Philanthropy: It’s better to give

Mining mogul Frank Giustra is now filling in holes instead of just making them.

As a visionary financier for junior mining ventures, Frank Giustra amassed a considerable fortune before the age of 40. And like most would, he went about spending it lavishly — a luxury MD-87 private jet, a stake with some friends in Creek, a trendy restaurant on Vancouver’s Granville Island, and a sprawling West Vancouver waterfront pile near the place fellow mining mogul Robert Friedland sold last month for $30 million. The list goes on. But now, just beyond his 50th birthday, Giustra is giving it all away — or a fair chunk of it anyway.

Somewhere along the line, a little of the visionary instinct Giustra used to find fortunes in mining was rerouted; the business focus that colleagues have long said is unwavering has shifted. Watch the lavish spending slow as Giustra — with a little help from his powerful mining connections and some new friends from the non-profit crowd — figures out what it means to do business in a whole new way. “Once you get your head around the fact that you’re not going to live forever, it’s a lot easier to set that money free,” Giustra says. “You just set it free. And you feel good about it.”

Sounds pretty touchy-feely for an investment banker. But don’t be fooled: this new venture is very much a business proposition. “What I’m going to try to achieve over the next number of years is to convince people that giving is the intelligent thing to do,” says Giustra, rather matter-of-factly considering the undertaking. This summer, he announced the creation of the Clinton Giustra Sustainable Growth Initiative (CGSGI) with former U.S. president Bill Clinton. The plan is to pick countries affected by mining and collaborate with governments, NGOs and other stakeholders to start attacking basic problems there — clean water, health, nutrition and education — with the ultimate goal of creating economic activity that will outlive the mines.

Giustra personally put US$100 million toward the project, and has promised a further 50% of his lifelong earnings. “What sometimes gets lost in discussion of the very big number is that a lot of this is going to be achieved on the back of his credibility within the mining sector,” says Eric Nonacs, former foreign-policy adviser to the William J. Clinton Foundation in New York, who moved up to Vancouver in August to work side-by-side with Giustra on the new initiative.

Giustra then went about soliciting a couple of hundred million more and resigned as chairman of merchant banking firm Endeavour Financial (he still works there as a consultant and Nonacs holds the title of managing director of global affairs with the company) in order to devote more time to his newfound passion — philanthropy. “Now that it’s launched, we’re definitely going wider,” he says, with undeniable aplomb.

When the spirit of giving took hold of Giustra, he was riding a series of triumphs from mining deals he had assembled. In 2001, he was so confident in rising gold prices — which were hovering at less than US$300 an ounce — that he took Ian Telfer, now chairman of Goldcorp Inc., to lunch to talk about how to take advantage. The pair gathered a few other big names from the mining crowd, including Gene McBurney, chairman of Toronto investment house GMP Securities LP, and Frank Holmes, CEO of U.S. Global Investors Inc., and hunted around until they found Wheaton River Minerals Ltd., a company with a market cap of $10 million, but about as much cash. They bought it, went on an acquisition binge, and proceeded to storm the gold market — when no one else was. Prices did indeed surge, and ultimately led Wheaton to a $2.4-billion merger with Goldcorp. “We were the biggest believers in the price going higher,” says Telfer. “It was just an absolutely perfect storm.”

Since then, Giustra has hit the mark in similar fashion with three other monster mining deals: Silver Wheaton Corp., UrAsia Energy Ltd. and, most recently, Peak Gold Ltd. — each with Telfer and each following a pattern similar to Wheaton. “One thing we have in common is we only want to do real things,” says Telfer. “We have no interest in an exploration story that gets way ahead of itself or turns out not to be real.”

According to Telfer, there wasn’t anything prophetic about Giustra’s gold predictions; it was just another example of his characteristic ability to see past what’s right in front him. “It was a case of who is going to put their toe in the water first,” he says. “Frank Giustra had been very successful in the past at picking one peak, and now he was picking a valley.”

