BCE's bidding process fails to even meet Teachers' own governance rules for like transactions

It would appear that the procedures followed in BCE’s sale to Teachers’ do not comply with Teachers’ own corporate guidelines under Section 3.2 "Going Private Transactions," "Leveraged Buyouts" And Other Purchase Transactions, available by clicking here.

And which states:

“In addition to such an economic analysis, we will review the process by which the proposal was received. In this regard, we will consider whether:

* Other potential bidders have had an opportunity to investigate the company and make competing bids”

And since it has been reported in MACLEANS magazine (Canadian Press) that:

“The directors of BCE Inc. were kept in the dark about offers for the telecom giant by managers and advisers who manipulated the bidding process to freeze out bondholders in the sale of the company, lawyers for the bondholders said Monday.

The court was reminded that three BCE directors - Tom O'Neill, Jim Pattison and Donna Kaufman, the head of the strategic oversight committee - testified they were unaware or couldn't remember seeing all the details of the bids or how they would affect all stakeholders.”

As well as the following suppressive action by BCE concerning a “competing bid”, which was never disclosed to shareholders or the reasons behind its non-adoption:

Catalyst's Bell bid silenced
Barry Critchley,
Financial Post
January 30, 2008

Surely these standards that Teachers' laid down for other issuers to adhere to in like circumstances in which Teachers is a passive shareholder, apply equally to situations like BCE where Teachers' is driving the bus, or will it be a case of the shoe is now on the other foot?

Today's situation and fact pattern will be a true test of whether Teachers' actually believes in good corporate governance for all, or simply as a point of leverage for Teachers' as a large shareholder seeking advantage over other smaller shareholders.

That's actually a very easy moral question to answer. Simply ask any of Teachers' 271,000 pension beneficiaries, and they will tell you that no one likes a schoolyard bully. That's as true for Canada's public capital markets as it is for the school yard jungle jim.

Harper Conservatives: Glossary of Terms

“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”: Self-exonerating closing statement at the Finance Committee Hearings on Income Trusts by Eddie Haskel, Chairman and CEO of Mea Culpa Financial whose motto is “our bottom line dictates your reality”

Eddie Haskell: Shmarmy duplicitous friend of Beaver Cleaver on Leave it to Beaver

Community Outreach Program: Ethnic, religious and racial profiling of voters

I have a fiduciary obligations to Canadians that today's social programs not be funded with tomorrows tax dollars (from RRSPs): But that doesn't stop me from using those very same taxes from yesterday's RRSP contributions that are withdrawn today which provided over $8 billion of tax revenues for fiscal 2007.

Different types of business can’t be taxed differently: Exceptions being, REITs law firms, accounting firms, and any different kind of business that is taxed differently, provided it is owned by a government sponsored pension plan. E.g. Thunder Energy Trust by the Public Sector Pension plan, or Legacy Hotel Income Trust by Caisse de depot etc.

Capital Insertion Rules: Growth restrictions and a secondary measure to kill income trusts (not applicable however if trust in question is opportunistically acquired by foreigners or pension plans)

Leveling the playing field: Taking the stronger team (income trusts) off the field to coddle the status quo and higher cost of capital corporations

Helping Corporations make choices: Taking choices away from investors

Independent Panel: People who are beholding to us, and whose purpose is to validate and promote our hidden agenda to absolve the government of liability and pacify others, all the while subverting the role of elected parliamentarians

Eminent Canadians: See independent panel above

Burka policy: xenophobia induced social intolerance

Transparency: 18 pages of blacked out documents, temporarily made available under the Access to Information Act (overnight lending section)

Accountability: Recall by Finance Department of blacked out documents when it is realized that alleged tax leakage isn’t about the numbers, its about the methodology

Mark Carney: Goldman Sachs Private Client Division (see accountability and transparency above for direct examples of his handiwork)

John Manley: Part time Liberal, full time/full fledged member of US Council on Foreign Relations

Council on Foreign Relations: De facto US State Department/Defence Department/US Treasury Department


Panel on Hollowing Out: Working on a comprehensive how to manual of how to hollow out Canada through additional government initiatives like the income trust tax, which amounts to tax subsidies to foreigners to acquire business undervalued by the government's tax measures.

Insurance Litigator: Ambulance chaser

After dropping out of first year undergraduate studies at U of T, Stephen Harper worked in the oil patch: Mail room clerk at Imperial Oil, (father’s employer)

Tax Fairness Plan: Scheme comprised of gross inequities based on fallacious concepts, also commonly referred to in the vernacular as the “Alms for Manulife Plan”

Stephane Dion is not a leader: Stephane Dion is not a liar

Fish or cut bait: I am presently up in the polls, but don't know how long I can maintain this charade of leadership and suppress my hidden agenda for, so I will act belligerantly in the belief it will help my cause.

CCCE: Corporate Canada's Controlling Elite

CARP: Canadian Advocacy for Rent and Profit. Used to great success by organizations like Manulife Financial and Power Corporations' Investment Planning Council and other seeking a portal

CRAP: Conservative Reform Alliance Party of Canada

Modesty: Narcissism in the form of Self-Portraitures plastered all over the PMO office (see garth.ca for details)

Canadian Must Trust: Duck and cover

If you are aware of any other misuses of the English language by the Harper Conservatives whose sole intent is to disguise the sole intent of their government, please forward your examples or post them below in the comments section.

I am hoping that we can at least have a government that is accountable to the proper use of the English language. Any hope that the Harper government would be accountable to Canadians was abandoned when the media abandoned the public in the media's ongoing biased coverage of the income trust scandal, commencing November 1, 2006, with this account by BNN:

The sky is falling, because chicken little says it is


Which was then followed up by BNN’s grossly distorted coverage and editorialized of the Public Hearings on Income Trusts by the Finance Committee. Why else do you think BNN has a broadcast license, if not to mislead and misrepresent the goings on in Parlaimentary Committees. Maybe Brian Mulroney can get CBC to cut back to the studio every time that an opposition member asks a question or Karl Heinz Schreiber tesitifies. Perhaps L. Ian MacDonald can provide color commentary on Mulroney ethics the way Amanda Lang is the great defender of her beloved Mark Carmey’s Tax Fairness Plan (see above for definition).

Masters of the Universe take note: Optimization involves maximizing return, while minimizing risk.

By: Brent Fullard, Catalyst Asset Management Inc.

Perhaps now that it’s January 30, 2008 and BCE’s stock is is trading $10.00 below Teachers’ notional bid price of $42.75, and with some pundits going so far as to say the Teachers’ deal has a zero chance of happening, it would be quite instructive and most worthwhile to go back and read the letter that was submitted to BCE’s Strategic Oversight Committee on June 25, 2007 by our firm, Catalyst Asset Management.

Recent testimony in the Quebec Superior Court casts doubt on how well the Board of BCE fulfilled its fiduciary duty to shareholders and other stakeholders of BCE, Canada’s most widely held public company, since it was reported by Canadian Press that:

“The directors of BCE Inc. were kept in the dark about offers for the telecom giant by managers and advisers who manipulated the bidding process to freeze out bondholders in the sale of the company, lawyers for the bondholders said Monday.

The court was reminded that three BCE directors - Tom O'Neill, Jim Pattison and Donna Kaufman, the head of the strategic oversight committee - testified they were unaware or couldn't remember seeing all the details of the bids or how they would affect all stakeholders.”

How does one reconcile that alleged conduct with the Ontario Teachers’ Pension Plan’s position on good corporate governance? The answer: you can’t.

Speaking of Tom O’Neill, Jim Pattison and Donna Kaufman, here were the benefits to BCE described in Catalysts’ June 25, 2007 letter addressed to them and discussed with them and their advisors, starting with how the Catalyst Proposal would have obviated the very risks that are now the source of the current deals’ possible demise, namely the bondholders' lawsuit, CRTC approval and financing uncertainty for the $20 odd billion that Teachers' & Co, don't have to complete this $34 billion acquisition:

· value maximization alternative for BCE common shareholders through use of Stapled Securities and the enhanced annual income of $2.55 per existing BCE common share, a 74% increase from BCE’s current annual dividend of $1.46
· zero transaction risk as transaction is fully self funding
· no regulatory or timing risk when compared with alternative private equity and merger alternatives that will involve extensive parliamentary, regulatory, CRTC and/or competition review with an uncertain outcome and uncertain timing
· preserves BCE’s investment grade credit rating and retains financial flexibility for Bell Canada to continue with significant capital reinvestment in its core businesses to remain a leading and growing competitor
· each Stapled Security will consist of one underlying common share that it is contemplated will pay an annual dividend of $1.46 and one underlying subordinated debt instrument that will pay annual interest of $1.09 for a total income of $2.55
· based on current market conditions and yield expectations in the marketplace for comparable instruments, we are of the opinion that the Stapled Securities will have a trading value in the market of between $42.50 to $52.00 and we are confident in the mid range value of $47.25 being attainable.
· each outstanding BCE share will be exchanged for one Stapled Security and therefore BCE shareholders will be entitled to a tax free rollover for approximately 60-70% of the consideration received. The balance will be treated as a dividend income and taxed at rates not dissimilar to capital gains rates of taxation
· the tax efficient nature of the transaction via a share exchange and the significant rollover of a BCE investor’s cost base, places retail investors on a more equal footing with large pension fund investors
· eliminates "reinvestment" risk for BCE common shareholders
· allows existing BCE common shareholders to participate in ongoing future growth of BCE
· no “frictional costs” or involuntary loss of a latent value to a third party, as full equity value of BCE is retained by existing shareholders
· preferred shareholders will be redeemed for cash, thereby addressing the concerns of these security holders who would otherwise rank junior to the new subordinated debt within the Stapled Security
· Stapled Securities are not affected by the rules governing the taxation of income trusts or the explicit policy intent of the governing legislation, which is to bring income trusts in line with the taxation of corporations. Stapled Securities are issuances of corporations and not tax flow through entities, which are the sole focus of the income trust tax legislation. Other outstanding Stapled Securities are explicitly unaffected by the new taxation on income trusts. There is no policy justification that can be credibly made to deny the tax deductibility of interest on the corporate debt component of a Stapled Security. Direct precedents already exist and have been explicitly unaffected by the income trust tax policy which has now been passed into law.
· maximizes tax collection to Ottawa from the earnings of Bell Canada by preserving the largest proportion of taxable Canadian investors
· preserves existing Canadian ownership and control of Bell Canada and
Head Office location in Montreal
· preserves existing competitive landscape in this key sector of the Canadian economy that touches all Canadians and businesses
· beneficial outcome to all stakeholder groups including customers, employees, union, management, debtholders and preferred shareholders
· most beneficial outcome to Canadians and the country

Jim Prentice: You look good on top of that high horse of yours, now investigate this:

By “this” I am referring to the charges contained in the full pages ads that CAITI recently ran in the Toronto Star and the Calgary Herald
that read: “To Finance Minister Jim Flaherty: YOUR TAX LEAKAGE ANALYSIS IS FRAUDULENT”

As a lawyer you should be familiar with the concept known as fraud, but just in case you aren’t, allow me to quote the Oxford Dictionary:

fraud –noun
1. deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage.
2. a particular instance of such deceit or trickery: mail fraud; election frauds.
3. any deception, trickery, or humbug: That diet book is a fraud and a waste of time.
4. a person who makes deceitful pretenses; sham; poseur.

