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HIRST RIDES TO THE RESCUE

(written June 29, 2005)

Who can resist a love story? Not The Black Rod.

So we're all agog watching a romance rekindled right before our eyes.

There's the knight in shining armour; let's call him Nicholas, come riding to the rescue. There's the damsel in distress; let's call her Crocus, about to be sold off by the evil villain. His name is The Receiver. The Receiver doesn't that just send a chill down your spine.

And the best part of this love story is that its all true.

Nicholas Hirst, the former editor of the Winnipeg Free Press, has come to save the beautiful Crocus Fund from the clutches of the Receiver so that she can bloom again in all her labour sponsored glory.

But this has created a dilemma for the Free Press. We're sure you've noticed that the newspaper is putting out almost a story a day on the Crocus scandal, no doubt to atone for missing the biggest financial and political scandal in the province until the Auditor General called a news conference.

And day after day they trot out the magic words "red flags" to point out that they weren't the only ones who couldn't see the scandal under their noses. The government missed the red flags, eh. And so did the Manitoba Securities Commission, eh. And how about Stu Murray. Yeah, Stu Murray did too, eh.

But wethinks the Grey Lady doeth protest too much. Because The Black Rod has discovered a clue, a red flag if you please, to explain the myopia of the Winnipeg Free Press when it came to the Crocus Investment Fund.

When Tory Finance Critic John Loewen first began asking questions about Crocus in February, 2002, the Winnipeg Free Press saw the red flags all too well. But they didn't give Loewen a full page to explain his position like they did to ex-Crocus CEO Sherman Kreiner a while back. Instead, they had their reporter Martin Cash churn out an apologia.

Winnipeg Free Press
The truth about Crocus-- beyond all the bluster Fund succeeds in risky world of venture capital
Friday, February 15, 2002
By Martin Cash
Crocus Investment Fund, drawn into the public spotlight this week by Tory finance critic John Loewen, has done as well or better than most other labour-sponsored venture capital funds across the country.

The bluster, was it, Martin?

But it's not Cash's puff piece that's the "red flag" in this story. No, to understand why the Free Press dismissed - not missed - the Crocus scandal we have to return to our love story.

For it was four years ago when Nicholas gazed into the eyes of Crocus and was smitten. Like Tom Cruise on Oprah's sofa, he professed his undying love to his Katie. We don't know if he had to convert to Crocusology, the worship of all things Mondragon, but we know they began going steady and it soon turned hot and heavy.

In November, 2001, a giddy Nicholas went public with their relationship. They were going to have a Conference together. Hearts melted. Lovers cooed. A conference. Together. Can it get any better than this? Yes, it could. They even called their conference "Getting Together, 2001". Awwww.

Nicholas went between the sheets first.

Winnipeg Free Press
An effort to connect the cliques
Saturday, November 10, 2001
By Nicholas Hirst
If I remember correctly the idea for a conference on how to get the economy in Manitoba moving faster than it has moved for decades, came from Sherman Kreiner, president and chief executive officer of Crocus Investment Fund. (He may blame me.) This was sometime in the spring before the collapse of high-tech stocks, before the word 'recession' had been mentioned by any credible forecaster and way before Sept. 11. It seemed like a very good idea and one that I was pleased to commit the Free Press to join Crocus in organizing.

Then Sherman followed that Alphonse-and-Gaston routine with this...

Winnipeg Free Press
Growing together 2001 Time to embrace a can-do vision
Monday, November 12, 2001
By Sherman Kreiner
Are we a "can-do" community? Some communities seem to get things done and their pattern of success generates confidence in meeting new challenges. Soon the tangible accomplishments and the collective self-confidence create a real "can-do" attitude.

This wasn't going to be some rinky-dink regional conflab. This was to be modelled on the annual economic conference held in Davos, Switzerland. These boys were thinking big.

And Martin Cash was there to capture all the glory.

