In the world of Liquor Control Board of Ontario chairman Andy Brandt,
there's nothing wrong with accepting invitations to dinners, sporting
events and posh Caribbean resorts.
And there's nothing wrong with Bacardi-Martini Ltd., the LCBO's
biggest rum supplier, picking up the tab.
Who says so? Andy Brandt.
There's similarly nothing amiss when Brandt visits southern Italian
wineries with a Toronto businessman, Sam Fuda, whom the Italian Trade
Commission calls a wine industry ``counsellor.''
And it's perfectly all right for Brandt to later accept valuable stock
options in a mining company run out of Fuda's office, as well as
directorships in three other Fuda-related companies.
Who says so? Andy Brandt.
Brandt says he takes trips to the Bahamas, southern Italy and
elsewhere to explain to suppliers that the LCBO - the world's biggest
buyer of booze - has an ``even-handed'' approach to choosing product.
Brandt insists he has no power over what products are purchased and
listed for sale. The LCBO, he notes, has a committee that does that.
``I have never in nine years . . . interfered with a listing or
influenced a listing or a position on the shelf,'' Brandt said in an
interview.
Former federal Conservative trade minister James Kelleher, now a
lawyer in private practice, tells a different story. (The law firm
Kelleher works for represented Mexico in the free-trade discussions.)
Kelleher remembers: ``One day, the Mexican consul-general was
complaining to me, `Jimmy . . . do you know anything about getting
listings on the liquor board?' He said, `I can't get any goddamn
listings.'
``I said, `Well, you're in luck. I'm having lunch tomorrow with Andy
Brandt.' ''
Kelleher had lunch with Brandt at Toronto restaurant La Fenice, where
Brandt frequently dines. Kelleher recalls he told Brandt that Mexico
was a trading partner and it deserved more listings of wine and other
products.
``Brandt said, `Okay. I'll give them a couple of listings,' ''
Kelleher recalls.
Over the past few years, LCBO purchases from Mexico, southern Italy
and from supplier Bacardi have increased. Brandt's spokesperson at the
LCBO, Bill Kennedy, says this is because the LCBO has decided these
products are of good value to consumers - not because of Brandt.
Trips. Stock options. Favours. Listings. It all leaves many booze
suppliers asking one question: Is there a level playing field at the
province's $2.3 billion-a-year liquor monopoly?
As well as purchasing liquor, the corporation is the province's
regulator, controlling the importation, storage and resale of all
liquor, wine and beer.
The LCBO has many critics among those who vie for space on its
shelves. But they fear the corporation's power and will not talk on
the record.
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Policy manual says nothing about employees taking trips paid for by
suppliers
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``They could shut us down,'' said a wine agent whose products, he
says, rarely get chosen.
Brandt, 61, has been head of the LCBO for nine years. A former
provincial Tory cabinet minister, Brandt was interim Tory leader in
Ontario in the late 1980s. NDP premier Bob Rae appointed him LCBO
chairman and chief executive officer in 1991. His appointment has been
renewed twice, and he is up for reappointment next March.
It's a full-time job, according to the job description. Brandt
oversees everything from the agency's regulatory to its retail
functions. All LCBO departments report to Brandt, and he reports to
the deputy consumer minister.
The Star's investigation found few controls in place within the
publicly owned corporation to ensure Brandt acts in its best interest.
For example, the LCBO policy manual says nothing about employees
taking trips paid for by suppliers, unlike the British Columbia Liquor
Distribution Branch, which bans them outright.
Brandt says he issues approvals for his employees to take foreign
trips, and issues his own approvals. He approved three Bacardi-paid
trips for himself to the Caribbean between 1995 and 1999.
Accepting trips like this ``is a bit of a judgment call, I admit, on
my part,'' Brandt said. ``But I look at, very carefully, our buying
practices, to make sure that if there are staff members who go to
various jurisdictions around the world, that they're not favouring a
particular country or a particular area.''
Brandt has a salary of $104,054 (plus a $52,000 ``performance'' bonus
he will get next year, based on his work over the past three years).
His base salary is modest compared with salaries paid to the heads of
the Ontario Casino Corp. ($131,236) and the Ontario Lottery Corp.
($133,968). In addition, Brandt, who lives in Sarnia, has a downtown
Toronto condominium toward which the LCBO pays $15,000 a year, and the
use of a car and driver.
In an interview, Brandt said accepting foreign trips and other
expenses from suppliers is part of his job. One of his main roles is
to meet suppliers, and it is cheaper for the LCBO if somebody else
pays, he said.
``The face of the LCBO is me. Not a very pretty face, I'm sorry. The
face of the LCBO is Andy Brandt. (People) like to know who they are
dealing with.''
One company that has had ample opportunity to get to know him is
Bacardi, according to records obtained under the Freedom of
Information and Protection of Privacy Act.
