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The Current Transcript for August 26, 2016

Host: Robyn Bresnahan

STORIES FROM THIS EPISODE

Listen to the full episode

Prologue

[Music: Theme]

SOUNDCLIP

JUSTIN TRUDEAU: The conversation we have to have is about what kind of governance we need and we want going forward. As a mature democracy looking at what's working, what's not working around the world, what suits us.

ROBYN BRESNAHAN: And that's the conversation we're having today. Changing the way Canadians vote — and moving past the first-past-the-post system. It was a campaign promise, and one the government needs to get going on now if they are to enact a new style of voting by the next election. It would be a major change to Canadian democracy. We’ll hear the pros and cons of some of the potential replacements. That's first up today. Then…

SOUNDCLIP

When we drink wine we look at the price value, you know, we look at what we get from the wine, the excitement, you know, the passion. The way to make the wine and everything, it’s not about the price of the wine you know.

RB: But if you did happen to look at the price of some of his wines, they would be in the range of thousands, tens of thousands, even hundreds of thousands of dollars per bottle. Coming up in half an hour, a vintage tale about the greatest fraud ever committed on the world of ultra-fine wines. I'm Robyn Bresnahan, and this is the summer edition of The Current.

Electoral reform: Moving beyond first-past-the-post voting system

Guests: Jane Hilderman, Arend Lijphart, Erin Kelly

[Music: Theme]

RB: It was one of the key campaign promises when the Trudeau Liberals swept to power last fall. And even if you haven't spent much time thinking about electoral reform in the months since, rest assured that an all-party Commons committee has been spending the summer listening to Canadians and probing the big question of how we should change the way we vote. In the crosshairs is the so-called first-past-the-post voting system that we are all familiar with. On election day, voters in each riding vote for one candidate of their choice, and he or she with the most votes wins. But that system has its critics, including the Liberals, who vowed that last fall's election would be the last with first-past-the-post. They've given themselves a December 1st deadline to introduce electoral reform legislation. And when it comes to what a new system might look like, there are a few different models out there. So let's walk you through them now.

[Music: Accordion]

JANE HILDERMAN: The alternative vote, or AV. So, in this system we continue to send one representative from each riding to Ottawa. But instead of just voting for one candidate on the ballot as you do now, you actually rank the names on the ballots according to your preferences. So instead of an X, you use one, two, three, etc. in order of your preference. As we count the votes, if one candidate has a majority, he or she wins. But if no one gets a majority on that first count of first preferences, the last place candidate is eliminated and those votes are then reallocated to the voter's second choice. We repeat this until someone gets a majority. Congratulations, that person is headed to Ottawa.

[kazoos being blown]

RB: All right, so that sounds pretty straightforward. And next…

[Music: Trumpet]

JANE HILDERMAN: Mixed-member proportional representation, or MMP. In this system you get to mark two choices on your ballot. You put an X beside the candidate you prefer and an X beside the party you prefer, and the candidate you vote for could be affiliated with the party you choose but not necessarily. In the end you end up with one MP who represents your riding, as well as a group of regional MPs elected by the party vote to ensure that the party representation in the house reflects how Canadians voted.

[trumpet blaring]

RB: OK, now pay attention to model number three.

[drum roll]

JANE HILDERMAN: Single transferable vote, or STV.

[background music]

JANE HILDERMAN: In this system we have larger ridings with three to five MPs elected from each using a ranked ballot. That means those MPs may be all from the same party or they may be from different parties. What's unique is that parties put up many candidates in the same riding, so you actually have them running against each other on the ballot. When you vote, you rank the names on your ballot. One, two, three etc. How the ballots are counted can be complicated and really depends on how the final process is decided. But basically, candidates must receive a quota or a certain number of votes to head to the Hill. In the end, the makeup of the House of Commons approximately represents the proportion of votes received by the parties.

[background music ending]

RB: So there you go. Those electoral moments were brought to you by Jane Hilderman, the Executive Director of Samara Canada, which is an organization that promotes voter education. Its new report is called What We Talk About When We Talk About Electoral Reform. Arend Lijphart knows this issue inside and out. He has spent two decades researching the relationships between a country's voting system and its wider social and political culture, not to mention the strength of its democracy. Mr. Lijphart is a Professor Emeritus of Political Science at the University of California San Diego. He is also the author of what many consider to be a definitive study on the subject, called Patterns of Democracy: Government Forms and Performance in 36 countries. We reached him in San Diego, California. Hello.

AREND LIJPHART: Good morning.

