Friday, June 01, 2007
This is quite the week for Michael
Lee-Chin, the controlling
shareholder of AIC Ltd.
Tomorrow the Michael Lee- Chin
Crystal -- which forms part of the
new expansion program at the Royal
Ontario Museum, one of Toronto's
major cultural attractions -- will
be officially unveiled.
The ROM is undergoing a major
transformation. About $200-million
is being spent, and Lee-Chin is
understood to have kicked in
$30-million, enough to get his name
on the crystal.
Meanwhile, the B.C. Securities
Commission is holding a hearing in
Vancouver into the activities of one
of his former star producers, Ian
Thow, who until May, 2005, was the
branch manager and senior
vice-president for Berkshire
Investment Group, a mutual fund
dealer controlled by AIC. Thow
worked for Berkshire for almost
According to the so-called notice of
hearing, Thow misappropriated "up
to" $30-million. He represented to
clients he was able to invest in
shares of National Commercial Bank
of Jamaica (controlled by AIC), a
Berkshire initial public offering
and high-yielding mortgages. "Thow's
representations were all false,"
said the notice.
To put the $30-million into
perspective, it happens to be equal
to what Lee-Chin invested in the ROM
crystal and, according to Sean
Devlin, enforcement boss at the
Mutual Fund Dealers Association of
Canada, the regulatory body that
oversees Berkshire, it represents
the largest loss in the MFDA's
history. Thow left Canada two years
Yesterday was day three of the
hearings. In fairly graphic detail,
Thow's victims have come forward and
explained how Thow, who has not
attended the hearing and is not
represented, moved their savings to
his pocket from theirs.
The stories were very, very sad.
Maybe Lee-Chin should be in
attendance to hear first hand about
the activities of the rogue mutual
fund salesman who constantly
reminded clients of his access and
friendship to the founder of AIC.
Indeed, Thow was the key organizer
for "meet the billionaire" when
Lee-Chin visited Vancouver in 2003.
And while Lee-Chin personally is not
suffering, the activities of Thow
have affected his plans for
A couple of months ago, National
Bank Financial was retained to find
a buyer for Berkshire.
A number of candidates were
contacted but no deal has emerged.
The reason: Would-be buyers are wary
of committing until they know the
outcome of the regulatory hearings.
"It's gone quiet," said one
executive at a firm that was
contacted. "And it's all because of
the guy out west."
- - -
While Lee-Chin is not at Vancouver,
some Berkshire executives, including
Julie Clarke, general counsel, have
turned up. But they aren't saying
much, even though they have been
given ample opportunity to do so by
some of the clients who have lost a
pile of cash by being associated
The clients want to know the
criteria by which Berkshire
"conducted mediations with 17
complainants" and not with the
others who have also lost money.
Berkshire has been less than clear.
In the past, Clarke said the
settlements were "largely" with
clients who provided cash to Thow to
invest in mortgages.
But Kirk Wong and Krista Kleven, who
have lost a pile of their savings,
have unearthed information that
Berkshire has also settled with
clients who invested in shares of
the Jamaican bank. "We asked what
the criteria were and she [Clarke]
said nothing," Kleven said.
- - -
Indeed, Berkshire seems to have a
policy of saying little and engaging
in delay. For instance: - In a
recent report in the Vancouver Sun,
David Baines said the following.
One of the lawsuits (against Thow)
has been launched by Nanaimo
businessman George Thomson, who is
claiming $686,000 on account of an
investment in the Jamaican bank.
The voluminous court file shows that
Berkshire's lawyers have balked at
answering questions and providing
Earlier this year, Judge Richard
Goepel chastised the firm for its
stonewalling tactics: "Berkshire's
failure to comply with the rules of
court and various court orders made
during the course of this
application is not acceptable," he
remarked. - Delays in dealing with
the Ombudsman for Banking Services
At Berkshire's urging, Wong and
Kleven approached the OBSI, an
independent body that investigates
complaints from individuals and
small businesses about products and
services provided by bank financial
Wong said Berkshire was required to
pass on information about their
situation by May 24. That date has
passed and the information has not
been passed over.
- - -
Meanwhile, the MFDA, which has a
number of its staff at the BCSC
hearing, is still beavering away on
its investigation into Berkshire.
Devlin said the investigation is in
its "final stage" and, in time, it
will make a determination as to
what, if any action, it will take.
Devlin said the MFDA has talked to
"all the necessary people and
gathered the necessary documentary
evidence." But the MFDA did not
There will be much attention given
over to what the MFDA decides.
In short, the world will not accept
that Berkshire did not know about
Thow's activities. "If you want to
act as a self-regulatory
organization, then you have to be
prepared to look out for those who
are affected," said one observer,
who has no personal stake in the