A matter of principle?
Who is the elusive man behind Canada's most notorious child-support battle, and a history of controversial business deals still in the courts?SARAH HAMPSON
Special to The Globe and Mail
Thursday, October 21, 1999
Toronto -- Society divorce lawyer Stephen Grant doesn't have to ask his client, Thomas Baker, if he will speak to me. He knows the answer. Mr. Baker doesn't give interviews.
Mr. Baker made headlines this September when he became a test case for wealthy child-support-paying parents in Canada. He took the fight with his former wife, school teacher Monica Francis, all the way to the Supreme Court of Canada. He lost. The increased support, calculated in accordance with federal child-support guidelines, amounts to $10,034 a month.
Ms. Francis lives in a run-down area near Jane and Finch with their two teenaged daughters, Lauren and Lesley. (She is now planning to move.) Mr. Baker lives in a $5-million turreted mansion, behind locked iron gates, on The Bridle Path, an exclusive Toronto address. His estimated net worth is $78-million. He has a house in Whistler, B.C., and an art collection that at one time included works by Salvador Dali and Pablo Picasso.
But his story is about more than a debate over the fairness or ramifications of the court's decision. (Mr. Grant would not rule out further action.) It's about Mr. Baker's character. Is he a meanie? Is he highly principled?
His fight with Ms. Francis lasted 11 years. Mr. Grant has called it "a matter of principle" -- that the increased child support amounts to a transfer of wealth. But in June, 1997, when Madam Justice Mary Lou Benotto awarded Ms. Francis the increase in a lower court judgment, which Mr. Baker appealed, she noted the "maze of delays and motions" in the case.
"He knows who he is," Mr. Grant says. "What you guys write has no relevance to his life. He doesn't even read it."
Ah, lawyers. They are a flock, gathering in their black flowing robes outside Toronto's University Avenue courtrooms, sharp-eyed, hard-nosed, silver-tongued. Mr. Grant's comment is ironic. Mr. Baker has taken action against this paper and The Toronto Star for investigative stories about him over the last decade.
Mr. Baker has long been one of Canada's most controversial business figures.
Scene: Federal courtroom in Toronto, Oct. 12.
Mr. Baker idly brushes imaginary lint off his dark, perfectly pressed suit. He stretches his legs before him, adjusting his slim, athletic body in his seat behind his team of defence lawyers, led by Brian Greenspan.
Two federal tax investigators sit behind Crown prosecutor Robert Goldstein. They are tall and broad-backed. They have bad haircuts and wear mismatched jackets and pants. One of them, Jim Talbot, casts a glance over to Mr. Baker.
Mr. Baker, 54, doesn't look at anyone. He is tanned. His greying hair is cut short, buzzed close to his head in a stylish fashion. He exudes a GQ-magazine sartorial ease that gives him the appearance of one serenely confident and self-contained.
In December, 1996, Mr. Baker and his former business partner, Michael Graye, were charged with criminal tax fraud, conspiracy and money-laundering of nearly $18-million. Each man was released on $750,000 bail. The charges relate to controversial takeovers of Agnew Group Ltd, a shoe-store chain; Seven-Up Canada Inc; a subsidiary soft-drink bottler, Pathfinder Beverages Inc; and Vancouver Wharves Ltd, a shipping company, made between 1987 and 1991.
The lawyers have convened 54 times to hear submissions of evidence in this stage of preliminary hearings, which is under a routine publication ban. The charges came after years of investigation by Revenue Canada. No trial is yet in sight.
Mr. Baker, who is a lawyer and a former president of Seven-Up Canada, is now a successful restaurant entrepreneur. In 1996, Mr. Baker started Wrap N Roll, a fast-food chain in Toronto with five outlets, and a sixth opening in the spring. He does not have a presence in Toronto society, and is not known to participate in the high-profile charity circuit.
Married for the third time to a former nurse, Donna (they were engaged by Christmas, 1987, two months after Mr. Baker's divorce from Ms. Francis), Mr. Baker has two more children. "Tom is very active in their schools, their sports activities, with community events, sponsorships and coaching," says Mr. Greenspan helpfully.
Mr. Baker has six children in all: two from each of his three marriages. Stephanie Baker, his adult daughter from his first marriage (there is also a son) worked with him at Wrap N Roll.
The prosecutor's case could be called Operation De-tangle. Allegations are that Mr. Baker and Mr. Graye paid themselves fees without paying taxes from an offshore company, Mogul Holdings, based in the Cayman Islands, the tax haven where business tycoons go for more than the cover of the palm trees. Mr. Baker and Mr. Graye have long maintained that Mogul was a separate entity for "stand-by financing" not under their control.
Over the past decade, there have been many investigations prompted by angry investors. The RCMP, the Ontario Provincial Police, the Metropolitan Toronto Police as well as the Law Society of Upper Canada have all, at one time or another, initiated investigations of his business dealings. With the exception of the criminal case and the Law Society's long-standing seven charges, two of which have been dismissed, the investigations have been dropped.
This much is clear: The tax-fraud case is a last effort to catch Mr. Baker by the toe.
