Thursday, March 31, 2011

What will Gray’s lawyers reveal and try to hide?

Bill Gray’s lawyers have some tough decisions as they sort through about 60,000 documents in the hands of a supervising lawyer appointed by Durham Regional Court in Oshawa. So far only a sampling of about 250 have been included in court files in courthouses in Durham and London.

The judge for the case has given the lawyers until next week to come to him with a list of documents they want returned from the files turned over by whistleblower Norman Bourdeau. Donald Good, lawyer for Svante Lind, wants Bourdeau’s documents for the lawsuits he has filed against L.H. Gray and Son Ltd., Burnbrae Farms Ltd. and the Egg Farmers of Ontario marketing board.

The dilemma for Gray’s lawyers is that if they ask for the return of documents, they run the risk that they will be accused of hiding evidence.  Bourdeau is an intervenor in the case and might have some helpful information for the judge. If Gray’s lawyers are, indeed, hiding pertinent evidence, they risk discipline by the Law Society.

On the other hand, if they allow all of the pertinent documents into the court case, their client’s dirty laundry will be exposed for all to see, and Gray, Burnbrae and the egg board will be hard-pressed to explain themselves.

If all of the pertinent documents are allowed into court, Gray and Burnbrae and the egg board better hustle to strike an out-of-court settlement with Lind,  else big-city media that have so far ignored this case will have a hey-day besmirching the reputation of the two egg graders, the egg board and supply management.

Meanwhile, Gray and Burnbrae face additional challenges. The federal competition bureau is pondering what to do with evidence that:

-       Gray and Hudson exchanged e-mails about keeping secret the degree of discounts Hudson’s Burnbrae Farms offered Shopper’s Drug Mart. In one e-mail from Gray to a Burnbrae executive, he worried that Loblaws would find out and would demand similar deep discounts and that might trigger discount demands by other clients across Eastern Canada.

-       The two companies have made huge payments to big supermarket chains to achieve exclusive supplier status. The deals prevent competitors from getting a foot in the door.

-       The two, whose companies grade more than 90 per cent of Ontario’s eggs, discussed pricing.

Gray is spending a small fortune in legal fees to try to shut down Bourdeau, including:
-       an injunction gained in Superior Court in London to keep Bourdeau from sharing his documents with anybody. That would include several police forces, the Competition Bureau, the Ontario Farm Products Marketing Commission and the Farm Products Council of Canada.

-       threats of civil litigation and criminal sanctions.

-       a lawsuit claiming $15 million.

-       efforts to quash Bourdeau’s counterclaims for damages.

-       several attempts to have Bourdeau cited for contempt of court.

Last October, Gray re-organized his company, transferring at least $5.4 million worth of assets from L.H. Gray and Son Ltd. to Gray Ridge Inc. It might be construed as an attempt to protect assets from court actions. It’s not clear whether the transfer of assets includes about $150 million worth of egg quota.

Wednesday, March 30, 2011

Egg farmers need to speak up

Ontario egg farmers need to speak up

While attending the annual meeting of the Egg Farmers of Ontario marketing board this week (March 29 and 30, 2011), it was clear that a lot of farmers have concerns about information coming out of court records about some situations in their industry.

Their main concern is the allegations that Bill Gray of L.H. Gray & Sons Ltd. has been cheating by putting up to five per cent cracks into packs of retail-ready Grade A eggs. Court records in Oshawa indicate that lawyer Don Good, acting for Sweda Farms Ltd., believes that what Gray was doing was also being done by Joe Hudson and his Burnbrae Farms Ltd. operations. Together the two handle more than 90 per cent of Ontario’s egg gradings.

It makes no sense for farmers to spend considerable time and effort complying with new on-farm food-safety protocols if grading stations are allowing cracks to go to market as Grade A eggs. There are considerable food-safety and quality issues to selling cracks as fresh eggs because harmful bacteria in wash water could seep into eggs through the cracks.

At the very least, the Egg Farmers of Ontario ought to be demanding that the Canadian Food Inspection Agency thoroughly investigate these allegations. Ideally, the egg board would hire professionals to conduct its own investigation.

One thing that might be done relatively easily is to check the percentage of nest-run eggs from Alberta and British Columbia that meet Grade A standard, and compare that with the averages at Gray and Hudson’s grading stations.

Egg farmers ought to also ask why the board of directors and staff rejected an offer from Good to exempt their general manager, Harry Pelissero, from the lawsuits that have been filed against the egg board, Gray and Burnbrae.  Instead of picking up on that offer, the board has decided to “vigorously defend” itself and staff in the lawsuits. Why are egg farmers allowing their levies to be used to pay high-priced lawyers to pursue a defence that seems unnecessary?

Egg farmers ought also to ask whether staff has provided favouratism to Gray and Burnbrae, or a standard of service that differs substantially from Sweda Farms Ltd. To find out, the directors could exercise its governance responsibilities to hire outside consultants to examine the situation.

In similar fashion, the board could turn to outside consultants to check personnel management and issues within the staff, including several who have left since Pelissero became general manager, and could hire auditors to check the integrity of the eggs-for-processing and surplus-declared eggs.

These kinds of independent checks by outsiders are standard procedure for governance-style boards of directors, but to my knowledge have never been pursued by any supply-management marketing board in Ontario. Then again, no board has faced the nature and degree of scandals as the Ontario egg board faces in connection with documents the courts have in hand from Norman Bourdeau, a former employee who is blowing the whistle on Bill Gray.

And, finally, where is the Ontario Farm Products Marketing Commission in all of this? How can it reasonably refuse to conduct an inquiry along the lines requested by Good and Bourdeau? Hiding behind the smokescreen of court action is a lame excuse. There are more than enough issues that lie outside of the aims of the lawsuits that should alarm and engage the commission.

But, then again, maybe the commission is not really a supervisor or marketing boards, but an apologist and cheerleader for them.  And maybe the politicians who appoint members for the commission are simply lacking courage when it comes to tangling with marketing boards.

Former egg board staffers confirm shenanigans

In the wake of an Ontario Farmer story about egg grading, people are coming forward with concerns they have with operations at the Egg Farmers of Ontario marketing board.

Mark Beaven, head of enforcement for the board until he quit two and a half years ago, said “my concern has always been the producer.”

He would not comment on his reasons for quitting.

Jackie Pierce, head of industrial procurement, left at the end of October, 2010, uncomfortable about some of the things she saw happening at the board.

She said it appeared that general manager Harry Pelissero was being unfair to Sweda Farms Ltd., and its Best Choice Eggs operations.

For example, when she was handling the file, whenever a Sweda Farms shipment of supplementary-egg-permit eggs from the United States arrived at the border, she would provide authorization to let it come in.
Harry Pelissero

Pelissero intervened last year to personally handle all Sweda matters and then its shipments would sit at the border for two or three days, awaiting Pelissero’s response.

Pierce said that Sweda often complained about the poor quality of eggs shipped from other Ontario egg graders. Her job was to find eggs if and when an application for a supplementary import permit was filed with the federal Department of Foreign Affairs and International Trade (DFAIT).

DFAIT would, in turn, ask Egg Farmers of Canada (the Canadian Egg Marketing Agency) whether eggs could be found in Canada to fill the demand and the national agency would pass that down from to the Ontario board where it would become Pierce’s challenge to find eggs to fill the demand.

