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mushroomed upon his arrival. In 1986, Imasco acquired Canadian building materials company, Genstar Corp. and its Canada Trustco Mortgage Co. "Almost immediately I led the acquisition of Genstar to get Canada Trust and right away, we had a lot of Genstar assets to get rid of," he says. Under Crawford's direc- tion, Imasco unloaded Genstar divisions including waste management, cement, and real estate companies in order to increase the value of Canada Trustco. He also recruited Ed Clark, who's now head of the TD bank, to the trust company. Smoke and mirrors? The activities of Imasco, at the time of Crawford's tenure leading the company from 1985 to 1995, would later come under the scrutiny of federal authorities dur- ing investigations of smuggling schemes allegedly orchestrated by Canadian cigarette makers to avoid rising sales taxes put in place to deter Canadians from smoking. Imasco, a holding company, owned Imperial Tobacco Canada. During the 1990s, cigarette makers in Canada increasingly exported their products to the U.S. and facilitated their re-importation back into the domestic market. Technically, the practice was ille- gal and police ultimately arrested former JTI-MacDonald Corp. (formerly RJR- MacDonald Inc.) president Edward Lang on charges of fraud in the spring of 2007. The charges against Lang and six other JTI executives were initially dropped but reinstated by the Ontario Superior Court in February 2008. Two former RJR MacDonald executives, Les Thompson and Stan Smith, pled guilty to smuggling and fraud charges. They are expected to testify at trial against their former com- pany and president. No other tobacco executives were charged criminally and ultimately in 2008, Imperial Tobacco Canada and Rothmans Benson & Hedges collectively agreed to pay $1.15 billion in criminal and civil fines relating to allegations of smuggling between 1991 and 1996. According to a former Imasco execu- tive, the company was deeply involved in the smuggling of product to ensure it kept its Canadian smokers inexpensively supplied and also recouping value for "We were generalists then. But he was understanding of my weaknesses and pointed them out to me from time to time and later, I became the beneficiary of a lot of his clients." — PURDY CRAWFORD ON HAL MOCKRIDGE shareholders. Paul Finlayson, who has been vocal as a sort of 'whistleblower,' says his role was as a strategic planner within Imasco's hierarchy, drafting mathemati- cal scenarios of the cost and profitability to export product to the U.S., pay mini- mum royalties, then have the bulk of the product smuggled back into Canada via reserves such as the Akwesasne Mohawk Nation bordering Quebec, Ontario, and the U.S. "Imperial Tobacco engaged in the distribution of tailor-made cigarettes on a smuggling basis," Finlayson told Canadian Lawyer. "This filled the hole in Imperial's earnings and in 1993, Imperial had a banner year because it shipped unlimited quantities across the border." While Crawford is reluctant to discuss any aspect of his dealings with Imperial during his leadership of Imasco, Finlayson says he met with his CEO regularly during that time to brief him on his projections. Finlayson still harbours some bitterness about the way he was forced in January 1994 to leave his job at Imasco after 16 years. During his free time, Finlayson had been instrumental in establishing an addiction centre on the Akwesasne reserve and says the company asked him to use this access to identify the people involved on the front lines of the reserve's tobacco smuggling operations and pro- vide a report on amounts, products, and prices. He refused on principle and was told by the CFO at the time not to report back to work. He then requested a meet- ing with Crawford. "A week went by and I didn't hear anything, so I knew what the answer was," says Finlayson. It wasn't until the fall of 2004 that the RCMP obtained evidence to initiate a search of Imperial Tobacco's Montreal office. Police seized documents related to Imperial's smuggling activities including a letter written in 1993 by Imperial's presi- dent and CEO Don Brown, addressed to the managing director of the com- pany's parent, British American Tobacco. Brown wrote: "Although we agreed to support the federal government's effort to reduce smuggling by limiting our exports to the U.S.A., our competitors did not. Subsequently, we have decided to remove the limits on our exports to regain our share of Canadian smokers. . . . Until the smuggling issue is resolved, an increasing volume of our domestic sales in Canada will be exported, then smuggled back for sale here." Following the release of the court documents that led to the search of Imperial's headquarters, a spokesper- son for Imperial Tobacco told media that while Imperial knew about the contra- band activity, the company did not col- laborate with criminals. The tobacco business is not something that piques Crawford's interest for discus- sion. Instead, he recalls the opportunity to learn the operations of some of Imasco's holdings he worked hard to diversify, such as Shoppers Drug Mart and Hardee's fast- food restaurants. "It was great fun visiting the branches," he says, "so it was quite an experience." Imasco's market capitaliza- tion grew from $131 million in 1970 to $18 billion in 1999, much of its growth attributed to Crawford's leadership over his 10 years. Crawford left Imasco in 1995, recruiting fellow Oslers partner, Brian Levitt, who stayed on as CEO until 2000. An artful compromise Crawford emerged from the Imasco experience with his reputation unblem- ished. Most recently, he was called upon to parlay his expertise as the head of the Pan-Canadian Investors Committee for Third-Party Structured Asset-Backed Commercial Paper, charged with finding a solution for the thousands of investors in Canada who lost significant money through their purchase of ABCP. When the sub-prime market south of the border imploded in 2007, investors here holding $32 billion in ABCP found their investments frozen. Financial insti- tutions and major market players met for what became known as the Montreal www. C ANADIAN Law ye rmag.com NO VEMBER / DECEMBER 2009 31