The Hand-over

by Elaine Dewar

  Which is why the first question I asked him was why he got into McClelland & Stewart in the first place, whatever had possessed him? I’d wanted to ask him that for years.

  “It’s a story I’ve never told publicly,” he said. “I’ll tell you the truth and how it happened. My late daughter-in-law Alison Gordon, and because late, I don’t like to be public about this, was writing a book for M&S called Foul Ball!: Five Years in the American League. She was the first woman to cover baseball. She worked for the Toronto Star. The book was heavy on being a reporter in the major leagues, first woman in the dressing room. She just died. She came to Friday night dinner complaining of mistakes at M&S.”216

  He stopped for a moment to be sure I caught the reference to Friday night dinner, which of course I did. Friday night dinner for Jews is like Sunday dinner for Christians: it’s when a Jewish family welcomes the Sabbath. When I grew up, our Friday night menu was chicken soup (“better it should run under bridges” is what my father infamously said to my mother over her first effort), roast chicken, salad, and pie. The subject was usually the politics of Medicare.

  “At that time, Jack [McClelland] was looking for public financing.”

  It was the summer of 1984. By then, Linda McKnight was running M&S for McClelland, who had stepped back a bit. John Neale—who would later buy 25% of M&S for Random House—was head of marketing. While the company had shown a small profit in 1983, M&S would publish 91 books in 1984 and was about to post a loss of $2 million. The prime rate at CIBC was 12.50%217 and M&S was spending way too much on interest. McClelland told everyone he was on the financial ropes again in spite of the loan made to him by the Province of Ontario ten years before, which had kicked off Canada’s nationalist book policy. Was his timing political? The federal election that would bring Brian Mulroney to power would be held four months later, and a provincial election would follow eight months after that.

  So, once again, the M&S debt was refinanced by the province on the condition that McClelland find some new investors. He raised $1.1 million in return for 36% of M&S.218

  “It was a bond issue,” Bennett said.

  Actually, it was more along the lines of a debenture that was done under the auspices of Ontario’s Small Business Development Corporation.219 Investors were to get back 70% of their investment over a 10-year period, payments waived for the first two years. As the book trade publication Quill & Quire put it later, the remaining 30% was already “returned to them in the form of an Ontario tax rebate or tax credit.” Several writers who had done very well by M&S, such as Margaret Atwood, Pierre Berton, and Farley Mowat, bought into it.220

  “I decided to buy a piece as a public-spirited thing,” Bennett said.

  How did you hear of it? I asked.

  He said it was in the papers that he was looking for money.

  And money is something Avie Bennett had in abundance by 1984, more than enough to be very generous to others, though very few others have been as generous as Avie Bennett. In 1983, Bennett and his wife Beverly and lawyer W. Norman Ross of the law firm WeirFoulds LLP, set up the Bennett Family Foundation.221 (I think Ross is also public-spirited, though I cannot be sure as he did not respond to my phone messages or emails. Stephen Harper appointed him to the board of the Canadian Mint. He previously chaired the boards of the Canada Development Investment Corporation and the Canada Hibernia Holding Corp. He also served on the Chapters board.)222 The Bennett Foundation has had assets ranging from $28 million to about $19 million between 2005 and 2015 (earlier information is no longer available.) Some years, the Foundation gave away as much as $7.5 million, others less than $1 million, depending on the vagaries of markets, how much Bennett spent on administration and professional advice, and the assets Bennett moved into the Foundation where they are protected from tax.

  According to the Foundation’s information returns, favourite recipients have been: University of Toronto, York University, the National Ballet, the United Way, and the Art Gallery of Ontario. The Foundation’s 2015 return differs from the rest. In 2015, while I was researching this project, Bennett gave $11 million in receipted gifts, reducing total assets to about $5 million. The U of T got $4 million, York University got $2.5 million, and smaller gifts were made to a long list of other organizations. An anonymous recipient paid about $170,000 each year, through WeirFoulds, got $550,000. By then Ross had stepped down as a director, and Avie Bennett’s assistant, Diana Massiah, had taken Ross’s place. She is listed, as Ross had been, as being at arm’s length to the Bennetts.223 The Foundation’s returns show that between 2005 and 2015, Bennett gave the University of Toronto over $8 million, though in 2006 and in 2013 he gave U of T nothing.224

  So how much money did you kick in? I asked Bennett.