Pierce said Sweda’s complaints were often justified by federal inspectors called in to verify the grade and wholesomeness of the eggs supplied by other grading stations. In Ontario, that usually means either L.H. Gray and Son Ltd. or Burnbrae Farms Ltd. because they together account for more than 90 per cent of the Ontario market.

She said she recalls one Sweda Farms Ltd. order for Grade A Small eggs. The eggs they got were Mediums. Pierce confirmed that the egg board paid L.H. Gray and Son Ltd. the going price differential at the time between Grade A Small and Grade A Medium.

“I saw invoices for fibre packaging,” she said. There are allegations that the egg board paid Gray for plywood for a shipment of eggs to Sweda Farms.

Lind did notify the egg board that he noticed U.S. plywood in one shipment and questioned how it could be re-used, given Canadian Food Inspection Agency regulations against re-use, and questioned whether the eggs in that shipment came from the U.S.  And he said in subsequent requests that were to be filled by Canadian eggs that he get the grade and quality of eggs specified, not a different size or quality.

That Lind correspondence is in court files in Oshawa.

Sweda and its owner Svante Lind, have filed lawsuits against Gray, Burnbrae and the Ontario egg board, essentially charging that they have conspired to drive Sweda out of the Ontario egg-grading business.

Dianne Benedetti objected to orders from Pelissero to change numbers in a report to the national agency.  The effect of the change would have reduced, or eliminated, over-marketing penalties (liquidated damages) the national agency would have required from Ontario.   When Benedetti refused, Pelissero ordered her supervisor to fire her. He didn’t. However, in 2007,  Benedetti voluntarily left the board.

“I really miss the producers,” she said, “but I’m glad all this stuff is finally coming out.”

Monday, March 28, 2011

Canadian Agra saga

This and several following stories were researched about seven years ago, but have never been published. Enjoy!   ..jimr

KINCARDINE -- It's 23 (now 30) years since Helmut Sieber left Austria and bought a 100-acre farm near Blyth.

He came from a failed background, hoping to make good on a new farm in a new country.

He can look back on 23 tumultuous years during which he ran one of Canada's largest farms - Canadian Agra - handled hundreds of millions of dollars for some of Europe's richest people and collapsed into disgrace and divorce and faced a mountain of law suits. Today he's trying to re-establish his reputation and rebuild his fortune.

He returned to Canada on July 1, 2002, determined to settle all of the lawsuits and outstanding business issues this year. Ths year he intends to begin another round of wheeling and dealing in Canadian farmland.

It's a remarkable achievement, even for notoriety, for the Austrian farm boy who never earned a degree beyond elementary school and failed in a bid to apprentice as a farm machinery repairman.

He was 15 when his father died, so he took over the farm and tried to run it on behalf of his mother and four older sisters. It wasn't working, so he sold the farm and moved to Canada.

He quickly learned that there was more money to be made buying Canadian farms for Austrians than trying to run his own farm.

Within 15 years, he was presiding over Canadian Agra's annual meeting at a posh hotel in downtown Toronto, gliding among shareholders like a 19th-century European aristocrat, an immaculately-tailored dark suit swathing his ample girth, a finely-waxed, precision-curled moustache gracing his face.

Nobody can question his ability to charm and impress.

But many of those he charmed have filed lawsuits and would take great delight in seeing him behind prison bars.

Sieber tells Austrians his home is in Canada. He tells Canadians his home is in Austria. He tells Customs and Revenue Canada his home is in Dubai, beyond its reach for about $13.4 million the tax collectors say he owes.

The lawyer

Wolf von Teichman may rue the day he handled the first farm deal for Helmut Sieber. He became a bitter enemy in the fallout from Canadian Agra, yet Sieber says "I haven't released him yet."

In many ways, Von Teichman has flown even higher than Sieber, and finds himself today in similar dire financial and reputational straits.

Von Teichman acted as lawyer for Sieber on about $200 million worth of farm purchases and company investments by Christian Straube, a shy bachelor, now in his mid-50s, trying to live quietly in Austria and to wisely invest the fortune he inherited from his mother, the only heir to the Opal car-manufacturing fortune.

Von Teichman acted for almost all of Sieber's purchases for European investors, probably knowing that Sieber was flipping the purchases through limited companies that skimmed millions.

Von Teichman also acted for another, far more notorious, Austrian - Karlheinz Schreiber, who lobbied the Mulroney government intensely on behalf of European manufacturers of aircraft and military equipment and is hiding in Canada from German prosecutors who accuse him of bribing politicians.

Sieber, Canadian Agra and Schreiber have a coincidental relationship that goes beyond being fellow Austrians, deal promotors and engaging the same lawyer: both invested heavily in the 1980s in industrial land around Edmonton. Sieber says he has never met Schreiber or any of the Austrians Schreiber enticed to invest in the Edmonton area.

Von Teichman owns about 25 per cent of the shares of Pelee Island Winery and is co-owner of the Walper Hotel in Kitchener. His partner in the Walper deal, Austrian Gerhard Ottenschlaeger,  is suing him over that investment.

Von Teichman once owned a number of industrial buildings in Mississauga. He has lost them all as deals and relationships turned sour.

Von Teichman was also involved in a number of "open trusts" that handled money and properties bought for the European investors, but they didn't know about these trusts and how money passed amongst a network of companies controlled by Sieber, Dr. Gerd Merz and von Teichman.

The Law Society of Upper Canada suspended von Teichmann for six months over his conflict of interest involving farm deals between companies controlled by Sieber and von Teichmann and a European investor. The investor never complained and, in fact, instructed his lawyer to withdraw his complaint. The lawyer withdrew that complaint, but substituted it with one of his own that resulted in a disciplinary hearing and the suspension.

Von Teichman has not returned any of more than a dozen telephone calls placed since September, 2001.

The accountant

Dr. Gerd Merz is an old and broken man, living modestly in the family home he no longer owns near Frankfurt, Germany.

He was Straube's trusted accountant, and came to Canada to oversee the investments here. He held signing authority for Straube.

Straube learned that Merz switched allegiance to Sieber, and that he was getting rich on Straube's investment deals.

Straube humbled Merz, but did not hound him into bankruptcy or prison. Instead he negotiated an out-of-court settlement and simply took all of the riches Merz had amassed, even his home. He allows Merz to continue living in that house, and to drive his aging car.

Merz tells his other creditors that he's in a Swiss hospital, fighting cancer, and has only a short time to live. This has been his story for years, yet most of that time he has been living quietly in his German home.

The richest investor

Hans Trapp-Dries of Reusselsheim, Germany, easily qualifies as the wealthiest investor lured into Sieber's maze that totalled about 160 companies.

Trapp-Dries struck it rich when he lined up a deal as the first car dealer for Japanese manufacturer Mitsubishi.

He not only opened the first dealership, but also persuaded Mitsubishi to grant him exclusive general import rights for all of Europe.

Mitsubishi cars are the most popular Japanese make in Europe, and Trapp-Dies has become a multi-billionaire. His Canadian investments, although they are large by any normal standard, are a miniscule mite on his balance sheet.

He has, in fact, continued to buy more farms since he parted company with Sieber.

Trapp-Dies made a more spectacular investment in Diamond Aircraft, which he set up at London, Ont., to manufacture private aircraft. It went broke.

When Trapp-Dries came to Ontario to settle that affair, he encountered a secretary who steered him to her uncle, Don Nott, to take over management of the farms he had bought through Sieber.

