Skip to main content

The ABC's of WCB's Conflicts of Interest

You'd think that in this age of instant scandale du jour, every business and every agency would work at being squeaky clean when it comes to questions of conflict of interest. You obviously don't know about the Manitoba Workers Compensation Board.

Manitoba's auditor general says that until recently the Workers Compensation Board had no clear conflict of interest policy. And the problems from that omission were never more obvious than when WCB went into the real estate development business with the Crocus Investment Fund.

Auditor Jon Singleton says the compensation board "placed their public reputation, and monies of the WCB, at risk" with the partnership because of the tangled web of interconnected relationships that created at least the appearance of a conflict of interest at almost every step.

Singleton makes clear he isn't speaking about anyone making a personal profit out of the deal, but rather about the power relationship between the major players that had underlings expressing concern, over and over, about how it looked. And it looked bad.

The auditor's review of WCB governance and other issues uses what it calls the "ABC Fund" to illustrate the conflict of interest situations.

The Black Rod can tell you that he's referring to the $25 million Manitoba Property Fund, which was announced with great fanfare by Crocus CEO Sherman Kreiner in the summer of 2004.

Singleton gives a blow by blow account of how the fund was put together, but the story is confusing and sterile without an understanding of how central the Crocus Fund is to the deal.

WCB and the Teachers Retirement Allowances Fund (TRAF) were to each contribute $10 million to the property fund, Crocus would kick in $3 million and Shelter Canadian Properties Ltd. would add $2 million.

The purpose of the fund?

" develop real estate in downtown Winnipeg," according to John Pelton, senior vice-president of investments at Crocus Investment Fund and president of the Manitoba Property Fund. The words revitalization and redevelopment were tossed around a lot.

The fund was a dream come true for Sherman Kreiner, who had, for years, talked about taking Crocus the next step up into managing third-party funds. In this case, Crocus and Shelter would collect a management fee of 1.5 percent of committed capital in a roughly two-thirds, one-third respective split.

The idea for the fund was first floated in December, 2001, according to Singleton. It was pitched to the WCB in March, 2002, a month after Kreiner squashed Bernie Bellan's plans to ask questions publically on behalf of shareholders about the valuations of Crocus fund holdings. Life was good.

Singleton's review makes clear how much of a one-man-show the Workers Compensation Board had become. Chairman Wally Fox-Decent ran a tight ship; staff told Singleton he micro-managed them to death. And 'What Wally wants, Wally gets' was pretty much the WCB motto.

But that's where the problems began.

* Wally Fox-Decent was chairman of WCB and at the same time the chairman of the Crocus Fund investment Committee.
* Sherman Kreiner was CEO of Crocus, and at the same time an advisor to the WCB investment committee.
* And Alfred Black, the chief investment officer of WCB, was at the same time the chairman of TRAF. He would later become interim, then permanent CEO of Crocus.

Confusing enough? We'll try to unravel the web.

- Sherman Kreiner wanted WCB to invest in the Manitoba Property Fund.

- Wally Fox-Decent stickhandled the idea through WCB committees, mollifying concerns raised by his own board members, consultants, and his director of investments.

The concerns? A lack of other institutional investors; conflicts of interest amongst certain of the parties; and the need for WCB to perform its own due diligence on the investment, among others.

- Kreiner was doing his part with the help of Alfred Black. They pitched the new fund to the TRAF board to become that other "institutional investor".

By December, 2003, it was almost a done deal. Kreiner informed WCB that TRAF was in, the deal could be consumated.

But who wasn't "in", was the CEO of TRAF who had resisted all the blandishments and kept raising concerns. In late January, 2004, he was advised by Black and the TRAF board that "his employment was terminated."

- The deal was announced in July, 2004---just before the Crocus Fund entered its own death spiral.

At year's end, says Singleton, WCB had advanced $2.3 million to the Manitoba Property Fund. The books still show the same value 18 months later and with the fund apparently moribund.

- Last July, WCB informed the management company partners (Crocus and Shelter) they were in default of their obligations.

- The vaunted property fund only ever invested in seven properties---four parking lots and three buildings.

Singleton concludes:

1) The lines of authority were so blurred that a senior manager had to remind the Board that the interests of WCB were not the same as the interests of the Crocus Fund and WCB should conduct their own due diligence.

2) He couldn't find an explanation why WBC didn't have their consultant manage the properties as usual, and asked why WCB would allow Crocus and Shelter to manage the fund when they could have done it themselves.

But the answer eludes his review.

Nowhere does he mention that Kreiner had a vision of becoming the Mondragon King of the City, bringing the Spanish model of co-operative business and development to little 'ol Winnipeg through Crocus, through the property fund and who knows what else.

He hasn't given up on his dream. He's now one of the three directors of the University of Winnipeg's newly created U of W Community Renewal Corporation. It's goal: to revitalize and redevelop downtown Winnipeg.

It's only accomplishment so far has been to shut down a section of Spence Street to traffic and turn it into an empty space spotted with large planters holding dead flowers, surely a crude metaphor for the fortunes of the Crocus Fund.

But the university did add 81 new parking spaces at two new parking lots, one on Young Street and one on Spence.

Forgive us for speculating that one or both are the property fund's lamented holdings - where WCB clients can come and see their investment.