By “high horse” I an referring to the lofty statements you made in yesterday’s papers where you claimed that: "The judge spoke of misleading and disingenuous conduct and I think that all Canadians believe that warrants a response"

This statement of yours concerns the matter of the takeover of Lakeport Brewing Income Fund by Belgian based Labatt Brewing, which is only one of over 40 income trust takeovers that have occurred since your governments’ ill fated decision to betray Canadian voters and seniors by taxing income trust and raiding seniors nest eggs after promising to never do so. The $65 billion in trust tax related takeovers will cost every Canadian, because of the $1.4 billion loss in annual taxes they result in.

Concerning Lakeport Income Fund, it seems you are siding with Labatt on this matter, as you must be eager to see Lakeport being sold to foreigners, and oblivious to the lessened competition it represents from the purchase of a price leader in the beer category by a multinational premium priced brewer. You made a similar pro “hollowing out” statement this past summer about the $5 billion takeover of another trust, Prime West Energy Trust by middle eastern oil giant, Abu Dhabi Energy, when you made a speech in Vancouver stating that the $5 billion Prime West takeover was something you were willing to turn a blind eye to based on the laissez-faire logic that “Changing the rules in the middle of the game is not how this country does business.”...

Well if that’s the case, you need to acquaint yourself with reality. No one was asking you to change the rules in the middle of the game. The fact that you had allowed Abu Dhabi Energy to acquire Northrock Energy for $2 billion in May of 2007 doesn't mean that you automatically rubber stamp the $5 billion acquisition of Prime West Energy four months later, and then send Abu Dhabi a letter encouraging them to do "more of the same."

And concerning your point about "not changing the rules in the middle of the game", how does such a logic allow you to introduce a 31.5% retroactive tax after promising that you would never do so and thereby causing the loss of $35 billion in Canadian’s hard earned life savings?

Please provide us with an answer. Failing which please ask Jim Flaherty to sue us for slander, since we repeat what appeared in the Toronto Star and Calgary Herald newspapers” Jim Flaherty: Your tax leakage analysis is fraudulent”

If we don’t hear back from either of you, we will conclude that you are not worthy of riding that high horse of yours and your lofty statements will be nothing more than horse manure, or as some people call it: Stephen Harper’s Income Trust tax.

Something's rotten in Denmark: Catalyst's Bell Bid Silenced

Excerpts from today’s Financial Post article entitled Catalyst's Bell bid silenced

These are testing times for Bell Canada Inc. investors as the country's largest takeover faces financial, regulatory and legal issues.
Yesterday was no exception: The stock traded down again, closing at $34.46 -- about $5 below the level of Jan. 1 -- as disaffected bondholders continued their claims in a Montreal courthouse, and as the market upped its risk estimate of the $50-billion-plus deal going through.

Through the drama, Brent Fullard, formerly with BMO Capital Markets, has reminded everyone of how Bell shareholders weren't told about a proposal his firm, Catalyst Asset Management, lobbed into Bell last summer. That proposal, involving a so-called stapled security, was sent to Donna Kaufman, one of the three members of BCE's special committee. A copy was also sent to Ed Waitzer, the Stikeman Elliott advisor to the Kaufman committee.

In Catalyst's e-mail, this was said: "Further to my conversation with Jim Pattison on Friday and Ed Waitzer on Saturday, please find attached a letter describing in greater detail our Stapled Security proposal including an overview of the benefits and an assessment of the relative risks. Our analysis holds that such a proposal, structured in the manner contemplated, would provide existing BCE shareholders with a tax-efficient surfacing of value of between $42.50 and $52, with a mid-point trading value of $47.25. In addition, this proposal would be a very good outcome for the company itself and all affected stakeholders, as fully described in the attached letter.

In that proposal, bondholders would have all been taken care of -- unlike the proposal accepted by Bell”


Excerpts from Canadian Press article entitled “Bondholders say BCE finessed takeover deal to avoid bond redemption”

The directors of BCE Inc. were kept in the dark about offers for the telecom giant by managers and advisers who manipulated the bidding process to freeze out bondholders in the sale of the company, lawyers for the bondholders said Monday.

The court was reminded that three BCE directors - Tom O'Neill, Jim Pattison and Donna Kaufman, the head of the strategic oversight committee - testified they were unaware or couldn't remember seeing all the details of the bids or how they would affect all stakeholders.

Excerpts from Catalyst Letter of June 25, 2007 to BCE’s Strategic Oversight Committee:

"[The Catalyst Proposal] preserves BCE’s investment grade credit rating and retains financial flexibility for Bell Canada to continue with significant capital reinvestment in its core businesses to remain a leading and growing competitor.

In addition, since the debentures contained in the Stapled Securities are subordinated in all respects to the outstanding debt of BCE, it is anticipated that ratings of New BCE’s debt will be preserved at a strong investment grade, as they were under the contemplated income trust conversion, for which the ratings were to have been (at least):

Long term debt:

DBRS: A(low)
S&P: BBB+
Moody’s: Baa1

Short term debt:

DBRS: R-1 (low) with stable outlook (confirmed)

Excerpts from Moody’s Credit Alert of September 2007:

With book debt expected to increase by more than 300%, the company’s risk profile will be profoundly affected by the proposed transaction, and its rating could be adjusted by several notches. Per Moody’s event risk policy, until both a full fact set is available and there is certainty of an event occurring, a definitive ratings assessment cannot be concluded. Accordingly, Moody’s review is ongoing and will be completed in due course.

In the interim, the available information does facilitate a preliminary and highly conditional assessment that can be used to illustrate key issues that will be considered. Given disclosure to date, and assuming there are no dramatic changes to the company’s business and asset portfolio, it appears that potential outcomes for BCE’s successor company’s (BCE Amalco) corporate family rating (CFR) range from B2to Ba3. It also appears that legal entity and debt structure considerations could cause Moody’s to rate individual debt instruments as low as Caa1and as high as Baa3.”

Excerpt from Standard & Poors Credit Alert of December 14, 2007:

As a result of the proposed LBO [of BCE by Teachers], Standard & Poors Rating Services expects reported debt to increase to about C$37 billion from about $10 billion at Sept. 30, 2007.
We originally placed the ratings on Credit Watch April 17, 2007. We subsequently we lowered the ratings on BCE in wholly owned subsidiaries to ‘BB-” from A- and kept them on Credit Watch Sept. 24, 2007.

On a pro forma basis, the company will have a highly leveraged capital structure, weakened credit measures, and significantly reduced cash flow generating capability owing to a dramatic increase in debt and the associated heavy interest burden.

Excerpt from the Telecommunications Act stating the policy objectives that govern Bell Canada:

7 (c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications;

7 (d) to promote the ownership and control of Canadian carriers by Canadians;

The Monte Solberg Jim Flaherty good cop bad cop routine

Monte Solberg promises he wants to help the homeless. ... Flaherty wants to jail them.

Monte Solberg promised he’d never tax income trusts. ... Flaherty promptly taxed them

Good cop ... Bad cop

Looking forward to the day we can say:

Good bye ... Good riddance

Tom D'Aquino opines on BCE leveraged buyout

Tom D’Aquino of the CCCE felt the need to intervene with the CRTC on behalf of CCCE Member and CCCE Director, Michael Sabia, who also just happens to be the CEO of BCE and the individual who, for all intents and purposes, ran the BCE "auction" which was widely criticized.

See D'Aquino intervention here, under 2007-19

Here is D’Aquino’s flawed logic contained in his intervention. None of which, incidentally, relates to any of the Acts that the CRTC is duty bound to enforce:

D’Aquino: “The proposed transaction approved by the majority of shareholders (Editor's note: actually 61%) of BCE, is a reflection of the market’s preference. The market should be allowed to prevail, subject to existing Canadian ownership and control requirements. To that end, I am indicating the CCCE’s support for the above-noted application by BCE Inc, related to its proposed transaction to change its ownership."

Rebuttal: How reflective of market forces governing the outcome of the BCE sale process is the following, as reported by Canadian Press?:

“The directors of BCE Inc. were kept in the dark about offers for the telecom giant by managers and advisers who manipulated the bidding process to freeze out bondholders in the sale of the company, lawyers for the bondholders said Monday.”

"Tom O'Neill, Jim Pattison and Donna Kaufman, the head of BCE's strategic oversight committee - testified they were unaware or couldn't remember seeing all the details of the bids or how they would affect all stakeholders."

How can Tom D’Aquino claim to know what the market’s true preference was, when BCE failed in its disclosure obligation to tell its shareholders about the Catalyst Proposal?

Is this the CCCE’s idea of good corporate governance and the free flow of efficient capital markets? Is this the CCCE's idea of how a Board of Directors of Canada's most widely held public company should function? Or any Board for that matter in fulfilling their fiduciary duty?If so, the CCCE has no credibility. If not, they should retract their stated support of the BCE takeout, in light of new unseemly information.

D’Aquino: “The objective of the major investor, Teachers’ is to strengthen a Canadian enterprise in pursuing strategies for growth and value creation”

Rebuttal: Teachers is not the major investor. They are only providing $4 billion of the acquisition price of $32 billion, of which the $26 billion in junk bond financing makes the new bondholders (Citibank, Deutsche Bank, Royal Bank of Scotland, etc.) the largest investors. See attached deal sheet from Teachers. The result is that BCE will become the most debt levered telecom company in the world with 3.6 times the Debt:Equity leverage of the average Telecom company. How will this help BCE grow as D’Aquino claims. More likely to default or divest. Meanwhile Tom D”Aquino should acquaint himself with the following articles and brush up on a few facts before putting pen to paper:

BCE Buyers May Have to Sell Wireless Unit to Pay Debt (Update2)
By Chris Fournier Bloomberg
January 15, 2008

Teachers' says bondholder win would threaten BCE buyout
By Carrie Tait, Financial Post
January 20, 2008

Not the straw but the camel
By Peter Foster, Financial Post
January 23, 2008

BCE objects to Catalyst being allowed to intervene at CRTC hearings into sale
By Ross Marowits Canadian Press
Jan 9, 2008

Bloc Québécois bloc transparency, thereby supporting veiled voters

Let’s be clear, the Bloc Québécois, in true xenophobic, vote-pandering fashion, are adamantly opposed to some 50 women wearing burkas to vote, and yet are doing their utmost to ensure that all Canadians are veiled from knowing the truth about the Conservative’s Income Trust Scandal in the next election.