Nott landed the farm management contract two years ago and finds himself in charge of about 14,000 acres in Bruce and Huron counties. Trapp-Dies recently bought another large farm across Highway 21 from the airport at Kincardine.

That puts it right under the nose of Sieber, whose Canadian Agra management company continues to look after some farms owned by European investors - but only about five per cent of the total involved at the peak of operations.

Trapp-Dies also owns about 40 per cent of the shares of Pelee Island Winery and a large bison farm in north-west Ontario near the Manitoba border.

Merz was his Canadian accountant, von Teichman his lawyer. He remains a partner with von Teichman in Pelee Island Winery.

Trapp-Dries is nearing 80 (in 2003) and his sons, who have earned a reputation as hard-nosed businessmen, are taking ever-greater responsibility for the family's investments. Close observers doubt the sons will retain much interest in the Canadian investments because the returns are marginal at best on cash-crop farming through property managers and custom operators.

Trapp-Dries won a $2,234,289 court victory over Sieber on March 27, 2002, but whether he can collect from Sieber is another matter. Sieber said only "I should not talk about these people," meaning Trapp-Dries and others who have sued him.

The Porsche

Peter Porsche lives at Salzberg, a tiny perfect tourist trap in Austria. He's in his mid-50s and is one of the heirs to the Porsche auto fortune.

He owns Underwood Farms Ltd., which has 1,631 acres near the hamlet of Underwood. He also owns about 2,000 acres in Manitoba.

He's a distant relative of Sieber and continues to deal with Sieber.

The relationship runs through Paul Haberl, whom we'll meet later.

The biggest loser

Christian Straube, now in his mid-50s, is clearly the biggest investor in Sieber's schemes and the biggest loser.

He not only purchased about 12,000 acres of farm land in Ontario, but also invested heavily in the alfalfa dehydrating plant at Kincardine, in the industrial basin at Kincardine that's connected to the nuclear power stations at Douglas Point, in a canola-crushing plant at Ste. Agathe, Man., and huge farms in Latvia, Lithuania and Hungary.

Straube took Sieber's share in the farms in Eastern Europe in the early stages of their falling out. They were also partners in holding the General Motors distributorship for Latvia, a business that Sieber says has been and remains highly profitable. Straube has that as well.

Straube and Sieber recently settled their suit and countersuit, but in four and a half years of fighting, they spent somewhere between $20 million and $30 million on lawyers, accountants and consultants.

Part of their out-of-court settlement, which Sieber will not discuss because it contains a confidentiality clause, is an agreement to jointly sue Ontario Hydro. No figure has yet been named, but Sieber said it will be about $300 million. Sieber says that lawsuit, which has been dormant for a few years, will be revived.

The Toronto court documents on the Straube-Sieber case fill 15 large boxes and reveal in obtuse legal language how bitter Straube felt about Sieber leading him down a number of dead-end garden paths. Straube claimed $350 million, but had he invested his money in Canadian government bonds instead of the Canadian ventures Sieber touted, it would be more than $500 million today.

At the end of all the court wrangling is a curt two-page document indicating the suit and countersuit were both dismissed on May 29, 2001.

Sieber said for the first three months after Straube sued, "I was getting nowhere." He said matters turned when he hired the high-priced firm of Tory, Tory, Deslauriers and Binnington in Toronto. Straube had Goodman, Phillips and Vineberg. And they each hired forensic accountants.

Straube has learned to his chagrin that he lost from the beginning because Sieber bought farms through Algonquin Farms Ltd. before he flipped them, often only a day later, to Straube's companies at markups of 30 to 50 per cent. Sieber counters that he deserved the profits because he assembled individual farms into larger blocks and did a lot of research into issues such as tile drainage and soil quality.

The deals were crafted to avoid Ontario's foreign investment property tax. The farmers who were selling their land had to first set up their farm as a corporation, then sold the shares to Algonquin which sold them to Straube's companies. Straube's accounting firm, KPMG, says these dealings alone netted more than $20 million for Sieber.

The province tried to collect its property taxes, but ultimately lost in appeals courts.

Sieber also made money from Straube by renting his land at low rates - say $60 an acre - and either farming it with Canadian Agra equipment and staff, or sub-leasing it to local farmers at about $200 an acre. Sieber says he earned every dollar he charged.

  The alfalfa dehydrating plant proved to be a dud because the cubes were prone to breakage, raising a lot of dust which made them unfit as horse feed because horses are notoriously prone to respiratory problems. Wetting the cubes to lay the dust didn't work because moulds developed, leading to mycotoxins that poisoned horses.

The cubes are fine as cattle fodder, but too expensive. Sieber was never able to make that investment work. Tonnes sat in storage for years, and eventually they were spread as manure.

The Snobelen family paid about $2.2 million to buy the plant and equipment from the receiver, which some count as a shrewd deal because the tractors, special trucks and equipment alone are worth the purchase price. The Snobelens are running the plant at a much lower volume.

There is no buyer yet for the brand-new canola-crushing plant at Ste. Agathe, Man. It was built to use a new cold-press technology, but has never opened for business and probably never will.

Sieber says he and his extended family invested $60 million in that plant and says nobody else knows how to run it properly because only he and his team know how it was designed to operate and have the computerized software to make it work right.

The cold-press technology yields a vegetable oil that is less desirable in the amrket, and leaves enough oil in the meal to make it a marketing challenge. In cold weather it freezes into rock-solid blocks. In warm weather the oil turns rancid, so it's only useful as a protein supplement for livestock or poultry if it can be fed almost immediately.

But Sieber says the technology can work to yield a premium-quality oil and meal, and that the trick to keeping the meal from going rancid is to keep the combined total of moisture and oil content below 15 per cent.

Richter and Partners, the Toronto-based receivers, have been trying for four years to unload this dog. At one point the rural municipality tried to seize the property for failure to pay taxes, and to sell it for a pittance. Ellis-Don, the London, Ont., company that was the lead builder on the project, paid the municipal tax bill to protect its position.
The plant has some wonderful facilities - wheelchair-accessible washrooms, plush offices, expensive computers - but might end up as a lowly feed mill.

Straube's main land-holding companies are the B.A.L. Group, now in receivership, and Transmaris Farms Ltd.

Transmaris was used to finance many of the B.A.L. deals, owned about 2,000 acres in the Brussels area, and lost about $84 million. Once the lawsuits are cleared away, Transmaris might be a takeover target simply to take advantage of its losses for tax-avoidance reasons.

Straube was livid when he realized he had been duped and his lawsuits were as much about wounded pride and anger as an effort to recover his money. Sieber says Straube "made all kinds of allegations" that are detailed in the court documents "but he couldn't prove anything."

Sieber maintains that's because he didn't do anything wrong and says the forensic accounting firm his lawyers hired have spelled that out in detail.

Straube has also settled with von Teichman who is now worth only a tiny fraction of his wealth at the height of his shenanigans with Sieber, Schreiber and Franz Josef Strauss, chairman of Airbus Industrie and Deutsche Airbus and minister of state for Bavaria.

The relatives

Foremost among Sieber's relatives is his mother, who took his teenage son and daughter to live with her in Quebec when his marriage to Helga ended in divorce two years ago. Sieber blames the pressures of the Straube lawsuit, and the related freeze on all his assets, for the failure of his marriage. He says they remain "on good terms." Their son, Johann, is 15, their daughter, Christina, 11.

Some say it's his mother who taught Sieber by example how to use charm to make deals.

Then there's Paul Haberl, the relative who made the connection to Peter Porsche.