For example, in a four-month period earlier this year, Brandt was
Bacardi's guest at a Caribbean resort; two Toronto restaurants (La
Fenice and Opus); a golf game; two high-profile political fundraisers,
one for Premier Mike Harris, the other for Brandt's boss, Consumer
Minister David Tsubouchi; and the Bacardi box at the Air Canada Centre
for two Toronto Maple Leaf games, one of them a playoff game against
Buffalo Sabres.
No other supplier treats Brandt so royally, according to a review of
Brandt's travel and scheduling records.
Bacardi's Canadian president Manual Diaz said these events are part of
a Bacardi policy ``to pay reasonable costs of (employees of government
agencies) . . . participating in business-related events.''
LCBO records for the 1998-99 year show about 60 per cent of its rum
comes from Bacardi, with a retail value of about $100 million.
According to a 1998 industry report, Bacardi's share in the over-all
world market is 49.3 per cent.
Bacardi rum bound for the Ontario market is made in Puerto Rico.
Brandt visited there in February, 1995.
In February, 1997, Brandt was Bacardi's guest at the Lyford Cay Club
in the Bahamas, a private, 85-room resort in a seaside area known to
play host to celebrities such as actor Sean Connery.
Last February, Bacardi again flew Brandt to Nassau and put him up at
Atlantis on Paradise Island. Billed as ``the Bahamas' most spectacular
resort,'' Atlantis features the Caribbean's largest casino, an 18-hole
championship golf course, snorkelling, windsurfing and scuba-diving.
When Brandt returned from his 1997 trip, he told the LCBO board he had
attended ``an information seminar on trading opportunities between
Canada and the Bahamas,'' board minutes show. There is no indication
in board minutes that Brandt reported the 1999 trip.
When The Star first asked for travel records, Brandt released a
document that said he had twice attended a ``Ministry of Tourism
seminar'' paid for by the Bahamas government.
A spokesperson with the Bahamian government told The Star that Bacardi
paid for Brandt's trips. Brandt said he understood this to be the
case. He said he recalled touring the company's rum plant.
Bacardi president Diaz said Bacardi's worldwide quality control
facility is in the Bahamas. His company gives tours of its facilities
to ``familiarize our major customers and regulatory authorities with
our operations.''
Other chairs of Canadian liquor boards have visited the Bahamas,
Brandt said.
The LCBO had a serious problem with Bacardi when Brandt was preparing
to take his 1997 trip. In October, 1996, a junior LCBO employee
discovered that Bacardi had been storing imported liquor in a Brampton
warehouse for a year without approval. The LCBO tightly controls
liquor imports and only allows an importer to store liquor beside a
manufacturing plant.
On Nov. 5, Brandt's invitation for the Bacardi trip arrived. On Nov.
21, Brandt and the LCBO board voted to allow the warehouse to stay
open until March because closing it immediately would have a
``negative financial impact on Bacardi.''
Brandt took his trip in February. When he returned, Bacardi asked for
a one-month extension, and Brandt and the board agreed.
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Trip to California wine country called product familiarization trip
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LCBO spokesperson Kennedy says there is no connection between Brandt's
trips and the decision to keep the warehouse open temporarily. Bacardi
told The Star the imported product was removed from the warehouse
after the extension period ended. It now stores domestic product
there.
The Caribbean has not been Brandt's only port of call. His journeys
have taken him to France, Scotland, Malaysia, California, Austria,
Italy, Chile and Kentucky.
Brandt pointed to his autumn, 1998, visit to the Napa and Sonoma
valleys with LCBO vice-chair Chantal Haas as a successful trip.
That excursion was paid for by the California Wine Institute, a large
association of wineries. Records show the two took a first-class
flight, stayed at the Fountaingrove and Vintners inns, toured wine
country, and were invited to dinner with members of the Gallo family
on one occasion, and Beringer Vineyards chairman Walter Klenz on
another.
California Wine Institute spokesperson Rick Slomka described it as a
product familiarization trip. Brandt said an important reason for the
five-day trip was that he was able to tell a particular wine-maker
that the LCBO wanted to buy larger quantities of a premium product.
With this one exception, Brandt is adamant that he has nothing to do
with purchases or listings.
``I don't go on a trip and come back with a bottle of anything and
say, `You list this product.' I would never do that, I have never done
that, and I am not about to do that. But there are people who have
said that I have done that, and I resent that deeply.''
In the Mexican case, in which former trade minister Kelleher asked
Brandt for additional listings, Brandt's spokesperson, Kennedy, denied
that Brandt promised to provide them. Kennedy said Brandt told
Kelleher to contact the LCBO merchandise division.
Brandt's expense records show he has taken a particular interest in
the listing of Italian wines.
Enter Sam Fuda.
A dapper man with grey hair, Fuda, 64, is a Toronto businessman with a
passion for the wines of Sicily and other parts of Italy.
