The sweet smell of Norman LeBlanc

How the IOS scandal moved to Montreal, shifted to the Bahamas and Costa Rica and ended up in Washington with Watergate


The sweet smell of Norman LeBlanc

How the IOS scandal moved to Montreal, shifted to the Bahamas and Costa Rica and ended up in Washington with Watergate


The sweet smell of Norman LeBlanc


How the IOS scandal moved to Montreal, shifted to the Bahamas and Costa Rica and ended up in Washington with Watergate

Norman LeBlanc was indignant. “Canada should do away with this type of nonresident operation,” he said, and the pudgy face fairly bulged with rage above the nattily cut lightweight suit. He hunched forward over his desk in a Nassau bank building, the corporate centre of a $500-million network of holding companies, banks and investment trusts. “The Canadian government has no business registering companies it cannot regulate,” he went on, “no business at all.” The upper lip trembled with moral fervor, the everglowing cigarette described punctuating circles in the air, and Montreal’s own Norman LeBlanc, sometime accountant, newly minted millionaire and self-acknowledged financial wizard, screwed his indignation to the sticking place. “It’s completely ludicrous,” he said, “that IOS was allowed to sit offshore, footloose and fancy-free and operate around the world under the shield of a Canadian company. I believe that companies should be required to operate in territories where they are incorporated

Robert A. Hutchison was a consultant to IOS Ltd. trom 1964 to 1969, and as Geneva correspondent of the London Sunday Telegraph has followed the company’s affairs with a watchful eye.

and that control over those companies should be in those territories.”

He fixed me with a challenging glare. I was enchanted. This, after all, was the partner, financial aide and disciple of Robert Vesco, a New Jersey businessman now under indictment in the U.S. and a fugitive from justice; he himself faced a civil suit for what the U.S. Securities and Exchange Commission calls “one of the largest securities frauds ever perpetrated,” arising out

of his own and Vesco’s operations (in fact, not long after I talked to LeBlanc, an arrest warrant was issued in Montreal, naming him in criminal charges for the misappropriation of funds). And the piquant point of his argument was not only that he was dead right but that the company he was citing, IOS Ltd., was one with which he and Vesco were intimately associated. What’s more, the string of companies that rose from the ransacked rubble of IOS are totally under

the control of LeBlanc, Vesco, et al. If he thought IOS had gotten away with murder under Canadian noses, well, who should know better?

LeBlanc has had a spectacular rise, a four-year scramble from an obscure accounting job in Montreal to the pinnacle of a financial empire domiciled in such exotic little lands as the Bahamas, Costa Rica, Lebanon, Luxembourg, the Netherlands Antilles and Panama. He has traded the humdrum pleasures of home and a car in Montreal for two legal residences (in Nassau and San Jose, Costa Rica), two passports (one Canadian, one Costa Rican), and a fleet of four jet aircraft (some owned, some leased). All that remains constant is his own volatile ambition, which now includes plans to make Global Holdings Ltd., the company of which he is chairman and controlling shareholder, into the world’s largest independent agency for investing in developing countries.

LeBlanc’s story holds two lessons for Canadians. In the first place, we are entirely too modest in assessing native talent for high-blown financial manipulation; we can produce men, / continued on page 56

LEBLANC from page 29 like LeBlanc, capable of turning out a balance sheet with the canniest Americans. That’s the good news. The bad news is that, as he so aptly noted, the finagling that went on in IOS — the looting, not to put too fine a point on it — of IOS assets, was made possible in large measure by the laxness of Canadian regulations and the non-enforcement of those that do exist. This nation provided an offshore shelter for the manipulations that stripped the company; we were the necessary tame banana republic. Worse, it is in part because Canada has had such a solid financial reputation

that the trick worked. A company, after all, that carries the proud statement on its share certificates that it is “subject to the Canada Corporations Act” sounds reassuringly square. In the wake of the IOS scandal that reputation is less secure; a number of European countries, led by West Germany, are beginning to hint that if our authorities can’t do better than they did in this case perhaps Canadian securities should be barred from foreign markets.

LeBlanc was right to be indignant; I couldn’t help but nod in surprised agreement. I had gone to see this intriguing

man to further research on a book I am preparing on IOS, a company I had come to know, first, as the London Sunday Telegraph's correspondent in Geneva (where IOS headquarters are located), then as a consultant to the firm from 1964 to 1969. There was a certain irony in discovering, after the collapse, that one of the key figures in the controversy that still surrounds it was this pudgy fellow-Canadian, who looks more like a stock clerk than a financier.