Winnipeg Free Press
Looking to the future Conference taps into community in bid to build economic vision for Manitoba
Tuesday, November 13, 2001
By Martin Cash
David Friesen, Rob Hilliard, Annitta Stenning, Emoke Szathmary and David Graves are a diverse group of Winnipeggers who individually have all achieved a high level of success in their respective fields,,,

November, 2001, Nicholas and Crocus co-host a conference. Remember this was held less than 3 months before Tory MLA John Loewen tried to ring alarm bells about Crocus and got Kreiner's threats of a paralyzing lawsuit as a response.

Do you think anyone at the Free Press was about to suggest that, maybe, somebody should look into Loewen's accusations? Can you say 'Career Ending Move'?

The editor of the Winnipeg Free Press and the CEO of Crocus were in bed together. Partners. Pals.

What do you have when you take a Visionary like Nicholas Hirst working with a Visionary like Sherman Kreiner under the watchful eye of a Visionary like then-mayor Glen Murray? (A Liberal Party kleptocracy? ed.) No, a mutual admiration society. You know, my baby and me.

Do you think this had anything to do with why the Free Press ignored the Crocus story in February, 2002, and every month thereafter? Goodness knows, it's not like The Black Rod wasn't pointing out the red flags to the Free Press week in and week out for the past six months.

Since the Auditor General's report on Crocus, the Free Press has had an aggressive approach to the fund---a passive aggressive approach, that is.

They gave Sherman Kreiner a full page to respond to the charges in the AG's report.

But they didn't bother to compare Kreiner June 19 with Kreiner June 1, the last time he was quoted in the paper. We did. For example:

Kreiner June 19 says he went to the Quebec Solidarity Fund "seeking an investment". The Philadelphia lawyer adds "both we and the Solidarity Fund believed they had made an investment." He cites a Free Press article from 2002 to prove it.

That article, by, wait for it, Martin Cash quotes Dany Laflamme, vice-president strategic development, investment at the Fonds de Solidarite .

"First, we think it is a good investment," Laflamme said in a telephone interview from his office in Montreal.

Yes, it was. For the Fond. They got 20 percent a year for two years with no risk. But its no "investment" when you're paying somebody 20 percent a year for two years for the pleasure of holding their money in a safe. Kreiner says that's too arcane for him to understand.

But the June 1 story quotes Kreiner's own letter to the Fond in which he writes "we presently face a short-term liquidity challenge" as the reason for the "investment." And the Free Press ignores the logical extension of Kreiner's defence.

If he depended on the Crocus Fund auditors, PriceWaterhouseCoopers, and their lead broker Wellington West, for guidance on how to turn a loan into an "investment' in the Crocus prospectus, then obviously the public interest demands a public inquiry which will look into the role of the auditors and the lead broker in the Crocus scandal.

Enron's auditors didn't escape scrutiny, and the public learned a lot about how they "guided" Enron's public accounts.

The Black Rod also notes that Kreiner failed to mention yet another article in the Free Press, something we call Exhibit A, where the Fund openly touted tax savings and no money down in a desperate attempt to lure investors away from other institutions. This was last November when Kreiner and Hirsts' pet project, the MTS Centre opened, and there was the ad, for all to see.

The problem is when the ad ran, according to the auditor the officers already knew the fund was facing a devaluation. It was only a matter of how much and how soon, a guaranteed loss for any one who "took advantage" of this offer.

The RCMP is examining Exhibit A and it sure would be interesting if someone who volunteered for the new board of Crocus was asked to attend "D" Division for an interview about what he knew, and when he knew it.

This weeks editorials in the Free Press bemoaning the lack of traction for the Tories on this issue, and how Gary Doer and his government are not fatally tarred in the eyes of the public, boils down to one thing. The Free Press reporting on Crocus let the public down.

Had the Free Press under Nick Hirst seen Crocus for what it was, and not for what he wanted it to be - well love is blind and so was the editorial direction of the Free Press.

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