Haberl owns Elderslie Farms Ltd., which has about 1,000 acres of farms in Ontario and about 2,000 acres in Manitoba. Haberl has a poor reputation among Austrians.

Hans and Ferdinand Piech of Vienna, Austria, are rich cousins of Peter Porsche. Ferdinand is president of Volkswagen.

They own Sigma Farms Ltd., Sigma Farms 2 Ltd. and United Manitoba Farm Enterprises Ltd. Their Ontario farm holdings total about 1,800 acres north-west of Blyth.

The Piech brothers, as with Porshe, are sticking with Sieber. The man who answers their telephone at Wien, Austria, was extremely guarded and would neither confirm nor deny their ownership of about 1,800 acres. He wanted to know the tone of the article about Sieber and Canadian Agra and how the involvement of the Piech brothers would be treated.

Dr. Hans Himmer, chief executive officer for the Porsche family, lost his job because of Canadian land deals. He sold his Cherocee Valley Farms Ltd., which owned about 300 acres on the 10th concession of Bruce County, to von Teichman. Himmer is a broken man, about 80 years old, living in Austria.

Some investors

Peter Cervinka, a 53-year-old Austrian who has homes in Europe and New York City, has a thriving business developing high-end condominiums.

His father, who died about 10 years ago, made his fortune in gravel.

He bought about 1,100 acres and held it under Frangis Farms Ltd. and Peri-Bruce Farms Ltd. Cervinka has sold those farms to Trapp-Dries. "I broke even," he told Ontario Farmer.

Heinrich Polsterer of Salzburg, Austria, owns about 1,000 acres near Whitechurch, between Wingham and Lucknow. He calls his company Whitechurch Farms Ltd.

The land is relatively poor; he has hired Matheus Stehle, a feed mill employee at Lucknow, to manage his Whitechurch affairs. The land is rented out.

Rudolph Hoffman, who is about 70 years old, made his fortune in construction. He is also a major investor in Pelee Island Winery.

He refused to confirm his investments in a trans-Atlantic telephone call.

"I'm not connected with Canadian Agra," he said. "It's not my intention to talk to you about Canadian Agra."

But it was through his connections to Sieber and Canadian Agra that he came to own about 400 acres near Seaforth and about 800 acres near Zurich through Gamma Farms Ltd., Gamma Farms 2 Ltd., St. Joseph Creek Farms Ltd., N.A.F. Investments Ltd. and Culrose Farms Ltd.

He left a number of disappointed creditors when his construction company declared bankruptcy about 20 years ago. Investment money flowed into Ontario farms before that happened.

Hoffman also owns about 3,000 acres in Manitoba. He has remained with Sieber, some say because he hopes to recoup earlier losses through participation in new deals.

Sieber says he assembled and sold about 20,000 acres in Manitoba and Canadian Agra also managed additional land that was purchased by Europeans before he got involved there.

Oscar Weiss-Tessbach is a lawyer from Vienna, Austria, who has retired and spends summers at a home he purchased opposite the airport at Kincardine. He owns about 300 acres through Elameo Farms Ltd. and GEO Farms Ltd. His son has taken over his law firm in Austria. Oscar is in his early 70s.

Friends say he's bitter and embarrassed about losing money on a Sieber investment he made as trustee for a wealthy orphan, Charles Anson.

Albert Roelen, a wealthy developer who lives at Dusseldorf, Germany, never bought any Canadian farm land, but was involved as a financier who raised money for Canadian Agra, the publicly-traded company as opposed to Canadian Agra, Sieber's farm property management company.

Merz acted as Roelen's accountant. Roelen was not one of the insiders who benefitted from the wheeling and dealing Sieber orchestrated.

Helmut Niederseuss of Austria and a Swiss investor whose health is failing and who asked that his identity remain guarded have filed a multi-million-dollar lawsuit against Wolf von Teichman, his law-company partner, Manfred Albert Tikal and Sieber. That lawsuit, which will take about three weeks, is heading to court this May.

Niedersuess and the Swiss investor owned Lake Huron Homes Ltd., Antade Farms Ltd., Biobag Farms Ltd. and Mamica Farms Ltd. They are claiming $5 million damages plus a return of $906,250 worth of markups on 11 farms bought from companies controlled by von Teichman, Sieber and Merz.

Sieber failed in a court bid to change his testimony that he took only a 10 per cent of the profit on those deals. A typical deal involved one 100-acre farm bought for $100,000 and sold to a European investor for $150,000.

Sieber says he won't offer so much as a penny to settle this suit out of court. He says the arguments the lawyer is putting forward are similar to those advanced by Straube.

The saga continues

Shareholders in Canadian Agra Foods Inc. have nothing to show for their investment.

Thousands of acres of prime farmland around Kincardine has changed hands, first in deals to Sieber and more recently in purchases by local farmers. Thousands more acres remain in the hands of aging Austrians and Germans who have no intention of ever mounting a tractor or entering a barn.

Their land is most likely to be sold when their heirs assume ownership.

Murray Elston resigned his seat in the legislature and became Sieber's apologist and lobbyist at $400,000 a year. He ended up suing Sieber for wrongful dismissal and now is back to practicing law in a local firm. He's one of the new directors at Hydro One.

The spiffy warehouse that Sieber built for Canadian Agra at Goderich never served as the transit point for processed agricultural products from his alfalfa dehydrating plant, or the other processing plants he envisioned. Nor did it stockpile imported fertilizers.

Today it's owned by the next-door salt-mining company, which bought it for about 25 cents on the dollar.
 Sam McGregor, a local industrial developer whose ambitions reached further than his money, sold his industrial basin that was supposed to be attractive because the Bruce Nuclear station next door would provide cheap electricity and steam to Straube, via Sieber.

The industrial basin remains almost as barren today as it was when McGregor ran out of money. There is little more than a greenhouse growing tomatoes and the alfalfa dehydrating plant
Sieber insisted for years that all he needed to make the industrial park thrive was a better long-term deal with Ontario Hydro.

He sued, then signed a deal when Maurice Strong was chairman at Ontario Hydro. He says Ontario Hydro reneged on that deal six months later, which is what prompted Straube to sue Canadian Agra and explains why they have now agreed to join forces and both go after Ontario Hydro.

Sieber now sits in an empty house, his wife and children gone, his reputation shattered and his days occupied with defending himself in court and bankruptcy proceedings.

He says he spent many 20 and 22-hour days gathering 19,200 documents for the Straube case. Some single documents took up 10 file boxes, he said, and it took a tractor-trailer to move the documents from Kincardine to Toronto, and $22,000 to prepare photocopies and a computer program to keep everything straight. He said it took tremendous determination and focus to deal with all of the pressures.

It's a long time since he was a farm boy and school dropout in Austria. But oh, what a ride from then to now, from there to Kincardine.

He says some day books will be written about him and Canadian Agra. "And a movie."

But he's not finished yet. He believes the economy will sink into deep recession, interest rates will soar and farmland will become a bargain similar to the early 1980s. And he's preparing for another ride on that market, beginning in 2003.

"This year (2003) I'm going to settle all of the outstanding lawsuits. I'm going to rebuild my good name and Canadian Agra. I can justify everything what I have done. If I've done something bad, I have no problem to say it. If it's done, it's done," he told me.

Blame the OFA for failed farm policies

It’s the fault of the Ontario Federation of Agriculture that Canada’s agriculture policies have been a unmitigated disaster for the last 20 years.

