Party of One (33 page)

Even if Conservative cabinet ministers and the PMO didn’t read the newspapers, they could have learned a lot about the man posing between the two prime ministers by looking into a lawsuit launched by Jacobson against the attorney general of Canada and various members of the Canadian Security Intelligence Agency (CSIS), Export Development Canada (EDC), and the Canadian Commercial Corporation (CCC) when the Liberals were in power. John Grisham would have found the legal twists and turns inspirational.

It all began in Russia, where Nathan Jacobson embarked on a stunning business career with the establishment of a GM dealership, extending the franchise to Ukraine and Kazakhstan. He also owned the distributorship of Philip Morris for Russia and Kazakhstan. He founded IFG Canada Ltd., an investment and development company with offices in Toronto, Calgary, Tel Aviv, Kiev, Montreal, Panama City, and Costa Rica. The company invested in technology, pharmaceuticals, financial services, real estate, and development projects. Jacobson’s company The West Group Inc. built six hundred gas stations, eight fuel terminals, and two oil complexes in Russia and Ukraine. At its peak the company had eighteen hundred employees. The West Group won almost a quarter of the deals signed by a Team Canada trade delegation to Russia in 2002.

Jacobson proposed a partnership with SNC-Lavalin to build pipelines and aluminum smelters in Russia. According to
Canadian Business
magazine, he also consulted for GM, Magna Corporation, and the CIBC. Jacobson was described in the magazine as “a persistent but charming man with a huge repertoire of jokes and amusing stories.” The success story changed with a bizarre lawsuit. It is not every day that someone takes Canada’s domestic spy agency to court, but that is exactly what Jacobson did in 1998. The case, which dragged on until 2004, laid out serious
allegations about several CSIS agents who in the mid-nineties worked on the Russian Desk of the intelligence agency.

In his lawsuit against the attorney general of Canada, which included several amended statements of claim as Jacobson gathered new information, his settlement demand went from $5 million in 1998 to $50 million by 2004, as well as $1 million in punitive damages, plus legal costs. According to Jacobson’s statement of claim, a business associate was told by CSIS that “Jacobson is heavily involved in criminal activities, specifically, narcotics, representing the Russian mafia in Canada, bringing over Russian members of the mafia to Canada—and other criminal activities. Jacobson is under close scrutiny by CSIS who are planning to arrest Jacobson in the near future.”

There was one other critical component to Jacobson’s allegations against the Canadian government when he went to court. He claimed that not only had a false report been entered into the government’s computer system by CSIS, but that the report had been shared with the Federal Security Service (FSB). The FSB is the intelligence successor in Russia to the Soviet-era KGB. This in turn led to a major and, according to Jacobson, damaging investigation into his business activities by Russian authorities. The impression was being created—falsely and maliciously, according to Jacobson—that his company, The West Group Inc., was up to no good in Russia. Jacobson alleged that this had also taken a grave toll on his private life.

In his statement of defence, the attorney general of Canada denied virtually all of Jacobson’s allegations, with one exception. The AG admitted that his office had not responded to a formal complaint from Jacobson’s lawyers in 1997 about the visa refusals and the alleged involvement of CSIS. The government specifically denied that a “false” report had ever been placed on its computer system by an agent, or that the alleged report had been shared with
Russian intelligence. It also denied that two other CSIS agents named in the action had defamed Jacobson to a potential business partner. The AG went on to raise the issue of security certificates, the legal tool of choice in national security matters to withhold or redact documents, in an attempt to block Jacobson’s access to information. Jacobson objected to the government’s motion and battled on.

The action moved at a snail’s pace, with the government opposing Jacobson’s multiple amended statements of claim and missing agreed-upon dates for providing documents. Pending the outcome of mediation, the stage was set for a bombshell court case pitting one of Canada’s leading businessmen against the domestic spy agency and several Crown corporations—all of it to be played out on the centre stage of the Canadian media universe, Toronto.

