Doyle was a little bit testy, to say the least. We imagine he's been hearing from a lot of union brothers and sisters who stand to lose a good chunk of their pension savings with the demise of Crocus.
Anyway, Doyle wanted it clear that the MFL "strenuously denies any responsibility for misleading investors", as the paper put it. "I feel badly for these people. But there is no responsibility for the MFL in this," was the way Doyle put it.
We beg to differ, John.
The Crocus Fund is sponsored by the MFL. The majority of the board of directors is appointed by the MFL. The MFL hired, or at least approved wholeheartedly of, the management. The MFL seconded people to sell Crocus shares. And the direction of the Crocus Investment Fund was set by the MFL.
And that's really why John Doyle of the MFL is in a snappy mood these days---the Revolution is over. And labour lost.
While shareholders agonize over their lost investment, very little is being spoken about how they were used a footsoldiers in the battle over capitalism. Just as the 1919 Winnipeg General Strike was a challenge to the unfettered capitalism of its day, so too the Crocus Investment Fund was a challenge to the capitalism of today.
The MFL never hid that fact. Except during RRSP season.
Rob Hilliard, President of the MFL, had this to say when he appeared before a committee of the Manitoba Legislature in 2000.
Mr. Hilliard: ... I chair the Board of Directors of the Crocus Fund... I had the opportunity last fall to visit perhaps the mecca of employee ownership in this world in the Mondragon area of Spain. If we had a system that was like that all over this world, certainly in this province, we would have a much fairer, much better system.In Mondragon, the workers vote on who their supervisors are. They elect them. They vote on every single significant decision that goes on in their enterprise. They share in the equity. They share in everything on an equal basis. The manager, the top manager in their operation cannot make more than six times the lowest-paid worker in that plant. That is a fair system, and I would support ...any legislation that promotes anything like that.
The Black Rod has written about Sherman Kreiner's devotion to the Mondragon ideal throughout his tenure as CEO of Crocus. But we bet few Manitobans realize how thoroughly he turned the Crocus Fund into labour's wet dream. Not only did he promote employee ownership in investee companies as the Eleventh Commandment, but he transformed Crocus itself into the epitome of the labour movement's vision for society.
Here's how he described his masterpiece:
"The Fund has also raised the profile of corporate social responsibility. Internal business practices entrench pay equity and family-friendly workplace practices, embed a living wage policy and establish salary ratios between the highest and lowest-paid employees."
Except that the secretaries didn't have to take those onerous free trips all around the world like James Umlah and waste valuable family time at Disneyland, Avril Lavigne concerts, Las Vegas spas, and at $1400 lunches.
"Ahh, Sherman, do I have to...? I just got back from Banff. I don't wanna go to Berlin. I hate driving those Jaguars. And my tennis elbow is killing me."
"Yes, James, you must. As Chief Investment Officer it's your job to take free trips all around the world and play lots of tennis. You knew how hard the job was when you took it. So stop complaining."
For Sherman Kreiner, Crocus was more than just a tool to make money for investors. In fact, that's exactly what he told shareholders in 1997.
"But as we have said over and over again, the Crocus Fund was not created solely to generate numbers. When you invest in the Crocus Fund, you are taking a stand for all Manitobans against the effects of globalization."
And that wasn't the best of it. No, Kreiner saw the Crocus Fund as nothing less than the vanguard for Democracy itself:
"But if you can change the workplace, and are able to do that on a large scale, you create a lot of pressure to change the institutions which prepare people for the workplace. So a more democratic workplace results in a more democratic educational system which results in a more democratic family. All those things promote, in a very meaningful way, democracy in our society. Democratic workplaces increase the prospects that authoritarian or totalitarian governments couldn't come in with the kind of results that have existed in the Western world, even in this century."
Of course, this was easier to say before Crocus became a basket case. In the roaring Nineties, Crocus was touting good returns for its shareholders, and they had the luxury of thinking the team of Kreiner and Umlah could change the world and earn some coin at the same time.
Alas, it was not to be. All you needed to make money in the Nineties was a copy of the Financial Post, a monkey and a dartboard. When the internet bubble burst in 2000, Crocus began its slide to hell, Mondragon and all.
But what the shareholders didn't know was that it didn't matter to Kreiner, to Umlah, to the MFL gang, and, most importantly, to the NDP who were ostensibly the watchdogs of the fund.
NDP MLA Tim Sale (of the Hydra House scandal) said as much when Crocus was still riding high four years after its inception:
"The unit value of shares has increased by an amount of approximately 15 percent since inception. While not a particularly sterling record of increase in investment value, that was never the purpose of labour-sponsored funds. Labour-sponsored funds were to stabilize employment, to offer new employment opportunities, and to work, as I have said, at community economic development."
He went on: "They look at how the proposed investment would affect our environment...They look for employment policies that comtain employment equity...They look for workers councils or for workers seats on boards of directors. In other words, they follow what might broadly be called a European model of economic development, rather than a North American model...Those are the kinds of criteria a good labour-sponsored fund employs in making its investment decisions."
Of course the European model of economic development has left Germany with 12 percent unemployment and no growth and France marginally better with 10 percent unemployment and growth measured in slivers.
But even as things were going sour with Crocus, Kreiner et al were working overtime on their social revolution.