RB: Earlier this week on Monday you appeared in front of Ottawa's special committee on electoral reform via a video link, and they asked you what system you think is best. What did you tell them?

AREND LIJPHART: What I told the committee is that I favour proportional representation. And proportional representation can be different for us. I think the summary that you presented is excellent, but I think the two forms of proportional representation that you outlined, namely STV and the MMP system as used in New Zealand, to be mostly in mind of people in Canada, because it seems to be those two systems are the main ones that they use in countries that are mainly or at least partly English speaking. And so there's a closer cultural relationship with Canada. So I would want to focus on that. And what I have found in my research is that systems of proportional representation tend to lead to better outcomes, certainly more democratic outcomes, since FPTP (first-past-the-post) typically gives rise to so-called majority governments that are actually not majority governments at all, because they're based on only between 30 and 40 per cent of voter support.

RB: Let's just break down some of what you've just had to say there, because you also stress that proportional representation is actually very effective in countries with significant cultural, religious, and other minority populations. How so?

AREND LIJPHART: It is because minority populations are going to get the chance to get representatives elected that reflect their interests and their viewpoints much better than FPTP, where it’s simply majority.

RB: I want to hone in on your research, because you looked at 36 different countries. What question were you trying to address when you were looking at what was the best electoral system for all those 36 countries?

AREND LIJPHART: I have a series of indicators of both the effectiveness of government and the degree of democracy of different governments, and the relationship is just very clear. The more countries tend to have proportional election outcomes, the better the effectiveness of government, reflected in things like control of inflation, control of employment, budget balance, and so on. Pretty clear indicators. And also the degree of democracy tends to be better. Think in terms of voter turnout, degree that minorities are adequately represented, women's representation, and so on.

RB: So proportional representation comes out as the big winner for you. But some people who are opposed to changing Canada's electoral system, they point to problems in countries that do have proportional representation such as Italy or Israel, and they say that they fear political deadlock, instability, too many fringe parties, having too much say. So how do you respond to those concerns?

AREND LIJPHART: I would say you can come up with specific instances, but of course there are also instances where you can say it has worked very well. Look at Germany, Norway, Sweden, the Netherlands. And the best way to answer all of these questions is to look at the general pattern. And even though you can come up with instances where things don't work that well, the general pattern is very clear. There are things that need to be improved. But the change to first-past-the-post is simply out of the question. I think the real problem with FPTP always is that you can get a government that has a great deal of power which may only be supported by about a third of the population. And if there's any first principle of democracy, it is majority rule. And on the whole, systems of proportional representation come much much closer to that than FPTP.

RB: One of the findings with proportional representation systems is that countries that have that kind of electoral system tend to have higher levels of tolerance for things like homosexuality, abortion, divorce, euthanasia, prostitution, and even a higher level of disagreement with the notion that men make better leaders. How do you square that correlation?

AREND LIJPHART: I think in proportional representation people are more attuned to the need for compromise and therefore also the need for tolerance. And it's not so much you know, a black and white thinking. So in that sense I think it is logical that when you have proportional representation, which means that people have a tolerance for minorities, that this attitude spreads to all kinds of issues like the ones that you mentioned.

RB: But if you're someone whose values are perhaps more on the right of the political spectrum, if you're not particularly interested in redistributing income or increasing social spending, passing environmental legislation, it sounds like your views might be disadvantaged by proportional representation. Is it possible that getting rid of first-past-the-post gives an unfair advantage to those who are left of centre?

AREND LIJPHART: I would think that first-past-the-post kind of leads to really minority government, minority power. So, that is the system that disadvantages people. With proportional representation, I think people all get basically the same chance. It might well be that say if people on the right who think that their viewpoints are not going to be heard sufficiently. But in fact those are just not shared by many people.

RB: Just finally professor, as we are entering this big change in how Canadians vote, what do you think that we as a country should know about this?

AREND LIJPHART: Well, I think they ought to keep in mind what the hard data tells them, which is that change to proportional representation would be a good thing for Canada. One of the difficulties I think will be to choose which form of proportional representation, and there are all kinds of details that need to be ironed out. And the chances of success depend a great deal on the supporters of proportional representation to agree on a particular form of proportional representation. Because one clear way to wreck the chances of that is for the supporters of PR to become such advocates for particular forms that in fact there can be no agreement at all.

RB: Professor, very interesting to talk to you today. Thanks very much for your time.

AREND LIJPHART: Thank you.