Doesn’t sound like an very effective opposition party to me. More like complicit lap dogs. The Bloc Québécois have sunk to the lows of the NDP and the fiscal competence of Judy Wasylycia-Leis.

From now on the BQ should be referred to as the BT, as this party clearly has no interest in providing Canadians or Quebeckers with transparency. The Bloc Transparency party. The BT prefer to keep voters in the complete dark about matters of fiscal importance, such as the reasons why $65 billion in takeovers have occurred that are directly linked to the income trust tax policy. Evidently the BT party could care a less about whether one of Quebec’s most iconic businesses, BCE, falls into the hands of private equity, led by none other than ONTARIO Teachers’, rendering BCE a crippled junk bond sub prime mortgage-equivalent borrower.

The BT party has made itself an essential partner in the Conservative’s fraudulent income trust policy. The BT are now officially complicit in the cover up of the trust tax's fraudulent underpinnings, known as alleged tax leakage.

Yesterday the Bloc had an opportunity to demonstrate to voters what their core values are. To show whether they believe in transparency and accountability. To show whether they are effective as an opposition party in hiding the Stephen Harper government to account. Not held to account on the most recent handout to Quebec, but held to account on the underpinnings of what makes government’s work over the short and long term, namely transparency.

The BT party failed to support the following Liberal motion before the Finance Committee. Even though the BQ are adamantly opposed to voter’s wearing burkas in the polling booth, the BT support the notion that all voters be veiled from knowing the truth about income trusts and the false premise that income trusts cause tax leakage, when in fact the income trust policy cause tax leakage.

“That this committee as soon as possible launch an inquiry into the unproven allegation by the Finance Minister that income trusts result in a loss of tax revenue to Ottawa, in light of reports that 70% of all recent trust purchasers are tax-exempt, while individual Canadian investors lost tens of billions of dollars, and therefore pay less tax, as a result of the government trust decision."

Who needs the Bloc when we have other party’s that are more interested in upholding the foundations of a democracy, such as transparency. The Green Party would make a much more effective opposition party in Parliament than the Bloc Transparency party under Gilles Duceit. Gilles Duceit thinks it's okay to support a policy that is hollowing out Quebec and costing Canadians the loss of $1.4 billion in annual taxes. That’s a lot less in discretionary tax dollars that Canadians will have available to fund ongoing transfer payments to la belle province, or shall I say the former la Bell province.

The term Gilles Duceit derives from the fact that we were assured by senior Bloc MPs that the Bloc would support this Liberal motion before the Finance Committee. The term Bloc Transparency on the other hand is self evident and their actions yesterday as traitors to democracy.

Saving Capitalism from the Capitalists:

Subtitle: Why didn't the CCCE "chide" Harper on Income Trusts?

Why is the CCCE so concerned about the ”policy chaos” over rules governing the environment? Why are they “chiding” the Premiers?

Speaking of chiding, where was the CCCE on the flip flop on income trusts and the chaos that policy enured? Isn’t the CCCE concerned about the resultant banana republic nature of Canada’s capital markets in the eyes of foreign investors, not to speak of Canadians saving for their own retirement? How can a capital market operate efficiently or fairly when a Prime Minister promises one tax regime and then delivers another? Retroactively no less, causing a permanent loss of $35 billion in hard earned investment capital? And offers no proof whatsoever to support the policy reversal? That is the act of a rogue government in the hands of a rogue Finance Minister. Or perhaps the rogue Finance Minister is actually in someone else's hands?

Meanwhile the CCCE remains deaf silent. Silence is complicity for a group that considers itself so powerful and so well populated by Canada’s great capitalists who routinely comment on virtually every development in this country.

I think Tom D’Aquino and his cohorts at the CCCE need to read the book entitled: “Saving Capitalism from the Capitalists”. How will Canada ever hope to become competitive on the world stage by destroying the investment vehicle that affords Canadian businesses of all sizes with a low cost form of capital and Canadians with an investment vehicle that suits their investment goals? The CCCE are proponents of a buggy whip economy and bespoke tax policies that coddle the status quo.

Saving Capitalism from the Capitalists is a non-fiction book by Raghuram Rajan and Luigi Zingales of the University of Chicago GSB. The full title of the book is: Saving Capitalism from the Capitalists: Unleashing the Power of Financial Markets to Create Wealth and Spread Opportunity.

The book is neither a defense of pure laissez-faire capitalism, nor is it an anti-capitalist polemic. Instead, the authors develop the following arguments in the book:

* The free market is the form of economic organization most beneficial to human society and for improving the human condition.
* Free markets can flourish over the long run only when government plays a visible role in determining the rules that govern the market and supporting it with the proper infrastructure.
* Government, however, is subject to influence by organized private interests
* Incumbent private interests, therefore, may be able to leverage the power of governmental regulation to protect their own economic position at the expense of the public interest by repressing the same free market through which they originally achieved success.
* Thus, society must act to "save capitalism from the capitalists" -- i.e. take appropriate steps to protect the free market from powerful private interests who would seek to impede the efficient function of free markets, entrench themselves, and thereby reduce the overall level of economic opportunity in society.

Question: Why does the outline of the book “Saving Capitalism from the Capitalists" so remind of this Globe article?

Income-trust crackdown: The inside story
November 2, 2006

“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.”

Answer: Maybe its because Paul Desmarais Jr. is a Vice Chairman of the CCCE along with his industry colleague Dominic D'Alessandro of Manulife who had the most to gain by eliminating the competitive financial product known as income trusts.

Just think of them along with the CCCE as the "incumbent private interests who were able to leverage the power of governmental regulation [under the easily coerced Harper] government to protect their own economic position at the expense of the public interest by repressing the same free market through which they originally achieved success."

Page Three of this week's Hill Times

This half page ad on page three of this week's Hill Times is intended as just a little something to remind Stephen Harper about when Parliament resumes on Monday. As if he doesn’t have enough self inflicted problems to deal with. But that’s the legacy of his constant lying: income trusts, isotope shortage, Sandra Buckler, Afghan detainees, Brian Mulroney etc. etc. I'm losing track....about as fast as he's losing any semblance of credibility.

The list grows longer with every session of Parliament. Speaking of every session of Parliament, the Finance Committee gets to deal with the following gem in the coming days. It’s about time we got some facts on the table about income trusts, rather than partisan dogma and whitewash:

December 11, 2007

Brent:

Today I have sent this motion to the clerk of the Finance Committee:

"That this committee as soon as possible launch an inquiry into the unproven allegation by the Finance Minister that income trusts result in a loss of tax revenue to Ottawa, in light of reports that 70% of all recent trust purchasers are tax-exempt, while individual Canadian investors lost tens of billions of dollars, and therefore pay less tax, as a result of the government trust decision."

Garth

Hon. Garth Turner, PC, MP
Member of Parliament, Halton
House of Commons K1A 0A6 (613) 996-7046
86 Main Street, Milton (905) 693-0166
Daily blog, www.garth.ca
Email, garth@garth.ca

Taxation without Misrepresentation

Historical events no less significant than the American Revolution had at their roots the unfair taxation of the masses. In that case the British colonies of America objected to being taxed by the King and be without representation in the British Parliament. The rallying cry of the Boston Tea Party was "No taxation without representation". Out of that skirmish over the taxation of tea, arouse the American Revolution and the founding of the United States. The earliest flag of the United States was that of a coiled snake and the words: “Don’t tread on me.”

The income trust issue that is still very much alive today and which festers in the minds of those aggrieved by it, is not a case of taxation without representation, but rather a case of taxation by misrepresentation. The saga of the income trust matter is a saga of misrepresentation by our elected representatives.

First there was the misrepresentation by Stephen Harper and every Conservative MP that, if elected, they would never raid seniors’ nest eggs by taxing income trusts. That misrepresentation was offered up on a platform of other misrepresentations such as promising a government of transparency and accountability and the misrepresentation that a Conservative government would compensate Canadians on a timely basis for any losses they may sustain as a result of government legislation.

Upon electing sufficient Conservative Misrepresentatives of Parliament, Stephen Harper had a change of heart. He was now the target of the affections of those in the business community such as Gwyn Morgan and Paul Desmarais Jr. , who for their own selfish reasons were well served by eliminating the competition known as income trusts.

After misrepresenting to the marketplace that a Conservative government would never tax income trusts, it was reasonable to expect that certain businesses would use this climate of certainty as a welcomed opportunity to convert to the income trust model.

The announcement by Telus proved pivotal, since it forced BCE’s hand to make a copy cat announcement of its own.

This provided the “perfect storm” for those who were waiting in the wings to bring about a reversal of the income trust policy.

Key to this exercise was the role played by the bureaucrats in Finance. Mark Carney was the epicenter of the misrepresentations that then ensued. Here is the apologetic account of his role that appeared in yesterdays Globe and Mail:

“Mr. Flaherty, whose political experience was at the Ontario level, was more of an Ottawa neophyte than Mr. Carney. The senior official's advice soon became indispensable as the Finance Minister set about dealing with income trusts, getting to know and understand financial market players, and gauging the effect of a soaring currency and hurting manufacturing sector.

Mr. Carney was a hawk on income trusts, and felt strongly that they were a counterproductive blight in Canada's economy, holding Canada back in an increasingly competitive global economy. His arguments were crucial in convincing Mr. Flaherty and Prime Minister Stephen Harper that trusts should be taxed before some of the country's biggest companies opted to convert to tax-free income trusts.

The decision provoked a bitter and ugly backlash that continues to this day.”

Let’s examine these misrepresentations for what they were and for what the Globe and Mail still promulgated them as being:

- Income trusts were a counterproductive blight in Canada's economy.

-Income trusts held Canada back in an increasingly competitive global economy.

-Income trusts should be taxed before some of the country's biggest companies opted to convert to tax free income trusts.

One thing that I won’t take issue with is the statement that: “The decision provoked a bitter and ugly backlash that continues to this day."

What do you expect to occur when the government lies to the people and steals their life savings and renders their future’s less secure, all the while allowing Pension Funds to own income trusts tax free, allowing law firms and accounting firms to operate as income trust and to allow corporations to be tax free entities when it comes to paying interest on debt?

And if that isn’t enough, this mindless policy has induced real tax leakage in its attempts to stem phantom tax leakage. This is costing the Government of Canada and every tax paying Canadian $1.4 billion a year.

It’s a good thing there are Canadians with a greater interest in uncovering the truth than those who occupy the Main Stream Media, since it will only be because of our actions and our dedication that we will live in a society where we can achieve Taxation Without Misrepresentation.

There are still those who righteously live by the credo of “Don’t tread on me”, especially when it come to one’s own elected misrepresentatives.

