Maclean Hunter Ltd. CEO Ronald Osborne. While McLennan succeeded in sprucing up Bell’s image, its share of the long-distance market continues to fall—a problem
critics blame on a lack of vision. Some analysts questioned the appointment of Osborne, an accountant with no experience in the phone business. “They’re getting rid of a marketing guy and bringing in a guy whose focus is on the dollars and cents,” said Ian Angus, president ol Toronto-based Angus TeleManagement. Bell’s parent, BCE Inc., has also shuffled the deck. Northern Telecom president Jean Monty will become BCE’s chairman and chief executive when Lynton (Red) Wilson retires next May.
Economists are forecasting a quarter-point hike in the Bank of Canada’s trendsetting interest rate as early as this week, despite last week’s decline in the fiveyear mortgage rate to its lowest level ever in Canada, 6.85 per cent. The drop in mortgage rates signals that the long-term outlook for rates remains favorable, regardless of short-term increases.
Affordable mortgages, an improving economy and lean inventories of homes have contributed to a housing boom across much of the country. A Scotiabank study predicts an average price increase of
more than seven per cent in Toronto next year, while prices in Calgary should rise almost six per cent.
“The manufacturing sector continues to show exception-
DEPARTMENT STORE SALES
ai strength. Increased railyard activity a pickup in steel production and a rebound in goods-producing employment pushed the production index higher in August. ”
“The percentage of youth unemployed for more than six months has declined from more than 20 per cent in 1995 to 15 per cent now. ” —CIBC
“The Canadian economy is just starting to emulate the high-growth, low-inflation pattern of the '50s and '60s. ” —Scotiabank
WALL STREET MERGER
In a deal uniting two powerful investment firms, New York City-based Travelers Group said it will buy Salomon Inc. for $12.5 billion and merge it with its Smith Barney brokerage division. The takeover will create the thirdbiggest U.S. securities firm, after Morgan Stanley and Merrill Lynch & Co.
OFFICE MARKET TIGHTENS
The national office vacancy rate is falling as the economy strengthens. Royal LePage Commercial Inc. said the vacancy rate is now 11.1 per cent, down from 14 per cent a year ago. Rental rates are rising and construction activity appears likely to pick up in Toronto and Calgary, the firm said.
GATES FIGHTS TAX BILL
Bill Gates, America’s richest man, is fighting his property tax bill. The Microsoft Corp. chairman spent $73 million building a new mansion near Seattle. Based on that, local authorities are demanding $830,000 in 1998 taxes. But Gates, whose fortune is estimated at more than $52 billion, says the assessment should reflect the property’s current market value.
MANNIX ASSETS FOR SALE
Calgary’s reclusive Mannix family is spinning off its Pembina pipeline system. Loram Corp., the family holding company, plans to sell the division through an income trust valued at $650 million. Loram wants to raise another $650 million by selling Pembina’s oil and gas production assets.
INTEL FACES PROBE
U.S. officials are investigating whether the world’s largest maker of computer chips is engaged in anti-competitive practices. Intel Corp. of Santa Clara, Calif., makes the microprocessors in 85 per cent of all personal computers. Intel said its business practices are in accord with the law.
FELDERHOF TAKES TEST
A lawyer for the former chief geologist of Bre-X Minerals Ltd. said his client passed a lie-detector test affirming he knew nothing of plans to defraud investors. Bre-X collapsed last spring after tests found almost no gold at its Indonesian property. John Felderhof’s lawyer said his client voluntarily took a lie-detector test and denied conspiring to tamper with core samples.
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