Beyond Fair Trade

by Mark Pendergrast

  “I thought you would offer me coffee,” Darch said.

  “I don’t actually like coffee that much,” Wicha admitted, “but it’s good for my people. I drink many cups a day anyway, just to make sure of the quality. But let me tell you about the Akha and their coffee.”

  Over the next several hours and more tea, Wicha told the story of the Akha. As Darch listened, he thought about his own limited encounter with hill tribes. When he had first come to Thailand, he had taken part in all of the expected tourist activities, joining other farangs in temple tours, shopping for jade and clothes at the floating market—and visiting a Hmong hill tribe village near Chiang Mai. Such forays to carefully staged hill tribe villages were the second-largest tourist attraction in the country. “They took us on buses,” Darch recalled, “so we could see these quaint people living in grass huts with naked children running wild with pigs and chickens. The tourists could take snapshots of smiling village women with elongated necks, their teeth blackened from betel-chewing.” He had been mildly embarrassed, uncomfortable at the zoo-like atmosphere, but he gave a few coins to the children, as did many other tourists. Now he was hearing a riveting story about a particular tribe and place.

  Wicha went on to explain how Adel had come to ask for his help, how he, Wicha, had spent many years roaming through the mountains, getting to know the hill tribes, and becoming increasingly outraged by the way they were treated. Young people were leaving their home villages because there was no future for them there other than grinding poverty. In the cities, lured by promises of a better life, they found themselves a despised minority, forced to take the most menial jobs. The girls frequently ended up as prostitutes. When they were mistreated, they had no one to turn to, not even the police, who were often bribed by Thai brothel owners.

  Finally, Wicha told the story of the last few years and the remarkable success of Doi Chaang Coffee. Young people were beginning to return to the village, now that coffee might provide some kind of future for them there. “We grow the best beans in the world,” Wicha said. “We need to find a way to export them for what they are worth. We are not asking for gifts. We don’t want charity. The Akha are not beggars. Sandra said that you might have connections or suggestions.” He explained that organizations from Korea, Japan, and North America had come to Doi Chang and offered to invest, but they all wanted at least 51 percent, a controlling interest. “The Akha came out of 200 years of slavery,” Wicha said, “and I am not going to put them back into it.”

  Darch was impressed. Wicha had not asked him for money after all. He was not trying to sell him anything, either. He portrayed the Akha as dignified, hardworking people who just needed an opportunity. Darch was relatively wealthy, having done well in the stock market, selling shares of Asia Pacific Resources and other enterprises he had promoted and managed. He had promised his wife, Louise, that he would retire, but no one who knew John Darch believed that for a minute. He had come to love Thailand and its diverse peoples and environments. Maybe this was a new opportunity for him to use his business skills as well as his interest in making the world a slightly better place.

  In the same way that Wicha’s life could be seen as preparing him for the moment Adel asked for his help, John Darch’s life might be seen as a similar preparation for his meeting with Wicha. The two men couldn’t have looked less similar. Wicha, the slightly built Thai Muslim, had lived a vagabond existence. Darch, three years older than Wicha, was much taller, solidly built, and slightly overweight, and he had pursued a career as a banker and mining venture capitalist.

  Yet there were uncanny similarities between Wicha Promyong and John Darch, and the two men who had grown up in such different cultures on opposite sides of the world seemed destined to form a close friendship akin to a brotherly bond and a partnership that would pioneer an alternative form of capitalism. This kind of enterprise would make sure that the profits flowed in an equitable way back to those who did the most important work.

  Back to His Youth

  AS HE LISTENED to the story of the Akha, John Darch thought back to something his mother had told him when he was growing up in a solid middle-class household in Weymouth, England. His parents owned, lived in, and worked in an old converted four-story hotel. On the first floor, Francis and Elizabeth Darch, his parents, presided over F. Darch Cycles and Motorcycles. His father worked in the back, repairing bicycles and motorcycles and making toys and clocks. His mother ran the front of the shop, kept the books, and served customers. “Mum was the real business lady, the driving force who dealt with salesmen and bankers,” Darch recalled. “Dad was a gentle soul who would have been happy to drink tea and talk with his brothers all day if not for Mum.”

