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Why Manor won't come back - yet

Boaz Manor's convoluted journey through the Israeli justice system is poised to take a new twist this week when he will ask a court for approval to return to Canada to face criminal charges related to collapsed hedge fund Portus Alternative Asset Management Inc.

In an unusual development, Mr. Manor's request is likely to be opposed by KPMG LLP, the receiver overseeing the bankruptcy of Portus. While KPMG would like to see the Portus co-founder return to Canada, it has been unable to reach a deal on terms to govern lifting a travel ban imposed in 2005 by an Israeli court.

Adding to the complication, RCMP officials in Canada have already negotiated surrender terms for Mr. Manor and are keen to see him on an airplane to Toronto. But KPMG has not been able to come to terms, Mr. Manor's criminal lawyer, Brian Greenspan, said yesterday.

"We, as his criminal counsel, and the RCMP and the prosecution have been bystanders, which is really what we are right now, because it has to be resolved in Israeli court with respect to the travel ban," Mr. Greenspan said.

Mr. Manor's travel ban is set to expire Oct. 18, so a court hearing must be held before that date to renew the order. Mr. Manor's Israeli lawyers will ask a judge to give precedence to the criminal charges and let him leave for Canada.

"They're going to take the position to lift the ban, that it's the right thing to do," Mr. Greenspan said. "He's been anxious to return since the arrest warrant was issued. The criminal law issue should trump anything that's happening [in Israel]."

The travel ban was put in place at KPMG's request in 2005 to prevent Mr. Manor from leaving Israel for another country.

In September, the RCMP charged Mr. Manor and Portus co-founder Michael Mendelson with multiple counts of fraud, money laundering and possession of property obtained by crime.

Since then, KPMG has said it wants Mr. Manor back in Canada, but it also wants to ensure creditors' rights are protected. Lawyers for KPMG will argue next week that the order should be renewed for another year.

"And, then hopefully we can work something out," said Bob Rusko, the KPMG partner handling the Portus bankruptcy. "We just don't think it's appropriate to lose the right to go after assets."

Mr. Greenspan said most issues have been resolved with KPMG and the only hurdle preventing a deal is a dispute over the fate of ongoing litigation in Israeli court over efforts to recover $9-million (U.S.) worth of diamonds that Mr. Manor took with him to Israel.

He said KPMG wants the right to be able to continue the Israeli proceedings after Mr. Manor leaves, while Mr. Manor's lawyers have argued the dispute should move to Canadian court for a resolution.

Mr. Rusko said there is no urgency for Mr. Manor to leave Israel since it could be months before the Canadian criminal case goes to trial.

© 2007 The Globe and Mail. All rights reserved.

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