The tycoons with a global reach

By Steve Buist and Joan Walters
The Hamilton Spectator
(Oct 4, 2006)

It was the summer of 2003 and California voters were in a foul mood.

They were looking for a sacrificial lamb to pay for the sins of a budget deficit and an electricity crisis, and that sacrificial lamb was Gray Davis, the state's governor.

In a rare move, California voters succeeded in having Davis recalled from office, forcing the state to hold an unexpected election.

On the Democrats' side, the main contender for the vacant post was Cruz Bustamante, the sitting lieutenant governor at the time. For the Republicans, it was The Terminator himself, Arnold Schwarzenegger, the eventual winner.

What's interesting wasn't that Bustamante was running or that he lost to an Austrian actor. What's interesting were the people who provided financial support for Bustamante's campaign.

Scan the list of donations he received and you'll find one entry for $21,200 --the maximum allowable under state law.

It came from Jerry Montour, Ken Hill and their business partner, Arthur Montour (no relation).

Hill and Jerry Montour are the two principal founding partners of Grand River Enterprises, the Ohsweken-based cigarette- maker that sells hundreds of millions of dollars of smokes a year.

Between them, Hill and Montour own 40 per cent of GRE and describe themselves in one legal document as the company's controlling shareholders.

With GRE as its heart, the two men have built a diverse business empire that includes mining, construction, gas bars, bottled water, junior hockey -- not to mention an apparent interest in California politics.

It's not clear why Hill and Montour made a significant donation to a candidate in the California governor's election.

The two men did not respond to repeated requests from The Spectator to be interviewed about their business operations.

What is known, however, is that Bustamante was criticized during the campaign for being seen as a hostage of native gambling interests.

He didn't include native gaming bands in his proposals to raise state revenues and he came under heavy fire from critics and opponents who pointed out that his election campaign received almost $4 million from native gaming interests.

Hill and Montour themselves have ties to the gaming industry.

A Spectator investigation has shown that one of their companies, SixNet, is listed as the computer hosting facility for illegal online gambling sites.

SixNet and two Six Nations Internet gaming regulatory bodies list the Grand River Enterprises headquarters on Chiefswood Road in Ohsweken as their business address.

Back in 2000, Hill was a Six Nations band councillor -- and one of the two main players in a bizarre, and costly, attempt by the band to establish a casino in the derelict downtown of Brownsville, south of Pittsburgh in Pennsylvania.

Six Nations council learned that more than $400,000 had been spent on lawyer's fees and lobbying efforts. But the local paper in the Brownsville area talked to a county legislator, the mayor and state representative and all said they had not been lobbied about the plan.

Stranger still, casino gambling isn't even legalized in Pennsylvania, and the state has no federally recognized Indian tribes.

The Brownsville plan apparently called for Six Nations to first establish a reservation in Brownsville by claiming the area was part of ancestral Iroquois hunting grounds, and then build a casino.

Hill also attempted in 2001 to get Six Nations included in the Seneca tribe's plan for a casino in Niagara Falls, N.Y.

The Seneca tribe, which now runs two casinos in western New York, is located near Buffalo.

One of the Seneca tribe's former band councillors is Art Montour Jr., (no relation) who is closely associated with Hill and Jerry Montour in the cigarette business.

It's the cigarette business that has helped shed some light on other parts of Ken Hill and Jerry Montour's holdings, courtesy of a six-year court fight that has been going on between Grand River Enterprises and one of its minority shareholders.

The company is suing minority shareholder Sidney Burnham for $3.1 million in damages after a falling-out between the two sides. Burnham, in return, is suing GRE.

Some of Burnham's allegations in various documents have raised questions about some of GRE's business dealings with other companies and whether they have been carried out in an arm's-length manner.

Last year, an Ontario Superior Court judge ordered Grand River Enterprises to produce certain pieces of financial information that would clarify the relationship between GRE, some of its principal shareholders and other companies that do business with the cigarette maker.

Burnham declined comment for this report.

His allegations against GRE and the company's allegations against him have not been proven in court.

The outcome of the case is pending.

* * *

Based on Burnham's documents and sworn affidavits, Justice Ray Harris was satisfied there were important questions to be answered by Grand River Enterprises about the "significant commercial intimacy" that existed between it and certain other companies.

One of the questions concerned a small Caledonia cigarette manufacturing company called Lanwest Manufacturing Technologies.

Located on Industrial Drive, Caledonia, near the Highway 6 bypass, Lanwest produces a cigarette brand called Podium, which is sold in the Costco and National Grocers chains in Ontario, Quebec, Alberta and other provinces.