Neither the Conservatives nor the Liberals have the courage to fashion their own agriculture policies. For years they have simply rubber-stamped what the Canadian Federation of Agriculture has asked and it, in turn, develops its policies from the research and political clout of the Ontario Federation of Agriculture.

The result has been record-high subsidies and trade barriers, declining research and declining regulatory vigilance. It’s therefore not surprising that Canada’s position as a world exporter of food and agriculture products has steadily declined, nor that imports steadily take a larger share of the Canadian market.

Farmers have lobbied loud and hard for subsidies and federal and provincial politicians have answered their every plea – sometimes later than farmers hoped, sometimes with less money than they sought, but always with substantial subsidies.

And then, when the finance minister and treasury board minister demand cuts to reduce deficits, the agriculture department has cut research, manpower and therefore knowledgeable, experienced officials to enforce regulations.

There has never been radical reform of meat inspection despite decades of scandals and problems. The basic problem is that the dregs of the veterinary profession runs that shop and successive agriculture ministers have lacked the wisdom and courage to call for expert outside opinion, such as inviting the Danes or the Japanese to examine our Canadian Food Inspection Agency and offer advice.

The state of inspection and discipline for the feed industry is abysmal, even though feed is the single largest cost of producing meat, milk and eggs.

There is no attempt to really inspect or discipline fertilizer blenders and retailers. What exists is a joke because only those who want to have the government check their products submit samples. And more than half of those samples routinely flunk the standard of value for money.

As recently as 1970, the federal agriculture department ran the largest and oldest research establishment in Canada. Universities, such as the University of Guelph, added their prowess, especially in basic research and getting messages out to farmers.

Those were the days when Canadian agriculture was recognized as a world leader. No more. Today China has many more agricultural researchers than Canada and they have already surpassed some of the best research Canadians have to offer.

While Canada’s federal bureaucrats twiddle their thumbs over advances such as transgenics (eg. the environmentally-friendly Enviropig) and cloning for livestock productivity and health, the Chinese have a more realistic approach to the balance of risks vs. opportunities and are forging ahead.

Various prime ministers have waxed eloquent about the gains to be realized from research, innovation and free trade. Under their leadership, Canadian agriculture has declined in all three categories.

Our highest trade barriers have been deliberately designed to coddle dairy and poultry farmers. They used to have protection via import quotas. Now they have even greater protection via sky-high tariffs. As a result, dairy and poultry farmers are richer today than ever in the history of North American agriculture. Almost all of them are millionaires; some of them, such as Ontario’s two largest egg companies, count the value of their quota holdings alone at more than $100 million.

Yet no agriculture minister, neither federal nor provincial, dares criticize the excesses and abuses of the farmer-run marketing boards. They appoint supervisory commissions, then stack the directorships with farmers whose passion is defending supply management.

So, farmers who want farm policy changes don’t need to bother voting in the upcoming federal and Ontario elections. Save your energies for radical reforms at the Ontario Federation of Agriculture. That’s where Canada’s farm policies, disastrous as they have been, are fashioned.

Sieber would do it all again

TORONTO -- When the courts put Helmut Sieber's empire into receivership and appointed Doane Raymond Limited on Nov. 7, 1997, to manage things, the court also hired KPMG Investigation and Security Inc. to find out what went on.

The KPMG report, marked confidential, is in the court files and reveals a great deal about why Christian Straube feels he was cheated by Helmut Sieber, lawyer Wolf von Teichman and his accountant, Dr. Gerd Merz.

For his part, Sieber says KPMG was hired by Straube and that his lawyers hired a different forensic accounting company which formed quite different opinions about what happened in the Straube-Sieber-Canadian Agra partnership.

The receivership was sweeping, embracing phases I to IV of the industrial park at Kincardine that's linked to the Bruce Nuclear reactors at Douglas Point, a total of 21 properties under Kincardine Farms, 10 under Underwood Farms, 17 under Tiverton East Farms, 11 under Ripley Farms, four under Gorrie Farms, eight under Zurich Farms, eight under Grand Bend Farms, the Willowdale subdivision, the Boiler Beach Family Park, Huron Bruce Subdivision, Tiverton Subdivision, preferred shares held in Canadian Agra International, common shares held in St. Lawrence Technologies Inc., 20 properties held by Bruce Farms, 17 by Transmaris Farms, 21 held by Bruce Energy Centre and Zurich Cold Storage.

KPMG reported to the court that there were a lot of murky deals with Raika, a finance company, at the centre.

Merkur and Transmaris, which were companies controlled by Straube and which Merz was sent to Canada to tend, transferred tens of millions of dollars to Raika.

Straube thought he gained title to farms and other properties. KPMG found the title actually was held by "open trusts" controlled by Sieber, von Teichman and Merz.

Straube thought he was paying bills for business related to his companies. KPMG found that this money went into Raika and got shuffled into other Raika accounts controlled by Sieber.

Sieber says Straube's personal testimony differs from these allegations filed in the lawsuit.  Sieber says Straube knew about the trusts and he also knew why money that flowed into the Straube accounts at Raika was transferred to accounts controlled by Sieber. He said it was payment for services.

"Everything was done exactly as it was agreed before. It was the way it was supposed to be," Sieber says. 

KPMG wrote in the court documents that Straube didn't know about Seiber's disputes with Ontario Hydro over providing low-cost energy to the industrial basin or that Sieber, von Teichman and Merz used Algonquin Farms and other companies to realize huge profits from Straube on land purchases and land management.

KPMG says $37.6 million of rent that should have belonged to Straube's B.A.L. Developers company ended up in accounts controlled by Sieber, plus another $33.6 million that included $4 million paid to Merz.

KPMG says on page seven of its April 15, 1998 report, that Raika's books do not reveal how Straube's money was used, nor do they reveal "terms of repayment, if any."

The KPMG report says B.A.L. Developers owned a total of 9,959 acres of land. That total comes from 6,203 acres of farm land, 823 acres of development land, 2,697 acres of industrial land in the Bruce Energy Centre and 236 acres of residential and commercial land.

Yet B.A.L. Developers "was never registered on title for its properties," says KPMG.

Instead they were under "bare trustee" arrangements, and the bare trustees were Sieber, von Teichman and Merz.

The trio running the trusts used the B.A.L. properties as security for loans from the Royal Bank, Halton Hills Gravel Farms Inc., Bankhaus A. Aufhaeuser, Marilyn Drive Holdings Ltd., Albert Roelen and B.A.L. Financial Corporation. Straube told KPMG he didn't know anything about a three-million-Deutchmark loan from the Aufhaeuser bank.

KPMG details how Sieber and von Teichman skimmed profits on deals. They used Ashfield Farms, controlled by Sieber, to buy 1,350 acres of land known as the Toma properties for $1,143 per acre, which is a total of $1,543,000. The next day they flipped 110 acres to B.A.L. Developments Ltd. for $8,727 per acre and 440 acres to HHGF for $2,045 an acre, or a total of $1,860,000 for 550 acres. When those deals were done, Sieber had 880 acres left in Ashfield Farms, plus $317,000 cash.

Sieber says the Toma family owned Ashfield Farms and that his involvement was only as an agent for this deal and he says he did not make any "significant" amount of money. He says the 110 acres Straube bought was in the centre of a larger parcel he intended to assemble to build a golf course and residential community on the shores of Lake Huron.