  His parents raised their five children to value honesty, hard work, and compassion. “One day I was playing with the toys and bicycles in the store, and my mother noticed some little kids staring in the shop window.” They were obviously hungry for the goods that their parents could not afford for them. “John,” his mother said, “you must never forget that the only difference between you and those children is an accident of birth. You didn’t do anything special to deserve to be on this side of the window, playing with these toys. It doesn’t make you any better or them any less deserving.”

  Elizabeth was also something of a risk taker. She liked to tell the story of how, during World War II, an unexploded German bomb was wedged in the floorboards, and she was about to hammer to dislodge it when horrified soldiers stopped her. Her son apparently inherited her appetite for risk, as his career would eventually demonstrate.

  At the age of eighteen, Darch married his girlfriend Dorothy. “I knew it was a mistake,” he recalled, “but I did not have the courage to back out.” The couple had four children—John Alexander, born in 1966, Robert, in 1968, Katharine, 1970, and Sophie, 1972. Darch joined the Weymouth branch of National Westminster Bank in July 1965, four months before his wedding. Banking might appear a rather staid occupation, but for Darch it held the promise of change and possible adventure. “I knew the bank would move me every few years. The thought of walking down the same path to the same job for the next forty years was like going to prison.” Still, joining a bank was akin to a career in the armed forces—it was regarded as a lifetime commitment, with a slow, steady progression up the ladder until retirement.

  Darch became a loan officer in 1973, and although some parts of banking were mundane, he enjoyed the challenge of qualifying applicants, combining number crunching with character reading. At age twenty-seven, he was transferred as assistant manager to the bank’s area office in Bournemouth. His new boss took every opportunity to belittle him, but fortunately he soon retired. He was replaced by David Giddings, who encouraged Darch’s creativity and initiative. If a loan had been turned down at the branch level, Giddings suggested that Darch should look for a way to turn it around and make a deal after all. Giddings treated his staff well. He became an important mentor for the aspiring young banker, and when Darch applied for a job at the Royal Bank of Canada, Giddings congratulated him on his sense of adventure.

  Though Darch didn’t get that job—he was seen as overqualified for the position—six months later the Canadian bank offered him a better job at the head office in Ottawa at a salary four times what he was making in England. When Darch told the branch chief that he would be departing for Canada, the chief reacted badly. “How could you do this after all the bank has done for you? You’re burning your bridges, young man. Don’t think you can ever come crawling back here.” Undeterred, Darch sold his home and all his possessions and left for Canada with his wife and children in January 1977. He was twenty-nine years old.

  A Canadian Banker

  PART OF THE reason John Darch decided to try life in a new country across the Atlantic was to save his marriage. “I kept thinking, If only I do this or that, if only I move to a new place, if only I make more money, things might get better,” he recalled. “But it never was better, regardless of what I bought or did.” Becau
se of his failing marriage, Darch focused his love and passion on his children and his work.

  After serving a probationary period in Ottawa, he was assigned to the Peterborough branch of the Royal Bank of Canada, four hours to the southwest, as an assistant manager. He stayed in a motel during the week, driving home to Ottawa on weekends. He missed his children. Relations with his wife were volatile. He hated the frigid weather. He had been thrust unprepared into a position of authority over his seniors, who resented him, regarding him as an immigrant who had displaced a more deserving Canadian. Maybe this had been a huge mistake. One cold November day, he found himself overwhelmed, sitting in the bank parking lot, crying uncontrollably.

  His weeping proved to be a pivotal catharsis. “It was like flipping a switch. After I dried my eyes, all my apprehension was gone.” His family moved to Peterborough soon afterward, where they stayed for two years, but Darch never got used to the cold or to driving in blizzards. He told the bank executives that he had to be transferred to the coast or he would return to England. They finally obliged him.

