Softwood-duty payouts

U.S. board to handle US$450M from Canadian firms. FP3




HP’s handling of probe into leaks triggers queries about board’s effectiveness. FP6

‘U.S. Marines couldn’t keep me away’ from trial, Conrad Black says. FP3


9/11 ‘not over, ever’
ew York heaves with life on a sunny Thursday morning. Hordes of commuters cram into Penn Station as street vendors peddle sweet-smelling honey-roasted peanuts nearby. In Times Square, aspiring rappers try to hock demo CDs to earlymorning shoppers. Downtown, an army of suited soldiers marches along Broadway toward their appointed posts on Wall and Broad Streets. Nearby, Jeff Pucillo is also getting to work. He and two friends take up position on the Ground Zero viewing platform and take turns reading from the New York Times book Portraits: 9/11/01, a collection of short tributes to the 2,973 victims of the World Trade Center attack. Some passersby stop and listen for a while, but most glance curiously — perhaps as they would at street preachers ranting about the coming apocalypse — then continue on their way. Mr. Pucillo is no preacher, but it was on a morning just like this one that he lost two cousins in the attack that destroyed the World Trade Center. He has been paying this tribute to them, and all the victims, every year for the past five years — a marathon task that takes five days, with 14 hours of reading each day. It’s not a paying job, but one that needs to be done, he says. “These people should never be forgotten. I hope this is going on when I’m dead.” Mr. Pucillo begins to read. David Alger, the entry says, was 57 and the chief executive of Fred Alger Management Inc., a boutique investment firm on the 93rd floor of the North Tower. He was charismatic, full of jokes and seemed to begin every story with the catchphrase: “That reminds me of something … . ” Mr. Alger’s firm was one of a handful nearly destroyed by the attacks. Almost a fifth of the company’s staff and its headquarters were wiped out. Brokerage firm Cantor Fitzgerald LP, meanwhile, suffered the heaviest human toll, losing 658 of its 1,000 employees in New York. Both firms struggled to survive in the weeks and


B Y P E T E R N O WA K in New York

How two New York companies survived and recovered from the terrorist attacks of five years ago

months to follow, but have persevered and, to a large extent, rebounded. Five years later, the firms’ executives share their experiences and stories of survival. Dan Chung shifts uneasily in his leather office chair as he remembers Mr. Alger. The young president of Fred Alger Management is lost in a memory; his eyes redden. The firm lost 35 of 230 employees on Sept. 11, including David — the younger brother of founder Fred, and Mr. Chung’s mentor. Five years on, the survivors still feel the pain intensely. “The effects of a loss like that are not really over, ever,” Mr. Chung says between long pauses. “These people were my friends or mentors, and my boss. It’s hard to replace the camaraderie and even the conflict that comes with a group of professionals.” By virtue of its small size, the firm was more of an extended family than a business. And like a family, everyone had a role to play. “Someone becomes the disciplinarian, someone becomes the centre of what’s happening — the receiver of gossip — the arrangers of offbeat parties, some lend some seriousness, some are teachers,” he says. “They were unique people and had enough continuity across their generations, from very senior to very inexperienced, to be kind of like a family.” Mr. Chung, 44, is far away as he recalls the events of Sept. 11, 2001. He was an analyst with the firm at the time and, as fortune had it, was at an uptown hotel that morning attending a presentation by a Tyco executive. The meeting had just started when an aide interrupted to announce that the North Tower had just been hit by a plane. The executives and analysts crowded around the television and watched in stunned silence first as the North Tower burned, then as the South Tower was hit. Mr. Chung tried calling his offices but couldn’t get through. The first plane had struck between the 90th and 92nd floor — his offices were on the next floor above. He tried to contact his family, but he now has trouble recalling it.
See NEW YORK on Page FP4


A charred document lies in the soot near the destroyed World Trade Center in New York on Sept. 12, 2001.

Business booming, Page FP5

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The U.S. Bond Market Association recommends that market participants maintain normal trading hours marked by two separate moments of silence on Sept. 11, the five-year anniversary of the terrorist attacks on the World Trade Center and the Pentagon. The BMA recommends that the moments of silence be observed at 8:46 a.m. ET, the time the first plane hit the World Trade Center, and 10:29 a.m. ET, the time the


Bond traders to observe two moments of silence on Sept. 11

second tower collapsed, two events that mark the beginning and the end of the terrorist attacks. The recommendations apply to trading of U.S. government securities, mortgage- and asset-backed securities, over-the-counter investment-grade and high-yield corporate bonds, municipal bonds and secondary money-market trading in bankers acceptances, commercial paper and Yankee and Euro certificates of deposit. Dow Jones

