Mandel won't talk about ATB deal: Ward 1

councillor draws blank on credit extension in

1995: [Final Edition]
Rusnell, Charles. Edmonton Journal [Edmonton, Alta] 27
May 2004: B1 FRONT.


EDMONTON - Alberta Treasury Branches told Stephen Mandel in
February 1995 that it could no longer extend him or his companies any
further credit.
Despite this, an ATB manager gave Mandel a $150,000 credit
extension, according to court documents obtained by The Journal.
The documents filed in an unrelated court action also show ATB
manager Larry Leroux did not seek approval for the credit extension
from his superiors, even though Mandel's company already owed the
ATB more than $6.8 million and was having serious cash-flow
problems.
Mandel, a Ward 1 city councillor, brought his financial dealings with
the ATB to the public's attention in a news conference Tuesday. He
called the news conference after receiving an anonymous letter which
alleged he paid kickbacks to get the $6.8 million loan. The letter
suggested he not run for mayor or the allegations would be leaked to
the media.
Mandel denounced the allegations as "garbage" and "out-and-out lies"
made by a "moron" and said they won't affect his future political
decisions. He was not a city councillor at the time of his financial
dealings with the ATB.
On Tuesday, Mandel agreed to an interview with The Journal later this
week to discuss contents of court documents related to his ATB
financial dealings.
But on Wednesday, an angry Mandel said he was finished answering
questions. He said he could not remember a meeting with Leroux and
did not recall receiving a credit extension.
"What he said I have no idea and I have no intention of commenting
on," Mandel said. "I don't remember February 1995 or 1998 for that
matter. I answered questions yesterday and I'm finished with it. You
can write what you want. I'm done with it. I have had enough of this. I
just think it's a bit of a witch hunt.
"You can print what you want to print and do what you want to do,
that's your choice."
On Tuesday, Mandel conceded some of the information in the letter
was correct. In 1994, ATB loaned $6.8 million to a company Mandel
controlled to refinance a mortgage on the Park West Mall in Hinton.
The loan was arranged by independent loan broker Jake Superstein.
Mandel paid Superstein $250,000 for arranging the loan. Mandel said
this amount was "not far off" the normal fee for such work, which he
said can range from two per cent to five per cent of the amount
borrowed.
Mandel told the news conference he had been an ATB customer for
about 12 years and had borrowed money on several occasions.
When asked why he would need Superstein's services, Mandel
answered: "It's my personal business why I needed Mr. Superstein. I
answered the questions yesterday and that's as far as I'm going."
At that time, he was a customer of the ATB's main Edmonton branch
and on at least one occasion he dealt directly with manager Larry
Leroux.
Leroux was subsequently charged with allegedly accepting benefits in
connection with loans to other customers. All the charges were
dismissed.
The ATB subsequently sued Leroux. The circumstances surrounding
the loans to Mandel, and several other businessmen, were the subject
of examinations of discovery.
Under questioning by ATB lawyers, Leroux said he met with Mandel on
Feb. 13, 1995. During the meeting, Mandel was told that neither the
Mandel Group nor Park West Mall could be extended any further credit.
Mandel was also told that he would have to sell some of his assets to
get out of his cash-flow problem.
"Now, despite the companies and Mr. Mandel having a cash-flow
problem, the credit was extended and renewed?" Leroux was asked by
ATB lawyer Richard Cotter.
Leroux replied that he was in a position "where you have to work with
your client and he has to follow through with his action to repay the
loan."
Cotter then points out that Leroux could have instead refused to
extend the credit, called in the loan and seized Mandel's assets. Leroux
said he had no authority to do that, but conceded that if he refused to
extend further credit, someone higher up in the ATB organization
would make the decision whether to seize Mandel's assets.
Although Leroux apparently had no authority to push the loan into
default, he did have authority to extend yet more credit to Mandel,
which he subsequently did without seeking the approval of his
superiors.
During the examination for discovery, Leroux denied receiving any
benefit in relation to the loans.
Mandel survived his cash-flow problems, paid off his loans and
subsequently sold the mall. He has yet to announce whether he will
seek another term as a city councillor or whether he will run for
mayor.
crusnell@thejournal.canwest.com