Such certainty about an idea no one saw coming is not without precedent. Friends and colleagues say Giustra can be single-minded when enamoured with an idea. And history shows he’s got an uncanny knack for business plans that see beyond the story everyone around him is focused on.

As for his own story, Giustra has always made a point of keeping it under the radar. But now he’s coming out. He chuckles a little at the misplaced expression, but accepts it, as he glances out the 31st-floor window of Vancouver’s Bentall Centre and onto the North Shore mountains near his home. Sitting across the table in his plush, beige-on-beige offices, he’d rather be spending the afternoon with just about anyone else, that much is clear. But Giustra’s latest venture needs a public face — and when following a business plan, the immaculately-dressed-financier-turned-charitable-guru is always meticulous. He’s not exactly standoffish, but there’s certainly no room for small talk. Giustra’s all business.

Not a single close-cropped white hair is out of place and at five-foot-six he cuts a slight figure, the product of daily cycling through the steep streets of his neighbourhood. His taupe summer suit blends with the bland executive surroundings, as he toys at random with the one tiny burst of colour in the room: a vibrant threaded bracelet around his wrist, the kind found in a Colombian market. Enthusiasm only breaks into his voice when the CGSGI comes up. “There are 700 billionaires in the U.S. alone,” he says, incredulously. “What are these people going to do with this money? It’s ridiculous.”

Is Giustra himself a member of that elite club? His spokespeople will neither confirm nor deny his net worth, but insist he’s not. For his part, Giustra jokingly says he has given away most of his money since meeting Clinton. And one thing is clear: at this point in his career, he’s nowhere near retirement. Guistra is channeling most of his drive, shrewdness and business acumen into this venture, which will absorb half of all the money he once spent on houses and jets. “The other half I might do something else with,” he says. “Other philanthropic things.”

That’s quite a turnaround for a man who made his mark in mining — an industry inherently all about taking. But making a sharp and unexpected turn just when things seem to be sailing along nicely is precisely Giustra’s style.

Frank Giustra’s drive emerged early. “I had bit of an epiphany at the age of 19,” he says. He’d found finance. “I knew it. I got it. I liked it. I was good at it.”

Giustra was born in Sudbury, Ont., and grew up in Italy and Argentina until just before his 10th birthday, when his family returned to Canada to live in the suburbs of Vancouver. His father — who turned 80 only a couple of months ago — was a miner all his life, and also played mining stocks on the side. “We had a good family, lots of food on the table,” says Giustra.

After graduating from Douglas College, a run-of-the-mill community college outside Vancouver, where he studied business finance, he took a job at mega-firm Merrill Lynch in 1978. But soon, he moved to Yorkton Securities Inc., figuring a smaller company would be a better place to prove himself. With Yorkton, Giustra moved to London to open European offices. “It was tough,” he says. “I went there with very naive ideas about being able to succeed in a short period of time. And it took a bunch of years.”

Being young and green in a foreign country pushed Giustra to experiment, though. From European firms he picked up new ideas about sector-focused financing teams and carved out a niche by combining a variety of disciplines — sales, finance and research — all strictly dedicated to the mining sector. In 1990, he returned to Vancouver to become president and later chairman and CEO of Yorkton. The 19-year-old’s epiphany turned out all right. He’d found something he was pretty damned good at.

In mining, being good means seeing things others don’t. And in the ’90s, what Giustra saw was the world outside of North America. “Today, no one would have a problem with going to Chile to invest in a mining venture,” he says. “But in those days it was unheard of.” Yorkton, in effect, led the franchise for bringing international mining projects to the capital markets. “He’s very shrewd and very forward thinking,” says Lukas Lundin, chairman of Lundin Mining Corp., who’s known Giustra for 20 years. Under Giustra’s leadership, Yorkton had a hand in financing deals totalling more than $3 billion, and between 1988 and 1996, revenues grew to $180 million from around $20 million.