Another deal KPMG details involves 2,047 acres of land Sieber owned under Grand Bend Farms Ltd. Two years after he bought that land, he sold it to B.A.L. Developments Ltd. for $5,179,000, realizing a profit of $1.8 million. Straube did not know what Sieber paid for that land two years earlier.

In a third deal, KPMG found that in April, 1990, Sieber traded 122 acres of land he had bought for $457,000 for 3,597 acres of  farm land that had cost B.A.L. $3,570,000. KPMG also notes that Sieber and von Teichman had already made $610,000 in fees on B.A.L.'s purchase of those farms.

KPMG also reported that Merz made huge profits on deals involving a company called Moka that he controlled.

In 1997, B.A.L. transferred 1,895 acres to Moka; no cash changed hands and KPMG could not trace the transaction through company records. Also in 1997, 300 acres of B.A.L. land moved to Sovar Farms Ltd., controlled by Sieber, and then to Moka. On May 12, 1997, Sieber transferred 1,696 acres of land he controlled to Moka.

In addition, Moka took out three loans totalling $9.3 million from the Aufhaeuser bank.

KPMG also questioned a $4 million advance from B.A.L. to St. Lawrence Technologies. It says in its report to the court that Sieber did not provide satisfactory answers to questions regarding:

  - the sale of the alfalfa dehydrating plant at Kincardine;

  - claims involving Ontario Hydro;

  - the leasing of Canadian Agra Cubing Ltd. and Bruce Agra Dehy Inc.'

  - transactions with SLT (St. Lawrence Technologies;

  - transactions with Bruce Foods Inc.;

  - the "airport land" swap of 122 acres for 3,597 acres;

  - a promissory note due from Canadian Agra Corporation and Canadian Agra Holdings Inc.;

  - management fees paid to Sieber and Merz;

  - loans to Pelee Vineyards Ltd.

The court records also reveal that Sieber, von Teichman and Merz set up dozens of companies, many of them numbered Ontario corporations, to own properties and do deals.

Sieber says "I can justify everything what I have done" and said "if I would do it again today, I would do it all the same way."

Lawyers enriched by Sieber's scandals

TORONTO -- The courts have set a May date (2003) to begin hearing a block-buster trial involving Helmut Sieber and his lawyer, Wolf von Teichman.

Helmut Niedersuess of Austria and a Swiss investor whose lawyer asked that he not be named because he's old and in frail health have sued them for $5 million in damages, more than $900,000 in markups in land deals and for "exemplary damages."

The suit officially pits Niedersuess, Lake Huron Homes Ltd., Antade Farms Ltd., Biobag Farms Ltd. and Mamica Farms Ltd. on the one side against von Teichman, his law-office partner, Manfred Albert Tikal, Sieber, Algonquin Farms Ltd., Austro-Canadian Enterprises Inc., Pelee Island Winery and Vineyards Inc., Canadian Agra Corp. and Canadian Agra Farming Inc. on the other.

Niedersuess and the Swiss investor bought 11 properties from Sieber between 1981 and 1984 and the court documents reveal that Sieber and von Teichman bought them at low prices from farmers that they did not reveal to the European investors who bought them at much higher prices.

One specific example is included in the documents - 300 acres that John and Janet McKenzie sold on March 30, 1981, for $350,000. Sieber and von Teichman put that farm under a trust to Austro-Canadian Enterprises Inc., which they contolled. Then they flipped that farm three weeks later - on April 21 - to Mamica Farms Ltd. for $471,000.

Other examples are the Mitchler farm, bought for $220,00 and sold for $380,200;, the Leishman farm bought for $300,000 and sold for $460,200, the Weibe property bought for $97,500 and sold for $177,660, the Cassidy farm bought for $95,000 and sold to Mamica for $140,000, the MacKinnon farm bought for $65,000 and sold to Mamica for $93,700, two Cameron properties bought for $135,000 and sold for $141,500, the Ribey property bought for $70,000 and sold for $97,500, the Inkster property bought for $168,000 and sold for $1290,000 and the Drummond property bought for $165,000 and sold for $220,000.

Tikal and Associates (the law firm for von Teichman and Tikal) acted for both Sieber and for Niedersuess and the Swiss investor on these deals. The Europeans say they knew nothing about these secret deals; von Teichman, Sieber and Tikel say in their defence statement that the Europeans waived their concerns about conflict of interest, that the Europeans didn't suffer any damages and that they knew that Sieber and von Teichman would make profits on the deals.

The court has denied Sieber's application to change his defence statement in this case. He wanted to strike his testimony that he got only a 10 per cent cut of the profits.

For his part, Sieber says Niedersuess has only 90 acres involved and said "he should go jump in the lake because he doesn't have a case." He said he rejected an offer to settle for $5,000 and said "I'll give him nothing."

Big-ticket legal firms are involved in this court battle - Blaney, McMurtry for Niedersuess and Teplinsky, Coslyn for von Teichman, Tikel and Sieber.

In the brief that lawyer Rodney Smith of Blaney McMurtry has filed includes a document from the Law Society of Upper Canada detailing how Von Teichman was suspended for six months for his part in identical transactions involving another European investor. Von Teichman reimbursed that investor more than $200,000 and the investor did not press a claim for discipline, but the lawyer who acted for that investor did and the discipline committee rapped Von Teichmann's knuckles hard.

The discipline committee wrote "the publicity in connection with these proceedings will be a source of great embarrassment to the solicitor." The committee wrote that he "has been well regarded and held in high esteem in his professional, business and cultural enviroments" and has been a member of the German Historical Society and a member of the board of directors of St. George's College.

The claim filed by Smith says Sieber and von Teichman's "actions have been in flagrant disregard of the ordinary ethical and legal standards of business, professional and fiduciary behaviour such as to warrant an award of exemplary damages" beyond the $5 million punitive damages and the $900,000 in markups, with compounded interest added.

In interviews for preparing this case, the Swiss investor said he was "scandalized" when he learned about the markups and Niedersuess says "we were cheated".

Sieber lost millions in court decisions

KINCARDINE -- Helmut Sieber and accountant Gerhard Merz have lost a string of court cases amounting to millions of dollars.

Revenue Canada gained a $13,301,170.38 judgement against Sieber in April, 2000, and has claimed all of Siebers "goods,inventory, accounts, equipment and other assets" to satisfy the debt.

Sieber says he hasn't yet paid that bill and said "I cannot talk about Revenue Canada, but they don't pressure me." Despite the court file, he says Revenue Canada has not taken any security for the $13.3 million.

 The Ministry of Finance has a similar claim on his 1991 Chevrolet in an attempt to collect on a $122,081 court judgement against Sieber for employer health taxes.

The Royal Bank of Canada has a court victory of $1,067,095 gained on Feb. 15, 2000, against Sieber and Merz. Sieber says this lawsuit was about a property he managed as a trustee, and not about him personally; he said the bank has seized the property.

Peter Cervinka of New York and Kitzbuehel, Austria, has a $2,243,260.25 judgement against Sieber that was filed in court in Toronto on Aug. 3, 2000. Cervinka bought two farms from Sieber in the 1980s - Peri-Bruce Farms Ltd. and Frangis Farms Ltd., and shares in Canadian Agra Foods Inc. Cervinka claimed he was misled and wanted his money back.

Sieber would not comment on that case or any other case involving specific Austrian investors.

