Flaherty's $50,000 challenge ....RSVP required

The proposed debate would be entitled “Tax Fairness Plan" or "Tax Failure Plan”?


Flaherty's $50,000 challenge
Barry Critchley,
Financial Post
Thursday, August 21, 2008


Brent Fullard was an investment banker for about 20 years, a career that included stops at Merrill Lynch, First Marathon and BMO Capital Markets, before retiring in 2003 with a plan to pursue capital markets' ideas that were constrained by the conflicts inherent in a bank-owned dealer.

But retirement for Fullard has been anything but a fade into the sunset. Indeed, he has been busier than ever in pursuing investor advocacy and capital markets opportunities. "It has been remarkably fulfilling and I remain confident that success will be achieved," Fullard says.

The first opportunity occurred in Halloween, 2006, when the Conservative government brought down the hammer on income trusts by decreeing that from 2011, they would start paying taxes. The move, completely contrary to what the Tories said during the election campaign, spurred Fullard into action: He helped form the Canadian Association for Income Trust Investors (CAITI), which mounted a campaign to restore the security of choice for many Canadian investors, particularly seniors who liked the monthly flow of income.

But Fullard, along with CAITI, focused their attention on tax leakage, the ostensible reason for the government's decision. The two commissioned studies that broadly concluded that while there was minimal tax leakage, it was way, way lower relative to the $35-billion "cost" of the government's decision. And Fullard's mood was not improved when Ottawa produced its studies, which showed 18 redacted pages and exposed some fundamental flaws in its methodology.

"If they had shown that there was tax leakage, then a valid reason for their actions would have existed. But that wasn't supported by the facts," he said.

Then along came the BCE privatization. Through Catalyst Asset Management, Fullard met with BCE's directors and developed a proposal whereby BCE shares would be converted to a stapled security. What irked Fullard was not BCE's rejection, but rather that it chose not to make mention of it in all its public disclosures. In Fullard's view, that was a breach of BCE's bid circular disclosure requirements. Concerned that Catalyst's plan wasn't mentioned, Fullard took to the court, first in an appeal court in Quebec and later the Supreme Court.

Now comes word that Fullard is hoping to embark on his next challenge, a debate with Jim Flaherty, the federal Finance Minister, on supposed tax leakage associated with income trusts. In this way, Fullard is responding to a comment attributed to a Flaherty spokesperson in April, 2008, as quoted in the Hill Times: "I don't think Jim's losing any sleep over it. As a matter of fact, I'm sure of it. I'm sure he'd love to go a couple of rounds with these [CAITI] guys in a debate situation."

Fullard's challenge was also inspired by the upcoming debate between Seymour Schulich, one of the country's legendary owner investors and John McCallum, the federal Liberal finance critic, on the question of a carbon tax. Proceeds from the Sept. 10 event will go to McCallum's riding association.

But Fullard's challenge comes with a twist: He will put up $50,000, payable to Flaherty’s favourite charity. Given the Minister's "current crusade on financial literacy," Fullard believes a suitable charitable cause would be an Ontario scholarship for business education. "By doing this we could also help repair some of the damage caused by the Minister's statement that Ontario is the last place to invest."

bcritchley@nationalpost.com