NATURE

MAN vs. NATURE

November 28 2005
NATURE

MAN vs. NATURE

November 28 2005

DAVID HO: ULTRA-SECRETIVE, AND ULTRA-RICH

SPECIAL REPORT

THE NEW-CANADIAN ESTABLISHMENT

PETER C. NEWMAN

SEVENTH IN A SERIES

The most imaginative and proactive members of China’s diaspora belong to an informal network known as guanxi that serves as a conduit for their astonishing mega-deals. While precise details of this floating financial kingdom, based on a mixture of reciprocity and self-interest, are hard to come by, its clout is measured by one stunning statistic: among world economies, the Chinese diaspora ranks in the Top 5 in wealth and economic clout.

David Ho is very much an integral part of this formidable cousinhood, a vital link in the legendary Bamboo Network that stretches around the globe and perpetuates the notion that in financial matters, the family is the inner citadel where the important decisions are made. In other words, the extent of family members’ fortunes is not even known to their bankers, and certainly not to itinerant journalists like me. Their operational code is simple: if discretion is good, silence is better.

I am the first journalist to interview the Hong Kong-born Ho in any kind of depth, and many of my questions remained unan-

swered. Still, in any survey of the New-Canadian Establishment, his presence must be recognized. I have no doubt he could buy and sell the half-dozen millionaires I have portrayed during the past six months in Maclean’s before breakfast, and ask for another helping of Cheerios, without realizing that his business day had already begun. His profile in Canada isn’t low—it’s non-existent. But he is currently investing in at least one highly visible enterprise, Harmony, his new private airline that he intends to build into a major carrier, so his days as a secretive backstage puppeteer may be numbered.

He did tell me that his grandfather was one of the first investors to back Bill Gates’ computer dreams. (The US$2 million in Microsoft stock he purchased in the mid-’80s was cashed out a year or two ago.) And, yes, the family was early into IBM and remains a major share-

Ho wants to build Harmony, his new private airline, into a major carrier, so his days as a secretive backstage puppeteer may be numbered. But his wealth is impossible to estimate, and he doesn't help you guess.

holder in HSBC, the world’s fourth-largest bank. All these and his other stock plays consist of less than five per cent of issued shares, and thus do not have to be publicly declared. David Ho is almost certainly the wealthiest of Canada’s many Chinese zillionaires, but his companies are privately held and his balance sheets are jealously guarded.

With fuel prices at prohibitive levels and the threat of terror still hanging over air traffic, it’s hardly an auspicious time to start an airline. But Ho, 53, has the courage of his convictions. He sees his venture as a way of taking the flying experience back to where it used to be, with meals served on porcelain dishes in an unhurried atmosphere that will make flying fun again.

It all started four years ago, when Ho and his younger daughter Kristen were stuck in Maui and had to wait 18 hours to fly home. “Air Canada kept saying, ‘We’ll fly soon, we’ll fly soon,’ ” he recalls. “I was very frustrated. Even the captain lost his temper, and started screaming. So Kristen said, ‘What are you going to do about it?’ That gave me the idea, and I did a u lot of research which satisfied me that there was

Rt a chance this business would be successful.” On Feb. 16, 2002, the company was formed, and it started flying in early November.

Airplane food is usually an oxymoron, like Microsoft Works or Ottawa nightlife, but Harmony hired Bruno Marti (champion chef at Vancouver’s La Belle Auberge) to produce feasts in the sky. The economy-class meals are the best I’ve ever tasted, and his business-class creations are unique. It’s been a while since I’ve

'He operates not just outside the box, but outside the warehouse/ says one associate

chomped lobster and foie gras aboard Air Canada. Part of the luxurious business-class ambience are seats that not only feel, but smell like expensive leather. For entertainment, you’re handed individual DVD, CD and video game units.