RB: Arend Lijphart is Professor Emeritus of Political Science at the University of California San Diego, and the author of Patterns of Democracy: Government Forms and Performance in 36 Countries. He was in San Diego. Electoral reform might not be one of those dinner party icebreakers, but I was curious to hear what Canadians know about the various different options. And so I hit a busy park in Toronto at lunchtime to take quite an unscientific survey.

SOUNDCLIP

[outdoors in the park]

RB: So, did you know that the prime minister has promised that he's going to change the voting system?

VOICE 1: I did not know that.

RB: OK, alright, do you know what our current voting system is?

VOICE 1: Going to the polls, and yes, I think so. [chuckling]

VOICE 2: No, not a clue.

RB: First-past-the-post.

VOICE 3: Oh, no, never heard of that. [laughing]

VOICE 1: No, I do not know the name sorry.

RB: Have you heard of first-past-the-post?

VOICE 1: Oh yes I have, yes, yes. First-past-the-post.

RB: Alternative vote, what's that?

VOICE 4: I'm guessing it would be you have a first and second choice, and somehow they rank maybe the majority of people that get overall votes. Like, if more people get first and second choice total then that would be the candidate.

RB: Are you just guessing on that one?

VOICE 4: I'm totally spit balling on that one.

RB: Here’s one for you, mixed-member proportional representation.

VOICE 5: Mixed-member proportional. OK, that's when people are representative of their population. Like, a good mix of the population, so everyone is represented.

RB: Yes. You're getting closer on that one. OK, and this is the last one. What is single transferable vote?

VOICE 1: That is something when you send a proxy to your real estate adviser or-- [laughing] I, you know, I could say, I could make up stuff but I'm not sure.

RB: Well, how might things have been different if proportional representation was the law of the land for the last federal election. Erin Kelly is the CEO of the data science firm Advanced Symbolics, and she is in our Ottawa studio. Hello.

ERIN KELLY: Good morning.

RB: What did you think of those guesses?

ERIN KELLY: [laughing] Well, the fellow who got AV correctly was fairly impressive, I thought.

RB: Indeed, there were some pretty impressive people and some maybe a little bit more clueless. Now, this is something Erin that you have looked at, and you've analyzed three types of electoral systems, and the results that they would have had in last year's federal election. Just take us through the different types of systems you looked at.

ERIN KELLY: Sure, and let me say before we start, I think it's very important that we don't do what Professor Lijphart suggested and look at what other countries are doing and assume that's going to work for us simply because we're English speaking. Nothing could be further from the truth. So, if we look at the 2015 election in Canada, what we would have seen if we had proportional representation would have been the Bloc Québecois would have increased their seat count by 60 per cent. That's 6-0 per cent. At the same time, as Professor Lijphart said, proportional representation favours minority governments. So, we would've seen the Liberals fall from majority status to minority status. So we would have had a weakened federal government at the same time that we would be greatly empowering the separatist party in Quebec. And I think enough Canadians have lived through that scenario in the past to know that that does not lead to better government in Ottawa.

RB: Why would the Bloc have done so much better under proportional representation?

ERIN KELLY: Because proportional representation, so it's fair to say that so far first-past-the-post has been keeping a lid on the Bloc Québecois. What proportional representation does is award seats according to the popular vote that the party wins. So, in the case of the Bloc Québecois, they won a greater portion of the popular vote than they got in seats in the first-past-the-post scenario. But under proportional representation, they would be awarded seats for the popular vote. And keep in mind Quebec didn't run candidates in every riding in the last election. Under proportional representation that wouldn't matter, they would be awarded seats whether they ran candidates or not.

RB: You also looked at the system of ranked ballot. Just very briefly explain how that works and how the results would have been different.

ERIN KELLY: So under a ranked ballot, electors or voters get to choose their first, second, and third choice, as mentioned earlier in the program. This is the best solution in our view for Canadians, because it allows you to get a more diverse and more democratic system. As Professor Lijphart was discussing. It also would allow more, you would also see in Canada more women and more minorities winning election under a ranked ballot than first-past-the-post. What ranked ballot avoids is the Bloc Québecois issue, because the reason visible minorities, women, and parties like the NDP would get more votes under ranked ballot is because they are everybody's second choice. And when you're everybody's second choice in a ranked ballot you win the seat. The Bloc Québecois is nobody's second choice, you're either a separatist or you're not. Nobody's going to say that I’m going to vote for the federal party and if they don't win I'd like to separate. Under a ranked system in fact, we would probably see support for federalism rise in Quebec.

