Cover

FRIENDS IN HIGH PLACES

Former politicians on Magna’s board of directors have boosted Belinda Stronach’s political career. But for sheer depth, says STEVE MAICH, you can't beat Power Corp.

STEVE MAICH April 18 2005
Cover

FRIENDS IN HIGH PLACES

Former politicians on Magna’s board of directors have boosted Belinda Stronach’s political career. But for sheer depth, says STEVE MAICH, you can't beat Power Corp.

STEVE MAICH April 18 2005

FRIENDS IN HIGH PLACES

Cover

Former politicians on Magna’s board of directors have boosted Belinda Stronach’s political career. But for sheer depth, says STEVE MAICH, you can't beat Power Corp.

IF THERE’S ONE THING Belinda Stronach must have learned in her time in the corporate world, it’s the importance of having friends in high places. Magna International Inc., the auto parts company founded and controlled by her father, Frank Stronach, has always made it a habit to fill its board of directors and executive ranks with well-connected former politicians, both Liberal and Conservative.

Magna’s board currently includes former Ontario Tory premier Mike Harris, and Ed Lumley, who served as minister of industry in Pierre Trudeau’s Liberal government of the early 1980s. Another former Liberal cabinet minister, Doug Young, and Liberal Dennis Mills, who served as parliamentary secretary to the minister of industry, are directors of another of Stronach’s companies, Ml Developments. Last year, Brian Tobin, the flamboyant former federal fisheries minister and ex-premier of Newfoundland, had a brief stint as chief executive officer of Ml. Tobin resigned after six months from Stronach’s corporate empire-taking with him a package of some $2.3 million-around the time that long-serving board member and former Tory Ontario premier Bill Davis also stepped down.

It’s not just Canadian politicians who have found their way into the Stronach family business. Franz Vranitzky was chancellor of Austria from 1986 to 1997, when he joined Magna’s board. This year, Stronach named former U.S. ambassador Paul Cellucci to an executive position with Magna Entertainment. Magna also has a global advisory board, which features such luminaries as former prime minister Brian Mulroney and Mexico’s past president Ernesto Zedillo.

But even this long list of contacts can’t outdo the myriad political connections boasted by Power Corp. The board of Paul Desmarais’ Montreal-based holding company includes Don Mazankowski, Mulroney’s former deputy prime minister, John Rae, brother of one-term Ontario premier Bob Rae, and Senator Michael Pitfield, clerk of the privy council under Trudeau in the 1970s and ’80s.

And the current board doesn’t begin to describe the depth of Power Corp.’s political ties. Alumni include Daniel Johnson, who worked his way up to vice-president at Power before moving into politics and becoming

Quebec premier in 1994. Prime Minister Paul Martin was also an executive under Desmarais until he bought Canada Steamship Lines from Power Corp. in 1981. Jean Chrétien sat on the board of a Power subsidiary in the late 1980s, during his hiatus from politics. Like Magna, Power also has a global advisory committee that has included such stars as Trudeau, former German chancellor

Helmut Schmidt, and Paul Volker, former chairman of the U.S. Federal Reserve.

Such relationships are not a corporate cure-all, however. That point was made clear by the troubles at Conrad Black’s Hollinger International, whose unparalleled network of board members and advisers included Henry Kissinger, former Illinois governor James Thompson, and Britain’s legendary former prime minister Margaret Thatcher.

Nevertheless, few Canadians could rival the connections Belinda Stronach made in her brief tenure as head of Magna. By the time she got involved in the talks to merge the Canadian Alliance and Progressive Conservative parties, she was already well-prepared to cross the increasingly fuzzy line between politics and business. With backers like Mulroney, Davis and Harris already in her corner, her career change was more of a hop than a leap.

STEVE MAICH