Monday, December 3, 2007

Stephen Harper leveled the playing field......in Paul Desmarais Jr's/Power Financial's favour


One year after the income trust announcement, a person simply needs to connect the dots:

Dot #1: December 3, 2007 as reported in the Globe and Mail:

CI Financial Income Fund has all but thrown in the towel in the bidding war for DundeeWealth Inc. because of some obstacles that appear insurmountable, leaving Power Financial Inc. and Bank of Nova Scotia neck and neck as duelling contenders for the coveted wealth management firm, sources say.

DundeeWealth's controlling shareholder, Ned Goodman, is reluctant to accept cash in exchange for his stock because that would trigger capital gains tax, sources suggested. However, he is also said to be reluctant to accept units of CI Financial as payment for his company, because the securities have an uncertain future.



Dot #2: November 2, 2006

Income-trust crackdown: The inside story
When the telephone rang, Flaherty knew he had to act

SINCLAIR STEWART AND ANDREW WILLIS
Globe and Mail

High-profile directors and CEOs, meanwhile, had approached Mr. Flaherty personally to express their concerns: Many felt they were being pressed into trusts because of their duty to maximize shareholder value, despite their misgivings about the structure.

Paul Desmarais Jr., the well-connected chairman of Power Corp. of Canada, even railed against trusts in a conversation with Prime Minister Stephen Harper during a trip to Mexico, and told him he should act quickly to stop the raft of conversions, according to sources.



Dot #3: Thursday, February 1, 2007

Standing Committee on Finance   
Mr. Dominic D'Alessandro (President and Chief Executive Officer, Manulife Financial):

"I will be very brief. It's my opinion that the income trust sector in Canada is increasingly populated by businesses other than those whose principal activity is the operation of real estate or royalty producing assets. In June of last year, CI Financial converted to trust status.

I don't know why we would want a tax regime that would discourage the accumulation of an appropriate level of retained earnings by the corporate sector.

I think underlying some of this is a theory that somehow corporate management can't be trusted to properly employ the capital and therefore they should distribute it out, and then go back to shareholders or unit holders and ask for a reinjection whenever the need arises.

The notion and the implication that somehow the government on this file is responding to initiatives that originated with corporations is not based on reality."


Obvious Conclusion:

We believe you Dominic. However reality and the actions of Power Financial betray you. The tax fairness plan was never about taxes in the first instance. If it was, then the analysis by the government would have been released as opposed to  being disguised.

This issue was only ever about the cost of capital advantage that income trusts, specifically CI Financial, had over your company, Manulife and Power Financial. As an income trust, CI Financial was worth more in the eyes of the marketplace. This is because investors prefer the discipline of management paying out its excess earnings. That model didn’t suit either you or Paul Desmarais for reasons specifically related to your personal goals and the form of your personal compensation. You have placed your personal goals ahead of your shareholders interests. You then enjoined the easily coerced Stephen Harper government to do your exclusive bidding. The government’s actions at your behest have done untold damage to millions of Canadians and has placed Canada in a disadvantaged position in the global economy.

This tax fairness plan has resulted in $65 billion of takeovers in the first 12 months and the loss of $2 billion in tax revenue to the government. This will soon grow to the annual loss of $7.5 billion in lost taxes.  Your actions  and those of Paul Desmarais Jr. were selfish and destructive. Meanwhile your fellow Co-chairman  of the CCCE and fellow member of the NACC, Paul Desmarais Jr., has lobbied the government and is not a registered lobbyist. Who does he think he is, Brian Mulroney?

See the Public Registry of Lobbyists

3 comments:

Robert Gibbs said...

Based on what one sees on the show, one has to wonder if Mike Duffy of CTV Newsnet's "Mike Duffy Live" is also an unregistered lobbyist for the Conservatives.

Much like Fox News in the U.S., independant and non-partisan journalism seems to have disappeared from CTV-Globemedia's properties.

Anonymous said...

Only three dots?

I don’t think so. There are many inter-connected dots in the tight circle of CCCE.

There are dots between Harper’s cabinet and BCE, including ON Teachers Pension Fund; and also between cabinet, Mulroney and Quebecor.

As a small ‘c’ conservative, I strongly believed that Preston Manning had the right message and the right ideas for cleaning up the fiscal mess left by the Mulroney. Now I see that the Harper Tories have been 'whored' as badly as the Mulroney Conservatives were 'whored' by power and money.

Whoa… Mulroney was power and greed for money. Harper is just concerned about power. But money follows power like a puppy follows a dog biscuit.

Dr Mike said...

"I think underlying some of this is a theory that somehow corporate management can't be trusted to properly employ the capital and therefore they should distribute it out, and then go back to shareholders or unit holders and ask for a reinjection whenever the need arises.

The notion and the implication that somehow the government on this file is responding to initiatives that originated with corporations is not based on reality."

By Mr. Dominic D'Alessandro (President and Chief Executive Officer, Manulife Financial).

Who does this guy think he is kidding--I guess he has forgotten about fine corporations like Enron who obviously had their shareholders in mind when the head honchos helped themselves to the money slated for dividends & operational expenses.

Dominic , like all CEOs with free reigns . loves the power that is virtually unrestricted by the needs of the investors.

Gimmee , gimmee , gimme & investors be damned--if there is something left after we waste & then line our own pockets , then we may throw them a few crumbs.

He is typical of the leaders of todays corporations.

Give me an income trust any day where the investor is number one & accountability is of the utmost importance.

Also , if he thinks that we did not see his obvious lobbying afforts to destroy trusts in order to line his own pockets , then he is more lame than I always thought he was.

Hey Dominic, "get a life".

Here`s a dog biscuit--go fetch.

Mike P from Rodney.