RB: This is all very interesting because Prime Minister Trudeau has obviously done very well with the current system of voting, so why do you think he's pushing for reform?

ERIN KELLY: Well, yes he did well in the last election, of course Liberals don't always do well under first-past-the-post. There's a difference between saying I don't like first-past-the-post and then choosing which system you like after that. So the Liberals would do fantastic under a ranked ballot, that’s what our results are showing. They'd do even better than they did under first-past-the-post. Under first-past-the-post they won 184 seats, under ranked ballot they’d win 193. The big losers aside from the Bloc Québecois in a ranked ballot would be the Conservative party, and that might be another reason why the Liberals want a change. The Conservatives would have lost about 10 per cent more seats under a ranked ballot.

RB: The idea of having a referendum on electoral reform has been floated. The Conservatives say they certainly do want one. What do you think of the idea?

ERIN KELLY: Well, based on what we heard earlier I mean, we'd have a big hill to climb to get people educated. And especially if you're going to get into STV vs. MMP vs. AV. I mean, I think we'd have to have you know, a simple way of explaining it. Proportional representation is easier to explain than the ranked ballot, so that would be another challenge that just not being able to explain it properly could prejudice the results.

RB: Do you get the sense that the public cares enough about electoral reform that they would actually get out and vote in a referendum?

ERIN KELLY: I don't know. I don't think they care [laughing] whether they get out and vote. I mean, I guess that depends on you know, how much we make them care between now and then. At the moment, it sounds even more boring than Meech Lake. [laughing] Frankly--

RB: That's a feat. [laughing] But why do you think that people don't care?

ERIN KELLY: Probably because you know, we haven't really talked about it much. I mean, I know it's talked about a little bit in the newspapers, but some of those things that you just glide over I mean, when you're reading the headlines. It sounds complicated, it's very bureaucratic. I think we need to start talking about it in terms of what would the difference be. Instead of saying well, you get to pick this that and the other thing, and then we throw out the last ballot. That sounds very boring. If you say look, we're going to change the system so that more women and visible minorities are elected. We're going to change the system so that we have more environmental parties, we have more political discussion. I think that would get people a lot more interested than saying we're going to change the ballots around.

RB: How optimistic are you that we will have a new electoral system in place by the next election?

ERIN KELLY: Well, we've got a majority government and they've made it very clear they want to do this. I'm fairly op-- well, it depends if they have a referendum, I think we'll get a different result than if they just try to push it through parliament.

RB: Erin, good to talk to you this morning, thanks very much for your time.

ERIN KELLY: Thanks Robin.

RB: That's Erin Kelly, she is the CEO of data science at the firm Advanced Symbolics. And she was in our Ottawa studio. And now over to you, how would you change the country votes? What do you think of the idea of a referendum? You can send us an email by going to our website and that website is cbc.ca/thecurrent. You can click on the contact link. You can also find us on Facebook or on Twitter @TheCurrentCBC. Well, coming up next is the news and then uncorking the world of fine wines where everything is not always as it seems. We will hear from the makers of the intoxicating documentary film Sour Grapes in our next half hour. I'm Robyn Bresnahan, and you are listening to the summer edition of The Current.

[Music: Extro]

ENCORE: Sour Grapes documentary uncorks high-end world of fine wine fraud

Guests: Jerry Rothwell, Reuben Atlas

ROBYN BRESNAHAN: Hello I’m Robyn Bresnahan, and you’re listening to the summer edition of The Current.

[Music: Theme]

RB: And coming up next, the rarefied world of the wine connoisseur.

SOUNDCLIP

[MOVIE DIALOGUE]

I like to think about the life of wine. How it's a living thing. I like to think about what was going on the year the grapes were growing, how the sun was shining, if it rained. I like to think about all the people who tended and picked the grapes and if it's an old wine, how many of them must be dead by now. I like how wine continues to evolve, like if I opened a bottle of wine today, it would taste different if I'd opened it on any other day. [Piano music begins] Because a bottle of wine is actually alive and it is constantly evolving and gaining complexity. That is, until it peaks.

RB: Well, the passion that wine aficionados can sum up for a bottle of vintage grape juice can be something to behold. For true wine lovers such as the characters from the movie Sideways, who you just heard a bit about there. It is more than an intoxicating hobby, it can become an obsession. Now pair that passion and infatuation with a sizable bank account and you can gain entry into a rarefied world of fine wine collectors. It is a world full of fascinating characters and one that film directors Jerry Rothwell and Reuben Atlas introduce us to in their documentary Sour Grapes. They spoke with Anna-Maria Tremonti in May.

