Pay Yourself First: Donald Cormie and the Collapse of the Principal Group of Companies

K.V. Nagarajan is an assistant professor of commerce and administration
at Laurentian University.

On June 30, 1987, Alberta Treasurer Dick Johnston pulled the plug on two
investment contract companies in Donald Cormie’s Principal Group. With
that action, the corporate house of cards came crashing down. The Cormie
empire dissolved, leaving thousands all across Canada reeling in its
wake.

This book, written by a journalist who covered the story for an Alberta
newspaper, is a detailed account of the rise and fall of the Principal
Group. Based on thousands of pages of documents and scores of
interviews, the book provides chapter and verse on every shady deal and
questionable transaction undertaken by the Principal Group, and explains
how they contributed to the group’s weakening and ultimate collapse.
Smith was refused interviews by Donald Cormie—the central figure in
this sordid tale—and by his high-level friends in Alberta politics.
Her book does not suffer much for it, however, because she was able to
piece together most of the details from other sources and thereby build
a persuasive account. Although she goes back and forth in terms of the
chronology of events, the overall story line is kept clear.

Pay Yourself First leaves open the disturbing possibility that another
financial collapse will occur. Smith points out that since the laws and
institutions have not changed to address the issues raised by Cormie’s
adventure in the free-enterprise system, there is nothing to stop
someone else from launching a similar venture. Consumers are advised to
take seriously the old warning caveat emptor.