The SEC has brought a massive fraud action against LeBlanc, Robert Vesco and 40 other individuals, corporations and banks who have, it claims, bilked four IOS mutual funds of more than $225 million. Now there is evidence that as much as $500 million has been looted from that company, the four dollar funds and two IOS-related closed-end investment companies.

A 14-week civil trial of the SEC charges ended recently in the U.S. District Court for the Southern District of New York. It mobilized a phalanx of attorneys and cost the defendants an estimated $ 1.2 million in legal fees. But that was just the beginning. Whatever verdict federal judge Charles E. Stewart Jr. hands down, the legal wrangling is likely to drag on for years. The SEC has said that it will turn over its files to the U.S. Justice Department for possible criminal prosecution.

Despite the seriousness of the allegations against him, LeBlanc refuses to recognize the jurisdiction of a U.S. court in the matter. “I invite the SEC to come down here and try its case,” he said in Nassau.

The touchy jurisdictional question that statement raises is at the very heart of the concept of “offshore” operations, and to understand this it is necessary to consider the origins of IOS.

Bernie Cornfeld, a former social worker who grew up in Brooklyn, had a simple notion that millions of investors around the world would buy shares of mutual funds if they could be removed from the surveillance of domestic tax collectors, and, if possible, based in countries where tax evasion is not a criminal offense. Accordingly, in 1956, he founded Investors Overseas Services in Paris and, two years later, moved it to Switzerland, where banking secrecy laws are conveniently strict. At first, the company’s growth was slow, although it speeded up considerably when he registered IOS Ltd. as a sociedad anónima in Panama and refined the hard-sell technique which was central to the unloading of mutual fund investment programs. Then, in 1969, IOS Ltd. became a nonresident Canadian corporation, and its registered offices were switched to the financial backwater of Saint John, New Brunswick.

There were two reasons for the move.

At the time, IOS Ltd. was about to launch a $ 110-million underwriting of its stock — that is, it would offer shares of its own company for sale, as opposed to those of the 20 mutual funds it sponsored — and to the investing public a Canadian-registered company inspired more confidence than a Panamanian one. The prudent investor may wrinkle his nose at the thought of plumping down cash for stock in a firm domiciled in a Central American tax haven, but what could go wrong in Saint John, Canada? What the prudent investor couldn’t know, but Cornfeld did, was that Canadian authorities exercise little control over enterprises such as his that conduct their business primarily in other countries. Finally, at that time, nonresident corporations paid no corporate taxes in Canada.

The result was catastrophic. Six months after the glamorous September, 1969, underwriting, crisis struck the Cornfeld empire in the form of a cash squeeze brought on by a series of selfserving ventures, including loans to insiders and friends totaling more than $30 million. The IOS stock, which had been issued at $10 a share, was soon trading at two dollars; subsequently suspended from the Toronto, Montreal and London exchanges, it now trades unofficially, if it trades, for a few pennies.

Had IOS been a manufacturer of ball bearings, the collapse would have attracted little attention. But it had grown into one of the largest financial services complexes in the world, with a far-flung network of banks, insurance companies and real estate operations valued at around $100 million. In addition, IOS had annual sales of three billion dollars, close to one million clients, and no less than $2.3 billion under management in its mutual funds. The imminent collapse of such an empire was bound to draw looters, and it did.

Robert Lee Vesco had been studying the IOS operation from a distance for some time. Vesco, the son of a Detroit auto worker and himself a trained auto mechanic, was only 34, but among a small circle of businessmen and bankers he was already known as something of a manipulative genius. In four years he had built his own International Controls Corporation, a New Jersey manufacturing firm, from a tiny concern with sales of $400,000 and no profits into a medium-size conglomerate with sales of $100 million and $4.7 million in profits. By early 1970, however, International Controls had run into sagging market conditions, sales were off 25%, and the company was having its own problems raising cash.

But Vesco’s study of IOS suggested that Cornfeld’s firm had more cash on hand than its own directors realized. So he offered to “rescue” the company with

a five-million-dollar loan — which International Controls itself had to borrow. Once the hard-pressed IOS directors accepted his emergency financing, he caused IOS to provide collateral for the loan with five million dollars of its own money. IOS had rescued itself with its own cash, but in the meantime Vesco had moved in to a position of control.