National REPORT
Telus Corp. said yesterday it plans to spend $600-million during the next three years to expand its broadband network in B.C., Alberta and eastern Quebec. The investment, which does not include $190-million this year, will be used to boost the speed of Telus’ residential network to between 15 megabits and 30 megabits per second. This will let Telus deliver Web-based television service, including high-definition TV channels, as well as Web access and Voice over IP service. In a research note, BMO Capital Markets analyst Peter Rhamey said the new information about the broadband strategy “increases our confidence that capital spending levels will not increase materially in the medium term and indeed could decline slightly.”
Financial Post


Doing what they had to do
Continued from Page FP1


“It’s funny, I can’t remember the exact moment I got in touch with my wife,” he says. The couple, with their two children, lived across the East River in Brooklyn Heights. His children could see the burning towers from the upper floors of their school. Mr. Chung left the hotel for a friend’s midtown apartment, which is where he finally got in touch. “It’s funny … I’m trying to recall it, I believe it wasn’t till I got to her apartment … that I got hold of my wife, who was completely panicked.” The next few days were even more difficult as the company desperately tried to find its missing employees. As time passed, the magnitude began to sink in. “I was the most senior surviving member of the research team, and I’d only been there seven years,” he says. Howard Lutnick, now 45, was dropping off his son, Kyle, for his first day of kindergarten when he was informed of the attack. The chief executive of Cantor Fitzgerald jumped in his car and sped down Fifth Avenue, listening to the news on the radio and watching the cloud of smoke grow bigger. The second plane hit while he was driving. Cantor Fitzgerald’s employees were spread over five floors — 101st to 105th — of the North Tower. When Mr. Lutnick arrived, he ran to the tower and grabbed the emerging people, frantically asking what floor they had been on in the hope that some of his employees had made it out. First, it was the forties, then the fifties. “The last person I grabbed was on 92, then I heard the loudest sound I ever heard in my life,” he says. “It sounded like a combination of a jet engine right above my head and the sound like from the movie Titanic where the [ship] split — loud mashing steel.” The sound was of the South Tower collapsing. Mr. Lutnick did the only sensible thing — he ran. “I looked over my shoulder and there was a black tornado of smoke chasing me.” When it overcame him he dove under a car, “and then it all went black.” Lying under the car in the darkness, he tried to breathe, but the air was thick with smoke, debris and soot. His breaths became shallower and shallower. “ ‘I can’t believe I’m going to die’ was all I could think,” he recalls. But the blackness eventually gave way to grey, the air become breathable again and Mr. Lutnick found himself alive. The North Tower had yet to collapse, but he had accepted the inevitable. “That’s when it dawned on me that everyone was dead. I had almost died and I was outside. How could my guys have survived in that building? There was no air.” He began to walk uptown, which is when he heard the North Tower collapse, sealing the

Global Alumina Corp., a Canadian company planning a US$2.8-billion alumina refinery in Guinea, said it is negotiating with “several parties” that may acquire a stake in the company or the project. The investment may be 25% and talks will conclude by yearend, Global Alumina chief financial officer Michael Cella said. Global Alumina wants “at least” one more partner, after Dubai Aluminum Company Ltd. took a 25% stake last year, he said. Global Alumina is one of five companies planning refineries in Guinea, a West African nation that is the world’s biggest producer of bauxite, the ore used to produce aluminum. Bloomberg News


Dan Chung, 44, president of Fred Alger Management, at the firm’s offices in New York this week. He was an analyst at the money manager when it lost 35 of 230 employees on Sept. 11. One was chief executive David Alger, 57, the younger brother of founder Fred, and Mr. Chung’s mentor.

Loeb Partners Corp. has hired Genuity Capital Markets as a financial advisor as the investment firm seeks support to elect three directors at Mosaid Technologies Inc. to increase its share price. New York-based Loeb, which says it owns 9.1% of Mosaid, last month called for “a prompt sale of the company to the highest bidder.” Loeb has said Mosaid, an Ottawa-based semiconductor designer, may be trading at less than half its value. Mosaid has rejected Loeb’s demand for a quick sale, saying other transactions may benefit investors more. Bloomberg News

fate of 658 of his employees, including his brother Gary and his best friend Doug Gardner. Completely covered in grey soot, he kept walking until he saw “clean people.” “People were looking at me like I was a zombie. Which wasn’t too far from the truth,” he says. In the days following the attacks, Fred Alger stepped out of retirement and resumed control of the firm he had founded in 1964. He had built the company on finding and investing in high-growth stocks, and he was determined to see it continue that way. The firm had peaked in 2000 with about US$20-billion in managed assets, from both individual and institutional investors. A downturn in the markets from the bursting of the tech bubble meant that at the time of the attacks, the firm was down to about US$14-billion. Still, “we were on top of the world,” Mr. Chung says. Mr. Alger had been named by Barron’s as one of the top 25 investors of the