  Don’t remember the amount, he said, which I found surprising. Others have reported that it was about $100,000 and that his was the second-largest investment in the M&S debenture. “He asked me on the board. Others were on it already… I said I’d be happy to help if I could.”225

  This was not the first time a developer had come to the rescue of M&S. Senator Leo Kolber, who managed the holding company, CEMP Investments, which stewarded the fortunes of Sam Bronfman’s children, had helped out after the company came close to bankruptcy following a blowout publishing year in 1967. Kolber was chairman of the board of the developer Cadillac Fairview and for years led fundraising efforts for the federal Liberal Party.226 Kolber’s wife was then an unknown poet. When M&S was desperately seeking capital in 1967, it published a book of Sandra Kolber’s poetry while asking at the same time for project finance support from CEMP. (Eventually, CEMP and the McConnell family backed a large bank loan for M&S.)227 Mordecai Richler had riotous fun with a Kolber-like figure in his satirical novel, Solomon Gursky Was Here, which was not published by M&S but by Viking Canada in 1989.

  Bennett was made a member of McClelland & Stewart’s finance committee. He helped organize an extension of a credit line with the Royal Bank. As Bennett remembered it, when he got a look at the books he could see that the company was not in big trouble.

  “Not doing well, but not serious trouble,” he said.

  Yet one day, Jack McClelland called him up and said he was done with the whole damn publishing business.

  “He said ‘I promised the Royal Bank $300,000 on Friday.’ I knew it. I’d spoken to the bank. He said ‘this fucking business is driving me up the wall. I used the money, don’t have it to give.’ I said Jack, do you want to sell? He said ‘I had enough.’ I said maybe I’ll buy it. I had no knowledge I was going to do this. It was very spontaneous… Within a day, we made a deal.”

  Do you normally act that fast? I asked.

  What’s the word, he said, searching for the right one to describe his action.

  Impulsive? I asked.

  “It was unusual. I was impetuous.”

  Well maybe. But by then he’d had a deep look into M&S’s financial situation and in 1985, the economy was on a tear with lucrative “bought” deals and hostile takeovers like Unicorp’s setting Bay Street on fire, with commercial real estate values rising to a peak. A man who had just made large gains in his development company could make good use of a company that could reliably incur losses far into the future. The fact that Bennett bought out all the other investors, as well as Jack McClelland’s voting shares, suggests he wanted to incorporate its losses into his development business. As Jack McClelland put it at the press conference when the deal was announced, Avie Bennett “can afford to own M&S.”228 Former publisher Jack Stoddart, who later took Bennett out for lunch at his club to welcome him to the business, said that Bennett explained to him that however dire M&S’s situation, his investment in it had already paid for itself many times over. Why? If he hadn’t bought M&S when he did, he wouldn’t have sold a large retail plaza to the Murray Frum Development Group. If he’d waited, it would have cost him $100 million because the retail real estate
market soon went down. As Stoddart put it, even if Bennett threw $1 million a year into M&S for years, that wouldn’t amount to the interest earned on that extra $100 million. Besides, he told Stoddart, he didn’t want to spend his days playing cards or wintering in Florida. What he liked doing is business.

  What Bennett now told me is that the real reason he bought M&S was that he was bored with the development business. By 1985, the deals he was doing were small, while the only deals that were “good” were big ones. “We had done large deals,” he said. “We had 100 draftsmen and architects, it was a large organization.” He didn’t want to spend his evenings going before City Council to “plead for rezoning” on itsy bitsy projects. And none of his children (he has six) were in the business.229

  What was the name of that business? I asked. I’m not sure why I asked. I’d just seen the sign for First Plazas Inc. outside the office door.

  He shot me a look, as if to say, you’re trying to embarrass me. “Principal Investments,” he said. That’s when I realized that he had been referring to a previous big company, not an earlier phase of First Plazas Inc. “It went into receivership. It was a big story. We were the biggest real estate developer in Canada, then we were flattened out completely.”