Like Stephen Harper, evidently seniors' group CARP is in the business of misleading seniors:

Stephen Harper is famous for having mislead seniors when he promised he would never raid seniors’ nest eggs by taxing income trusts. As bad as that broken promise was, he took his deceit to an even higher level by falsely invoking seniors in the Ways and Means motion by saying the goal of taxing income trusts was:

“strengthening Canada’s social security system for pensioners and seniors”

What a load of Stephen Harper Income Trust tax, that fraudulent claim surely is. A snake oil salesman exercise in false invocation of the vulnerable members of society.

Just like the following claim that CARP made in their February 2008 magazine ad that appears above which states:

“7. CARP has been vigilant in key financial areas like successfully fighting to preserve income trust tax status”

Well you could have fooled me. First the battle to preserve the status of income trusts for average Canadians on a par with that of pension funds and partners in law firms is far from over as no tangible progress has been made to right this inequity.

Furthermore any pending victory will not be something that CARP can claim any role in whatsoever. CARP is more concerned with preserving two of its major advertisers, Manulife Financial and Power Corporation owned Investment Planning Council than it is interested or serious about advocating on behalf of seniors for, since doing so conflicts with the interests of its advertisers.

By the way: What exactly is a CARP certified Investment Planning Council Representative? Does the OSC know about such an arrangement?

Don’t take my word for it concerning the utter lameness of CARP, here’s what Grover had to say on another blog site:

“Perhaps CARP really means that they successfully supported Flaherty in keeping the new tax thus helping him rob the very people that CARP should have been standing up for.

Sadly, I joined CARP once and quickly found out just how useless and spineless an organization it really is when it comes to things that actually matter such as fighting the unfair taxation regime imposed by Flaherty and Harper.

I let my membership lapse because I could no longer stomach their lack of action when it came to looking out for the financial well being of our aging investors.

Perhaps their initials should really stand for Conservatives Against Retired People.”

Stephen Harper: "Tacked and Weaved"? .... more like: "Lied, Concealed and Fabricated" !

Stephen Harper is truly a pathetic facsimile for a leader. In yesterday’s National Post article entitled “It's been two years, where will he go now?", we are privileged to learn about Stephen Harper’s self assessment of his two years in office and the unchartered nature of where he is headed, with the statement:

"Along the way, we've made the occasional mistake, but experience is a great teacher," Mr. Harper admitted. "We've listened. We've learned. We've grown. We have tacked and weaved in the face of wind and storm, but our final destination -- a better Canada for all of us -- remains the same."

To which Don Martin appropriately responded: "Okay, yuck."

As for "tacked and weaved", I wholeheartedly beg to differ, as I think Harper’s mantra and modus operandi is better summed up by Lie Conceal Fabricate. And I’m not just talking about the scandalous income trust treatment afforded by his back handed government.

Evidently Don Martin of the National Post is having a serious rethink about just how alive today the income trust betrayal is in the minds of voters.

On December 31, 2007 Don Martin tried to fly the lead balloon idea in reference to Jim Flaherty that Flaherty “seems to have finally put the income trust flip-flop behind him.”

More realistically, Don Martin yesterday pointed out that:

“The five priorities of the 2006 election, spliced into 170 Blue Book promises, have largely been met with only the odd flip-flop, the most spectacular being when the government reversed its position and opted to tax income trusts.”

Again, I beg to differ.

What Don Martin and all Canadians need to realize is that the income trust issue is about so much more than income trusts and about whether a government should have the right to summarily “raid seniors nest eggs” to the tune of $35 billion. The income trust issue is about whether we as Canadians have a transparent and accountable government as we were promised and as we should demand at the very minimum.

The central rationale for braking the income trust issue is the unproven allegation that income trusts cause tax leakage. Seldom is proof for the central tenet of a major policy so readily available and so easily discerned.

So where is it? Where is the proof of tax leakage? Where is the transparency derived from 18 pages of blacked out documents? Where is the accountability for this policy’s many adverse outcomes, apart from Flaherty’s reprehensible plea of “It’s not my fault”?

Apart from Diane Francis and occasional others, where is the press? As one example of the press' co-joined indifference: is the press not even remotely aroused by the fact that the government demanded that the 18 blacked out pages issued under the Access to Information Act be returned immediately?

Democracy should not be thought of as the default mode that societies like Canada revert to in the absence of ongoing scrutiny and vigilance by its citizens. Whereas plutocracies are.

That is the ultimate destination of the short journey on which Stephen Harper is taking Canadians when he is “tacking and weaving” and allowing an embedded plutocracy to take hold unfettered in this country that for lack of better definition goes by the name of Corporate Canada’s Controlling Elite (CCCE).

What’s their common modus operandi and jelly bean mentality?:

Answer: Lie Conceal Fabricate.

To quote Don Martin: “Okay, yuck”

To quote Diane Francis: “Prove the case or drop the tax”

Brian.....what are you afraid of revealing to Canadians this time around?

Today we are to understand that Brian Mulroney thinks the House of Commons Ethics probe is 'Unfair'

Brian Mulroney is going to have to learn to stop acting like the wounded puppy and start showing more contrition for his acts. A good place to start would be by being a little more co-operative and less indignant.

Personally I am most interested in whether Brian Mulroney lobbied Stephen Harper on behalf of Archer Daniels Midland to abolish the Canadian Wheat Board. Second I want to know whether he remitted GST on the $300,000 in cash he surreptitiously received from Karlheinz Schreiber. After all, it was Right Honourable Brian who implemented that most unpopular (at the time) tax. How deliciously hypocritical that revelation would be, if true.

And third, I want to see the complete file from the Canada Revenue Agency concerning the late payment of Mulroney's federal and provincial taxes on the $300,000 in cash he failed to declare except at a much later date under CRA’s voluntary disclosure program.


Probe 'Unfair': Mulroney
Committee has exceeded mandate, letter says
Allison Hanes, National Post Published: Friday, January 25, 2008

What a load of Stephen Harper's Income Trust tax

Title: Garbage in, Garbage out:

Subtitle: Ways and Means Motion to tax income trusts:

That it is expedient to amend the Income Tax Act, in accordance with proposals announced by the Minister of Finance on October 31, 2006, to uphold the value of fairness for Canadians by:

* levelling the playing field between trusts and partnerships and corporations,


* ensuring that taxes are not unfairly shifted onto the shoulders of Canadian taxpayers, especially Canadian families,

* strengthening Canada’s social security system for pensioners and seniors,


* helping corporations make choices that are consistent with economic growth and competitiveness, and

* bringing Canada’s approach to the taxation of trusts and partnerships back in line with other jurisdictions,


The only antidote to Stephen Harper's effluent tax policy nonsense, is a little truth which will soon be forthcoming now that Parliament resumes next week, and the following matter can be dealt with:

Brent:

Today (December 11, 2007) I have sent this motion to the clerk of the Finance Committee:

"That this committee as soon as possible launch an inquiry into the unproven allegation by the Finance Minister that income trusts result in a loss of tax revenue to Ottawa, in light of reports that 70% of all recent trust purchasers are tax-exempt, while individual Canadian investors lost tens of billions of dollars, and therefore pay less tax, as a result of the government trust decision."

Garth

Hon. Garth Turner, PC, MP
Member of Parliament, Halton
House of Commons K1A 0A6 (613) 996-7046
86 Main Street, Milton (905) 693-0166
Daily blog, www.garth.ca
Email, garth@garth.ca

In actual practice, Stephen Harper’s much vaunted “accountability”, is simply a vacuous jingle

Today we learn in the Globe and Mail, that Natural Resources Minister Gary Lunn claims that ”There’s no need to independently review firing of nuclear watchdog”. How very convenient. How very unaccountable.

This level of utter non accountability is so reminiscent of Finance Minister Jim Flaherty’s statement of “It’s not my fault” when confronted with the reality that his income trust tax had induced over $65 billion in takeovers, the vast majority by foreigners, with the result that $1.4 billion in annual taxes were now being lost.

Which leads to the obvious question: If it’s not the Finance Minister’s responsibility to be held to account for the causal outcomes of his actions, then whose responsibility is it? Is he suggesting that it is the fault of the people who elected him to Parliament? Or perhaps it is the fault of the person who placed him in a position of Cabinet authority for which he is so utterly lacking in competence to properly execute?

Accountability with the Harper government is a facile and vacuous jingle that, in practice, simply means “go pound sand”.

Although it needs to be acknowledged that Harper's unaccountable regime does have another nifty moniker for your consideration: Canada’s New “It’s Not My Fault” Government

TD Bank's prominent role in BCE takeout: Coincidence or imbedded conflict of interest?

The quasi-auction of BCE to private equity consortia in June 2007 was a direct consequence of the undervaluation of BCE that occurred as the immediate aftermath of Jim Flaherty’s denying BCE from carrying through with its announced intention to convert to an income trust and Stephen Harper’s reversal of his solemn election promise to never “raid seniors’ nest eggs” by taxing income trusts.

One person’s adversity is another person’s opportunity, and there are many interests that are well aligned to exploit the opportunity presented by BCE’s resultant undervaluation. TD bank is one of them. At least that was the plan.

As a result of the proposed highly debt leveraged buyout of BCE, by a group consisting of Ontario Teachers’, and US investors Providence, Madison Dearborn and Merrill Lynch, Canada’s largest telecommunications carrier will go from being Canada’s most widely held company to the private preserve of four institutions, three of them foreign. Such an outcome flies in the face of the Telecommunications Act whose goal is “to promote the ownership and control of Canadian [telecom] carriers by Canadians.”

Meanwhile here’s what proud new US investor Providence had to sat about their new catch of the day:

"This is a unique opportunity to contribute to and participate in the growth of one of the world's most significant communications companies," said Jonathan M. Nelson, Chief Executive Officer of Providence Equity Partners.”

I don’t suppose that comment will form part of BCE’s presentation when they go before the CRTC on February 25, 2008 to seek approval for this sale, since the CRTC’s role is to uphold the legislated goals of the Telecommunications Act. Providence will own 32% of BCE, Madison Dearborn 9% and Merrill Lynch an unspecified lesser amount.

The other adverse outcome of the leveraged buyout of BCE is that the $34.8 billion purchase price for the equity of BCE is being funded with a mere $6.7 in equity and the remaining $28.1 billion is borrowed money. This borrowed money comes from the company itself and not from the equity purchasers, hence the name leveraged buyout. As such the $28.1 billion in new debt used to fund the leveraged buyout will be in addition to the already $10 billion in outstanding debt. As such, these new buyers are purchasing a $52 billion acquisition wih less than $7 billion of cash.

As a consequence BCE will go from being an investment grade credit borrower that had complete access to the equity markets to one whose debt will be rated as junk bond status and with no access to public equity markets. It’s no wonder the bondholders are suing, since such an outcome was never foreseeable in their wildest dreams. This outcome is also counter to the other policy objective of the Telecommunications Act which is “to promote the efficiency and competitiveness of Canadian telecommunications”.