AMT: Jerry Rothwell, take me into the world of these wine collectors.

JERRY ROTHWELL: So, these are wines that might cost between sort of $100 and $100,000 a bottle, so we're talking about a kind of wine that is way beyond the price range of most of us, I guess. And I think, the time period of the film is 2002 to 2012, at a time at which there was a lot of kind of new money around the finance and new media boom and I think a lot of people got into wine and a lot of wine groups were forming around that, where wine became a sort of bragging right. People would be bringing the most expensive, the most valuable bottles to those groups.

AMT: $100,000 for one bottle. Who pays that kind of money? Who are they?

JERRY ROTHWELL: Well, you've obviously got to be kind of a billionaire with a lot of money to spend.

AMT: Reuben Atlas, there's a man named Rudy Kurniawan who is at the centre of this story. How does he emerge into this high end wine scene?

REUBEN ATLAS: He sort of came on the scene around 2001, 2002 and there are rumours about him that he was a trust fund kid and his family owned a brewery in China, that he was here on a golf scholarship and that he had money to burn. He would show up at auction and put his paddle up and not put it down until he had everything that he wanted. A lot of people were curious about who this young mysterious guy was.

AMT: And how young is young?

REUBEN ATLAS: He was, I think at that time, in his mid-20s and this is a world where there's not a whole, or especially at that time, not a whole lot of young people at all spending, and definitely not spending that much money.

AMT: Jerry Rothwell, how did people describe his palette and his wine knowledge?

JERRY ROTHWELL: People thought he had the most extraordinary palate, you know, that any wine he could pick out where it was from and what year it was, and I think that was true. You heard that from enough people that there was a sense that Rudy was like a kind of super taster. He was someone who had this incredible natural gift to taste and identify wine.

AMT: Like a savant.

JERRY ROTHWELL: Exactly. The word savant was used a lot.

AMT: Of course, he ends up hanging out with the people who buy these wines because according to your film, they hang out, they have big meals together, they share wine, I don't think I've ever seen that many glasses on one table. He sells millions of dollars worth of wine at auction. I have a clip of him from your documentary talking about the price of wine. Let's listen to that.

SOUNDCLIP

RUDY KURNIAWAN: When we drink wine, we don't look at the price value, we look at what we get from the wine, the excitement, you know, the passion, the way to make the wine and everything. It's not about the price of the wine, you know. Oh my gosh. This is, it’s cork. [laughter]

AMT: Reuben Atlas, why do you think some people are willing to spend so much on wine?

REUBEN ATLAS: There's a very similar comparison to fine art. If you put a lot into learning about history and learning about the culture and where the wine came from, you care about it like you would art. And then there's part, especially during the time this story took place where wine was becoming a commodity in a way that stocks were commodities, and the price of wine was shooting up and it became a good investment.

AMT: And how did the rise of a high rolling wine culture affect the price of wine? What happened in the market?

REUBEN ATLAS: It skyrocketed almost 20-fold. Between 2000 and 2006, the parallels to the stock market are very similar.

AMT: They would go to wine at auction, how did that work?

JERRY ROTHWELL: So, you know wine would be consigned by collectors. We’re usually talking about wine that might be 20,40,60 years old, so is it becoming increasingly rare because more and more of it is being drunk. These are being consigned from kind of old cellars or from collectors who've had them for a long time, and typically you will get an auction catalogue, you’ll decide what to bid on, and decide mostly on the basis and mostly of a picture and the description in the catalogue.

AMT: So, how did Rudy contribute to the frenzy over Burgundy wines?

JERRY ROTHWELL: Rudy contributed to that because he specialized in buying Burgundy so, you know in a way, he was kind of cornering the market in Burgundy and that helped the price increase even more.

AMT: And how much wine was he able to sell?

JERRY ROTHWELL: In one year, in 2006, he sold 35 million dollars’ worth of wine through Acker Merrall auction house in New York. You know, I think it was selling before that, he was also selling to private collectors, and he sold again in 2007, 2008, 2009, so you know I’d say you could probably say there's a figure of around $100 million worth of wine was sold by him over that period.

AMT: It’s so extraordinary. $35 million in one year. As you followed this through, when you look at those numbers, what were you thinking? Is this a new world to you?

JERRY ROTHWELL: I mean, they're crazy numbers. In some ways it is a film about money as well, and about how money kind of detaches itself from the value of the thing which it's paying for; that the numbers are insane.