  In April 1979, Darch moved his family to Vancouver, British Columbia, where it was far more likely to rain than snow, and where the rugged mountains swept down to the sea. “I thought it was heaven.” He quickly settled into his job at the Vancouver branch of the Royal Bank of Canada as a senior commercial loan manager, supervising a staff of fifty. Vancouver was the world headquarters for start-up mines and risk-taking entrepreneurs, who made and lost millions, apparently without batting an eye. Darch didn’t get along with his immediate boss, but he took to the high-rolling scene, quickly getting to know clients who referred other hopeful borrowers to him. He enjoyed putting likely bank clients together to work on projects. “I just liked networking, looking for opportunities,” he recalled.

  Darch particularly appreciated getting to know on a personal level some of the characters he had for clients. One, Gerry Wright, a hard-drinking Irish engineer for whom he arranged a car loan, would feature strongly in his life. “Gerry was great fun and kept me in fits with his jokes at our lunches.”

  In 1980, one of Darch’s bank clients introduced him to Gary Crawford, an Australian gold miner. Crawford wanted to restart placer mining operations in the Yukon area of Bear Creek and Fraser, to look for gold in the alluvial (sand) deposits. Darch authorized a $50,000 loan, and at Crawford’s invitation, flew up for a few days that July to take a look. He invited Wright to come along. Wright, who had a doctorate in water resources, had been working on drainage for a mine in Jakarta, so it seemed logical that he should help with the placer operation, which was all about controlling water flow while separating gold nuggets from sand and dirt.

  Darch loved the romance of the wild Yukon, much preferring its rugged vistas, adventure, and miners’ bars to his coat-and-tie bank office and conservative boss. He pondered how he might continue to have such exhilarating experiences periodically, while being his own boss.

  Blarney, Bluster, Adventure

  OVER BEERS, DARCH and Wright talked about all the money they saw thrown around in the mining world. “Many of these guys were successful despite themselves,” Darch observed, “so we figured we could do better.” What if they combined their talents and struck out on their own as consultants to snag some of those dollars for themselves? Darch, with his British accent, well-researched sales pitch, and banking background, paired well with Dr. Gerald Wright, the engineer who could charm clients with his Irish jokes while explaining the nitty-gritty of the geological exploration. Their long-time mutual lawyer, George Brazier, explained: “John was gentle and could get things done without causing too much disturbance. Gerry was more hit-you-between-the-eyes to get his point across. He’s Irish, you know. They were a good team; they complemented one another.” Or as Paul Royce, their accountant, observed, “John was the ideas man, Gerry more the front man.”

  As they were discussing what to call their new enterprises, Wright looked out the window and saw a sign for Cypress Street. He became Cypress Consulting. Darch settled on Western Investments, since they were located on the west coast of Canada.

  With great hopes and bravado, Darch resigned from the bank in the summer of 1981, but he soon found that many of his great friendships were really client relationships that cooled when he no longer had the bank’s money to lend. He did get a lead through his association with Gary Crawford, though. Gold Sciences, an American corporation, was looking for mining projects to serve as assets behind their gold bond portfolio, and they had struck a deal with Crawford to buy Bear Creek and Fraser, along with another nearby property. Gold Sciences wanted Darch to monitor the books, pay the bills, and file reports.

  They didn’t need Wright, so Darch spent the summer of 1982 in the Yukon, where he got a good dose of local life during the long days and nights when the sun never set. Miners blew all their pay once a month in Dawson City on women and booze. Once, when Gold Sciences failed to send money, a miner threatened to kill him. Darch became friendly with the local police.

  The gold operation was “so basic and fundamental,” Darch recalled, as he observed the water from roaring creeks being diverted in channels to wash out the gold. At one spot, he and a miner saw a worker attempting to steal gold by placing a chain across a river. Darch had to prevent the miner from shooting the worker.