Given the capital intensive nature and rapid technological changes in telecommunications that will be a difficult objective for the privatized BCE to fulfill, given its new high cost of capital that it will be burdened with both in terms of the high cost of equity capital and the exceedingly high return thresholds of private equity and the burdensome cost of BCE’s sub prime debt ratings otherwise known as junk bonds. Meanwhile an alternative exists known as the Catalyst Proposal that averts all of these negative outcomes. Catalyst intends to intervene before the CRTC to acquaint them with the choice that is available to BCE as the country’s largest telecom carrier.

In order to be successful in bringing together this leveraged buyout, the leveraged buyout consortium needed two things in the immediate term Shareholder approval and a syndicate of lenders to provide the $28.1 billion leveraged buyout loan. To achive the latter, the Teacher’s consortium turned to a group of 50 banks led by Citibank, Deutshe Bank and Royal bank of Scotland. Of these 50 banks, TD Bank was unique in that it was both a shareholder of the company to be acquired and a lender to the group who was acquiring BCE. Furthermore TD Bank wasn’t just simply a garden variety lender to the buying group, it was what is known as a bridge equity lender, which carried with it risks and rewards that were greater and which were exclusively tied to approval by BCE shareholders of which it is one.

In fact TD Bank’s TD Asset Management is the second largest shareholder of BCE with 46 million shares, next only to Teachers’ who owns 50 million shares. However unlike Teachers’, TD Bank is not the beneficial owner of these 46 million shares that are registered in its name. Nor are TD Asset Management’s clients’ the beneficial owners of these shares. In fact a very large portion of these shares are shares that are held passively by TD Bank as part of an TSX index portfolio that it is the custodian of and in which BCE is one of the most heavily indexed wighted stocks. Meanwhile it still gets to vote these shares, as if they were the owner. That's hardly kosher.

So the question then becomes, is it merely coincidence or a conflict of interest that TD bank is reported to be the only Canadian Bank amongst a syndicate of 50 banks and certainly the only Canadian Bank with the lucrative and yet high risk role bridge equity provider, whose very risk and reward is determined by the outcome of a successful shareholders’ vote. At the very least, TD Bank should have dealt with this conflict of interest and/or perceived conflict of interest by asking that the shares that they hold passively as part of a passive index portfolio be excluded from the vote tally for purposes of approving a deal, whose outcome affected them in a significant collateral way, namely as a bridge equity provider.

Selling coal to Newcastle

You really have to hand it to our esteemed leader, Stephen Harper, as he has solved one of the great riddles of our time: How to sell coal to Newcastle.

Except in his case, it involved selling Canadian oil and gas properties to Middle Eastern oil interests, specifically the $5 billion purchase of Prime West Energy Trust by Abu Dhabi Energy , a state owned enterprise controlled by Sheikh Zayed bin Sultan Al Nahyan, whose modest personal residence and fleet of Bentleys, Mercedes and BMW's are pictured above.

Now that Sheikh Zayed owns one of the largest energy income trusts in Canada, and Hong Kong billionaire Li Ka Shing now owns TransAlta Power Income Fund, it has become quite clear who Stephen Harper had in mind when he wrote the following words in the National Post in 2005:

"Seniors are actually enraged, frightened and panicked about potentially losing retirement savings that they count on for the essentials of daily living."Income trusts are popular with seniors because they provide regular payments that are used by many to cover the costs of groceries, heating bills and medicine. They also provide tax relief from a government that is addicted to taking too much money from their pockets and spending it without care, and very often without meaningful results.

So one must ask, why is the government clamping down on the retirement savings of seniors and investors?”

Well Stephen, that is a most insightful question that you posed in 2005, that demands an answer in 2008, since, in the end, it was you who did the clamping and not the Liberals. It was you who promised never to raid seniors nest eggs, only to turn around and do that very thing.

Obviously you have a particularly close place in your heart for the world’s billionaires, as they seek safe havens to invest their abundant wealth in. Perhaps you derive your affinity for the lifestyles of the rich and famous from your wife Laureen, when you let it slip that your wife Laureen thinks that Bill Gates is “the worlds sexiest man”. Not because of Bill Gates’ philanthropy, but based on Laureen Harper’s reasoning that "when a man has that much money, he's sexy".

Well that pretty much explains the Harper family mindset and value system. Welcome to the third world, Canada style. It's too bad that Stephen and Laureen Harper don’t think that it's “sexy” to honour election promises, or see the sexiness associated with the act of seniors being in a position after a life time of hard work of being to have sufficient income from their investments to “cover the costs of groceries, heating bills and medicine”.

Evidently I am not alone in my questioning of the merit of selling the assets that provide the basis for Harper’s other bold assertion that Canada is an Energy Superpower, while Harper is simultaneously encouraging and fostering the sale of those very assets to middle eastern oil companies on the cheap. Assets that were otherwise happily owned by average tax paying Canadians,

Stephen Harper solved the age old conundrum of how to sell coal to Newcastle by imposing a draconian 31.5% tax on the 20% of Canada’s oil and gas production that is held in publicly traded trusts and the 80% of Alberta’s energy infrastructure assets that are held in publicly traded trusts on the average Canadians who owned, while allowing foreign big oil to be free from this tax.

In addition, Harper further advantaged foreign big oil to acquire these newly undervalued trusts by relieving big oil of the growth restrictions that Harper imposed on these businesses whilst in the hands of average Canadians. Harper furthered greased the slides of takeovers by foreign big oil by eliminating the 15% withholding tax these players would have had to pay on the debt they used to acquire these companies. The technical term for such an unlevel playing field is called event driven arbitrage. In layman’s terms its called a sweetheart deal for the rich and famous.

And what is Industry Minister Jim Prentice’s words to Abu Dhabi Energy’s future acquisition ambitions in Canada? Please, help yourself. Your petrodollars are most welcomed here, in a way that average Canadians’ are not.

Next on Harper’s agenda will be solving the problems plaguing the Canadian automotive manufacturing sector. Rather than helping fund the start up of the idled Ford engine plant in Windsor, Harper has better use for that $60 million. It’s a sure thing. Canada will soon be opening the new Bentley dealership in Abu Dhabi to cater to the uber wealthy carpetbaggers from the middle east who have just struck oil in Canada.....of the most viscous and greasiest kind.

P.S. Did I mention tax leakage?

CRTC and BCE: Let your voice be heard

The CRTC is holding pubic hearings on February 25, 2008 into the purchase of BCE by Teachers and 3 US Private Equity funds, Providence, Madison Dearborn and Merrill Lynch. CRTC approval is required for the deal to proceed.

The deadline for submissions to the CRTC is by the end of tomorrow (January 24, 2008). It is very easy to make a submission, as described below.

Any party wishing to do so, can express their views to the CRTC in advance.

The Teachers’ transaction will turn Canada’s largest telecom company into a junk bond issuer with no access to public markets, from what is presently Canada’s most widely held public company with broad access to capital via its public status and investment grade credit ratings.

This junk bond transformation into a narrowly held private company is not a recipe for success in a capital intensive industry that is experiencing rapid technological change. This is not the way to reduce the cost of telecom services or enhance service offerings for Canadians. This is not why Bell Canada was granted an effective oligopoly license. Government granted oligopolies should be two way streets. These new buyers are mere financial buyers and not industry players per se.

It is estimated that the leveraged buyout of BCE by these private equity players will result in the loss of $793 million in annual taxes to Ottawa, given the deductibility of interest from taxable income and the elimination by the Harper government of the 15% withholding tax paid by foreigners on leveraged buyout loans. Foreigners are the source of virtually all of the BCE leveraged buyout loans, coming from groups like Citbank, Deutsche Bank and the Royal Bank of Scotland.

It is obvious that the leveraged buyout is a marginal proposition for the buyers, as there is rumour hat the will have to spin off core assets to pay down the mountain of debt and the deal only makes sense if the Bell bondholders take an $800 million hit. All, in order that management and their advisors can experience a $250 million+ personal pay day from accelerated stock options, retention bonuses and free carried interests in the newly privatized BCE and advisory fees.

If you feel this is not a good outcome for a company that is regulated by the CRTC, then it is very easy to let your voice be heard. Simply fax (819-994-0218), mail or upload your letter to the CRTC via the following instructions.

It is very obvious that BCE and Teachers are out “trolling” for letters in support of this transaction, as there are submissions from a number of groups like Kids Help Phone and others who are closely tied to BCE and Teachers, like Carol Stephenson of the Ivey School of Business, Michael McCain of Maple Leaf Foods, the Canadian Chamber of Commerce, and the Ontario Chamber of Commerce. All of these parties are closely linked economically to either Teachers’ and/or BCE.

Meanwhile the CRTC’s job is to uphold the policy objectives of the Telecommunications Act and the Bell Canada Acts, whose explicit policy goals are:

Bell Canada Act:

The works of the Company are hereby declared to be works for the general advantage of Canada.

Telecommunications Act:

7(c) to enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications;

7(d) to promote the ownership and control of Canadian carriers by Canadians;

How does the Teachers’ deal achieve these ends, when there was an alternative that served everybody’s objectives , including consumers, whose interests the CRTC is mandated to protect?

Other interventions can be viewed here.

Here are two questions that were asked at BCE’s June 2007 Shareholders Meeting that were obviously dismissed by the Board and management of BCE, but are probably representative of where most well informed Canadians are on this issue:

Question: Unidentified Woman: Concerning the privatization of BCE, I would like to make the following points: Given many small, individual shareholders are retirees, who have invested their savings in BCE for their save and attractive dividend; Given many shareholders have bought their shares more than 20 years ago, they will take a big tax hit should the privatization of BCE go ahead. Since the original cost of their shares cannot be adjusted for inflation — it has been significantly lowered because of stock splits and spin offs — there will result an over-inflated capital gain taxed at a higher marginal rate plus additional tax brought on by clawbacks. Furthermore, in some cases, they may be required to make advanced tax payments to governments in the form of provisional accounts. Given that the public pension funds are exempted from capital gains tax, they can disregard fiscal consideration and push for the privatization of BCE in order to get a higher prize for their BCE shares — an action detrimental to the small, long-term shareholders, who do have to pay capital gains tax and will incur an extra tax burden because of clawbacks. My question is for Mr. Sabia: How much weight are you prepared to give to the very real concerns of long-term shareholders in the face of the privatization of BCE, which, personally, I don’t think will enhance the value of my shares. Thank you.