Harris asked GRE to explain an apparent loan made by GRE to Lanwest in 2002 for almost $500,000. It's not clear why GRE would loan money to a competitor.

Further documents filed in court suggest Jerry Montour has acted as a guarantor for Royal Bank loans to Lanwest.

GRE responded by stating that Lanwest is 100 per cent owned by John Landry and that certain GRE shareholders have invested money in the company.

Burnham introduced a GRE accounts receivable sheet for Dec. 31, 2004, which includes a statement that Lanwest is 100 per cent owned by some shareholders of GRE. The sheet doesn't specify which shareholders.

The sheet includes a notation that Lanwest does not pay for its cigarette purchases and that Lanwest's accounts receivable are written off.

Another court document showed that the investments made by GRE shareholders in Lanwest happened to be proportional to their percentage ownership of Grand River Enterprises.

Landry told The Spectator he is, in fact, the sole owner of Lanwest and he was unfamiliar with the documents entered by Burnham.

In earlier days, he said, there were discussions about investment by GRE shareholders but nothing was ever formalized.

Landry also said Lanwest and GRE aren't necessarily competitors because GRE is only licensed to make cigarettes for sale on reserves in Ontario, while Lanwest only produces smokes for sale off reserves.

In fact, GRE cigarettes are sold in such diverse nations as the United States and Jamaica.

Also, GRE has concluded a reported $70-million deal to be the official supplier of cigarettes to the German army.

The judge also raised questions about a business known as Mohawk Investment Group, which in his words "is composed of certain GRE shareholders."

Mohawk Investment Group entered into a 50-50 partnership with the Peter Ballantyne Cree Nation in northern Saskatchewan to develop a graphite mine at Noble Bay, on Reindeer Lake.

A 2004 press release from the Peter Ballantyne Cree Nation suggested the mine could contain billions of dollars in graphite, which is used in everything from golf clubs to fuel cells.

The release indicated the Mohawk group put up $4 million in cash to establish the mining development company, which is working on acquiring the necessary permits from the federal government.

A search of Saskatchewan corporate records shows the company is called Noble Bay Mining Development Incorporated.

Ken Hill and Jerry Montour are two of the four directors listed and Peter Montour is listed as the company's treasurer.

Court documents filed by Burnham suggest it was Grand River Enterprises that actually provided some of the funding for the mining development.

Burnham alleges GRE paid $436,150 for the acquisition of land related to the mining venture, but the land was not recorded in GRE financial statements.

* * *

Some of the businesses of Hill and Montour are located at the Wahta Mohawk Territory, just west of Bala in the heart of Muskoka's cottage country.

Jerry Montour and his father, Peter, are members of the Wahta Mohawk reserve.

The Wahta reserve was originally settled in 1881 when a group of Mohawks moved there from Kahnawake, near Montreal. The two reserves have maintained historical ties as members of the Mohawk nation.

The reserve is also home to Wahta Springs Natural Spring Water, a bottled water facility that sits next to Highway 69.

The company shot to prominence during the summer of 2003 when it landed a contract to supply more than three million bottles of water for the Rolling Stones' SARS relief concert in Downsview, Toronto.

A Grand River Enterprises organizational chart filed in court by Burnham shows Jerry Montour with 45 per cent of the Wahta Natural Springs Water partnership, Ken Hill and Peter Montour with 22.5 per cent each and another man with 10 per cent.

In his May 2005 order, Justice Harris also required GRE to provide certain information about its dealings with Wahta Natural Springs based on information that came to light.

Based on Burnham's allegations, the judge noted there were concerns that:

* GRE had moved funds to Wahta.

* Wahta owed almost $1 million to GRE by the end of 2001.

* GRE and Wahta employed the same person as chief financial officer.

* The two companies' accounts were maintained with the same business system.

Another associated business on the Wahta reserve is the What A Convenience gas bar and general store. According to staff, it's owned by Jerry and Peter Montour.

A court document filed by Burnham suggests that the store is owned by Peter Montour.

The store, which sells cigarette brands made at the Six Nations GRE plant, is the only gas stop on Muskoka Road 38 between Highway 69 and the town of Bala to the east.

One court document suggests that the What A Convenience store had an account receivable with GRE for slightly more than $1 million in December 2003.

* * *

The Spectator's investigation also shows that 48-year-old Ken Hill has accumulated significant landholdings at Six Nations over the past two decades.

