BUSINESS WATCH

Three views of power, influence and courage

‘Paul Reichmann produced a dance of the seven veils for the bankers—a glimpse of asset ankle, a peek at cashflow calf

Peter C. Newman May 3 1993
BUSINESS WATCH

Three views of power, influence and courage

‘Paul Reichmann produced a dance of the seven veils for the bankers—a glimpse of asset ankle, a peek at cashflow calf

Peter C. Newman May 3 1993

Three views of power, influence and courage

BUSINESS WATCH

PETER C. NEWMAN

Some fortunes become so big and abstract that instead of belonging to anyone, people belong to them.

That was the case with the three Reichmann brothers. The world’s largest real estate developers, they owned 40 million square feet of prime office space in 35 North American downtowns, and their ambitions had no limits. On Oct. 28, 1985, for example, Paul Reichmann paid $2.8 billion for Chevron Corp.’s 60.2-per-cent stake in Gulf Canada Resources Ltd., although he knew nothing about the energy game. He told Business Week at the time that the family intended “to be as big in natural resources as it had become in real estate.” He boasted that Olympia & York held assets of $15 billion and everyone believed him. Every tally of the world’s richest individuals ranked the Reichmanns near the top, just behind the inevitable Arab sheiks and the Queen of England.

The $15 billion that the family claimed in assets may or may not have been real (no outsider was ever allowed to see the balance sheets), but through their banking connections the family had also run up a stunning $23 billion in debt. And that was real enough.

The empire collapsed under its own weight in the 1990s because the Reichmanns tried to run it like a Mom & Pop variety store, with family members making all the decisions. Until she died in 1990, Renée, the Reichmann matriarch, chaired all the meetings, which were conducted almost entirely in Hungarian.

The rise and fall of the Reichmanns is ably documented by Toronto business writer Peter Foster in Towers of Debt, one of several compelling books published this spring. Foster paints Paul Reichmann as a dealaholic, not that different in his addiction or morality from Donald Trump or Robert Campeau. “What both Trump and Reichmann knew,” he writes, “was that a superhuman image was critical to the banks. Both had set about creating such an image, albeit one was under neon lights and the other set behind a discreet veil. Paul had always produced a dance of the seven veils for the bankers and for the press—a glimpse of asset ankle, a peek at cash-flow calf. But nobody got to see the big picture. Even to suggest such a thing would have been indecent.”

‘Paul Reichmann produced a dance of the seven veils for the bankers—a glimpse of asset ankle, a peek at cashflow calf

Among the book’s best chapters are Foster’s re-creation of Paul Reichmann’s abortive attempt to buy Hiram Walker, the Walkerville, Ont., distillery and a detailed reconstruction of exactly how the Reichmanns euchred themselves into the Canary Wharf fiasco. All in all, Towers of Debt is a fascinating and significant document that proves nobody can flout the laws of financial gravity.

A very different book is Douglas Fetherling’s A Little Bit of Thunder. The Strange Inner Life of the Kingston Whig-Standard. Fetherling, who spent five years as the paper’s literary editor, is a poet, artist and essayist whose 20 previous volumes have established him as an essential Boswell of Canada’s cultural community. His approach is low-key and his style is as clear and refreshing as a cool mountain lake, but he tells a hell of a story. His saga of what was undeniably “the best small daily in the country”

allows Fetherling to reflect on the quirks and qualities that produce—and destroy— great journalism.

Until its sale was announced on Oct. 26, 1990, when the newspaper became an indistinguishable broadsheet within the Southam empire, the Whig was the creation of Michael Davies, a wonderfully old-fashioned “proprietor” who purchased the paper from his brother and cousins in 1976. He subscribed to the ultimate heresy that newspapers were responsible to their readers, rather than their advertisers or some Toronto-based chief financial officer who long ago hocked his soul to the company store.

Fetherling’s topic is the leisurely chronicle of a medium-sized newspaper, but his real subject is integrity—what Neil Reynolds, who was editor under Davies for twelve years, accurately labels as “the highest principle of journalism.” Most editors and reporters pride themselves on their grasp of this elusive quality. It cannot exist in a vacuum. It can only grow in the kind of flower garden that flourished during the Davies regime. Like a garden that performs its eternal act of drawing out from the earth its natural increase, the paper fed on its own quirky rules and ethics. It was that kind of place.

None of this means that the book is preachy or dull. On the contrary, A Little Bit of Thunder bristles with anecdotes and wonderfully assorted characters like Edward John Barker, the paper’s founder, a self-proclaimed medical doctor who arrived in Kingston in 1832 from England after an imaginary career in the Royal Navy. When the sale to Southam was announced and Davies as well as Reynolds had departed the scene, a Whig staffer lamented: “There aren’t any grown-ups here anymore. They’ve all left. From now on, it’s going to be like Lord of the Flies.” And so it is.

In Dead Silence, John Geiger and Owen Beattie explore one of the great mysteries of the Canadian Arctic, the disappearance of James Knight, his two ships and 40 men while trying to discover the Northwest Passage in 1719. They were stranded on Marble Island, 50 km off Rankin Inlet, on the western shore of Hudson Bay. The writers and their assistants made four voyages to the site, and using the latest scientific instruments (which had earlier allowed them to examine remains of the Franklin expedition) partially reconstructed how Knight and his crew perished.

Although the outcome of the Knight expedition ranked second only to the Franklin tragedy in the number of men lost, no one at the time or ever since has seemed particularly concerned about their fate. Marble Island remains a haunted place. The few modernday Inuit who go there crawl up its ghostly beaches on knees and elbows, obeying the legend that some terrible event will strike the person who walks ashore. They thus pay silent tribute to the futile endurance of Knight and his brave comrades. But the mystery endures.