And then, nearly six years after it had begun, Jacobson’s lawsuit was dismissed without costs on a motion brought by the plaintiff and agreed to by the defendant. The case was settled out of court, though no record of a settlement could be found on the public accounts under either government departments or lawyers of record. Nathan Jacobson’s allegations against CSIS, EDB, and CCC were never established in court, nor were the attorney general’s blanket denials of any wrongdoing that caused harm to Jacobson’s business operations. Since CSIS and the other Crown agencies involved in the action were blameless, Nathan Jacobson wasn’t entitled to a dime of damages—or so the government argued.

Former justice minister Rob Nicholson’s office declined to comment on the settlement, claiming that inquiries should be directed to the lead agency in the matter, CSIS. CSIS spokesperson Tahera Mufti told me the terms of the settlement were “confidential” and suggested an alternative source: Nathan Jacobson. Of course.

Notwithstanding the murkiness in which the lawsuit was resolved, Jacobson got right back to business before the legal dust
settled. By May 2004, newspapers in Israel were reporting about the dynamic businessman’s latest venture, an online pharmacy called
MagenDavidMeds.com
. The idea was to sell drugs manufactured in the United States or Israel to American consumers at prices up to 70 percent lower than at their neighbourhood pharmacy. Jacobson’s marketing focused on Jewish community media. He personally regarded the new business as a “social and Zionist mission.” Many of his elderly customers faced a choice of buying medication, turning down the heat, or going without a hot meal. The whiz kid from Winnipeg was determined to give them another option by becoming a kind of pharmaceutical Robin Hood.

Not everyone was thrilled with his new business adventure. The US Food and Drug Administration frowned on Jacobson’s venture, arguing that his company couldn’t guarantee the safety of the imported drugs and charging that the businessman had simply taken advantage of the “Canadian niche”—the price gap between the cost of a particular drug in Canada and in the United States, where pharmaceutical prices are market-driven.

And another new direction appealed to this Canadian entrepreneur: the security business. Jacobson’s long-running battle with the attorney general of Canada—which featured a confession that he had made regular payments to a CSIS agent—didn’t appear to limit his extraordinary access to some of the most sensitive intelligence issues in Canada. In March 2006, three months after Stephen Harper became prime minister, Jacobson was given permission to do a four-day, independent security assessment of the tar sands with a team of experts paid for and provided by Jacobson himself. The six-member team included Alan Bell, former British SAS officer and president of Toronto-based Globe Risk Holdings; James G. Liddy, the son of Watergate’s Gordon Liddy, and a former leader of the US Navy’s Antiterrorism Assessment Team; and Alon Moritiz, an Israeli computer expert.

Bell had already designed security protocols and armed tactical teams for Ontario’s nuclear reactors. He wasn’t impressed with what he saw in Alberta: “You can’t have a $9-an-hour security guard protecting this kind of asset,” he told the
Edmonton Journal
. With ten Muskoka-sized lakes full of highly corrosive toxic waste at the tar sands, a breach in one of the containment berms could produce what Jacobson told an Alberta cabinet minister would be “an environmental holocaust.”

So how did a businessman with no obvious expertise in oil security matters gain access to the Alberta tar sands with a team that included foreign experts? The question is all the more intriguing since Jacobson’s serious run-in with CSIS and the Canadian government is so firmly on the record. One potential explanation can be found on Jacobson’s own declaration of his board memberships, which included the Mackenzie Institute—one of Stephen Harper’s favourite groups. The Mackenzie Institute website features several pictures of the prime minister: Stephen Harper in conversation with Mackenzie Institute officials in 2006; a portrait of a smiling prime minister with the chair of the Mackenzie Institute a month after Harper won his majority government, “subsequent to a briefing to the Prime Minister about the security of Canada’s infrastructure”; and that photo dated 2010 of Mackenzie Institute board member Nathan Jacobson, with the caption “Nathan enjoying some levity after a meeting with visiting Israeli prime minister Benjamin Netanyahu and Canadian prime minister Stephen Harper.”

After his guilty plea became public in July 2012, Jacobson told the CBC that he had purposely been avoiding his friends in the Harper government: “I myself made the decision that it’s best to keep a distance, in order to protect my friends. I would, for the most part, consider them still my friends. But while I’m—for the lack of a better term—radioactive, better let them to continue to run government.”

