Party of One (32 page)

Lester Pearson wouldn’t recognize what passes for diplomacy these days in the building that bears his name.

eleven

BAD BOYS

P
olitical parties dream about supporters like Nathan Jacobson. Rich, generous, and very well connected, few businessmen were as close to the Harper government as the man who held dual citizenship in Israel and Canada, and who claimed that he had introduced Jason Kenney to Benjamin Netanyahu. Fewer still could boast of having made a fortune in post-Soviet Russia. When one sups in Vladimir Putin’s house, one must have a long spoon.

The kid who had grown up poor in Winnipeg now operated at the highest levels of business and politics. The Mackenzie Institute posted a photo dated 2010 of a kibitzing Jacobson standing between Prime Ministers Harper and Netanyahu. It was posted under the caption “Members in Action.” Shortly before I published a piece on Jacobson in iPolitics in September 2012, the Jacobson photo disappeared from the site, although other photos featuring members posing with Stephen Harper remained.
¹

When Jacobson’s fortunes sank, the Harper PMO’s reaction to the photograph was that the PM met Nathan Jacobson at a “community event” as he meets thousands of ordinary Canadians.
Ordinary is the last thing Nathan Jacobson is—nor is he the kind of man you are likely to meet at a neighbourhood corn roast. Jacobson was a star in a demographic uppermost in Stephen Harper’s political mind—Canada’s Jewish community. After leaving high school in Winnipeg, Jacobson served six years in the Israeli army during the 1970s, rising to the rank of Captain. Honourably discharged in 1979, he returned to Canada and settled in Toronto, taking a job with a subsidiary of IBM.

Well known for their philanthropy, Jacobson and his wife, Lindi, remained staunch backers of Israel. The couple were major sponsors of an event in September 2007 to celebrate the fortieth anniversary of the “re-unification of Jerusalem.” Jacobson was also a sponsor of the Maccabi Tel Aviv football club, a franchise that Gerald Schwartz of Onex Corporation once considered buying. In October 2010, when the Royal Winnipeg Ballet celebrated its seventieth anniversary with performances in Israel, two of the major funders of the tour were Gerald Schwartz and Nathan Jacobson.

Jacobson’s business acumen and philanthropy made him legendary in both Canada and Israel. He was honoured at the thirtyeighth Annual Sports Dinner in Winnipeg on June 23, 2010. “Nathan lives in Herzliya, Israel and is the current International Ambassador of Jerusalem,” a local paper proudly declared. The Israeli ambassador to Canada attended. Jacobson received glowing profiles in the
Winnipeg Jewish Review
, a favourable notice in the Jewish National Fund of Canada newsletter, and praise in newspapers including the
Jerusalem Post
and
Haaretz
for his entrepreneurial brilliance.

Jacobson was busy in the world of the boardroom, too, holding positions with the Jewish National Fund, Golda Meir Hospital, and the Ukrainian Jewish Congress. He also sat on the board of Tel Aviv University (TAU) and personally funded two faculty recruitment chairs at TAU, bringing over young researchers from
Toronto. Fellow board member Sheldon Adelson is corporate royalty. In 2014,
Forbes
ranked the gambling tycoon as the eighthrichest man in the world. Earning an average of $32 million a day, he had a personal net worth last year pegged at $38 billion. Jacobson and Adelson shared the same working-class roots as descendants of immigrants from Ukraine, and both were self-made. Both have given generously to a variety of charitable causes, and have shown unwavering loyalty to the hard-right policies of Israeli prime minister Benjamin Netanyahu and to neo-conservative causes in their own countries.

If Mitt Romney and the GOP couldn’t imagine a better supporter than Sheldon Adelson, Stephen Harper and the Conservative Party would have had trouble finding a more dedicated backer than Nathan Jacobson. He not only shared their ideology, he put his money where his political heart was. From 2007 to 2011, he made the maximum donation to the Conservative Party of Canada, and also gave money to several individual Conservative MPs and cabinet ministers, including Peter Kent, Lisa Raitt, and Wajid Khan. The love did not go unrequited. Jacobson was a fixture at major events involving senior Harper cabinet ministers. In May 2009, Jacobson was master of ceremonies for the sixty-first anniversary of the founding of Israel, an event that took place in the West Block of Parliament. He introduced the keynote speaker, the then minister of citizenship and immigration, Jason Kenney.