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century, while the firm was ranked 17th most influential in the industry, despite being nowhere near that in asset size. Fortunately for the company, Mr. Alger had learned the hard lessons of business continuity after the World Trade Center bombing in 1993. Following the attack, he had set up a disaster recovery site in Morristown, N.J. — a plan that proved invaluable in getting the company back up and running soon after Sept. 11. For Mr. Alger, there was never any question of folding the company. “We made a lot of decisions after 9/11 that were from the heart. One of them is that we would continue the business and would try to rebuild, we wouldn’t sell or try to partner with some big firm or just close,” Mr. Chung says. From there it was a matter of survival. The firm’s managed assets had fallen to US$7-billion. Clients had been lost, but Mr. Chung gets choked up thinking about those who stayed despite its diminished capabilities. “A lot of them wanted to support us. Some of them were very vocal about it through some of the darkest times.” The company also benefited from sympathy from the larger business community. Mr. Chung recalls how eBay Inc. executives visiting New York went out of their way to meet with the firm, above and beyond their regular analyst presentations. “Microsoft also called and said, ‘You need free software? You got it. You need people to install it? You got it’.” Beyond that, it was only the hard work of the survivors that allowed the company to continue. Former employees returned to the firm and everyone doubled their efforts. The family, in essence, became tighter. Mr. Chung was named president of the company in 2003 and Mr. Alger stepped down in 2004. The rebound is now nearly com-


Cantor Fitzgerald CEO Howard Lutnick stands on the firm’s bond-trading floor on the east side of Manhattan on Thursday. The brokerage lost 658 of its 1,000 employees in New York.

plete, with the firm back up to 150 employees and about US$9billion in managed assets. “In many ways we’ve recovered fully. We’ve rebuilt the team fully and clients are able to look forward with the firm now,” Mr. Chung says. Still, he can’t help but get wistful about what might have been. “We had lovely offices and people loved them and it’s extremely sad that if we’d only been 20 floors lower … .” The company’s current headquarters sits on the second and third floors of an old Victorian building on Fifth Avenue in midtown Manhattan, far from the World Trade Center site. The decision to move on to low floors was a conscious one, but Mr. Chung says, “we never really considered not coming back to New York City.”

Cantor Fitzgerald had to discontinue several lines of business following the attacks. Eighty-six members of its 90-member corporate-bond team were killed, and its interest-rate swapping division was gone as well. The accounting and human resource teams were virtually wiped out, and the firm couldn’t even look for new office space because its facilities manager had been killed. Mr. Lutnick didn’t help matters initially when he ignited a public relations disaster by first promising to take care of missing employees’ families, then cutting them from the company payroll only four days after the attacks. But the scrappy, raspy-voiced CEO is defiant to this day. He says he did what he had to do to keep the business afloat. He also backed up his pledge by announcing a month after the attack the firm would donate 25% of its profits for the next five years to the families, and pay their health care costs for 10 years. The profit-sharing program, which ends Monday, has distributed nearly US$190-million dollars to the families. “I wouldn’t change a single thing because the odds were so unlikely that we’d be here now.” Like Alger, Mr. Lutnick attributes Cantor Fitzgerald’s survival to the bond forged between employees. After the 1993 terrorist attack, “we realized life was too short to work with people you don’t like,” so the company began practicing deliberate nepotism — the hiring of friends and family. That made Sept. 11 all the more difficult to cope with, but it was also what saved the company afterward, he says. Cantor Fitzgerald luckily had backup offices in New Jersey and London and, with several business lines wiped out or in disrepair, focused on its core areas — equity and bond trading — where it still had staff to steady the ship. Above all, the company needed people, so Mr. Lutnick encouraged employees to suggest people who could join the firm. “Give us someone you really like, and they’re good. That’s how easily they get the job,” he says. “The day they start, they are granted their complete career. We consider them reinforcements, the cavalry.” The desire to provide for the families drove the business, which became profitable again in 2004, Mr. Lutnick says. It then reentered areas it had quit and began expanding into new ones, such as the wholesale voice brokerage business with its BGC Partners spinoff in October, 2004. By Mr. Lutnick’s measure, Cantor Fitzgerald is now bigger in every measure. Its rebuilt New York staff of 1,200 is headquartered on eight floors — none higher than 15 — of a 37-storey building on 59th Street, a stone’s throw from the Bloomingdale’s department store. Most important, Mr. Lutnick feels he has fulfilled his promise of providing for the victims’ families. “Once you know that the promise was made to the families of those that you love, then you’re never going to let them down,” he says. “It was a promise from the heart and the soul.” Across from Mr. Pucillo’s ongoing tribute at Ground Zero stands a gleaming glass tower, the brandnew 52-floor 7 World Trade Center. The original building collapsed along with its twin tower brothers on Sept. 11, but was rebuilt and reopened in May. On this particular Thursday morning, a press conference is being held on the top floor to unveil the designs of three new World Trade Center buildings. In his speech unveiling the rebuilding plans, state Governor George Pataki echoes the sentiments of the firms that have fought hard to survive and to rebound from adversity. “We knew we could do it,” he says. “And we knew we had to do it.”
Financial Post


framework accord with Mr. Silverstein soon. Local politicians have repeatedly been criticized for the rebuilding’s many delays. One problem is the Port Authority’s difficulties with the huge re-