They created a nonprofit organization, Community Ownership Solutions, to renovate homes in the Inner City and create "quality jobs". That's non-profit, like in no return to shareholders.
They sponsored a program with the University of Manitoba to teach participative management.
In 2003 the Fund joined others in creating a Centre of Employee Ownership in the university's business school.
And then there was the "investment" in the Manitoba Centre for Labour Capital, along with the MFL (them again), and other Manitoba unions. Here's how one union website described it:
MCLC is a non-profit corporation aimed at building knowledge and skills for union pension trustees, leadership, and activists so that working people will be assured of having well-governed pension plans with well thought out investment strategies that benefit pension plan members.
There's that word again, non-profit.
And, who's that? Why, it's former MFL president, former Crocus Fund president Rob Hilliard gone to work at the MCLC. (Not to be confused with the MLCC, which more Manitoban's support).
Rob? What were you teaching these past few years? Ponzi Year One and Ponzi Year Two? Did your time at Crocus come in handy?
There was a lesson to be learned, though--- If you want a pension, keep your labour rep's hands off your money. And --- it helps to have friends in high places.
Two years ago, Crocus officials got wind that Tory MLA John Loewen was about to ask questions. They went ballistic. You would think Loewen was accusing Michael Jackson of being a child molestor. Crocus managment, hello Mr. Kreiner, threatened to sue Loewen, the Conservative Party, and anyone else who showed any interest in questioning the valuations of their portfolio. Then, to rub his nose into it, they forced Loewen to buy shares in Crocus. Ha ha. How they must have laughed about that in the board room later.
And then came the famous ad by Crocus investees.
SETTING THE RECORD STRAIGHT.
Winnipeg Free Press
Saturday, February 23, 2002
As members of the Crocus Group of investee companies we found it particularly offensive that any member of a political party would choose to attack the credibility of our investment partner without undertaking proper due diligence.
It was signed by the owners of a dozen companies which had gotten money from Crocus. Among the signatories---Sam Katz, President and CEO of Winnipeg Goldeyes Baseball Club Inc. Katz and the rest sang the praises of Crocus like good corporate citizens should. Then, reading the minds of Manitobans, they added:
THIS AD WAS DEVELOPED WITHOUT THE PRIOR KNOWLEDGE AND APPROVAL OF THE CROCUS INVESTMENT FUND AND PAID FOR BY THE ABOVE NOTED COMPANIES
Not that anyone believed them then. Or now.
But when it comes to friends in high places, you can't beat the government, the watchdog that not only doesn't bark, but which wags its tail, licks your face and rolls over for a tummyrub when it sees you.
As Crocus humiliated Loewen, Premier Gary Doer couldn't hide his glee. He bit his tongue for a few months, but finally could stand it no more. In a response to Tory leader Stu Murray, the Premier said what he believed:
Hon. Gary Doer (Premier): Mr. Speaker, this is a Leader of the Opposition who has a Finance critic who attacks the Crocus Fund, which was one of the engines for employee ownership across Manitoba. So let him not feign this new-found interest for employee ownership. They tried to kill employee ownership with their unwarranted attack on the Crocus Fund.
Now remember, this was after the government had been warned internally that there were problems with Crocus. This was after a prudent government would have asked questions about valuations--just to be sure.
But the NDP did not want anyone asking questions, just like the MFL did not want anyone asking questions, and Crocus did not want anyone asking questions.
The NDP has spent the past six months ducking questions. They appointed a director to sit on the board of Crocus, then bragged that he told them nothing. His only responsibility was to shareholders, at least 40 percent of whom are union members.
Never mind that we, the public, are all shareholders thanks to the $2 million seed money put into Crocus.
There's another, more famous family, which also practices the code of Omerta.
And they, too, have attracted the attention of legal authorities.
The NDP can't hide behind their appointed member of the board anymore. He quit. Without ever reporting a thing to the shareholders to whom, according to the man who appointed him, he owed his sole allegiance.
The NDP tried, with a straight face, to turn this into a positive but announcing that they would change the law so that the public could select someone to sit on the board of Crocus instead of having the government appoint a person.
* Did they know when they made that public announcement that there would soon be no point, that Crocus was about to be wound up?
* Did they know that the decision to kill the Crocus Fund was being made with no shareholder member sitting on the board?
* That the investors who the NDP claimed to be worried about all these months, are totally shut out of the decision-making process?
* That all the decisions are being made by the non-public board members, the majority of which are appointed by the NDP's long-time political ally, the MFL?
These are just a few of the questions left unanswered in the entire Crocus scandal. And these are a few of the reasons why a public inquiry is needed more than ever.
We must have a public inquiry to discover
- when the Crocus board realized the fund was in trouble,
- who was told,
- who made the secret loan from the Quebec Fond,
- was the Fond part of the conspiracy to lie about the loan,
- which board members knew the truth and approved misleading the public about the purpose of the loan,
- what discussions were held about taking money from Manitobans who were being misled about the health of the fund, and
- what the government--and the public's-- representative on the board knew, when he knew it, and what he told his political masters.
The government is counting the days until the current session of the Legislature is over. They hope they can spend the summer hiding, to let the heat die down.
Could they hide from a rally of thousands of Crocus investors and Manitoba taxpayers on the Legislature grounds ?
Could they hear us then ?