He acted quickly to consolidate that control. In January, 1971, he manoeuvred ousted chairman Bernie Comfeld into selling his dominant block of six million preference shares for $5.5 million, without Cornfeld’s knowledge as to the real identity of the purchaser. (Cornfeld’s problems were far from over when he was ousted, however; he was later arrested in Geneva and charged with fraud, abetting speculation and criminal mismanagement under Swiss law, for his role in the IOS collapse.) The mystery purchaser of the Cornfeld

stock was eventually identified as Linkink Progressive Corporation, a Panamanian shell company (that is, a company that exists on paper only). To this day Linkink’s principals have never been disclosed, although the fact that the stock was later acquired by a subsidiary of Vesco’s international Controls for $50,000 has led some of the suspicious minds down at the SEC to conclude that Vesco was somewhere in the picture. He denies this flatly.

At the time Vesco assumed control of IOS, the four IOS dollar funds — Fund of Funds Ltd., IIT (an International Investment Trust), Venture Fund (International) NV, and Transglobal Growth Fund Ltd. — had combined assets of about one billion dollars. For the past 18 months, no audited reports for these funds have been issued. By mid-1973, however, it was estimated that the assets had decreased to less than $358 million. Redemptions are now suspended. At any rate, because of the large quantities of dubious and unmarketable securities that have been stuffed into their portfolios, it is virtually impossible to compute a fair net asset value per share for any one of them. Thus, for 264,000 remaining fundholders, even if their shares were not frozen, there is little hope of recovering more than a small

fraction of their original investment.

LeBlanc’s involvement with IOS began in 1970. He had been raised in Montreal, and, after graduating from the Town of Mount Royal High School at 17, joined an accounting firm, and spent the next five years attending McGill University night school. He wrote his final exams in 1958, winning the Governor General’s gold medal for the highest marks in Canada. At 26, he became a junior partner in his accounting firm, specializing in mergers and acquisitions, but also undertaking some auditing work in underdeveloped countries for the World Bank. Then, in 1969, he decided to leave Montreal for a year to broaden his horizons in Europe. He arranged for his company, McDonald, Currie & Co., to transfer him to the Paris offices of their overseas affiliate, Coopers and Lybrand, one of the Big Eight international auditing concerns.

He was working in Paris when, in mid-September, 1970, he received a call asking him to fly to Geneva for an urgent meeting with an important client, the president of International Controls Corporation. LeBlanc recalls, “I had had many of these calls before — somebody from America wanting to buy a business in Europe, particularly with the European Common Market opening up — and so I went down to Geneva expecting, you know, a 60-year-old executive who wanted to buy some company and I find a 34-year-old fellow [Vesco] who controls quite a big company and he said, ‘I’m getting involved with IOS and need some auditing help.’ At that point ... I almost fell off my chair.

“I said, ‘Well, what do you want me to do?’ And like he wanted Coopers and Lybrand to make a complete investigation. I said by when, you know, and he said, ‘Well, like yesterday.’ And so I spent from September through till April or May commuting back and forth from Paris to Geneva, working virtually inside the IOS empire with a staff that ranged up to 45 professional accountants.”

The audit, LeBlanc says, disclosed that “at that point in time IOS had no financial controls at all. Management had no idea what was going on ... I found three warehouses — they didn’t even know they owned them. And in one there was a pink Rolls-Royce, and in the other two there were two Fords. . . with a whole lot of other stuff, material they didn’t know they owned.”

Toward the end of his assignment LeBlanc was approached by Vesco and asked to “come in and implement many of the things we were recommending as a firm.” Accordingly, he was appointed IOS financial vice-president on July 1, 1971, the same day that Vesco won a bitterly fought proxy contest in Toronto by circumventing an Ontario Supreme continued on page 58

LEBLANC continued Court order pertaining to the voting of a key block of stock. The victory left Vesco in outright control of IOS, and he quickly set LeBlanc to work restructuring the crisis-worn company.

LeBlanc split the IOS combine into three separate parts, the banking assets, the real estate and insurance interests, and the mutual funds. In October, 1971, the banking assets were transferred to a newly formed Bahamian holding company, International Bancorp Limited. Seventy percent of International Bancorp’s stock was in turn distributed to IOS shareholders, while the other 30% went to a close Vesco associate in exchange for all the outstanding shares of the brand-new Bahamas Commonwealth Bank, which was to become the cornerstone of the Vesco-LeBlanc group’s future banking operations. Then, in December, 1971, substantially all of IOS’s real estate and insurance interests were transferred to another Bahamian shell corporation, Value Capital Limited. Following the same scenario, Value Capital’s shares were promptly paid out as stock dividends to IOS shareholders. The mutual funds were left in the old IOS corporate shell.