AMT: Well, at the top of his game, Rudy is living the good life. Let's listen to that.

SOUNDCLIP

[ominous music playing]

One person described Rudy as having a never ending reservoir of needs. He ran like 16 million dollars through his American Express account.

Rudy had a number of very nice cars, an Italian sports car, a Mercedes, SUV. He purchased a mansion in Bel Air, California. He was buying contemporary art, he had Damien Hirst, he had some Warhol. All of these trappings go into creating Rudy. He was like the Gen-X Great Gatsby.

AMT: Okay, Reuben Atlas, how did that empire begin to crumble?

REUBEN ATLAS: I think it coincided with the, you know, the same way that the stock market was moving, and that when money dried up around Rudy and around the world of wine, I think that's when you start to see Rudy looking for loans and things like that. I think people also started to see that there were suspect bottles floating around the marketplace all pointing back to him.

AMT: You introduce us to someone who had some suspect bottles, and he's not just anyone, he's a Koch brother. Who is he?

REUBEN ATLAS: He's the twin brother of one of the more famous Koch brothers, and Bill is a big collector in lots of different things and happens to be one of the biggest collectors, and sort of most reputed collectors in the wide world. But, he does not spend the same money on politics that his brothers do.

AMT: He spends his time online and in your film we see him finding fraudulent wine in his cellar. This is Bill Koch describing some of what he has found.

SOUNDCLIP

[mysterious music playing]

We had to find experts who knew about corks. We hired a guy who knew about labels, capsules, glass and even looked at the glue. You know on an 1858 bottle, we found Elmer's glue, and Elmer’s glue didn't come in until sometime in the seventies.

AMT: The Elmer glue on the label--he had his own investigator?

JERRY ROTHWELL: As soon as he started to realize there were fake wines in his cellar, he basically decided he wanted to see what the scope of the problem in these 43,000 bottles that he owned was, so he pulled in an incredible team and in a way, Bill Koch is very unusual. It was hard for us to get people to talk about fake wine and fake wine they might own because obviously there's a risk that you know, suddenly their cellar is worthless, they don't want to seem a fool, of being conned, whereas Bill Koch has kind of made a crusade out of it.

AMT: Before there's a trial, there's an investigation and Bill Koch has his own investigator. Reuben Atlas, that man is Brad Goldstein. How does he go about his job of exposing fake wines?

REUBEN ATLAS: Brad had all of the resources of Bill’s wealth at his disposal, so he hired a team, like an all-star team of experts and FBI and you know, had people go to Indonesia and they could basically do whatever he wanted to sort of track him down. One of the most revealing places that he went was where Rudy was supposed to be from, and where he was supposed to be holding assets or a house, and he found out that there wasn't anything related to Rudy there.

AMT: A little storefront. Jerry, what's known now about how he was producing some of his fake vintage wine?

JERRY ROTHWELL: When the FBI raided his house, they found 17,000 labels and bottles soaking in the sink to soak the labels off, capsules, corks. As the investigator says in the film, you know ten times ten, times ten of the amount of evidence he would hope to find; all the evidence that you need around to prove that someone's been faking wine, but Rudy really wasn't only kind of reproducing bottles and labels. You have to get a bottle of the vintage, of the correct vintage for the wine you're faking, you have to do a good version of the label, but also you have to kind of put wine in that bottle that at least will pass as the original wine. Sometimes these are wines that the people you're sharing them with or selling them to have never tasted before and obviously that's good for the faker. But, you do need to kind of create something similar to that wine and really would be buying old, off-vintages from France, blending them with Californian wines to try and match the specific tastes of the wine he was faking.

AMT: It was a lot of work.

JERRY ROTHWELL: Yeah, for sure. Yes. People said he used to be very nocturnal. [laughs] He would be up late at night blending.

AMT: And this was going on in this mansion that he had?

JERRY ROTHWELL: He had a house in Arcadia in Los Angeles. He had bought a mansion which actually he never got to live as he was still in the process of redeveloping it when his house was raided. So basically, yes he was doing it in the kitchen of his home where lived with his mother.

AMT: The FBI gets involved, you quote ‘One of you FBI guys says that he actually had to buy Wine for Dummies’?

JERRY ROTHWELL: [laughs] Yeah, I mean that the FBI department got involved with it. It was the department that's around kind of art and I guess kind of cultural fraud. They hadn't taken on a wine case before and Jim, the FBI officer, I think he said you know, I've read the French Wine for Dummies book and that's how I got into it. You know, they visited Burgundy, they kind of got to learn about the specifics of Burgundy wine as part of the investigation. I'm told they weren't allowed to drink any wine, but it was certainly a kind of learning curve for him.