And then he quit. Giustra says it was just time for a change, but in those days rumours spread wildly about his bailing in protest after the company got involved with a bogus mining deal in Africa. Just before he left, a few Yorkton brokers in Calgary had a hand in promoting the aptly named Timbuktu Gold Corp., and it turned out the ore samples had been salted. Whether it was a case of his being frustrated with penny-stock promotion or simply that he was exhausted, what’s more intriguing about Giustra’s exit is his timing. “It appeared that within days or weeks of when Frank left Yorkton, the whole mid-’90s boom started to fade away very, very quickly,” says Telfer. Bre-X began to unravel about three months later.

Did Frank know? How did Frank know? Those were the questions circulating throughout the tight-knit circles of Vancouver’s mining community after he up and walked. No one really saw Bre-X coming, but Giustra sensed early that things were getting out of hand. “What I did see and did not like was the froth in the market,” he explains. “Mining markets were just way out of line, and the valuations were ridiculous.”

Today, Giustra only smiles at the mention of all the speculation, and in his calm, gravelly voice explains the philosophy behind his moving on. “It’s like many things in life,” he says. “If you do something long enough and you’re successful at it, it becomes repetitive and, for me, uninspiring.”

In search of new sources of inspiration, Giustra boldly veered away from resources and looked instead to the movies. At age 40, less than a year after leaving Yorkton, the lifelong film buff started fresh again by building a production company, Lions Gate Entertainment Corp., which took its name from the mountain peaks that tower over North Shore Studios, one of the first acquisitions he made when putting the venture together. “The idea of setting up a movie or entertainment company of that size from scratch was unheard of. And certainly,” Giustra says with a laugh, “a lot of people pointed that out to me.”

Giustra wasn’t entirely new to the business though. During his investment banking days he’d dabbled a little in film financing for kicks, including a gig as executive producer of Buster, a 1988 British film starring singer Phil Collins that told the story of 1963’s Great Train Robbery in England. The première in was struck by controversy when the Prince and Princess of Wales declined to attend in protest over the film’s supposed glorification of violence. That would turn out to be a foreshadowing of the various public uproars Lions Gate would face for such contentious movies as American Psycho (2000), a graphically gory depiction of a yuppie serial killer, and the sexually explicit and racially charged Monster’s Ball (2001), which earned Halle Berry the Academy Award for Best Actress. But the company began to see commercial success.

Lions Gate found its place by sliding into a hole in the market that Giustra watched open up after Disney took over Miramax in the U.S. in 1993. It made its name with non-studio movies in the under $25-million budget range. “It was a business niche that was easier to compete in than some of the other things that we tried with the larger studio pictures,” Giustra says. At the time, there was no shortage of skeptics that an investment banker from the mining world could make it work. But with a confidence teetering on arrogance, Giustra proceeded to raise $120 million — including some from his former colleagues at Yorkton — threw in $18 million of his own, and started buying up film properties.

Lions Gate signed big-time Hollywood producer Peter Guber and got a listing on the TSX through a reverse-takeover of Beringer Gold Corp. Giustra was CEO until he stepped down in 2000 — not long before he invited Telfer to lunch to talk gold — and remained chairman until 2003. “I have a tremendous respect now for CEOs of public companies that I didn’t appreciate before Lions Gate,” Giustra says. “There’s a lot of pressure.”

Lions Gate has picked up 27 Oscar nominations and seven wins since it launched — and as one of the largest independent film studios in the world saw nearly US$1 billion in revenues last year.

How do you follow an act like that?

All the sharp turns in Frank Giustra’s career ultimately led him to Bill Clinton, the CGSGI and his big push to change the way mining affects developing countries. “Why this initiative and why now? It’s a combination of a number of serendipitous events that have taken place,” he says.

Making a huge fortune through mining in developing countries, combined with the current commodities boom and his chance to see Clinton, his new partner and mentor, in action, all culminated in the CGSGI, Giustra says. He’s still in a position to make a lot of money, but his reason for doing so is transformed. “Once you’ve taken care of the needs of your family — however you define that — the only remaining purpose of wealth is to create more wealth,” he declares. “And how pointless is that?”