  Why flattened? I asked.

  “We borrowed too much money,” he said. “Peter Newman wrote it as a cover story in Maclean’s.”

  Later, I hunted for Newman’s story. I searched the periodicals index from the 1970s onward and couldn’t find it—that’s because, as I would soon learn, the bankruptcy of Principal Investments had occurred way back in the early 1960s. I learned that only because, while I was searching for the Newman story, I found a cover story about Bennett by business writer David Olive. It had been published in Toronto Life in June, 1988. As soon as I got the magazine up from the stacks and opened it to Olive’s article, I remembered that my colleagues and I had read the piece avidly when it came out. That’s the problem with getting older. Memory is an active process. Unless you revisit your memories again and again, they just get buried beneath an onslaught of new ones.

  As Olive told the story, Bennett’s first couple of years running M&S had not been smooth. In the beginning, he hired a former bra salesman to handle marketing—not a good idea. People wondered: was he trying to kill the business? Is that why he bought it? Or is he just inept?230 Jack McClelland left M&S after Bennett’s first year running it, though he’d said he’d hang around as an advisor for five.231 Also, early in 1987, Bennett let go several people who were very experienced and then he held a fire sale of the books published the previous fall which had failed to sell. The howl that went up from writers and agents was loud and long because royalties are calculated as a percentage of a book’s sale price. Bennett’s response: “In the slow season every other business has sales, so why is the book business sacrosanct?” This was an outsider’s question, a retail plaza czar’s question whereas insiders knew that the book business is in many ways irrational and not like any other business at all. Out of the blue, Bennett hired Adrienne Clarkson as his Publisher, though her publishing experience was no greater than his. She had just finished her stint as Ontario’s Agent General in Paris. Apparently she called him one day, they went to lunch at Il Posto and realized they were on the same wavelength on many things, like being left of centre, like being Canadian nationalists.232

  Bennett explained to me that he hired Clarkson because he didn’t care at all “for being in the public eye… this public thrust my life had taken. I felt it wasn’t me. And Adrienne fit into the picture… she had a public persona.”

  But that relationship didn’t last long, either. Clarkson went on to other things (eventually becoming Governor General) and Doug Gibson took her place.

  So: why had we read Olive so avidly? Because by June of 1988, some of us in the publishing business—magazines, newspapers, books—had passed beyond curiosity about why a successful developer such as Avie Bennett would suddenly buy the most important Canadian independent publisher. By then, we were in a full-blown state of fear that something bad was happening to the Canadian publishing business, that reporters were being blocked from publishing that which really needed to be published.

  By the spring of 1988, some developers and other major business figures had begun to face off against journalists and authors in a series of libel suits. Olive, then a staff writer for Toronto Life, set to work on his profile of Bennett only a few months after several members of the Reichmann family (not the eldest brother who I had interviewed extensively) and Olympia & York Developments, sued me, my colleagues, and Toronto Life over our November 1987 story on the family’s history. They also sued the Globe and Mail and the Toronto Sun for their coverage of our story. Some of us feared that the courts were being used to suppress information important for the public to know. And some of us also feared that a clever way to derail an upsetting forthcoming book would be to buy the publishing company that had contracted for it, refuse to publish it, and then refuse to release the manuscript for someone else to publish without payback of the advance.

  These fears were not wholly irrational. The Reichmann/O&Y’s statement of claim against the Globe and Mail revealed that a writer named Leo Heaps had written a book about Samuel Reichmann under a 1984 contract with M&S. M&S had refused to publish it in 1986, not long after Bennett acquired the company. Heaps had apparently researched the business done in Tangier during World War II by Samuel Reichmann, progenitor of the brothers who later founded Olympia & York Developments. Adding one developer to another developer to make a conspiracy theory, some wondered if Bennett had bought M&S to kill that book. Years later, Bennett told Anthony Bianco, the author of another book on the Reichmanns, that Heaps had asked him and Jack McClelland to convey what amounted to blackmail demands to the Reichmanns. Bennett said that Heaps had asked them to tell the Reichmanns that if they paid him $1 million, he would destroy his manuscript, and if they paid him $250,000, he’d write a different book.233 Heaps denied that charge and published his allegations about Samuel Reichmann in British Esquire in 1992. He and the magazine were sued. But then O&Y went bust and Heaps died.