AMT: Well, that's a pity, but anyway [laughs]. Okay, well at the time that Rudy Kurniawan is auctioning off seemingly rare bottles of wine of Burgundy, there is a man named Laurent Ponsot. He is a wine producer from Burgundy. He looks at the catalogue that you were talking about earlier and something doesn't add up. Let's listen to him.

SOUNDCLIP

[peppy French music playing]

This is the catalogue of the auction, April 2008 in New York. The page to present the main Ponsot, and when you see the pictures here, there is a 1929 Claude LaRoche. Ponsot started estate bottling in 1934, so first of all, in the catalogue, it was already wrong and fake. Everything here is also fake. Fake. These works were never used, we never sold any wine to Nicola, we never had this vintage printed outside the label here, and Clos St. Denis, Clos St. Denis, Clos St. Denis, ’45,’49,’66, and ’71, and we started to produce Clos St. Denis in 1982, so—

AMT:[laughs] I felt like I was watching the Pink Panther. It's so interesting, but Reuben how does this hurt the producers of wine?

REUBEN ATLAS: It has to do with it being your family's heritage and that somebody out there is sort of taking your family's name and using it, and what the people are opening when they drink the wine isn't actually the wine that your family made, and it's not rooted in the soil of Burgundy, maybe. I think ultimately it's a question of that's not my wine.

AMT: And this is a man you introduce us to, Laurent Ponsot, this is a man who cares deeply about his workers, his wine, this is a life, this is a business passed down through the ages, yes?

JERRY ROTHWELL: Ponsot’s family have been producing wine I think since 1872 in those small patches of land just south of Dijon, Burgundy. So for him, you know the 1929 bottle has associations of his grandfather. You know, he can probably find exactly how that was produced and who was involved in picking the grapes, so it's so it's kind of a history that for him, goes very deeply into his family.

AMT: Well, we get a sense of that from him and you'll hear it in this next clip. Listen to this.

SOUNDCLIP

[Peppy French music]

When you find a fake wine, it is dirt on the integrity of Burgundy and I wanted to wash it. So, two days later I jumped into a plane and I flew to New York.

AMT: Jerry Rothwell, what did Laurent Ponsot do to help solve the mystery of where this fake wine was coming from?

JERRY ROTHWELL: So when Ponsot was sent this catalogue, in fact by some American collectors where there was this suspicious wine, his first instinct was to try and get the wine pulled from the auction. He wasn't convinced that that would happen, so he decided to go himself and intervene and he traveled to New York, stepped into the back of the auction and basically held up his hand and said I withdraw my wine at the point at which those lots are being called. Apparently collectors had gathered from all around the US to come to that auction in the hope of buying those wines, so people were actually kind of very upset when they were withdrawn.

AMT: And so eventually we see reality catch up with Rudy Kurniawan. What else did we learn about who this guy is?

JERRY ROTHWELL: Bill Koch and Brad Goldstein not only wanted to track down which particular bottles were faked, I think they started to get interested in, okay who is who is the faker? Who is really Kurniawan? Rudy and his brother who was also someone who'd been around these circles both have the names of these Indonesian badminton players, so there was this kind of question about how they got these names, that seems a coincidence when in fact, I think their father had given them that name because of the danger to the Chinese in Indonesia. They seemed to have relatives who were involved in this bank fraud around the Asian banking crisis in the late nineties when one of his, possibly, we think, his mother's brothers made a number of fraudulent loans. A second brother, when the IMF put money into the banks in Indonesia, ran off with a large amount of money, I think around about 800 million dollars between them. Most of that money, 90 percent of that money has never been recovered so there was clearly--the origins of Rudy's wealth were not necessarily kind of legitimate origins.

AMT: And throughout the documentary, people seem to like this guy. Even Laurent Ponsot kind of likes him. Here he is describing a moment from the trial.

SOUNDCLIP

At a certain point of my testimony, our eyes, for once, get in touch and he smiled at me, and he made me a little sign with his head and smiled at me. [laughs] I found it bizarre, but nice.

AMT: Did either one of you ever get to speak to him?

JERRY ROTHWELL: We were both at the trial. We tried to make contact with him to get involved in the documentary; to give an interview. That wasn't something-- you know, he never replied to our calls.