The same month, Jacobson and Kenney appeared with Ezra Levant at a private party, an event attended by the who’s who of conservative journalists, columnists, and bloggers. Guests at the party included conservative author Mark Steyn; Stephen Taylor, who would be appointed a director at the National Citizens Coalition on December 7, 2010; Kevin Libin, who, while at the
Western Standard
, published the controversial Danish cartoons mocking the prophet Muhammed; Sun Media’s Brian Lilley, who
would later out Michael Sona in the robocalls affair; and
National Post
columnist Father Raymond de Souza. One of the pictures posted on the internet by an attendee of the event shows Nathan Jacobson with his arm around a smiling Father de Souza.

When the then transport minister, John Baird, travelled to Israel in March 2010 to study airport security methods (principally conducting behavioural analysis to identify human threats), Nathan Jacobson was photographed with Baird at Israel’s holiest site, the Western Wall. Baird and Jacobson also attended the annual ACTION party of the Canadian Jewish Political Affairs Committee (CJPAC) together that same month. Jacobson sported a T-shirt bearing the caption “Marxism” with a picture of Groucho Marx. His sense of humour and skills as a raconteur were legendary. CJPAC works to advance the interests of the Canadian Jewish community and claims it does not endorse political parties. But since the powerful committee does not have charitable status, it can be directly involved in political action.

Jacobson moved in the Jewish community’s highest social circles. On December 8, 2008, Robert Lantos was honoured with an Award of Merit dinner at the Sheraton Centre in Toronto. It was put on by B’nai Brith Canada. The co-chairs were Peter Munk, chair of Barrick Gold, and Gerald Schwartz, chair of Onex Corporation. Jacobson was on the Tribute Committee, along with such luminaries as former Ontario premier David Peterson and renowned criminal lawyer Eddie Greenspan.

On May 5, 2010, Jacobson and his wife, Lindi, sponsored an event on Parliament Hill to celebrate Canada’s partnership with Hebrew University of Jerusalem’s Institute for Medical Research Israel–Canada, designed to conduct world-class research into prostate cancer. The event was attended by four hundred people, including MPs, senators, and six Harper cabinet ministers. Peter Kent and Tony Clement both spoke at the gathering.

On November 4, 2012, Nathan Jacobson was to have attended another glitzy event with significant social and political overtones—the Mount Carmel dinner in Toronto’s Fairmont Hotel. The event was hosted by the Canadian Friends of the University of Haifa. Immigration minister Jason Kenney was to receive an honorary degree from the university. Senator Irving Gerstein, a man soon to be in the middle of the Senate expenses scandal, was master of ceremonies. The campaign chair for the event was to have been another heavy hitter: Nathan Jacobson.

That was before an extraordinary disclosure by the US Department of Justice put an end to Jacobson’s life at the pinnacle of business and political elites in two countries. Though his troubles had been brewing for some time, the official date of his exit from the corridors of business and political power was July 30, 2012. It was on that day that the millionaire-philanthropist was supposed to appear for sentencing in front of a California judge. He had quietly entered a guilty plea on May 7, 2008, to charges of conspiring to commit money laundering, including processing $46 million through his credit card clearing company RX Payments Ltd. US judge Irma Gonzalez issued an arrest warrant for the convicted fugitive and Nathan Jacobson went to ground.

The investigation by US authorities had been painstaking, involving special agents from six federal agencies, including the Drug Enforcement Agency, the Federal Bureau of Investigation, and the Internal Revenue Service. Their work led to a 313-count indictment against 18 people on July 27, 2007. The individuals, including doctors and businessmen, were all involved to varying degrees with a company called Affpower. It was an internet-based prescription pharmaceutical business that generated $126 million in illegal sales of prescription pharmaceuticals before police entered the picture.

The delay in sentencing Jacobson after his guilty plea in 2008— following multiple charges of fraud, money laundering, and the
distribution and dispensing of a controlled substance through an online pharmacy—is part routine and part mystery. Jacobson simply made a deal with US prosecutors, just as David Radler did in the Conrad Black case. In exchange for his cooperation in the continuing criminal investigation of Affpower, Jacobson’s file was sealed. What is mysterious is that Jacobson’s guilty plea was kept under wraps for four years. He had, in fact, been indicted in 2006, charged with ten criminal offences, including racketeering. Two years later, he pleaded guilty to conspiracy to launder $46 million. Then due process slipped into the shadows.