  At that point, the price of gold had dropped to $300 an ounce from its high of around $800 two years earlier, but it was still profitable if you could find the nuggets without too many expenses. In this case, the profits couldn’t justify the expense, and on Darch’s advice, Gold Sciences closed down. When the season ended, Gold Sciences was unable to settle its bills, so Darch borrowed money from the bank to do so, using a large Caterpillar bulldozer as collateral.

  In December, Darch and Wright heard of a promising project in Atlin, in northern British Columbia, on Otter Creek. It had produced very large nuggets but was difficult to mine because it lay beneath 200 feet of dirt. The partners agreed to pay $100,000 for the prospecting rights to the two owners, Ken O’Connor and Ken Watson.

  For seed capital, John Darch called his old boss, David Giddings. “Have you got any money, Dave? I need some,” Darch began. “Well, don’t we all?” Giddings laughed. “I’ve left the bank,” Darch continued. “Gerry and I are going up to the Yukon to work on a placer deposit, and we need some seed corn.” Giddings sent him £4,000 to help him get started. “I thought they would do well,” Giddings said. “John was a good talker, quite a charmer, and he understood money.”

  They came up with a $50,000 down payment for the Atlin claim, agreeing to pay the balance in three months. “We got along with O’Connor,” Darch recalled, “but Watson saw us as suckers who would never come up with the rest of the money.” So Darch struck an ingenious deal with O’Connor. “Ken, you lend us the $50,000, and we’ll pay off the debt. You’ll get $25,000 back immediately, with the other half going to Watson, and we’ll still owe you the full $50,000. Plus, you’ll be out of your partnership with Watson.” O’Connor agreed, and he also agreed to take the Caterpillar, worth $40,000, plus $10,000 in cash to pay off the debt.

  That winter, Darch and Wright hired Leo, a former mine manager, to drive his big truck with them up to Dawson City to retrieve the Caterpillar. Once there, Leo went off with his buddies, leaving Wright and Darch with the truck. They had a few drinks with Darch’s police officer pals, then drove for dinner and more drinks with friends up the hill. By the time they left, they were quite drunk. As they drove around town, they decided it would be a great lark to knock down all of the stop signs. Amazingly, though the police caught them, they got away with only a fine, and they paid Leo for the damage to his truck.

  In retrospect, it’s astonishing that Darch and Wright eventually became millionaires, because in the early 1980s they lurched from one unsuccessful venture to another, albeit still somehow making money. “That’s the nature of venture capitalism, though,” Darch observed, “where the odds of success are a million to one.�
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  They acquired the Atlin claim but needed to raise money to develop it, so they hired a geologist to review their leases and write a report, which showed that the mine did have real potential. It also revealed that there was a 3-meter gap between the two leased properties, so Wright went up and staked that sliver of land as well. After failing to raise sufficient development money, they ended up selling the Atlin rights back to Ken O’Connor, including $80,000 for the new “spoiler” claim. O’Connor went on to develop the placer mine profitably.

  During that same period, a friend introduced Darch to Orville Gillespie, the president and majority shareholder of Caroline Mines, once known as the “princess of Canadian gold mines.” The share price having dropped from $50 to $8, operations had ceased, and Gillespie needed money for redevelopment. Agreeing to work on a contingency fee basis, with Gillespie covering their expenses, Darch and Wright flew to London, where they knew no one, but as Canadians (albeit with English and Irish accents), they had the advantage of being seen as swashbuckling entrepreneurs. Through Lions Mining, a fledgling British company, Darch and Wright were introduced to James Hamilton, who worked for an Australian brokerage firm, and other London brokers who pledged $20 million to Caroline Mines, with the condition that Orville Gillespie step down as president. Gillespie refused, but since the partners had secured the money, they were still paid their fee of $50,000, even though the deal fell through.

  And so it went. Darch and Wright fell into one complex international deal after another, creating a network of useful contacts, and as their reputation for fund-raising grew, people sought them out. “By the mid-eighties,” Darch recalled, “we were the flavor of the week.” It was at this point that Darch, looking back, compared the growth of his multiple enterprises to branches beginning to sprout off the trunk of a tree.