-9-
In February of that year, petitioner formed a joint venture with
Anchor Wate Co. to perform this contract. Mr. Leonard personally
guaranteed a $1.5 million debt by petitioner to the Royal Bank of
Canada in connection with this project.5
Mr. Leonard was directly responsible for petitioner’s growth
and success. Over the years, despite his criminal conviction, see
infra note 4, Mr. Leonard had a favorable reputation in the
pipeline construction industry. Petitioner relied entirely upon
Mr. Leonard (and on his personal guaranty) to obtain the necessary
financial backing to participate in large pipeline construction
projects.
Compensation Paid to Mr. Leonard
Petitioner contracted for Mr. Leonard’s management and
consulting services through RLLC for calendar years 1978-82.
Pursuant to a contract between RLLC and petitioner, RLLC paid Mr.
Leonard for the services that he provided to petitioner for these
years. Despite this financial arrangement, Mr. Leonard considered
petitioner to be his employer.
Mr. Leonard received the following amounts through the
corporate entities and joint ventures with which he was involved:
5 Petitioner was not permitted to pay compensation to Mr.
Leonard in 1985 and 1986 due to restrictions imposed by the Royal
Bank of Canada in connection with the line of credit extended to
petitioner.
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