Question: Stanley Goldstein: Long time shareholder of the company. I’d like to pick up the comment of [the] shareholder earlier. Does the oversight committee, management, have a plan in place a pro-public ownership plan and if so, might you share with us the essence of its component parts. I ask this because you mentioned in the beginning in your the speech about the changing landscape, about privatization, etc. But the transfer of the ownership of a telecom company is not like the transfer of ownership of a concessionaire of the hot dog stand at Bell Centre. There’s easements, rights of way, spectrum, Section 7 of the telecom act, there’ll be regulatory review, there’ll probably be parliamentary review, we see winds of change in the country, but icons of Corporate Canada transferring to foreign ownership. And I ask this question because as someone who’s been around the industry for a long time, I expect the regulatory process will be long and protracted, and some of the conditions of the transfer of ownership might be exacting and will impact the cash flow expected by the buyer. And so we might still be here next year, talking about this issue, and where will that leave the shareholders? And so therefore, I come back to the question, about having in place and sharing with us a pro-public ownership plan. Thank you.

Proof of concept: Harper's fiscal incompetence

In today’s Ottawa Citizen we learn that the “Party faithful are set to pick economy as next hot-button election issue.”

It’s one thing to advance a concept. Quite another to prove it.

If the opposition parties are intent on making Canadians aware of the fiscal incompetence of the Harper government, the income trust tax affords the opposition parties with the perfect “proof of concept” example.

The concept being that Harper is fiscally incompetent and deceitful to boot

Virtually every Canadian voter is aware of the income trust issue and the loss of savings that many Canadian experienced from this election flip flop. Many Canadians harbour the belief that Stephen Harper was compelled to act in the manner that he did.

This widespread belief is only reflective of the success with which Stephen Harper and the CON party were able to advance the “big lie”, known as tax leakage.

The Big Lie can easily be laid to waste. And with it, the Harper government and any belief that they are competent managers of fiscal affairs or a party of integrity.

The first step is to acquaint Canadians with the fact that the only evidence of tax leakage is 18 pages of blacked out documents.

The next piece of evidence is that the government demand that these blacked out documents be returned, after they realized how much damaging information is contained.

The next step is to acquaint Canadian with the $65 billion in trust policy takeouts that have occurred, that have already induced $1.4 billion in tax leakage to solve an alleged $500 million tax leakage problem, that was never proven to exist on the first place.

Next is to acquaint Canadian with the knowledge that the Department of Finance knew this takeover outcome would occur.

The next step is to acquaint Canadians with who it is who benefits from this policy, namely Big Lifecos like Manulife and Power Corp’s Great West Life and London Life, foreign private equity firms like Brian Mulroney’s Blackstone Capital, foreign big oil firms like Abu Dhabi Energy and Hong Kong billionaires like Li Ka Shing.

Next in line is to acquaint Canadians with the role played by former Goldman Sachs investment banker, Mark Carney, who was catapulted into his present capacity of Governor of the Bank of Canada

The last step is to simply reveal tax leakage for the total fraud that it is. This matter is well underway, what with the Green Party’s call for an inquiry into alleged ax leakage. And answers to the following motion currently before the Finance Committee by Liberal MP Garth Turner:

"That this committee as soon as possible launch an inquiry into the unproven allegation by the Finance Minister that income trusts result in a loss of tax revenue to Ottawa, in light of reports that 70% of all recent trust purchasers are tax-exempt, while individual Canadian investors lost tens of billions of dollars, and therefore pay less tax, as a result of the government trust decision."

The highly evasive Mark Carney on the price of tea in China

Below is the testimony provided by Mark Carney before the Finance Committee on December 5, 2007.

At that point in time, income trust investors had lost over $35 billion in their life savings because of the income trust tax policy that Mark Carney was responsible for while in the Department of Finance. This policy was designed to deal with the alleged tax leakage that was caused by income trusts. Mark Carney’s proof for alleged taxleakage takes the form of 18 pages of blacked out documents.

When asked about the negative consequences of his tax policy on Canada, as it pertained to the $40 billion in takeovers that it had induced and the loss of over $1 billion in tax revenue loss that it had cost, Mark Carney provided MP Garth Turner with a very evasive answer that went off on some tangent about how the stock market was up over the last year and a half.

What does that have to do with the price of tea in China? And now that you mention it, the TSX is no longer “up” in value, since it has lost over 10% of its value in the last four trading days, essentially wiping out all the gains that you were so effusive about.

When will you answer Garth Turner’s question about the takeovers and loss of taxes that your policy resulted in? Or have you moved on to greener pastures in your new role as Governor of the Bank of Canada?


Hon. Garth Turner: A year after the decision more than $40 billion in Canadian trusts have basically been sold and it would appear that the better part of a billion dollars worth of tax revenue is not flowing into government treasury that was before.
Given that, I have two questions. One, did you anticipate the consequences of the advice that you gave the minister? Secondly, how can you consider to be anything other than a failure?

Mr. Mark Carney: I'll refer to my previous answer, which is that I'm not going to go into the details of advice given to any minister of finance or any minister of the Crown that I gave as a civil servant. I will point out though, as a macro fact, that over the course of the last year-and-a-half, as I'm sure you're aware, the TSX, the largest market, is up substantially. We have a $1.6 trillion market cap on the TSX. It's important to keep context--

Hon. Garth Turner: I know that and I'm not interested in the TSX--

The Chair: I'm sorry, Mr. Turner, allow Mr. Carney to finish answering the question.

Hon. Garth Turner: No I'm not because that's not what I asked him. He can answer a question I didn't ask him if he wants--

The Chair: Do you have another question, Mr. Turner?

Imagine if the TSX were down 17.8% and it WAS the government's fault?

Perhaps with the TSX down 10% during the last four trading days, people can get a better appreciation of what it was like and continues to be like for income trust investors who believed Stephen Harper when he solemnly pledged he would never raid their nest eggs by taxing income trusts. These folks experienced a 17.8% drop in the value of their savings. A loss of retirement savings that is perpetuated to this day.

That precipitous move by Harper and Flaherty is the largest loss willfully inflicted on citizens by any government, ever. It has cost 2.5 million Canadians over $35 billion of their life savings and every tax paying Canadian the loss of $1.4 billion in ANNUAL taxes to date .

I think Stephen Harper has a penchant for nuclear meltdowns. He is not fit to lead our country. Difficult times calls for competent and steady leadership. Not shoot from the hip dogmatic nonsense, which in the case of income trusts, Stephen Harper was spoon fed by lobbyists , Gwyn Morgan, Paul Desmarais Jr and Dominic D’Alessandro

Calculation of $35 billion loss:

The income trust market closed on October 31, 2006 at 164.86 as measured by the S&P/TSX Income Trust Index. On the evening of that same day, Finance Minister Jim Flaherty announced that he would introduce a 31.5% tax on income trusts. Two days later the index was at 138.21, This represents a loss of 16.2% which on a $200 billion market represents a loss of $32.5 billion. Two weeks later the index was at 135.51 representing a loss of 17.8% or $35.6 billion.

Harper treats us like unequals

Treats us like unequals? That’s the title of an article in today’s Leader-Post.

Let’s examine that claim as it relates to Stephen Harper’s decision to tax income trusts after he promised he would never raid senior’s nest eggs by making such a move.

As a starting point, Harper has allowed pension funds to own income trusts in their private equity portfolios free of the 31.5% tax and the 75% of Canadians without pensions can not? That sounds decidedly unequal to me.

Meanwhile as "compensation" for his draconian income trust tax, Harper has granted those 25% with pensions the right to split their pension income with their spouses or common law partners, whereas the 75% of Canadians without pensions can not. That sounds decidedly unequal to me.

Interest on corporate debt can be serviced with pretax cash flows, but distributions on income trusts can not. That sounds decidedly unequal to me.

Interest on corporate debt can flow to foreign investors free of any taxation, but distributions on income trusts can not. That sounds decidedly unequal to me.

Harper’s mini budget called for corporate tax rates to be reduced by 34% by the year 2012, and yet no such corresponding reduction on the income trust tax . That sounds decidedly unequal to me

John Manley and his 700 fellow lawyers at law firm McCarthy Tétrault LLP can participate and own a tax flow through partnership, but average Canadians seeking retirement income can not. That sounds decidedly unequal to me.

The pension plan of newly minted Bank of Canada Governor and architect of the Income Trust tax, Mark Carney’s own pension plan, the Public Sector Pension Plan can own Thunder Energy Trust, free of any 31.5% tax and growth restrictions, but average Canadians can not. That sounds decidedly unequal to me.

The resultant undervaluation in the trust sector, allowed the Public Sector Pension Plan to act in a predatory manner, working hand in hand with the civil servants who provided this legislative “carve out” and who are its beneficiaries. That sounds decidedly unequal to me.

And yet before being caught with their hands in the cookie jar, the Public Sector Pension Plan felt compelled to make this statement of self admission:

“Our exceptional level of liquidity provides us with a competitive advantage vis-à-vis others (Read: the average Canadian) in capturing the return premiums offered on less liquid (Read: private equity) investments.

Of course, as investors we are not called upon to formulate government policy...but we do have to make assessments of the potential impact of these various forces and factor those assessments into our investment decisions.”

Sure, we believe you. Just like we believe that our illustrious leader treats us like equals, or not, as the case may be:

Harper treats us like unequals
Murray Mandryk, Special to The Leader-Post
Published: Friday, January 18, 2008

Three bad days, and 2007’s gains are gone

That’s the title of today’s headline article in the Globe’s Report on Business. That’s also the way that Canada’s Finance Minister would like Canadians to save for retirement, when he condemns income trusts on the basis that we cannot become a “nation of coupon clippers”.

Implicit in that statement is that Jim Flaherty, an ambulance chasing insurance litigator who favours jailing the homeless, would prefer that Canadians saving for retirement become a nation of stock speculators or a nation of day traders.

The problem with the stock market at large is that it is premised largely on the greater fool theory, in which you attempt to buy low and sell high, provided you can find someone willing to provide you with your investment gain. Unfortunately the broad market is captive to investor sentiment at any point in time, which can turn on a dime, as it has these past three days, wiping out in three days all the returns that investors experienced during the entirety of 2007.

This is what makes income trusts unique, in that their returns are largely derived from the distributions that are paid on a monthly basis. Never will you read a headline in the Globe that says “Three bad days and 2007’s distributions are gone”. Once paid, these distributions are irrevocable.

Doesn’t that sound like the more prudent way to provide retirement income and peace of mind? With the traditional common share investment in a corporation, the investor looks to the market for his/her return, whereas with the income trust investment, the investor is looking to the company for his/her return. Income trusts are a buy and hold strategy as opposed to a buy and sell strategy.

Income trusts had grown over the past 10 years to a $235 billion market, as a result of the dramatic decline in interest rates and the fact that Canada has an aging population, of whom 75% do not have employer pensions. Stephen Harper solemnly promised he would never tax income trusts, but as with most of his promises, he promptly broke it. The reasons he cited are all fabricated nonsense, as income trusts do not cause tax leakage or weaken our economic growth or prosperity .

