The Black Rod

The origin of the Usher of the Black Rod goes back to early fourteenth century England . Today, with no royal duties to perform, the Usher knocks on the doors of the House of Commons with the Black Rod at the start of Parliament to summon the members. The rod is a symbol for the authority of debate in the upper house. We of The Black Rod have since 2005, adopted the symbol to knock some sense and the right questions into the heads of Legislators, pundits, and other opinion makers.

Location: Winnipeg, Manitoba, Canada

We are citizen journalists in Winnipeg. When not breaking exclusive stories, we analyze news coverage by the mainstream media and highlight bias, ignorance, incompetence, flawed logic, missed angles and, where warranted, good work. We serve as the only overall news monitors in the province of Manitoba. We do the same with politicians (who require even more monitoring.) EMAIL:

Monday, March 12, 2007

From the archives: The Crocus Timeline

With the wave of recent bombshell leaks of finance department memos and emails regarding the NDP cabinet's earliest knowledge of big troubles with the Crocus Investment Fund, we have to take a fresh look at everything we thought we knew, and when we knew it.

From our archives, we are reprinting our earliest timeline of what we thought happened when the fund collapsed.


The Black Rod (originally published Jan. 3, 2005)

Today's topic: the Crocus Fund.

The question on everyone's lips today is whether Crocus is about to croak.

Ever since trading in shares of the Crocus Fund was suspended in December, a cone of silence has descended over everyone who knows anything about, uh, that thing where they take your money and put it in stuff to, uh, create jobs and stuff.

The only thing we know for sure is that the NDP appoints someone to sit on the Crocus Board of Directors on the basis that that person will never, ever, under threat of torture or worse, tell the government anything that goes on with Crocus. Charlie Curtis, board member and the financial advisor to the Province of Manitoba Minister of Finance, is presumably the person sworn to eternal silence.

This forces us to dissect the shadows for clues to the real Crocus story. The Black Rod has examined the timeline of Crocus in '04, and oh, what a story it tells...

In January, Laurie Goldberg joins the Crocus Investment Fund as Chief Operating Officer.

In March, this story runs in the Winnipeg Free Press (emphasis ours):

"Key hiring boosts Crocus' outlook
John Pelton brings 'brilliant financial mind' to city firm
Monday, March 29, 2004
By Martin Cash

Crocus Investment Fund continues to beef up its organization as a prelude to its expected expansion into the managing of third-party institutional funds.
Last week, the $175-million labour-sponsored venture capital fund announced the hiring of John Pelton, the former CEO of Federal Industries Ltd., as its new senior vice-president, investment.
Crocus officials said although they were not able to announce details of any new funds for it to manage, they said the Pelton appointment means it will just be a matter of time before that is a reality."

Sherman Kreiner, President and CEO of Crocus, says to expect an announcement in 90 to 180 days.

In April, it's official as John Pelton joins Crocus Investment Fund as Senior Vice President, Investments.
In July, 90 days after Pelton signs on, a major announcement:

"Crocus to direct fund for downtown
Real estate development targets 'old Winnipeg'
Thursday, July 22nd, 2004
By Martin Cash

THE Crocus Investment Fund is going to manage a downtown real estate development fund on behalf of institutional investors, the first of what it hopes will be other, third-party funds that it will manage.
The Manitoba Property Fund closed on a $25 million offering this week with $10 million each coming from the Workers Compensation Board investment fund and the Teachers' Retirement Allowances Fund (TRAF).

The remaining $5 million will come from Crocus and Shelter Canadian Properties Ltd., a well known Winnipeg property development and management company controlled by Arni Thorsteinson. A partnership between Crocus and Shelter, with Crocus as the majority interest, will run the fund.

Fees for managing the fund as well as its share of the profits that are generated will flow directly back to the Crocus Investment Fund pool."

Prominently mentioned in the story is Alfred Black, the chief investment officer for WCB and chairman of TRAF's board and chair of its investment committee.

He says," This fund was presented to us as a good opportunity to make a good return on property available in old Winnipeg."

Seven months into the year, everything at Crocus looks hunky dory. But its all about to change.

In September, a mere two months later, Crocus announces a $1.10 reduction in its share price.

It's news release states:
"The adjustment is primarily associated with ongoing information technology positions Crocus took in the late 90's where performance expectations have not materialized. The optimism in the sector last year has not been sustained."
Coincidentally this is 180 days after the March announcement.

Only two days later, a shakeup. James Umlah, Chief Investment Officer and President of Crocus Capital Inc., is gone. He's taken another job with another company.

Laurie Goldberg moves into Umlah's job as President of Crocus Capital Inc., and John Pelton takes his desk as Chief Investment Officer.

Paul Soubry Jr. joins the board to serve on the board's investment committee.

Nobody mentions that Umlah was responsible for overseeing the Crocus Fund's investment committee, which evaluates proposed investments and recommends investments to the Board of Directors. He was also the CEO of Scitech, a subsidiary of the Crocus Investment Fund. In that job Umlah was responsible for investments of the Manitoba Science & Technology fund. That fund handles investments in information technology.

But something seems to have happened in either July or August, something which triggered the upheaval at Crocus.

The only evidence of that period bearing the fingerprints of the Crocus Fund is in the sad fortunes of Winnipeg company Infocorp Computer Solutions Ltd.

Once a jewel in the Crocus crown of investments, Infocorp has fallen on hard times by mid-2004. The value of shares tanked in May by the time trading was suspended by the Manitoba Securities Commission and---hey, hold on--in July, trading on the TSX was also suspended. July. How about that. One of Crocus' IT investments from the 90s hits the skids. Sound familiar?

In September, Infocorp files under the Bankruptcy and Insolvency Act for time to restructure itself. But no one is talking about Infocorp in September.

That month Goldberg and Pelton settle into their new jobs and read the files. What they see raises alarms.

Three months later, it's Dec. 10th, Black Friday.
* A trading halt is announced.
* Kreiner is gone.
* Two board members have resigned (one resigned before the trading halt was announced but his leaving was never revealed until after).

In a matter of days Paul Sobry Jr. quits too.

The National Post provides the next piece of the puzzle.

In a story headlined "Deepening Intrigue With Crocus Fund" the Post notes "The trading halt was initiated by three people from the fund's upper management...along with one board member who personally went to the Manitoba Securities Commission". The newspaper identifies the four as interim CEO Alfred Black, Laurie Goldberg, John Pelton and board member Albert Beal.

But wait a minute. How could Alfred Black go to the Securities Commission before he was on the board?

We guess he could have, if Goldberg, Pelton and Beal took their concerns to him directly, and he joined them in the long walk to the MSC, before he took Kreiner's job. If that's the case, the three Crocus amigos found out something which scared the bejeezus out of Black, something which probably involves the investments he's pledged to oversee.

And who's Albert Beal? His Crocus bio says he retired in 2001 from being Regional Occupational Health and Safety Advisor, Department of Fisheries and Oceans, Central and Arctic Region. He is presently Secretary-Treasurer of the South Eastman Regional Health Authority Board of Directors having served on the Board since 2000.

Well, we know he's got something to do with health. But does the Crocus imbroglio?

We know for sure that whatever the secret is, its big enough for Goldberg to forego about $25 million that Crocus would have raised during RRSP season.

Goldberg, as you recall, took Umlah's job as head of Crocus Capital. Crocus Capital is the wholly-owned subsidiary of the Crocus Fund whose job it is to sell shares of Crocus. He obviously felt he couldn't, in good conscience, sell shares that weren't worth what they cost.

Happy New Year Mr. Goldberg.

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