Wold Trade Center developer sees Liberty bond sale within two years
World Trade Center developer Larry Silverstein said this week he expected to sell triple tax-free Liberty bonds to help finance three new office towers planned for the site within two years. The Port Authority of New York and New Jersey, which owns the 16-acre World Trade Center site, hopes to finalize its taining wall needed to keep the Hudson River from flooding the site. The Port Authority has also said government agencies must lease one million square feet of offices in the planned Freedom Tower to get the skyscraper built. Reuters


Disaster now a booming business
More Canadian businesses get as ready as they can

If there’s a bright side to disasters such as terrorist attacks, it’s that business is good for consultants who help companies prepare for emergencies. “Business is booming for me out there right now,” says Michael Smith, who runs his own business continuity consultancy, ReadySmith Inc., in Oakville, Ont. Mr. Smith, who sits on the advisory board of the Canadian Centre for Emergency Preparedness and has been consulting firms on disaster planning for 20 years, started his company in March because of growing demand. The 9/11 terrorist attacks were “a significant wake-up call” for companies to come up with a plan to prevent large-scale disruptions of operations, he says.


Disaster touched the Wall Street area in 2001, as women walk down a nearby street shortly after the collapse of the World Trade Center.

Subsequent disasters — SARS and Hurricane Katrina among them — have only added to that sense of urgency. Prior to the attacks, only about a third of all medium and large enterprises had a tested contingency plan in place, Mr. Smith says. Financial-service firms were generally well-prepared, but many sectors — such as manufacturing in particular — were laggards. Now, about half of such firms have come up with plans and the number and breadth continues to grow, he says. “It’s starting to reach across all sectors now. There’s more demand across more industries.” Business continuity plans typically identify a company’s critical functions, then allocate specific resources to them — whether it’s people, additional physical space, technical systems or paper records. Regular testing and updates of the plan are then implemented. The nature of contingencies has changed over the past five years from well-intentioned, theoretical policies on paper to meaningful, fully implemented strategies, says Bob Wilkerson, managing director of corporate preparedness for New Yorkbased global risk consultancy Kroll Inc. “We went through a 15-year span where everybody agreed that you should do business continuity planning but ... the real product out of it was a document that was in a three-ring binder,” he says. Plans can cost into the tens of thousands of dollars, which makes them more suitable for bigger businesses, says Grant Whittaker, executive director of the Disaster Recovery Institute Canada. Big firms also have more to lose, he says. “Senior executives of organizations have accepted the idea that continuity planning is an integral part of overall corporate strategy ... . Five years ago we’d hear, ‘Well, that’s never happened before and the probability is pretty low, so let’s not worry about it.’ Today, that argument is gone.” The absence of a continuity plan can have devastating consequences for companies and the larger economy. The SARS outbreak in Toronto, for example, cost the unprepared Ontario tourism sector $2-billion in 2003, and took businesses at least two years to recover from. The good news, experts say, is that Canadian firms seemed to


An expert in corporate preparedness says Canadian firms have improved their disaster planning. Following Toronto’s 2003 SARS outbreak, above, “Canadian businesses had an insight into the issue that many other businesses around the world didn’t see,” Bob Wilkerson says.

have learned from the experience. Kroll’s Mr. Wilkerson says Canadian firms are generally well-prepared for disaster, particularly in the case of a pandemic. “Businesses almost across the board have made significant steps in their preparedness,” he says. “[With SARS] Canadian businesses had an insight into the issue that many other businesses around the world didn’t see.” But others warn that Canadian businesses haven’t taken the disasters of the past five years seriously enough. The Retail Council of Canada in June warned the sector is “vulnerable” to a pandemic, with few retailers having made contingency plans. Mr. Smith agrees that “considerably too few” firms have made plans, but says overall sentiment is improving. The U.S. government and Canada’s auditor general have both mandated that all federal agencies must have continuity plans. The Office of the Superintendent for Financial Institutions also recently requested proof of pandemic plans from its regulated institutions. “A lot of people are taking this very seriously,” Mr. Smith says.
Financial Post




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