Income trusts however do cause headaches. Headaches for the likes of Dominic D’Alessandro of Manulife and Paul Desmarais Jr of Power Corporation/Great West Life, who were having a difficult time selling their investment wares like annuities and Income Plus in the face of the broad and growing popularity of income trusts.

In addition, corporations like CI Financial who had adopted the income trust model were provided with a higher valuation by the marketplace. This higher valuation was accorded by the market to income trusts. because investors place a premium on companies who were more disciplined in the payout of their earnings and who would only do acquisitions that would be accretive to earnings. Meaning acqusitions that increase the monthly distributions, rather than decrease the monthly distributions.

This caused a problem for companies like Manulife and Power Corporation, since they certainly liked the idea of enhancing their valuations by converting to income trusts but the idea of embracing these new ground rules of financial discipline was anathema to them. For example, Power’s acquisition of Putnam Investments which was not accretive to earnings, would not have been permissible by investors, had Power been an income trust.

As such, the Harper government has become the instrument of big business and the big Lifecos and made himself the arbiter of which investments will be available for the 75% of Canadians who must fend for their own retirement and which ones will not, meanwhile hypocritically and most unjustly allowing the Pension Funds who manage the retirement income for the 25% of Canadians to own income trusts in their private equity portfolios free of the new 31.5% tax. How can this be considered a Tax Fairness Plan? Harper then took this inequity even further by allowing the privileged 25% to split their pension income, but not the 75%, resulting in tax savings of up to $12,000 a year.

Would it surprise you to learn that every person, namely every politician and every bureaucrat who was involved in this policy’s design was a member of that exclusive 25% club?

And to think that this whole policy flip flop that was designed to serve the bespoke policy objectives of Manulife and Power Corporation and the like was perpetrated on the complete falsehood of tax leakage. All in order that you too can be the proud owner of retirement investments where all it takes is three bad days and all of last years’ gains are gone. Poof.

Perhaps Stephen Harper’s next occupation could be working in a boiler room operation, swindling unsuspecting investors from their life savings. He would come well recommended for that job, having swindled $35 billion form Canadians during his first nine months as the Right Honourable Prime Swindler of Canada

Open Letter to Jim Abbott and the Voters of Columbia/Kootenay

Jim Abbott, as it now stands you are untrustworthy, not credible, deceitful and
corrupt. You do not represent the people of Columbia/Kootenay, you represent
yourself.

Explain to the Union Workers, the Rotary Club, Seniors, and young savers and investors how some Trusts that could be owned by all and taxes paid, are now in your pension fund where no taxes are paid and we can no longer own these companies?

We, the voters were promised the CONS would not interfere with the Trust structure to get our vote, tamper with the Trust structure causing $35 Billion of voters' savings to evaporate, and then your pension fund snaps them up at discount prices where they pay no taxes and are no longer available publicly. Stripped out of our union pension funds and mutual funds.

There is no tax leakage or was there ever any. You can't prove it. When asked to prove it you produce a document with 18 pages blacked out.

In fact Jim Abbott your lies and deceit and manipulation have cost every taxpayer in Canada @ $344.00 so far, and a $7 Billion tax loss so far.

You Jim Abbott are beneath contempt.

If you were not protected by political immunity you would be on trial. You may be on trial yet. We, along with millions of other Canadians will not vote CON in the next election or ever again.

It is obvious you have 3 choices.

1) Run as a CON, be defeated, walk the streets of Cranbrook knowing you've screwed everyone you meet. You will be remembered forever. "The Greatest Betrayal by a Government on the Citizens in Canadian History"

2) Don't run. Walk the streets of Cranbrook knowing you've screwed everyone you meet. You will be remembered forever. "The Greatest Betrayal by a Government on the Citizens in Canadian History"

3) Run as an Independent. Distance yourself from the CONS manipulation, lies, deceit and betrayal. Prove to the People of Columbia/Kootenay and Canada you are a man of honesty, integrity, ethics and dignity.

Life is a series of choices Jim Abbott, choose wisely.

Silence and avoidance are no longer choices you have.

As you do not reply to letters, phone calls or emails we ask you to announce a press release when you plan a Town hall meeting and tell Canada what you plan to do. The National Media will attend.

Names withheld-we fear reprisal.

Yes Jim Abbott, we fear you.

From: http://www1.investorvillage.com/groups.asp?mb=6966&mn=3188&pt=msg&mid=3900797

Isodope Man: Able to leap tall buildings in a single bound.

Able to create tax leakage where none previously existed.

Able to hollow out the Canadian economy and hand over prime Canadian oil and gas reserves to middle-eastern state-owned enterprises with a single tax policy:

January 16, 2008
TAQA completes $4.6 billion acquisition of PrimeWest Energy Trust
CBC News

January 17, 2008
TAQA cites letter from Jim Prentice urging further takeovers
Globe and Mail

New Bank of Canada Governor Rodney Dangerfield gets no respect: Big banks consider defying rate cut

Looks like Mark Carney is getting the respect he deserves. After all, he only got the job by being an instrument for larger forces.....why would they kow tow to him now?

Looks like the Big Banks are now setting Canada’s monetary policy. Just imagine if these 600 pound gorillas were allowed to merge?


Big banks consider defying rate cut
Would risk destabilizing country's monetary policy
HEATHER SCOFFIELD AND TARA PERKINS
From Wednesday's Globe and Mail
January 16, 2008 at 2:50 AM EST

Some of Canada's big banks are contemplating holding their prime rates steady in the face of a rate cut by the Bank of Canada, a move that could destabilize the country's monetary policy.........

Stephen Harper practices bulldozer democracy: "Conservatives fire president of nuclear safety agency"

Stephen Harper is going to have to learn to “play nice” in the sand box, lest he have no sand box at all to play in. That said, there is nothing child’s play whatsoever about the issue of nuclear safety.

One thing is for certain: if Bulldozer Steve doesn’t get his way, he will fire you. As occurred when he fired the head of Elections Canada following his spat with Jean-Pierre Kingsley over the brewing “in and out” campaign financing abuses of the Conservatives in the 2006 election.

Who is well served by this form of bulldozer democracy? Canadians? Our important institutions like Elections Canada and the Nuclear Safety Association? It reminds me of his draconian treatment of once pandered to income trust investors, whose nest eggs he promised he would never raid and once elected, condemned them as “coupon clippers”. Better perhaps that Canadians become day traders and stock speculators in retirement?

Yesterday income trust tax apologist Terry Corcoran of the National Post had an article entitled Who's cashing in on the ABCP market? that ended with the following lofty statement:“ it looks too much like an insiders' game, in which some people are protected, others aren't, and the market is being starved of information”.

Too bad people like Terry Corcoran aren’t able to apply their lofty principles more uniformly, since that comment applies equally to income trusts and its handling by the press. Perhaps its time for someone to write the piece entitled: Who's cashing in on the income trust policy?

Starved of information? Bulldozer Democracy? Where is the proof of alleged tax leakage? When it comes to policy making, it’s always best to start and the beginning and work forward.


Conservatives fire president of nuclear safety agency
Ian MacLeod, Vancouver Sun
Published: Wednesday, January 16, 2008
OTTAWA - The federal government late Tuesday night fired Linda Keen as president of the embattled Canadian Nuclear Safety Commission......

Happy birthday CAITI. You’re one year old today!

It was January 15, 2007 that the Canadian Association of Income Trust Investors came onto the scene. And not a minute too soon, if Liberal MP Paul Szabo is to be believed.

About a year ago, the Liberals and the Bloc were attempting to get the Finance Committee to hold Public Hearings into the income trust tax. These attempts were being fought tooth and nail by the Conservatives and the Chairman of the Finance Committee, Brian Pallister.

Paul Szabo was one of a number of MPs who were not members of the Finance Committee, but who intervened before the committee in the name of CAITI and the average Canadians who are its members and called for a Public Hearing to be held. In the end the efforts of the Liberals and the Bloc were successful.

Unfortunately the Hearings were conducted in a shameful manner, as every effort was made to render them ineffective. It was no surprise to anyone who participated in the hearings, that about three months later it was revealed in the press that the Harper government had prepared a 200 page manual for Committee Chairman on how to render these committee as ineffectual as they can be in order to force the government’s agenda. Virtually every tactic in that manual was in full display. The Committee Report was entitled Taxing Income Trusts: Reconcilable or Irreconcilable Differences?

The public hearings ultimately gave rise to the Liberal’s position on income trusts as well as the Green Party. In light of the $65 billion in trust tax related takeovers and the $1.4 billion loss in annual taxes these takeovers have induced, both of these parties are calling for a public inquiry specifically focused on alleged tax leakage. That proposition has been put to the Finance Committee and to be debated when Parliament resumes on January 28, 2008.

Within the first two weeks of CAITI”s existence we had over 5,000 individuals join as Founding Members , either as Income Trust Investors or Concerned Canadians. We received thousands of letters and emails. Here’s a good example of one received a year ago today:

Brent, I wish to congratulate you and your associates on your initiative at http://www.caiti.info/index.html
A voice on behalf of Income Trusts generally may prove invaluable.
To the extent meaningful representation can be made to the Commons Finance Committee, perhaps all or most of the punitive aspects of the so-called Tax Fairness Plan can be eliminated.
I do not profess to be particularly knowledgeable about the viability of Income Trusts as a segment of the larger capital market in Canada, but most of what I have read suggests there is a place at a much higher level than was most recently being contemplated with the Telus, BCE and Encana conversions.
I have read your consultation paper to the Department of Finance relative to the previous government initiative to resolve income trust confusion.
Contrary to conventional wisdom, I do not believe the intention was to dismantle the sector, but rather to simply get a handle on the whole affair.
So much conflicting information in the public arena, but not much based on clear cut evidence.
The Al Rosens and Professor Mintz's with their doomsday scenarios, and the Income Trusts with their claims of productive economic contribution.
The previous government was wise to take steps to better understand. They just didn't seem to do it as well as they could have.
Personally, I have very little exposure to Income Trusts.
My inner rage comes from what I perceive to have been an outrageous fraud perpetrated on Canadians.
To watch as the government tried to support their breaking of a substantial election promise without substantive evidence was unbearable.
Their resort to hyperbole and fear to justify their action was highly insulting. Reminiscent of George Bush and Iraq.
To claim "Clear and Present Danger" was offensive in the extreme.
To throw a pittance at Seniors to offset the hurt was cynical in the extreme.
And finally, to claim their actions took great courage was simply incredible.
I was astounded to learn that Gwyn Morgan and Murray Edwards were two of the very first to claim the government plan was good public policy.
Not until I looked at how both would have to start paying substantially more in current income taxes based on their holdings (should either of their companys decide to convert to trusts) did I realize why they may have been so inclined to offend so many of their contemporaries.
This is not to say they should not legitimately have a voice. Just not when their personal well-being is being so substantially protected at the expense of the Canadian tax system generally, and Income Trusts/Investors specifically.
Following the Dec 22/06 Calgary Herald editorial coming down on the side of the government I decided to establish a discussion thread on Canadian Business Online.
You may view it at http://forums.canadianbusiness.com/thread.jspa?threadID=8442&tstart=30
I have a fairly extensive list of parties that I like to copy on these messages, and am taking the liberty of doing so with this message.
Hope you don't mind too much.
One in particular, a College Professor from Sudbury, Ont. was particularly injured by the Halloween Massacre.
I have also decided to include the Calgary Herald for what it is worth.
As far as I can determine, they consider the issue non-existent.
Anyway, Brent.
Best wishes for what you are doing.
I will now go and sign up to be a founding member.