You will recall that International Controls, Vesco’s company, was by this time the largest shareholder in IOS. It was the recipient, therefore, of the biggest block of the shares in the two corporations that now owned the hard assets — the banking, real estate and insurance interests - while the major liabilities, which included about 200 lawsuits around the world, were left with the old firm.

When the dust settled, International Controls had a dominant minority share of IOS, 22% of International Bancorp and 38% of Value Capital. The extraordinary feature of this massive restyling of assets was that at no time was IOS shareholder approval obtained for the restructuring plans. Whether such approval was a legal requirement is a complex legal point; it is enough to note that if there is no such requirement under Canadian law in this kind of case, there should be. In any event, had authorities here followed their own responsibilities by insisting on proper disclosure of this traceable series of steps, it is hard to see how they could have taken place once the scattered, but majority, IOS shareholders knew what was up.

Although Canada was not acting, in the U.S. the SEC was probing Vesco’s role, and once more LeBlanc became the key figure in the New Jersey wheeler-dealer’s game plan. As a Canadian, he could not be subpoenaed before the commission, and so, on April Fool’s Day, 1972, Vesco publicly resigned as chairman of IOS. Simultaneously, the sale of International Controls’ 38% interest in IOS Ltd. was announced. The

purchaser was Kilmorey Investments Limited of Nassau, a company owned by four IOS executives — including LeBlanc — all of them Vesco lieutenants. The four were said to have paid $2.8 million in cash and notes for 23.6 million IOS shares, but the cash basis for the transaction was only $200,000 and it came to Kilmorey from that jewel in the Vesco group’s crown, Bahamas Commonwealth Bank.

As far as LeBlanc was concerned, the Kilmorey transaction was only a way station on his climb to the top of the somewhat wobbly structure that was conceived to replace the fallen empire of IOS. Eight weeks later he announced his resignation from IOS Ltd. and moved to Nassau with his wife and four children. His 20% interest in Kilmorey was sold to one of the other lieutenants — for a tidy profit, he later claimed, of $400,000. The very next day, the board

of directors of International Controls met in New Jersey to discuss the sale of the two IOS dividend companies (International Bancorp and Value Capital) to a company called Global Holdings, for $7.3 million. Global Holdings was one of two shell companies (the other was its subsidiary, Global Financial Limited) which LeBlanc had purchased for $1,000 each. The deal was approved, and LeBlanc issued an unsecured “slow” note with a five-year maturity date for the full amount.

Now Vesco could claim to the SEC that he had totally disassociated himself from IOS, and LeBlanc could congratulate himself on his acquisition of a holding company that had wound up with the lion’s share of the hard assets of IOS. There was, of course, the matter of that $7.3 million note to meet. No problem. He went back to IOS management with a suggestion that they invest in Global Holdings. IOS fund managers looked at the two Globals for less than three weeks before deciding to put $20 million from one of the mutual funds, Venture Fund (International), into them — $10 million in nonvoting common stock and $10 million in debentures. That investment represented about 45% of Venture’s total assets, and it gave LeBlanc the money he needed without the incon-

venience of having a voting partner to account to. He promptly paid off the $7.3 million note.

Meanwhile, new developments were taking place in Canada. Many of Vesco’s deals had been routed through Butlers Bank, a small Nassau bank run by Harvard graduate Allan Butler but owned by his wife, Shirley Oakes Butler, daughter of the late Sir Harry Oakes. Vesco suddenly found that Butlers Bank was in trouble. That bank, through a web of interlocking companies, indirectly controlled Security Capital Corporation Ltd. of Toronto, which was deeply engaged in an abortive bid to take over Seaway Multi-Corp Ltd., also of Toronto. Vesco had promised Butler his support in the take-over, and claimed to have five million dollars in front money on deposit with the Bank of Nova Scotia waiting for the closing.

However, Vesco had become alarmed at the chaotic condition of Butlers Bank, which looked as if it might fall into the hands of a public liquidator. At the last moment, therefore, Vesco failed to produce the needed five million dollars for the Seaway deal. This put Butlers Bank in an impossible situation; not only did the take-over collapse, it had to pay penalties for that failure; it could either sell out or face bankruptcy.

