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Mediation starts in Thow case


Barry Critchley

Wednesday, February 06, 2008

For some clients of Ian Thow, the hope is that mediation will end their nightmare. Thow is the former senior staffer with the Berkshire Group in Victoria who, in the words of the B.C. Securities Commission, pulled off "one of the most callous and audacious frauds this province has seen."

Those mediation efforts -- Geoff Plant, a former B.C. attorney-general, is the mediator -- started this week in the hope they will mitigate expensive and time-consuming litigation.

If that's the goal, the feeling is the clients will have to take a haircut despite the claim that Berkshire and its new owner, Manulife Financial Corp., are committed to reaching a resolution fair to all involved.

How do we know that? For starters, all the cards are stacked in favour of Berkshire, and its law firm Torys, for the simple reason that it has far more resources than Thow's clients. And despite some soothing words from Berkshire -- started by Michael Lee-Chin, whose net worth is north of $2-billion--and Manulife, no serious attempts have been made to satisfy the clients until now. Their argument is that the activities involving Thow -- who is estimated to have taken more than $30-million from his clients -- were non-Berkshire business. Berkshire says the disaffected clients should have known that.

Second, Thow's clients are desperate. The B.C. Securities Commission -- which has fined Thow $6-million and banned him for life -- noted that as a result of investing with Thow, "clients lost their retirement funds, and other clients find themselves in financial difficulty. Clients continue to suffer stress, anxiety, depression and other health problems."

In short, they are, in some cases, old and vulnerable and short of cash. But all of them trusted Thow, whom they had known for many years and who was seemingly a prominent member of the local community. "Some clients were impressed with his wealth, and with his apparent close relationship with Michael Lee Chin," the BCSC said.

Third, if Berkshire and Manulife wanted the situation to end, they would say, 'We will pay you what you lost plus interest.' In short: not a penny more not a penny less.

But we will never know how good the mediation deals are because Berkshire has made all the former clients sign confidentiality agreements. (If Berkshire/Manulife wanted to show their commitment in a public way, they could issue a press release that detailed the settlements -- minus the names, of course -- and the haircuts. Then they would let everybody judge how fair they are.)

On the positive side, Berkshire has tried mediation in the past with about two dozen of Thow's former clients. Again, they were asked to sign confidentiality agreements.

bcritchley@nationalpost.com


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see: 

Ian Thow takes flight