Popular posts from this blog

The unreported bombshell conspiracy evidence in the Trudeau/SNC-Lavelin scandal

Wow. No, double-wow. A game-changing bombshell lies buried in the supplementary evidence provided to the House of Commons Judiciary Committee by former Attorney General Jody Wilson-Raybould. It has gone virtually unreported since she submitted the material almost a week ago. As far as we can find, only one journalist-- Andrew Coyne, columnist for the National Post--- has even mentioned it and even then he badly missed what it meant, burying it in paragraph 10 of a 14 paragraph story. The gist of the greatest political scandal in modern Canadian history is well-known by now. It's bigger than Adscam, the revelation 15 years ago that prominent members of the Liberal Party of Canada and the party itself funneled tens of millions of dollars in kickbacks into their own pockets from federal spending in Quebec sponsoring ads promoting Canadian unity. That was just venal politicians and a crooked political party helping themselves to public money. The Trudeau-Snc-Lavalin scandal is

Crips and Bloodz true cultural anchors of Winnipeg's aboriginal gangs

(Bebo tribute page to Aaron Nabess on the right, his handgun-toting friend on the left) At least six murder victims in Winnipeg in the past year are linked to a network of thuglife, gangster rap-styled, mainly aboriginal street gangs calling themselves Crips and Bloods after the major black gangs of L.A. The Black Rod has been monitoring these gangs for several months ever since discovering memorial tributes to victim Josh Prince on numerous pages on, a social networking website like Myspace and Facebook. Josh Prince , a student of Kildonan East Collegiate, was stabbed to death the night of May 26 allegedly while breaking up a fight. His family said at the time he had once been associated with an unidentified gang, but had since broken away. But the devotion to Prince on sites like Watt Street Bloodz and Kingk Notorious Bloodz (King-K-BLOODZ4Life) shows that at the time of his death he was still accepted as one of their own. Our searches of Bebo have turned up another five ga

Manitoba Hydro is on its deathbed. There, we said it.

Manitoba Hydro is on its deathbed. Oh, you won't find anyone official to say it. Yet . Like relatives trying to appear cheery and optimistic around a loved one that's been diagnosed with terminal cancer, the people in power are in the first stage of grief -- denial. The prognosis for Hydro was delivered three weeks ago at hearings before the Public Utilities Board where the utility was seeking punishingly higher rates for customers in Manitoba. It took us this long to read through the hundred-plus pages of transcript, to decipher the coded language of the witnesses, to interpret what they were getting at, and, finally, to understand the terrible conclusion.  We couldn't believe it, just as, we're sure, you can't--- so we did it all again, to get a second opinion, so to speak.  Hydro conceded to the PUB that it undertook a massive expansion program--- involving three (it was once four) new dams and two new major powerlines (one in the United States)---whi

Nahanni Fontaine, the NDP's Christian-bashing, cop-smearing, other star candidate

As the vultures of the press circle over the wounded Liberal Party of Manitoba, one NDP star candidate must be laughing up her sleeve at how her extremist past has escaped the scrutiny of reporters and pundits. Parachuted into a safe NDP seat in Winnipeg's North End, she nonetheless feared a bruising campaign against a well-heeled Liberal opponent.  Ha ha.  Instead, the sleepy newspeeps have turned a blind eye to her years of vitriolic attacks on Christianity, white people, and police. * She's spent years  bashing Christianity  as the root cause of all the problems of native people in Canada. * She's called for  a boycott of white businesses . * And with her  Marxist research partner, she's  smeared city police as intransigent racists . Step up Nahanni Fontaine, running for election in St. John's riding as successor to the retiring Gord Macintosh. While her male counterpart in the NDP's galaxy of stars, Wab Kinew, has responded to the controversy over

Exposing the CBC/WFP double-team smear of a hero cop

Published since 2006 on territory ceded, released, surrendered and yielded up in 1871 to Her Majesty the Queen and successors forever. Exposing the CBC/FP double-team smear of a hero cop Some of the shoddiest journalism in recent times appeared this long August weekend when the CBC and Winnipeg Free Press doubled teamed on a blatant smear of a veteran city police officer. In the latest example of narrative journalism these media outlets spun stories with total disregard for facts that contradicted the central message of the reports which, simplified, is: police are bad and the system is covering up. Let's start with the story on the taxpayer funded CBC by Sarah Petz that can be summed up in the lead. "A February incident where an off-duty Winnipeg officer allegedly knocked a suspect unconscious wasn't reported to the province's police watchdog, and one criminologist says it shows how flawed oversight of law enforcement can be." There you have it. A policeman, not

Winnipeg needs a new police chief - ASAP

When did the magic die? A week ago the Winnipeg police department delivered the bad news---crime in the city is out of control. The picture painted by the numbers (for 2018) was appalling. Robberies up ten percent in  a single year.  (And that was the good news.) Property crimes were up almost 20 percent.  Total crime was 33 percent higher than the five year average. The measure of violent crime in Winnipeg had soared to a rating of 161.  Only four years earlier it stood at 116. That's a 38 percent deterioration in safety. How did it happen? How, when in 2015 the police and Winnipeg's police board announced they had discovered the magic solution to crime? "Smart Policing" they called it.    A team of crime analysts would pore through data to spot crime hot-spots and as soon as they identified a trend (car thefts, muggings, liquor store robberies) they could call in police resources to descend on the problem and nip it. The police