At this point, LeBlanc stepped in and offered to buy the Butler group, including the bank, associated trust companies and Security Capital Corporation. Butlers Bank, with an undisclosed deficit, was folded into Bahamas Commonwealth Bank. However, Security Capital needed about $2.7 million because of the abortive take-over bid, and who should come to the rescue but another IOS mutual fund, IIT, which loaned it $4.5 million. This transaction is currently being investigated by the Ontario Securities Commission.

Now LeBlanc and his associates moved into new headquarters at Charlotte House, a plush four-story building in Nassau which Butler had designed to include a $250,000 rooftop dining room.

In addition to new premises, Bahamas Commonwealth Bank inherited from Butlers a loan and mortgage portfolio containing some delicate political loans. One, for “a couple of hundred thousand” dollars, was to Prime Minister Lynden O. Pindling. Another was to Paradise Bakeries, a Bahamian bakery owned by Pindling’s relatives. Through a string of companies included in the package, the LeBlanc group also had become one of the dominant forces and largest employers in the Bahamas.

LeBlanc was an instant tycoon, and began to build a legend for himself in Nassau social circles. Vesco, however, remained more retiring, living a secluded home life at Brace Ridge Manor, a Nassau house purchased for him by continued on page 61

LEBLANC continued Trident Bank, one of the group’s alternate banking arms in the Bahamas.

Vesco has reason to be shy. He has been indicted by a U.S. grand jury in connection with an undisclosed $200,000 contribution to the reelection campaign of President Richard Nixon. The money was “loaned” to Vesco by Trident Bank and loosely stuffed into a worn attaché case which was secretly handed to Maurice Stans, former Secretary of Commerce and then Nixon’s chief money-raiser, on April 10, 1972. Vesco wanted his lawyer to see the head of the Securities and Exchange Commission who, he claimed, was harassing him, and he asked John Mitchell, then Nixon’s campaign manager (and formerly the Attorney General) to arrange the interview. After the money was received, Mitchell did arrange the meeting, but the SEC suit against Vesco was not dropped.

There were other connections between the LeBlanc-Vesco group and Nixon. An important group member was Gilbert R. J. Straub, also known as “Mr. Fixit” because of his influential friends, who include the President’s brothers, Donald and Edward. It was Straub who hired Donald (“Don Don”) Nixon Jr., the President’s nephew, as Vesco’s personal aide. The younger Nixon occasionally handles Mrs. Vesco’s shopping chores and sometimes drives the children to school. He was employed in Nassau by New Providence Leasing, one of the group’s companies, although he has never leased a car in his life. He refers to Vesco as “Big Bobby” and has put through calls to the White House on his behalf. His contact there was John Ehrlichman, the President’s assistant for domestic affairs until caught up in the Watergate scandal.

The LeBlanc-Vesco group’s attempt to win influence worked better in the Bahamas than in the U.S. While other banks were cutting back credit because they were nervous about the commonwealth’s economic prospects after independence (the official date was July 10), Bahamas Commonwealth Bank has pumped more than $20 million into the economy in the last year alone, mainly in the form of loans and renewable 90day treasury notes. By coincidence, friends and allies of the ruling Progressive Liberal Party have benefited, with the result that while most companies centred in Nassau find it difficult if not impossible to get work permits for foreign personnel Vesco and LeBlanc have had no such problems.

With the Bahamas squarely in their orbit of influence, LeBlanc’s team has moved on to Costa Rica, with a series of transactions through Global Holdings, Bahamas Commonwealth Bank and a new LeBlanc venture — Bancorp de Costa Rica, SA, — pouring at least $25

million into the original banana republic. As a result, LeBlanc and Vesco have been granted official residence status, have announced their intention to become Costa Rican citizens and have been issued with Costa Rican passports. Vesco’s is stamped “diplomatic” and identifies him as a financial adviser to President Jose (“Don Pepe”) Figueres. (By one of those happy chances that mark this trail, IOS’s IIT fund loaned $2.15 million to a company controlled by Don Pepe’s family.)

LeBlanc moved his wife, Alice, and three of their four children down to San

Jose, the Costa Rican capital. The fourth is in school at Geneva. “I commute back and forth between Nassau and San Jose. It’s only a two-hour flight in my jet,” he says. He has a $60,000 home just around the corner from Marti Figueres, his close friend and the eldest son of the president.

LeBlanc maintains that, since the purchase of Global Holdings, his interests have been separated from those of Vesco, who is now an official fugitive from the U.S. (for failure to appear at a grand jury hearing, he was held in crimicontinued on page 62

LEBLANC continued nal contempt and two warrants have been issued for his arrest). When I asked what their present connections were, LeBlanc replied, “None really ... He is on the board of a company I have a small percentage of ownership in, Global Natural Resources Properties Limited. We are good friends. We see each other fairly often.”