A lot of this change evolved through the newfound relationship with Clinton. Giustra and his wife, activist and documentary filmmaker Alison Lawton, threw a $10,000-per-couple tsunami fundraiser at their West Vancouver home in 2005, and through an introduction from an acquaintance, film producer Bud Yorkin, Clinton agreed to provide a videotaped message for the event. Afterward, Giustra made a concerted effort to learn more about the William J. Clinton Foundation, and eventually the 42nd president made a guest-of-honour appearance at a second charity dinner at the couple’s home. The two men made an immediate and personal connection. “I learned about the foundation, offered to help and the next thing I knew I was on a plane with him flying around Latin America,” Giustra says of the whirlwind friendship. Clinton, meanwhile, couldn’t be more pleased with his new partner. “I’ve known Frank long enough now that nothing he says or does should surprise me,” the former president said after the venture was announced. “But I was stunned.”

It was on those trips — in Giustra’s MD-87 jet — that the CGSGI took shape. And it looks like once again he’s on the cusp of a growing trend. It’s called “strategic philanthropy,” according to John Peloza, an assistant professor at Simon Fraser University’s faculty of business administration, who studies corporate social responsibility.

Peloza says the Bill Gates Foundation really popularized the concept of taking a business approach to giving, with a focus on measurability and cost-effectiveness. Critics have suggested that the CGSGI is only about burnishing the image of a pillaging industry, and Vancouver newspaper columnist Alan Ferguson even suggested in The Province that its donations are a way to butter up governments in developing countries so future deals progress more smoothly. But Peloza says the criticism doesn’t really apply to Giustra. “The idea that it’s buying reputation has fairly limited legs, especially if you think about him doing it individually,” rather than under a coporate banner, he says.

Giustra’s not affected by the minor-league mud-slinging — he says it’s simply good business and wonders what on earth is wrong with wanting a good public image. “We’re in a world today, and it’s not just in the mining sector, where corporations have to be socially responsible,” he insists. “It’s just smart. And it’s a trend that’s growing.”

But Giustra never just follows a trend. He’s leading a charge by tapping into one specific sector — mining — for funds and support. Right off the bat, about 20 companies, including Teck Cominco Ltd., Canaccord Capital Inc. and Northern Orion Resources Inc., jumped on the bandwagon. But Mexican telecom giant Carlos Slim Helú and Giustra’s longtime colleague Lukas Lundin — through Lundin for Africa, the philanthropic arm of the family resource empire — coughed up US$100 million each, fully matching his own donation. “The essence of this initiative is private-public partnerships in philanthropy,” says Giustra. And he’s been knocking on the doors of virtually “anybody that derived a benefit from the mining industry — brokerage firms, banks, law firms and audit firms.”

As far as functioning goes, Giustra will keep the initiative funded by continuing to woo the mining industry for ongoing participation and cash injections, while the Clinton Foundation will be on the ground implementing projects and making things happen. According to Nonacs, specific projects will be up and running in at least a couple of countries, Peru and Colombia, by early next year. Nonacs was brought in to use his non-profit background to help take the grand vision that Clinton and Giustra have cooked up and turn it into something real and scalable. That started with assessing needs in a series of countries and seeking out projects and organizations that are already working there — and then establishing relationships with those involved. Everything is now in the next stage, which is developing strategies for taking existing small-scale projects and expanding them — they may also start new projects in response to needs. “Our approach is to bring together all these groups, organizations, governments, money, what have you, in one co-ordinated effort with the organizational skills of the Clinton Foundation,” says Giustra.

No small task. But without even a hint of irony, the man who found fortunes in holes in the ground is now out to save the developing world. With the same confidence with which he called the price of gold, he’s now calling this the latest global movement. “I really believe that it’s going to be a trend and it’s not going to be only applicable to the mining sector,” he predicts. And when Frank Giustra sermonizes about the bigger picture, people listen.

“This is the animating project for Frank,” says Nonacs. “This is how he sees spending a large part of his life going forward, and it informs even the time he’ll be spending on his for-profit endeavours.”

The more Giustra’s business thrives, the more he’ll have to give. His advice these days? “Do something. Don’t sit on your money.”