To liven things up, sometimes when he flies on his own airline, Ho stands up in front of the plane, identifies himself, and holds a draw. Those passengers seated in the lucky seat numbers receive one of the $100 bills that he peels from a roll in his pocket. (Robert Milton please note.) Harmony at the moment has only four planes (171-passenger Boeing 757s) that fly between Toronto and Vancouver and use that western hub for services to Honolulu, Maui, Las Vegas and Palm Springs. (In December he’ll be adding flights to Hawaii from Calgary and Kelowna.) All this is a prelude to Ho’s plans to break into the Asian market, especially China. Now that Canada has approved destination status with Beijing, Harmony has already been recognized as an approved carrier, and seems poised to sign a reciprocal agreement with China Eastern Air-

lines. It has the best chance of getting rights to those exponentially profitable routes because, well, David Ho is Chinese and has carefully cultivated the right contacts within Beijing’s bureaucratic hierarchies. Major fleet additions are already being negotiated. “For Canada, the potential is huge,” he says. “At the moment it’s very hard for Chinese people to get visas to come here. When Australia was designated as an approved tourist destination, tourism went up 10 times, and now Canada has the same designation.”

Meanwhile, Ho is enjoying life to the full in his Vancouver house, 13,000 sq. feet of marble and good taste off Granville Street. It is not visibly ostentatious, but as I considered its probable value, sitting in his magnificent living room on a recent afternoon, it occurred to me that not too many Canadian mansions have their own moats, as his does. (And it is not filled with hungry sharks.) He also has two palaces in Hawaii, one an exquisite house that is reserved for family retreats with his children Stephen, Cynthia and Kristen; the other, a mansion for which he recendy turned

down US$20 million. And yes, he does have a bodyguard, but his home also boasts a unique security system. In addition to the usual complicated electronics, it consists of the model of a police car that Ho acquired from an abandoned Vancouver movie set. The prop sits in his driveway, more of a scarecrow than a reality, but it keeps the burglars at bay. “That’s the kind of guy he is, always thinking outside

£ the box,” says Bill Dalton, an adviser with > Ho’s companies and a former Canadian head 8 of HSBC. “That police car model probably cost > him $500, while I just spent $2,000 putting i in a security system. It’s a very good example

H of his thinking—he doesn’t let his brain get “ cluttered with superficial, theoretical stuff, ¡j and uses common sense instead. He oper° ates not just outside the box, but outside the I warehouse.”

> Ho’s second child, Cynthia, who just finished 8 up at the University of British Columbia, dis£ dains the luxury life. “She doesn’t buy brand-

Ho's second child disdains the luxury life. 'She i refuses to sit in my Bentley/ he says.

Despite his wealth, or maybe because of it, David Ho is driven to achieve his personal best, a target that shifts ever higher as his empire expands. A team of specialists at North Carolina’s Duke University recently

told him that his brain never shuts down, and operates at Mach speeds with few respites. A nighthawk, Ho will take midnight walks around Stanley Park’s seawall, accompanied only by his doberman-German shepherd cross, Kaila.

Unlike most businessmen, Ho doesn’t golf, although he owns Vancouver’s prestigious University Golf Club. “They won’t let me play on my own course,” he laments. “I kill the grass when I miss the ball.” To relax, or try to relax, he prefers fishing, or going out in one of his boats or cars. He has at least three of each,

including a 100-foot motor yacht that easily ranks as the West Coast’s most luxurious floating pleasure palace. The ship has a dome that contains every conceivable form of international communication except its own area code. His guests swear he invites them aboard mainly to show off how well he can dock the giant craft. On open water, they share his excitement at slicing through the waves at 32 knots. “At that speed,” he points out, “it consumes as much fuel as a 757” He purchased the vessel in Florida, went to the Bahamas for 10 days, then took her up to Alaska. But mostly it’s his private toy, used as a place to celebrate deal-closings. Also among his fleet is a 38-foot Miami Wee-style cigarette racing machine that looks as if it could outrun a jetfighter. On the ground, speed is equally important to him. He owns a Porsche, and a custom-made Ferrari Testarossa that he bought for $250,000.