LeBlanc forbore to mention that contracts exist between the controlling shareholders of key companies in the group whereby, in some instances, an option requires that if one of the group wants to bail out his voting stock must be offered back to one of the others. He also forgot to mention that he and Vesco are partners in a Costa Rican cattle ranch.

Since the SEC launched its fraud suit, pressure has been building against the LeBlanc-Vesco group. The Vesco issue is now a matter between governments, and at the highest levels. President Figueres of Costa Rica personally wrote President Nixon over the alleged persecution of Vesco. Prime Minister Pindling’s Nassau office has consulted with the State Department, Washington has sent emissaries to Ottawa, London, Luxembourg and Bonn.

The Luxembourg Banking Commission got into the act, prompting the freezing on February 1 of $155 million in cash from the four IOS funds that had been on deposit with Bahamas Commonwealth Bank. No less than $105 million of that money was traced to a BCB account with the Bank of Montreal in Montreal. The Quebec Securities Commission clamped a freeze order on this, causing several BCB cheques to bounce. Another $18 million was uncovered at the Bank of Montreal (Bahamas and Caribbean) Ltd. in Nassau.

The freezing of these funds has restricted the financial operations of LeBlanc and his friends. However, as soon as the SEC action was filed, plans were drafted to sidestep the attachment of assets wherever possible. Two employees of Bahamas Commonwealth Bank, one

of them identified as “The Flying Bishop” and the other a young Scots accountant, left for Panama City with a briefcase full of money. There they attempted to open five numbered bank accounts in five different names. In addition, the group’s local affiliate, Phoenix Financial Services SA, received $54 million originally allocated to Interamerican Capital SA, a newly formed Costa Rican “closed-end” investment company, although what it invests in has never been disclosed. The $54 million, along with another six million dollars already on deposit with Interamerican, came from the IOS Fund of Funds.

Panamanian-registered Phoenix, like the ancient bird, is ready to rise from the ashes of its own funeral pyre, if need be.

All these wheelings and dealings have drawn scrutiny, not all of it friendly, to LeBlanc, who says he has been portrayed as “the largest swindler of all


time.” Rather, he says, he is the victim of an SEC conspiracy to extend its jurisdiction beyond U.S. borders. Even worse, he says, he has become involved in a private war being waged against him by U.S. bureaucrats.

“The harassment extends far beyond what one would expect a regulatory agency to do. I am usually followed . . . The phones are bugged in my homes. This office phone [was] bugged.”

The Nassau bank has been turned into a maximum security area on LeBlanc’s orders. Visitors are scanned by a closed-circuit television camera before being admitted. A platoon of uniformed security men equipped with walkie-talkies patrols the premises, and armed guards are stationed at the residences of the principal group members to keep out the unwanted, the curious and, above all, the U.S. marshals.

LeBlanc makes a nationalist point out of his battle with the SEC. What makes the Americans really mad, he suggests, is the removal of $225 million from U.S. stock markets to invest in developing countries like Costa Rica.

“These are countries where people . . . are a little sick and tired of putting their hand out for foreign aid ... People are saying ‘We’re not taking big handouts from the Americans any more.’ ”

He plans to keep investing in such countries through his network of companies, and he hopes to see his personal fortune blossom to rival E. P. Taylor, Howard Hughes or Aristotle Onassis.

If that happens, Canadians, including those who invested at one time or another in IOS ventures, may have a right to wonder how much they, and their government, helped. Had Canadian authorities insisted on disclosure while the IOS drama was unfolding, much of the debacle might have been avoided, but they were too timid, too unconcerned or too busy. Later, when it became obvious that the assets were disappearing, the suspension, or even the threat of suspension, of the Canadian charter would have served to warn the foreign financial community that something was drastically amiss, but that did not happen, either. The Ontario Securities Commission suspended trading in IOS Ltd. shares, but this action, while it provided protection for some Canadian investors, did nothing to meet our responsibilities to the world at large. The Department of Consumer and Corporate Affairs has launched a study to review and tighten existing legislation while drafting a new set of proposals to regulate financial markets in Canada. It is expected to take three to five years for these proposals to come to fruition.

When I told LeBlanc that the Canadian government was working up to closing the barn door five years after the stables had been looted, he laughed.

In fact, I imagine he laughed all the way to San Jose. ■