By failing to show up in San Diego for sentencing on July 30, Jacobson had breached his plea deal, and an arrest warrant was issued. Despite that warrant, Jacobson was able to fly from Myanmar or somewhere in Asia home to Canada. US extradition proceedings began against Jacobson while he remained a free man in Toronto. Finally, in October 2012, after an international “red notice” was issued, Jacobson voluntarily surrendered to Canadian authorities and was remanded into custody. Freed on bail, he was finally escorted to San Diego by US Marshals on June 27, 2013. Surprisingly, Jacobson was granted bail again in the United States, even though he had already proven to be a flight risk. There are no other cases on record in which a defendant who had failed to appear for sentencing, and had to be extradited to the US, was subsequently granted bail pending trial or sentencing. Nathan Jacobson was no ordinary felon.

Jacobson had more surprises in his bag of tricks. The disgraced businessman hired a new set of lawyers, including Michael Attanasio, the attorney who represented controversial baseball player Roger Clemens. On August 30, 2013, Jacobson was freed on $1.4 million bail, albeit wearing an ankle bracelet to monitor his whereabouts. Despite pleading guilty to money laundering in 2008, he now wanted to change his plea. Jacobson claimed that his previous lawyer, the highly regarded Steven Skurka, had talked him into a guilty plea in a deal with US authorities. Under the terms of the proposed deal, he would remain free while he cooperated with US investigators. Otherwise, Skurka had allegedly advised, Jacobson was looking at a twenty-seven-year prison sentence.

But Jacobson had serious reservations about doing a plea bargain. He emailed his lawyer to remind him that a criminal conviction would affect his ability to receive diplomatic postings. This was not a theoretical matter. In May 2007, President Oscar Arias of Costa Rica and his acting foreign minister, Edgar
Ugaide, had appointed Jacobson as honorary consul of Costa Rica in Toronto. The prescription drug network Jacobson was involved with also operated out of Costa Rica. In May 2006, Jacobson had visited San José, Costa Rica, and donated $25,000 to the Arias Foundation for Peace and Human Progress, an organization created by the country’s former president. The Canadian government twice rejected Jacobson’s appointment and asked the Costa Rican authorities to withdraw his name after an RCMP review. In fact, the deputy director of protocol in Foreign Affairs warned that Canada would react negatively if Jacobson’s name was not withdrawn. Finally, Costa Rica withdrew the appointment on December 6, 2007.

As for his guilty plea in 2008, Jacobson said that it all came down to paying $3 million for bad advice—a claim that was swiftly answered by Skurka’s lawyer, Brian Greenspan. Greenspan replied on behalf of Skurka—who was silenced by his solicitor– client privilege with Jacobson—that “any suggestion of ineffective assistance, coercion and conspiracy with prosecutors has no foundation of fact and is categorically denied.”

In supporting documents filed with his December 20, 2013, motion to change his plea, Jacobson further claimed that he and his family “suffer from the fear and for threats against our lives by organized crime directly connected to my plea bargain.” He also said that for many years he had “provided services and information, some of it classified, to government agencies in the United States, Canada and Israel.” It raised an interesting question. Had Nathan Jacobson been a spy or a double agent during his close relationship with the Harper government? Jacobson claimed that government files, including transcripts of telephone conversations with US agents “were forwarded to foreign companies and international crime syndicates in order to systematically defraud [him] of all [his] business interests.” Had anyone in the Harper
government bothered to look at Jacobson’s lawsuit with CSIS, this claim would have had a familiar ring. He had also accused CSIS of sharing their information about him with Russian intelligence.

In his December 2013 motion to change his plea, Jacobson said a strange thing. He told authorities that a criminal conviction “would prevent [him] from being nominated as a Senator” and would also likely prevent him from receiving the Order of Canada or the Israel Prize. Had these public honours been sought or offered before his legal debacle?

The motion to withdraw his guilty plea continues to work its way through the US courts.

T
HE
WORST
APPOINTMENT
decision Stephen Harper ever made was placing Dr. Arthur Porter in charge of the Security Intelligence Review Committee (SIRC). In that capacity, the medical doctor with a controversial past had access to all information held by Canada’s domestic spy agency, CSIS, “no matter how sensitive and highly classified that information may be.” The one thing he couldn’t examine was cabinet documents.