A search of the federal government's Indian Lands Registry System indicates Hill holds about 172 hectares of land on the reserve that has been acquired in about 20 transactions.

In May, for example, Hill paid $415,000 for about 66 hectares of land between Sixth Line and the Grand River.

The land was obtained by Hill from Norman Cayuga, a member of the Tuscarora nation who lives in Reno, Nev.

But many of Hill's acquisitions over the years have been recorded officially for a price of either $1, $2 or $5.

Thirteen of the parcels representing about 71 hectares of Six Nations land have been acquired by Hill from a variety of people for a total recorded value of $19.

Six Nations officials refused to disclose to The Spectator information about landholdings on the reserve, even though it's publicly available through the federal government's Department of Indian and Northern Affairs.

It took two weeks of repeated requests before Six Nations provided simple lot and concession numbers for three municipal addresses on the reserve.

Because they aren't members of Six Nations, Jerry and Peter Montour aren't permitted to hold land on the reserve.

They do, however, hold properties on the Wahta reserve.

According to the federal registry, Peter Montour acquired two lots on the Wahta reserve totalling slightly more than 19 hectares in November 2004 and January 2005 for a recorded price of $1 per lot.

Since 1999, Jerry Montour has acquired three chunks of land for $1 apiece on the Wahta reserve totalling about 28 hectares.

One of the parcels of land is the site of the What A Convenience gas bar and general store.

Jerry Montour currently lives in east Hamilton, but that will soon change.

A year ago, he and his wife spent $880,000 to purchase a 3,000-square-foot Mediterranean-style villa perched along the escarpment's edge on Balfour Drive.

Montour demolished the house, obtained a $515,000 building permit in June and is in the process of constructing a reported 9,000-square-foot house on the property. When Heinz Brune heard the news, it almost brought tears to his eyes.

Brune, a retired engineer from Germany, and his wife had the original house on the property built over the winter of 1983 and '84.

The roof trusses had to be specially made in Alberta to support 25,000 kilograms of red clay tiles, and the house included 24 solid oak doors and hardware imported from Germany.

When a former neighbour phoned to tell them this summer that the house was being demolished, they drove straight there to see with their own eyes.

"It was very painful seeing something that was a labour of love be torn down," said Brune, now in his 80s.

Brune said he approached Montour and asked him why the house had to go. Montour told him it was a difficult decision, but his family needed more living space.

* * *

Some of the other interests of Ken Hill and Jerry Montour, either together or separately, are related to the cigarette business.

Native Wholesale Supply is an American company on the Seneca tribe's reservation in western New York which handles the distribution of GRE's cigarettes to U.S. reservations.

A legal document lists Art Montour Jr. as the sole shareholder of Native Wholesale Supply.

The document is part of a $340-million US claim made by Grand River Enterprises against the U.S. government over the North American Free Trade Agreement.

But a GRE organizational chart filed in the company's court case with spurned shareholder Sid Burnham suggests that Native Wholesale Supply is "partially owned by Jerry and Peter Montour."

Hill, Jerry Montour and his father, Peter, also own and operate a business called Corner Distribution, which purchases massive amounts of cigarettes from Grand River Enterprises.

A GRE sales summary sheet suggests that in the five years from 2000 to 2004, Corner Distribution purchased more than $78 million in products from GRE.

Hill, Jerry Montour and some other investors also formed a company called Turtle Island which participated in a joint venture with the Omaha tribe in northeastern Nebraska.

The Omaha tribe built a cigarette manufacturing plant there, and Montour said in a court affidavit that he would receive 50 per cent of the net profits of the Nebraska tobacco facility in exchange for providing capital and management expertise.

And then there are other interests outside of the cigarette industry.

Jerry Montour, father Peter and Hill own the Brantford Golden Eagles, a junior hockey team that plays in the Mid-Western Jr. B Hockey League.

Hill owns Sit-n-Bull Construction, located at the corner of Sixth Line and Cayuga Road on the Six Nations reserve.

Hill also owns the Sit-n-Bull Gas Bar and Convenience on Sixth Line, near the reserve's border with Caledonia.

About the writers

Steve Buist and Joan Walters were winners of a National Newspaper Award in investigative reporting earlier this year for a series entitled Blind Faith, which examined the relationship between the pharmaceutical industry and researchers at McMaster University.

Walters was also a NNA nominee in 2005 for breaking news reporting and has been extensively involved in special projects at The Spectator.

Buist shared a National Newspaper Award in 2005 for a Spectator series about Drive Clean and he was the Ontario Newspaper Association's Journalist of the Year in 2004.