  As Olive researched the Bennett story, I was revising my book manuscript about the Reichmann family and their business interests, under the direction of my Random House editor, Ed Carson. After a while, I was not allowed to work on it in my own office. Random House’s lawyers insisted that I must always leave the evolving manuscript in Random House’s control in case the court ever ordered me to turn my drafts over to the Reichmanns’ lawyers. And sure enough, a motion was filed demanding the manuscript. Toronto Life’s lawyer, Julian Porter, Q.C., argued, to no avail, that if I was made to turn the draft over as I was still working on it, this would be like sticking a straw into the mind of the writer as she wrote. Yet the court did so rule: eventually I had to turn it over. But in the meantime, I had to drive every day to the warehouse/editorial offices of Random House of Canada, which were then located in an industrial zone not far from Pearson airport. I worked at a computer in the office of a junior editor named Douglas Pepper—the same Douglas Pepper who would become the President and Publisher of McClelland & Stewart in 2004, replacing Doug Gibson. As I corrected facts, juggled syntax, and made cuts, I worried that something I did might be misconstrued by the Reichmanns’ many lawyers and blow back on me, my colleagues, and the magazine that employed them. I spent hours deleting phrases that were apt in favour of phrases that were safe.

  One day, a woman I’d never seen before came up to me in the Random House lunchroom and asked me if I was very, very afraid. Afraid of what? I asked. The people suing you, she said. I told her I was not, and tried to get away from her, but she followed, and kept asking. There was something about the way she persisted that I read as a threat. When I told my editor about it, it was discovered that she was a brand-new hire. Now we had to consider: had she been sent in to get a look at the manuscript? Or to intimidate me? Or none of t
he above? How would we ever know? Toronto Life’s lawyers had learned by then that a very well known detective agency, Kroll Associates, had been hired by the plaintiffs to go over every facet of the Toronto Life story, and every detail of the Reichmann brothers’ parents’ lives in Tangier, Paris, Vienna, Hungary. During the first three months of 1988 alone, the Kroll bill reached $844,000. (The investigators’ work continued for two more years involving as many as a dozen agents at one time, each paid $1500 per day.234)

  But the truth is that I was afraid, as were many of my colleagues. Kimberley Noble, who had been writing in the Globe and Mail about the Edper/Brascan/Hees group of companies, was threatened with legal action if she proceeded with a planned book on the group’s history.235 Globe and Mail reporter Jock Ferguson had so many developers suing him that he and the Globe parted ways. Conrad Black sued. Garth Drabinsky was litigious. Many years later, these two would be found guilty of certain crimes and end up going to prison, but then they were aggressive in their use of the courts to secure their reputations.236 Some of us who had been sued began to think that these lawsuits, emanating from people who sat together on important business boards, were about more than individual reputations: these suits represented a business strategy to discourage reporting about important interests, unless that reporting was of the fawning variety.237

  So, Olive’s article was read by unhappy libel defendants with close attention. It provided an answer to that whispered question: why had Bennett–a developer!—bought the leading publisher of Canadian fiction and non-fiction? Had a fox bought the henhouse?

  As Olive saw it, and as he compellingly told it, Bennett’s motive had nothing to do with any of that, and everything to do with redemption. He had taken on a company in trouble that was considered to be vital to the sovereignty of the nation, as if to atone for the failure of his family’s development company, the biggest in the country, more than twenty years earlier. Bennett told Olive that he “would keep McClelland & Stewart as an important force in Canadian literature…if profits were the underlying motive I wouldn’t have bought the company, because there are a lot of easier ways of making money. It’s not worth my saving McClelland & Stewart unless I try to save what Jack started.”238 According to Olive, it had taken Bennett 17 long years to make his comeback, 17 years to earn a seat at important tables, like the Governing Council of the University of Toronto to which Premier Peterson appointed him in 1987, as well as to its Business Board later.239 He would be inducted into the Order of Canada as a Member by 1991, his ownership of McClelland & Stewart cited as the reason.240