AMT: And you were at the trial, that's how you met, right? You both wanted to do a film and you met there? You had different filmmaker perspectives and put it together?

REUBEN ATLAS: Yeah, we had both started developing films. Once we went to the trial, half of the audience was media and press and the other half was wine world, and it was a movie of itself. Everybody could have played themselves in the movie. And as soon as somebody came off the stand there was media and other documentary filmmakers are jumping on them trying to get interviews and things like that and Jerry and I would be, you know not near the front and sort of found ourselves talking in the back and we eventually decided to work together.

AMT: It is so interesting. So this guy is essentially, and you talk about that the money that might have gone on with a wider family, this guy was very comfortable conning people.

JERRY ROTHWELL: I think like all conmen, they're like the best conmen, you know Rudy was very charming, very kind of able to make human contact with people very quickly and was very, very knowledgeable about wine and very generous. So, all of the things which would enable you to kind of gain the trust of the people who you are then going to defraud.

AMT: So, in the end what was he convicted of?

JERRY ROTHWELL: So there were a number of quite complicated charges. I think mail fraud was one because he was involved in auction catalogues. Catalogues were sent through the post that had described wines as genuine that were not genuine. He was given a sentence of 12 years, he'd already been two years in detention at that time, so I think it is a ten year sentence that he's serving. At the moment, he's in jail in California.

AMT: If he was selling millions worth of fake wine, where did it go? Who's got it?

JERRY ROTHWELL: Well, you know there are lots of questions about the story, but we don't really know how much he produced, how much of his wine was fake. I think Bill Koch discovered he had 400 bottles in his cellar that were worth four million dollars, but not all of those bottles were produced by Rudy. There are other fakers around in the wine world. And the problem I think, is that those fake bottles will circulate. They're bought by private collectors. Often people won't necessarily want to let people know that these incredibly valuable bottles that they've got are fake. People will try to pass them on. The auction houses are taking them back and refunding in some cases, But there are still an awful lot of bottles out there.

AMT: But people bought them as investments so that means their investments are gone.

JERRY ROTHWELL: Yeah, I mean if you don't drink the wine, you've got to determine whether it's fake just from the label on the bottle, and then of course, wine goes off so it's a kind of an interesting crime because you have to [laughs] destroy the evidence in order to prove that it's fake.

AMT: Yes, and it is an interesting crime too, because we're watching all these high rollers who can't get their heads around the fact that they've actually even been duped.

REUBEN ATLAS: I think deep down they probably know, but there's a sympathy with--I think it comes down also to realizing that you have this friend of yours that you've been living with and sort of have respect for and you can't get over that he's somebody you didn't think he was. And there's also something super likable about Rudy and you don't want to believe that he's devious in any way because there is something super charming, and innocent, and boyish about him and you want to have a drink with the guy.

AMT: Which makes him the best con of all.

REUBEN ATLAS: Right.

AMT: And how has this affected that strata of the wine world?

JERRY ROTHWELL: I think there's a much greater consciousness about fakes and counterfeits in the wine world, but you know, auctions continue to sell. Even when people realized that there were a lot of fakes coming out of Rudy's cellar, people were still happy to consign his wine to auction or you know, consigned through third parties.

AMT: And after this film, what do you think, how much is too much to spend on wine?

JERRY ROTHWELL: [big laugh] Ponsot, I think says you know, the feeling you get from wine has no price. You can't equate wine to money, so maybe I’ll sit on the fence and say that. For me, I'd still never spend more than you know 30 dollars on a bottle of wine.

AMT: What about you?

REUBEN ATLAS: [laughs] I would say that if I had the money, I'd probably spend a little more than I do, but I don't.

AMT: It's a fascinating world that you lead us into. Thanks for your film.

GUESTS: Thank you.

RB: Sour Grapes directors Jerry Rothwell and Reuben Atlas talking to Anna-Maria last May. Well that is our program for today. Stay tuned to CBC Radio 1 for a new episode of The Current’s summer series Ripple Effect. And finally today, we have just been hearing about how the very rich spend their millions on outrageously expensive bottles of wine. Well, there was news this week about a multimillionaire making a very different kind of investment. Herb Alpert the famous trumpet player donated ten million dollars to the Los Angeles City College to provide free tuition to all of the school's music majors. Here's one of the songs that helped make Herb Alpert his millions. His number one hit from 1979, Rise. I'm Robyn Bresnahan, thanks for listening to the summer edition of The Current.

[Music: Herb Alpert]

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August 26, 2016 full episode transcript

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