Brandt and Fuda met in 1992, when Fuda was selling a Niagara Region
vineyard he owned. ``Some months later, we became friends, we became
business associates, and he is a personal friend,'' Brandt said.
They have an intriguing relationship. For example, Brandt said he uses
his chairman's office to help Fuda buy rare wines and champagnes that
the LCBO releases in small quantities.
``My secretary will get a call from Mr. Fuda when this book comes
out,'' Brandt said, holding the glossy LCBO Classics Catalogue.
``She's got his credit card number, and she takes the credit card
number and makes the purchase. I've got probably 40 people, mainly in
Toronto, some are outside of Toronto, who will put their orders
through me because they hope to get the products quicker, because most
of those products are on allocation (limited number of cases).''
According to Brandt, he and Fuda have travelled in Italy together
twice, once to Sicily, another time to Campania (in the central-west
region).
``Sometimes I fly with him, sometimes I've met him there, sometimes he
goes off on business,'' said Brandt, who indicated the trips were
between 1996 and 1999, but would not give exact dates or the
itinerary.
The Star obtained records for a 1996 trip. They show Brandt visited
the islands of Sicily and Sardinia, and stayed at hotels in Palermo
and Afghero.
Fuda told The Star he pays his own way. Brandt said both trips were
paid by Enoteca Italiana, a national association that showcases
Italian wines in a castle in Tuscany, but would not provide supporting
documents.
Alessandro Mugnieole, a senior Enoteca official, told The Star last
night that Enoteca has not paid for Brandt to visit Italy in recent
years. He said Enoteca paid for a Brandt trip to Italy around 1993.
Fuda, Mugnieole said, helped arrange that trip for Brandt, and
travelled with him.
Italian Trade Commissioner Piero Tarantelli said Fuda helps Italian
wine companies promote themselves to the LCBO. ``Sam Fuda, as a
counsellor, met with Mr. Brandt to push a little bit for the
products,'' he said.
In describing Fuda's role, Brandt said: ``(Fuda) also introduced me to
people that he knew in the business over there, but again he did it as
a friend; he didn't do it for a commercial interest. And anyone who
suggests otherwise is smoking funny cigarettes.''
Brandt expense records show he had three lunches in Toronto during
which the listing or importation of Italian wines was discussed.
Two were at La Fenice on King St., Brandt and Fuda's favourite
restaurant. Brandt's records show:
Aug. 1, 1996: Discussed ``Imports of Italian wine.'' His guest was
Tory lawyer David McFadden and a third person (name blacked out by
Brandt).
June 24, 1997: Discussed ``Italian wine imports from Southern
Italy.'' The guest's name was blacked out.
July 8, 1997: Discussed ``listings.'' Brandt's guest was then
Italian Trade Commissioner Dr. Antonino Mafodda and LCBO vice-chair
Haas.
The LCBO purchased six new southern Italian wines in 1997 and seven
products in 1998.
``There is no connection between the chair's trips to Italy and the
LCBO purchasing of products from this country,'' Kennedy said.
Kennedy produced a memo written for The Star by an LCBO wine buyer,
who said the LCBO decided in 1997 that Sicilian wines were of good
value.
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Businessman says he helped Brandt meet some wine makers
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Brandt said he took the trips because southern Italian wine producers
wanted him to know their product was safe to drink.
In an interview, Fuda said: ``I helped Mr. Brandt meet some of the
wine makers. If I can help the wine industry I will . . . I drink wine
from Italy, I don't act for any of them.''
Fuda's lawyer, Brian Finlay, wrote to The Star this week, saying his
client ``does not help the southern Italian wine industry.''
In 1997, Fuda appointed Brandt a director of Pifher Resources, a
mining company run out of his Toronto office. The prospectus for
Pifher, dated July 7, 1998, shows Brandt has the option to buy 65,000
shares for $1.55. Pifher is currently trading at $3.75. Brandt also
owns 987 shares, the document shows. Brandt is also on the board of
Leader Capital, Avanticorp and Euroalliance - all Fuda-related
companies.
Brandt was asked this week whether he had cashed in the options, but
he did not respond. Based on a current trading high of $3.75, the
options would be worth $143,000 to Brandt.
Brandt's expense and scheduling records show he sometimes attends
board meetings for Fuda-related companies on LCBO time. Brandt says he
uses holiday time to do so.
Sometimes, Brandt's LCBO chauffeur Nick Foti takes Brandt to Fuda
meetings. For example, at 9:45 a.m., June 4, 1999, Foti picked Brandt
up at his Esplanade condominium and took him to Fuda's York St. office
for a Pifher Resources board meeting.
It was Thursday, a work day for the LCBO. According to Brandt's
itinerary, Foti picked him up two hours later and Brandt headed home
to Sarnia.
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Kevin Donovan can be reached at (416) 869-4425, or by E-mail at
kdonova@thestar.ca