The Bank Fur Arbeit Und Wirtschaft Aktiengesellschaft has a court victory that says Sieber is to pay enough Canadian money to buy 20,380,148.40 Austrian Shillings. That court made that ruling Sept. 25, 2000. In an Austrian court action earlier, Sieber agreed in another part of this bank debt to pay 30 million Austrian shillings to Agra Tagger Kraftfutterwerke & Muhler AG, but on condition that the bank would not sue in Canada. The orginal bank deal was a loan of 120 million Austrian shillings to Sieber made in February, 1998.

Hans Trapp-Dries won a court order of $2,234,289 from Sieber on March 7 this year. That was in connection with mortgages on nine properties in Kinkardine and the townships of North Huron, North Wingham and Morris-Turnberry. The mortgage was issued Sept. 24, 1996, for $3 million at 9.5 per cent interest. When Trapp-Dries filed suit in July, 2000, against Sieber, Canadian Agra, the Royal Bank, an Austrian bank, Peter Cervinka and one of his companies and the federal and provincial governments, the principal debt was down to $1,815,475, but $418,814 in interest was owing.

In the strangest deal of them all, Oberbank has sued Sieber for $1 million in connection with a deal Sieber was making with Ferdinand Koch Gesselschaft to sell the vegetable processing plant at Ste. Agathe, Man. Sieber was to guarantee a loan of $1 million to the purchaser which was to be used as a downpayment on the deal, but the deal was conditional on the buyer lining up credit. That involved negotiations for a mortgage from Pacific International Capital Corp. The mortgage did not come through, the deal collapsed, but Oberbank wants the $1 million. There was a mediation meeting this March 27, but Sieber mediation collapsed at the second meeting April 8.

Agra Monenco of Oakville, engineering consultants on the Ste. Agathe plant, have sued Sieber and HWS Project Development Inc. for $1,440,800. Sieber has responded to the suit, filed in July, 2000, by claiming he doesn't owe anything. That's also exactly how his lawyers first responded to all of the other suits.

Competition Bureau mum about egg investigation

The Competition Bureau is not saying whether it is investigating collusion between Ontario’s dominant egg-grading companies, L.H. Gray and Son Ltd. and Burnbrae Farms Ltd.
The Competition Bureau has been made aware of a treasure trove of e-mails between the two companies, including ones involving how they will deal with the move by Shoppers Drug Markets chain to begin selling eggs.
The e-mail indicates that Gray anticipates there might be trouble with Loblaws over which company gets the Shoppers account, that there could be “major problems for supply in Eastern Canada. We have been talking about this for the last four weeks at least.”
Another e-mail from Bill Gray, owner of L.H. Gray and Son Ltd., to Aaron Kwinter says “Joe H (Hudson of Burnbrae?) called last night requesting support for the following” and the list begins with a price hike of half a cent a dozen.
Kwinter runs Global Egg and Egg Solutions in Etobicoke; Gray is one of the owners of those businesses.
In response to an Access to Information request, Industry Canada says “we regret to inform you that we can neither confirm nor deny the existence of any records” about an investigation into improprieties by the two egg-grading companies.

Even if the records do exist, Kimberly Eadie, the director of information and privacy rights administration for Industry Canada writes “they would be exempt from disclosure.”
It is Competition Bureau policy to keep its investigations secret unless and until charges are laid.
The treasure trove of information about how the two companies share information is sealed in court in London, Ont., and is under protection of a court-appointed lawyer in Oshawa. There are, however, a number of e-mails from and to Gray that are open to public scrutiny in the court files of Superior Court for Durham Region is Oshawa.
Gray’s lawyer, Allison Webster, succeeded in getting a court order to seal similar information in the Superior Court at London.

More than Oda’s “not” is wrong at CIDA

The Canadian International Development Agency is bungling the job of international relief and development.

To start on a long list of problems, consider that long-term relationships have been broken because Prime Minister Stephen Harper decided to drop a number of countries, among them some of the poorest in the world, from the list worthy of Canadian help.

Second, although Harper can boast that he has increased spending on international aid, toomuch of it has gone to the wrong people and places. The greatest corruption is involved in country-to-country projects and in multi-national agencies’, such as the World Bank, projects.
Third, agriculture keeps falling off of the Canadian International Development Agency’s (CIDA) list of priorities.
Fourth, CIDA recently began requiring aid agencies, such as the Mennonite Central Committee, the Christian Reformed World Relief Committee, The Presbyterian World Service and Development., etc., to competitively bid for projects.  This approach scraps decades of relationships and experience by these agencies and their partners overseas and replaces it with the political whims of people in Ottawa, including members of Harper’s Prime Minister’s Office.
Dr. Jeffrey Sachs, an economist who has been working for the United Nations on aid issues and knows far more about the issues that Harper and his political advisors ever will, says we’re missing the boat by failing to help farmers boost food production, especially in needy countries.
Sachs says that money spent on research and development to boost food production would do far more than military might to quell unrest in the Middle East and North Africa.
Sachs says focusing on smallhold farmers helped lift China and India out of hunger.

What a novel idea: support for family farmers and rural communities.

This is precisely the kind of community-development work that Christian organizations have been doing for decades, and some of them have recently lost their CIDA funding. There has been lots of media attention to the “not” that CIDA Minister Bev Oda had her staff insert to reverse a staff recommendation on renewing funding for KAIROS, but the media have missed similar funding reversals for the Christian Reformed World Relief Committee, the Presbyterians and others.
Millions of Canadians faithfully support these Christian organizations. CIDA used to, often somewhat reluctantly, chip in some taxpayers’ money to supplement the donations.
But CIDA bureaucrats never seemed happy with this situation.  It was certainly never one of their top priorities. They seemed to prefer hob-nobbing with the powerful and rich in Geneva, so their
priorities have always been making big deals with governments and the likes of the World Bank.
The track record there is abysmal, featuring corruption and failures. Dambiso Moyo in her book, Dead Aid, details the reasons why billions of dollars of this type of aid has not only failed, but also been counter-productive.
I have often written to cabinet ministers in charge of CIDA to urge them to reduce the percentage spent on this type of aid and to increase the percentage devoted to support for Canadian organizations such as the Mennonite Central Committee and Doctors Without Borders.                                                Bev Odo, Min. Resp. for CIDA
They have consistently ignored the advice.
Whoever wins this election needs to recognize that Canada’s spending on international relief and development needs radical reform. It should start with increased support for the agencies with proven track records for honest, integrity and effectiveness.
Besides, this would be politically astute. After all, millions of constituents are donating to these agencies. They might be easily swayed by candidates who promise to support these wonderful organizations and their compassionate work.

Egg inquiry may never happen

The Ontario Farm Products Marketing Commission is refusing to say what it will do, if anything, about complaints of widespread problems in the egg industry.

Chairman Geri Kamenz declined to answer a list of e-mailed questions, saying it  would be “inappropriate to make any comments about this matter right now.”

Harry Pelissero, general manager for the Egg Farmers of Ontario marketing board, said “I am aware of the allegations” made by Norman Bourdeau, a former employee of L.H. Gray and Sons Ltd. and, noting that there are lawsuits underway involving Bourdeau, the egg board, Sweda Farms Ltd., Gray and Burnbrae Farms Ltd. said “I am limited in what I can say.”

“We take the allegations seriously,” he says of a 170-page report Bourdeau filed with the commission in which he calls for an inquiry. Donald Good, lawyer for Sweda Farms, has also called for an inquiry.

Pelissero said the egg board is “co-operating fully” with the commission. He said Bourdeau’s allegations “are without merit and foundation.”