His many close friends include movie star Jackie Chan, West Coast tycoon Jimmy Pattison, Vancouver networking king Lyall Knott,

His many close friends include movie star Jackie Chan, West Coast tycoon Jimmy Pattison, Vancouver networking king Lyall Knott, and Bill Cohen, the Republican who was President Bill Clinton's secretary of defence

with him. Ho confesses that nearly everything important he learned about business came from his grandfather, who never got past kindergarten. “During the war, there was a paper shortage in China, and my grandfather was able to acquire a lot of paper,” he recalls. “At that time, there was a cigarette company that had no packaging. So my grandfather sold them paper, and the guy wrote him an iou. At the end of the day, the tobacco guy didn’t have money to pay for the paper, so he sold the business to my grandfather. Eventually, his Hong Kong Tobacco Co. became the eighth-largest tobacco company in the world.” Ho does his best to boost sales by chain-smoking company-produced Companion cigarettes.

The only other major business that he is publicly associated with is Vancouver’s leading luxury car dealership. In 1992, when Vancouver investor Bob Lee was a partner in MCL Cars, the city’s premier Jaguar, Porsche and Range Rover agency, it was losing money. Lee

and Bill Cohen, the Republican politician who was President Bill Clinton’s secretary of defence. (Cohen now sits on Harmony’s corporate advisory board.)

It’s a long way from Ho’s teenage years in Hong Kong. He’d started in business at age 16, sorting tobacco leaves by hand in his grandfather’s warehouse, but no school in the British colony would take him in. (“I wasn’t much of a studier. Too naughty. Too lazy.”) He ended up at Woodberry Forest prep school in Virginia, and then the small, private University of Richmond, also in Virginia, concentrating on business courses.

Ho’s biggest public investment before the airline was his purchase in 1987 for at least $100 million, of Gray Beverage, one of Canada’s largest independent soft drink bottlers, whose products include 7-Up and Pepsi. (Its founder, Abe Gray, was best known for his dubious campaign to persuade Canadian mothers that babies preferred their milk mixed with 7-Up.) Ho has since sold the company at a generous markup. Bill Dalton, who was his banker for five years, learned never to expect the usual credit analysis or any other documentation when Ho wanted to make a major investment. “David would just appear and ask to borrow a considerable chunk of money, and he always got it,” Dalton says. “It would be beyond my comprehension to ever think of him not living up to one of his commitments.”

The Ho fortune originated with David’s grandfather, Ho Ying Chie, who fled Shanghai in 1949 for Hong Kong before the Communist takeover, taking the family’s wealth

had doubts about being limited to luxury cars, and thought a Japanese car dealership would be a better bet. “We sold MCL to David Ho,”

Lee recalls, “because I knew he was a car nut.

I phoned him and said, ‘David, have I got a deal for you!’ ”

“What is it?”

“Do you have a dollar?”

“Sure.”

“Well, you own MCL.” And that was how Ho got into the car business. It’s typical of the man that his dealership now leads the country in the luxury lines that squat elegantly on his sales floor.

The Ho family arrived in Canada in 1984, when David was 30, mainly because his thenwife had relatives in Vancouver. “When I first came here,” Ho recalls, “I’d never even heard of Vancouver before, but my wife was educated in Canada. In my mind at that time,

I pictured that when I stepped off the plane, we would find horses to ride, because it was in the Wild West. I was most impressed—it was like being in Disneyland. I drove down Granville Street, and all the houses had gardens. The weather was very nice, and I said, ^ ‘We’re going to stay here.’ Canada has been H1 a good place to raise a family. Still, I found Canada very slow. There were no fax machines. There was prejudice everywhere. Some people didn’t like Chinese, but now, by and large, it’s pretty good. But the taxes! In Hong Kong, we paid 14 per cent and had huge reserves; here, it was 50 per cent and governments ran deficits. But do I regret coming here? Not at all. I married the future.” M