Over the next several years he continued his career in the business and political stratosphere. No one apparently knew he had already been fined $4.5 million for his part in the Affpower scheme, or that he was looking at a maximum twenty-year stretch in prison when he finally stood in front of an American judge for sentencing. After his guilty plea was made public, the exits began to clog with friends, contacts, and business partners who claimed they didn’t know anything about Jacobson’s dealings or history, and who reduced their relationships with him to distant associations, or, as in the case of the PMO, chance acquaintanceship.

According to his office, foreign affairs minister John Baird knew Jacobson but didn’t know about his legal transgressions. For some reason, foreign affairs officials neglected to tell the minister that they had stopped the appointment of Jacobson as an honorary consul after a police review of his file, and that his travelling companion had once sued CSIS. Nor, Baird’s office said, did the minister meet with Jacobson during an official trip to Myanmar in March 2012. Jacobson was reportedly on a business trip to Asia, in Myanmar, when the indictment against him was unsealed by the Americans.

Jacobson’s new company, Myanmar Access, was created in 2012 to develop business opportunities in Myanmar, one of the
last frontiers in Asia. The company was based in the same city, Yangon, that Baird travelled to in 2012 after Canada decided to open an embassy in what was considered the third most corrupt nation on earth. Resource rich, but wracked by civil war and military rule, Myanmar was (and continues to be) the site of many human-rights violations, including child labour, human trafficking, and media censorship. (In a list of 182 nations, only North Korea and Somalia were considered more corrupt.) Baird told Myanmar opposition politician Aung San Suu Kyi, “We would love to play a bigger role in development and trade and commerce,” an objective Nathan Jacobson shared. Suu Kyi wisely replied that she welcomed development aid “that is used for our people.”

Treasury Board president Tony Clement’s office said that Clement knew Jacobson but had no idea of his US conviction before July 30, 2012, or the activities that led to it. Former business associate Alan Bell said in a telephone interview from Toronto that he knew nothing about Jacobson’s legal problems in the US. Bell and Jacobson were members of the Mackenzie Institute, and did a security evaluation of the oil sands together in 2006. When the institute rebranded its website on January 20, 2014, Alan Bell was the new president. The new site described the Mackenzie Institute as “a globally recognized Canadian-based public policy institute for research and comment on issues impacting political and social stability, specifically terrorism, organized violence, and security.” It also announced something not seen on the previous site: “Working with colleagues in Washington DC, Israel, and the UK, we emphasize a world view on the various topics we cover.” Canada and Israel had signed a major security agreement in 2008.

When Stephen Maher, who broke the Jacobson money-laundering story, asked the PMO for a comment, the then director of communications, Andrew MacDougall, told him, “I understand the prime minister may have met with Mr. Jacobson at a community
event, as he meets thousands of Canadians from all walks of life each year.” It was intended to be an official response, but it was more like the PMO’s debut in stand-up comedy—unless you believe someone gets their picture taken between the prime ministers of Canada and Israel by running into them at a political barbecue.

When Netanyahu landed in Ottawa on May 30, 2010, he was met personally by Canada’s foreign minister, John Baird. No one in the Harper government, including Canada’s foreign minister, had apparently read the Israeli newspapers just three days before that power picture with Jacobson standing between two of the most security-conscious prime ministers in the world was taken. If they had, they would have known that
Haaretz
had run a story about a police complaint focusing on PayGea, a Canadian company controlled by Jacobson that entered the Israeli market in 2008.

That was also the year that Nathan Jacobson secretly entered his guilty plea on money-laundering charges, and the year he moved to Israel, which does not extradite its citizens. PayGea provided online services similar to Paypal Inc., but specialized in clearing payments for medicines, soft pornography, and gambling sites. It is astounding that the security forces of both Canada and Israel would have allowed a man with Jacobson’s criminal conviction so close to their leaders.

On April 2, 2012, Jacobson’s online clearing company abruptly halted its Israeli operations, leaving behind debts running into the millions of shekels. As one of PayGea’s creditors told
Globes
,
²
a business paper in Israel, “One morning they were simply gone.” So was Nathan Jacobson. A full three months before senior members of the Harper government, including John Baird and Jason Kenney, said they learned of Jacobson’s self-admitted crimes with the unsealing of his US indictment, PayGea was an open scandal in Israel—a country in which both ministers had more than a passing interest and excellent contacts.