Kamenz would not say whether the commission will conduct an inquiry or whether it has ordered audits at the egg board and grading stations, also citing the lawsuits as his reason for not commenting.

Among the e-mailed list of questions he declined to answer was one seeking to know whether there are regulations to forbid those who are importing eggs from declaring surplus eggs that are removed from the “table egg” market and sold at a lower price for processing. Farmers fund the price gap.

In 1975, Joe Hudson, the owner of Burnbrae Farms Ltd. of Lyn, Ont., was removed as a director of the Ontario Egg Producers Marketing Board by former agriculture minister William Newman because he was both importing eggs from the U.S. and declaring surplus eggs to the marketing board.

A person who has worked for the egg board on import permits and surplus declarations said the operating approach has been a requirement of a two to three-week gap between seeking a supplementary import permit and declaring a surplus.

It has, however, been a practice at the national agency level to deal with shortages and surpluses on a specific-market basis such as a shortage of organic eggs while there’s a surplus of Grade A Large eggs.

Bernadette Cox, who speaks for the national agency, refused to divulge whether there is a specific regulation at that level dealing with near-simultaneous importation of eggs and declarations of surplus eggs. She would only say that the national agency is charged with the responsibility of balancing supply and demand.

Friday, March 25, 2011

Egg Troubles "Get Cracking" in Ontario

OSHAWA – Thousands of pages of court documents here outline allegations of conspiracies to make business life difficult for Sweda Farms Ltd., a business owned by Svante Lind who is trying to break into Ontario’s egg-grading and distribution business.

The lawsuits against L.H. Gray and Son Ltd., Burnbrae Farms Ltd. and the Egg Farmers of Ontario marketing board originated several years ago, but have taken on a more sinister tone on the basis of information provided by Norman Bourdeau who took copies of thousands of e-mails and more than one million other electronic documents from L.H. Gray and Son Ltd. where he was head of information technology from 2006 to 2009.

Many of those same e-mails and some of the documents also appear in court files in London, Ont., that were sealed Feb. 22 at the request of lawyer Allison Webster, acting on behalf of Gray. She said the files contain sensitive commercial information.

The documents also indicate that Gray denies wrongdoing and accuse Bourdeau of trying to harm the company.

Justice J.C.Corkery appointed Darrel N. Hawreliak to be the supervising solicitor to protect the electronic files Bourdeau turned over. They are now in the hands of Kay Professional Corp.

Webster has asked the court to give them back to Gray, but lawyer Don Good, acting for Sweda Farms, told the judge he fears Gray would destroy the files.

Webster argues that the Bourdeau information is not related to the Sweda lawsuit against the egg board; Good counters that the Gray, Burnbrae and egg board actions are inter-connected.

Bourdeau says in the court documents that Gray did order him to delete the e-mails and Gray also says in the documents that it is normal company practice to destroy files once cheques have been cut to pay farmers.

The court in Oshawa will be asked on March 10 to combine the lawsuits Lind has filed against the egg board, Burnbrae and Gray. Each action seeks millions of dollars in damages.

One part of Sweda’s complaints is that when it could not get enough eggs to satisfy its customers and applied to the federal government for supplementary import permits, the egg board found Ontario-produced eggs to fill those orders and therefore result in denial of import permits.

But Sweda says the eggs furnished by Gray and Burnbrae were of inferior quality or not what was requested. There is e-mail evidence that Harry Pelissero of the egg board and Bill Gray of L.H. Gray and Son Ltd. arranged to include Mediums in a shipment that was supposed to be Grade A Small eggs.

For example, in e-mail exchanges in September 2009, between Pelissero and Scott Brookshaw of Gray, with carbon copies to Bill Gray, Pelissero writes “whether there are some Mediums in the lot they are being sold as Small.”

In another set of e-mails that September, Brookshaw writes “there would be some downgraded Mediums to make the order.”

On Sept. 17, Lind sent an e-mail outlining specifications for what he sought – 300 cases (of 15 dozen each) of Grade A small brown eggs with no downgrades from Medium, no upgrades from Cracks and Dirties and graded under Canadian Food Inspection Agency supervision.

Lind reminds them that upgrading Cracks and Dirties “is deemed an adulterated grading practice” and is a food safety issue.

Brookshaw, in an e-mail to Pelissero, writes that “the regulations allow downgrading” from Mediums to Smalls. He does not cite the regulation wording or number.

A Sept. 9 e-mail from Brookshaw to Burnbrae, carbon-copied to Bill Gray, says that the eggs from Gray’s plants are to go to Burnbrae so Sweda Farms will be misled about their origin. “Harry (Pelissero, general manager of the egg board) wants them to look like they came from Burnbrae so they have to be delivered together,” he wrote.

In another e-mail dated Sept. 24, Lind wrote Gray that the “eggs came on U.S. material that also asks the question are t these eggs U.S.?”

He goes on to write that “the use of material more than once to transport eggs is illegal.” and to tell Gray that he needs “documentation that these U.S. skids are approved to be imported to Canada.”

On May 4, 2009, Bill Gray e-mailed Pelissero to say that he heard that there has been an application for a supplementary import permit for organic eggs and writes “this is a dangerous play as now they can request a specialty product and receive and import. We must develop a plan and make formal submissions to the people in control.”

Earlier, on Oct. 10, 2008, Brookshaw e-mailed Bill Gray that Lind had applied for a supplementary import permit for organic and free-range eggs” and that Lind is lobbying politicians to grant producers the right to produce “3,000 units of specialty product per producer.”

In November, 2009, there are e-mails between Brookshaw and Ron Hasnoot about placing cracks in Grade A egg cartons. Brookshaw wrote “the more that can go into the pack the better. Good revenue.”

On Sept. 30, 2009, Bill Gray and Ted Hudson of Burnbrae exchanged e-mails about how they will handle supplying eggs to Shoppers Drug Mart.

“What will happen if Shoppers triggers Loblaws, etc. Major problems for supply in Eastern Canada. We have been talking about this for the last four weeks at least,” Gray wrote Hudson.

On Nov. 27, 2009, Gray e-mailed Aaron Kwinter to say “Joe H. (Hudson?) called last night requesting support for the following” and then has a list that includes increasing prices “1/2 cent on all eggs” and increased import quotas for breaker eggs.

Lind claims that one of his employees, John Klei, was lured away by Gray who therefore gained information about his clients and suppliers. There is an e-mail Dec. 15, 2009, from John Leitch, head of finance for L.H. Gray and Son Ltd., to staff members Joan Jewell and Sharon Morgan, instructing them to prepare a cheque for $5,000 for Klei.

Ted Hudson e-mailed Bill Gray on April 22, 2008, to say that he has been negotiating to buy out Lind, that he offered to “split the difference” at $2.47 million and that if Lind rejects that offer, he will revert to his original offer of $2.2 million.

He says that Lind’s business is not worth the price, but buying him out would avert the possibility that Nutri Oeuf of Quebec might buy out Lind and then become a competitor for the Toronto market.

Burnbrae made another attempt a few years earlier to buy out Lind.

There are also documents in the court files outlining how Joe Hudson and Bill Gray decided to split the purchase of competitor Aaron Metzger Ltd. of Wallenstein. Hudson seemed to be concerned that if Burnbrae bought Metzger alone, some of the major supermarket-chain clients would object.

There are indications that Burnbrae also invited Gray to participate in purchasing Lind’s business.