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Pay Yourself First: Donald Cormie and the Collapse of the Principal Group of Companies
488 pages, Paperback
Published January 1, 1993
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November 14, 2024
A very good book on one of the more infamous financial scandals of the Getty era. The author, Wendy Smith, does an outstanding job of breaking down the mechanics of Alberta’s regulatory apparatus and the byzantine corporate structure of the corporation. The financial malfeasance at the heart of the story is, by design, very complex and difficult to follow: Capital and debentures cycle constantly throughout theoretically independent but materially interlinked corporate entities; regulation is skirted or outright ignored; valuations fluctuate. Smith breaks down the movement of money step by step and simplifies it, assisted by a collection of diagrams detailing corporate structure and individual transactions.
The book does drag somewhat in the middle period detailing the years preceding the collapse, but this is understandable given that the defining characteristics of this period is inaction. The same beat are repeated over and over: provincial and federal regulators demands action to address capital deficiencies and nothing happens.
The book is structured chronologically with each chapter comprised of several subsections, each covering the events on a day-to-day basis, bouncing back and forth between Principal executives and the regulators. It’s a real testament to Smith’s skills as a researcher and an author that the events of this book are full of detail and easy to follow. Turning this much information, sourced from testimony, departmental records, and interviews with major players into a compelling narrative is not easy, but it works. Despite the admittedly fairly dry subject matter (corporate finance, property valuation, regulatory proceedings, etc) there is some stellar writing here as well:
“Since the 1987 collapse, investors have watched the ugly spectacle of the contract companies and their parent squabbling over the pitiful remains of the corporate corpse. Pieces of an enormous jigsaw puzzle in life, the companies in death are separate and hostile, each at the other's throat for control of the few remaining assets. Pathetically, most of those assets are pieces of one another. Whatever the Principal salesmen suggested, whatever the investors believed - and however the companies actually functioned - in law they were independent sland-alone entities with separate assets, liabilities and obligations. The companies behave now, not as the collective victims they mostly definitely were, but as the scavenging creatures the law requires.”
Smith also lays out a case that the Code inquiry whitewashed the role of certain senior politicians, notably Peter Lougheed, in the protection of Principal by Alberta’s regulatory agencies. There’s no smoking gun here, but the argument is compelling.
The book makes a great companion to Monique Rahall’s Banksters and Prairie Boys. Both share a similar cast of people (Jack Agrios, Don Getty, Gary Campbell, Bill Comrie), and corporate entities (North West Trust, Cooper and Lybrands, Carma, Churchill Corporation). Where Smith’s book ends, Rahall’s begins, following the same group of Alberta’s Old Boys network into the Klein years.
The book does drag somewhat in the middle period detailing the years preceding the collapse, but this is understandable given that the defining characteristics of this period is inaction. The same beat are repeated over and over: provincial and federal regulators demands action to address capital deficiencies and nothing happens.
The book is structured chronologically with each chapter comprised of several subsections, each covering the events on a day-to-day basis, bouncing back and forth between Principal executives and the regulators. It’s a real testament to Smith’s skills as a researcher and an author that the events of this book are full of detail and easy to follow. Turning this much information, sourced from testimony, departmental records, and interviews with major players into a compelling narrative is not easy, but it works. Despite the admittedly fairly dry subject matter (corporate finance, property valuation, regulatory proceedings, etc) there is some stellar writing here as well:
“Since the 1987 collapse, investors have watched the ugly spectacle of the contract companies and their parent squabbling over the pitiful remains of the corporate corpse. Pieces of an enormous jigsaw puzzle in life, the companies in death are separate and hostile, each at the other's throat for control of the few remaining assets. Pathetically, most of those assets are pieces of one another. Whatever the Principal salesmen suggested, whatever the investors believed - and however the companies actually functioned - in law they were independent sland-alone entities with separate assets, liabilities and obligations. The companies behave now, not as the collective victims they mostly definitely were, but as the scavenging creatures the law requires.”
Smith also lays out a case that the Code inquiry whitewashed the role of certain senior politicians, notably Peter Lougheed, in the protection of Principal by Alberta’s regulatory agencies. There’s no smoking gun here, but the argument is compelling.
The book makes a great companion to Monique Rahall’s Banksters and Prairie Boys. Both share a similar cast of people (Jack Agrios, Don Getty, Gary Campbell, Bill Comrie), and corporate entities (North West Trust, Cooper and Lybrands, Carma, Churchill Corporation). Where Smith’s book ends, Rahall’s begins, following the same group of Alberta’s Old Boys network into the Klein years.
Displaying 1 of 1 review