The subject of Mr. Baker is so touchy that none of his former colleagues would be quoted by name. (In tight Toronto, who you know can help as well as hurt you.) He was born in Ottawa, and had "humble beginnings," according to one former colleague. He attended the University of Ottawa, where he was an above-average student, completing his LLB in 1974. He was a superior athlete, playing on the varsity football team, the Gee-Gees. By his final year, he was married to his first wife, Valerie. They moved to Toronto, where Mr. Baker practiced corporate law at Campbell Godfrey & Lewtas, now Fasken Campbell Godfrey, the only law firm he ever worked for.
"He was very aggressive," says one lawyer. "He was a client's kind of lawyer. He would go to them with solutions, not problems, and would work all night if they wanted him to."
He also loved parties -- and women -- and would often entertain at local restaurants, though he strictly monitored his intake of food and alcohol. Young associates at the firm were enthralled by his controlled, aggressive style. One of those lawyers, Claude Macdonald, is reportedly holed up somewhere in the Cayman Islands, looking after Mr. Baker's investments. Was he charming? "I have trouble with that word," the source said. "He had magnetism."
By 1979, Mr. Baker had married Ms. Francis, after meeting her in 1976 at a bar. He left her, five days after the birth of their second child, in July, 1985. He was a partner at the firm, earning $120,000 a year, but it had become obvious that he wanted more. "Clients would fly him to Europe to go skiing and he wanted that lifestyle too. His values became different. He alienated himself, and was not a team player on committees. He thought we were stuffy and old-fashioned," observed one lawyer. Mr. Baker snubbed bourgeois convention. "Is he a member of the Granite Club?" I asked. Situated near The Bridal Path, it is an exclusive club. Oh no, came the reply. Why? "Well, they're not his type. He likes aggressive people."
Mr. Baker's deals were clinically executed. He set up a complex structure of numbered companies as vehicles for the acquisitions. Mr. Graye, a former accountant, would put the investors together, including loan-happy banks. The two had met when Mr. Graye was chief financial officer at Bata Shoes, a client of Mr. Baker's.
The first big deal was a takeover of Agnew for $89-million in 1987. The legal documentation on this and other deals could form the basis for a best-selling thriller. One man, Fred Randolph, claimed to have initiated the Agnew deal only to allege he was be cut out at the last moment. Others raised the allegation that $3-million was paid to Mogul via a trust account at Campbell Godfrey & Lewtas and had disappeared. Shortly after, came the purchase of Seven-Up Canada for $76-million. Fred Rosbrook was president of the bottling company. Mr. Baker helped him and other investors, including Mr. Graye, buy the franchise operation from Pepsi Canada. Suddenly, Mr. Rosbrook fell ill with terminal lung cancer. Mr. Baker became death-bed executor of Mr. Rosbrook's estate. He then left his law firm to become president of Seven-Up.
On his desk at the Seven-Up offices, Mr. Baker had a brass sign reading "Kill or be killed." He minimized the proportionate share of the Rosbrook family estate from 20.1 per cent to 9 per cent through the acquisition of Pathfinder Beverages Ltd. in 1988. He and Mr. Graye ended up as majority owners of Seven- Up. They eventually sold the company back to Pepsi in 1992, sharing a $50-million windfall.
Among other things, the Law Society's investigation is looking into allegations of conflict of interest, that as executor of the Rosbrook estate, Mr. Baker was furthering his own interests.
What's clear from reading court papers, filed in Ms. Francis's child-support action, is that complaints by investors were closely linked to her suit. At one point there were child-access issues. In one affidavit, Mr. Baker said that Dr. William Forder, a disgruntled Agnew investor, had encouraged Ms. Francis to deny Mr. Baker liberal access to the children, claiming that Mr. Baker and Donna were drug addicts and provided "an unsavoury environment." Mr. Baker also claimed that Dr. Forder had caused the Ontario Provincial Police and the Attorney-General of Ontario to investigate the death in 1991 of John Jackson, a Metro Toronto Police officer who was said to have worked for Mr. Baker. He had a consulting agreement with Seven-Up. When he died following cancer surgery, he was under police investigation. Dr. Forder, a respected urologist, declined an interview. So did Ms. Francis. "She wants to get on with her life," says her lawyer, Nicole Tellier.
How does Mr. Baker feel about all the litigation and investigations he has endured? "He looks forward to an end, to an end to the harassment," says Mr. Greenspan. That wish may well be in sight. Mr. Baker is not a quitter. And he has an appreciation of the intricacies of the law.
There have been many motions in the Law Society proceeding. Chris Paliare, Baker's lawyer in this matter, is about to bring a new motion for dismissal. On what basis? That the allegations are too old.
As for the criminal case, Mr. Greenspan confidently -- and pointedly -- says this: "That it has taken this long may give some insight into the strength of the Crown's case."
Others are surprisingly cynical.
"He has the kind of ego that says I can take anyone on and win," says one of his former colleagues.
In the courtroom, Mr. Baker looked straight ahead or down at his leather loafers, somewhat bored, it seemed, in the manner of a parent who dutifully attends his child's school Christmas concert. Sometimes, for extended periods, he closed his eyes.
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