Respectfully,
B. D.
Calgary

Sandra Buckler, Harper's communications director was formerly a paid lobbyist for Power Corp.

Surprise . Surprise. Turns out Sandra Buckler was a paid lobbyist for Power Corp. immediately prior to jumping on Stephen Harper’s band wagon.

Just part of the revolving door of lobbyists becoming government officials and government officials becoming lobbyists in a never ending struggle to gain the higher ground of personal economic advantage. Ideology is measured by dollars and cents.

Do you suppose Sandra Buckler provides the Desmarais with daily updates about the inner workings of the Harper government the way that Marjory LeBreton did/does with Brian Mulroney?

I didn’t think Power Corp needed paid lobbyists. Just private jets and compliant Prime Ministers.

Income-trustcrackdown: The inside story
Globe and Mail
November 2, 2006 at 1:00 AM EST

"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."

The Leona Helmsleys of this world, reign supreme in Canada

Nothing wrong with the rich...it’s just the abusive rich we don’t need. Gwyn Morgan, Dominic D’Alessandro and Paul Desmarais Jr
are Canada’s answer to Leona Helmsley. They need to learn how to make an honest buck and compete like the rest of us rather than being coddled by bespoke tax policies from compliant governments who don’t know up from down or right from wrong, all designed to destroy these folks’ competition so that they can “compete” at the expense of our country’s competitiveness.

This is euphemistically referred to by Harper and Flaherty as "leveling the playing field".

The problem however, is that rather than stemming alleged tax leakage, this brand of Tax Fairness is actually inducing tax leakage in epic proportions known as Harper Valdez . It really doesn't get dumber than that. A policy outcome which is 180 degrees off course from the stated goal. Perhaps the government should have actually attempted to proved the existence of tax leakage before it sought to deal with the alleged problem.

Meanwhile why are employee stock option gains taxed at half the rate of the employment income that they most clearly represent?

Stock options do not represent capital at risk and therefore should not be taxable as capital gains which accrues from capital that is at risk. This is just another bespoke tax policy for the uber rich. I don’t know of too many stocks, in fact I know of none, that are able to be repriced or back dated, as is the case with risk free employee stock options.

On the larger issue if reining in the rich and powerful during Election 2008, I think Diane Francis is on to something:

Elections 2008: rein in rich
Posted: January 14, 2008, 7:06 AM by Diane Francis

National Citizens Coalition Alberta Membership Survey

Questions:

7. Which of the following issues would you like the NCC to concentrate on most on during 2008 (pick three only):
-reform health care for a greater role for the private sector
-reform Canada's health care system
-reform election gag laws to allow more independent individual free speech during election campaigns
-reduce government spending
-stronger national defense and national security issues
-reduce federal government involvement in areas of provincial jurisdiction such as healthcare and education
-slow the transition to recently enacted changes on income trusts
-don't know

11. Do you think the federal government should be spending time to solve the "fiscal" imbalance with the province? Yes No Don't know

17. Do you have an investment portfolio that has been affected by the recently passed income trust changes? Yes No

18. If you answered yes to question 11, would you like us to mount an aggressive campaign calling upon the government to slow the transition period of these changes so that income trust holders, including seniors, will have time to make financial adjustments that will lessen the tax blow to their portfolios?
Yes No Don't know/I am not an investor


Perhaps it would be more instructive if the National Citizens Coalition were to simply ask their membership about whether they believe in the need for government being transparent and therefore accountable. That way, the answer to the questionnaire wont be swayed by whether the respondent owns income trust or not in their investment portfolio, since Canadians need to realize that the Income trust issue is not about income trust per se.

It's about the need for honest, accountable, government, stupid....er, rather Harper .

Sort of like the gospel that Stephen Harper preached back in the ways when he headed up the NCC. Sort of like the gospel that Stephen Harper preached when he headed up the NCC. Or better yet this exercise in voter deception and dead on arrival pretense of accountability, contained in the Conservatives election platform entitled "Stand up for Canada":

”People who work hard, pay their taxes, and play by the rules want accountability from their political leaders. We don’t expect politicians to be perfect. But we do want to know that our tax dollars – money we’ve worked for – are being spent properly and wisely.”

Once in office we instead received 18 pages of blacked out documents and self excusing comments like this from Stephen Harper’s Chief of Staff. Ian Brodie, circa November 16, 2006 e-mail:

"The alternative to breaking the election promise and taxing trusts was to abandon all other tax cut plans as the corporate tax base quickly disappeared. Instead, Flaherty acted quickly, in the face of rapidly changing conditions, to break the trusts promise and save the rest of the government’s promises. Not a pretty choice, to be sure, but hardly an epic betrayal either."

Or this gem from the great man himself, Steve Harper, circa November 24, 2006 e-mail:

"I understand your disappointment with this decision. We recognize that Canadian investors, including many pensioners and seniors, have made important investments over the years and benefit from the current income trust structure. However, Canadians must trust that their government is watching out for them and is upholding the values that define us, like fairness. They expect us to fix problems, right injustices and close loopholes."

Forget about fixing alleged tax loopholes. It would be much better if you proved their existence in the first place. Maybe that would provide a basis for the "trust" that you think is yours for the asking....or exploitation as the case may be.

Ether way, one thing is certain. Don Martin of the National Post couldn't be more wrong when he wrote the following apologist piece ,a mere ten days ago. Just ask the National Citizens Coalition about the validity of this statement after they get the results of their membership survey:

“Jim Flaherty seems to have finally put the income trust flip-flop behind him.”

If that’s the case, them someone better let Liberal MP Garth Turner know, since Garth Turner as member of the Finance Committee is so far behind the times, according to Don Martin’s wishful thinking that the he and his Liberal colleagues want an answer to the following:

"That this committee as soon as possible launch an inquiry into the unproven allegation by the Finance Minister that income trusts result in a loss of tax revenue to Ottawa, in light of reports that 70% of all recent trust purchasers are tax-exempt, while individual Canadian investors lost tens of billions of dollars, and therefore pay less tax, as a result of the government trust decision."

Terms of reference, or terms of endearment?

I was of the belief that public inquiries had value because of their independence. And yet David Johnston has recommended the inquiry into Brian Mulroney’s illicit dealings is to be DEPENDENT upon the conclusion of the Ethic’s Committee’s hearings. How very convenient. How very endearing David Johnston has no doubt made himself of Stephen Harper’s best possible scenario.

No doubt there was some public “channeling” going on as between Stephen Harper’s public musings at year end about how he thought the public inquiry should proceed, if at all, and the recommendation of the apparently highly compliant, and as such, highly questionable David Johnston, who has proven himself to be the most useful political instrument in a time of need.

By turning an independent public inquiry into a dependent public inquiry, Stephen Harper has achieved a number of nefarious ends, all of which are consistent with his initial visceral response to the whole notion of a public inquiry when he infamously condoned a tolerance for corruption by stating:

“This is not a route that I want to go down, and I don’t think that if the Liberal Party thought twice about it, it is a power they would want to give me.”

So what has Harper achieved through these Terms of Endearment? First it needs to be acknowledged that the Ethics Committee is much broader in its mandate. For example it can chose to look into the The queer intersection of Mulroney's Directorships with major policies of the Harper government . However the Ethics Committee is more dysfunctional by its very partisan nature than a Public Inquiry.

Meanwhile the powers and functionality of a Public Inquiry only come into play upon the cessation of the Ethics Committee whereupon the focus of the inquiry become vastly more narrow, which is all designed to immunize Harper from the dealings he most assuredly had with Brian Mulroney and the large number of Harper polices that align with the commercial interests that Brian Mulroney now represents, the most telling of which is Harper’s hell bent mission to dismantle the Canadian Wheat Board, which apart from making no policy sense whatsoever would accrue to the tremendous commercial benefit Archer Daniels Midland, a board on which Brian Mulroney sits and has sat, ever since ADM was ADM was charged with one of the largest price fixing fines in history by the US Justice Department.

Speaking of justice, do you suppose this highly rigged and contrived Dependent Public Inquiry of David Johnston’s will ever see justice served and the truth revealed? Perish the thought.

It shouldn’t be the role of journalists to knowingly propagate lies

There is a very curious dance going on between the Harper government and Canadian journalists. With the latter being taken for a complete ride along with their readers who rely on the press for the truth.

On the one hand we have journalists lamenting the fact that Stephen Harper has an aversion to meeting with the press in the normal fashion, typical of most democracies. And yet these very same journalists are the ones who are being hauled around by their noses as they dutifully report on the snippets of information that there are served, one spoonful of pablum at a time by the likes of paid government propagandists, such as Sandra Buckler and Dan Miles .

Here’s a classic example afforded by a recent article by Carol Goar in the Toronto Star in which she dutifully regurgitated all the nonsense of the past about income trusts. When confronted with information that refutes what she had written in her article, her response is simply:

“I didn't explore the possibility that [Flaherty] was lying. Perhaps I should have.”

Let me repeat that once again: “I didn't explore the possibility that [Flaherty] was lying. Perhaps I should have.”

Perhaps I should have? Well, yeah, isn't that your main occupation?

If Carol Goar is in possession of information that refutes what she has written in the past or present, it is incumbent on her to correct the record. Failing which she has simply made herself an instrument in Stephen Harper’s Propaganda Ministry.

Meanwhile who in the media or elsewhere in the general public finds Jim Flaherty to be deserving of the public’s implicit trust, as evidenced by his proud pronouncement of today that he is descended from pirates ?

While Carol Goar engages in the exercise of correcting the record about the existence of a comparable instrument to income trusts in the US namely Master Limited Partnerships, perhaps Carol Goar would benefit from Digging Deeper .

Perhaps Carol Goar would also benefit by acquainting herself with what has now happened to BCE following its denial to become an income trust. Perhaps she is unaware that the $30 billion of new debt that is being used by the private equity consortium that will turn BCE into a junk bond private company will mean Ottawa will collect $793 million less in taxes each year from BCE that had it been a trust .

However all is not lost as the Catalyst Proposal can put this Humpty Dumpty back together again and preserve BCE as Canada’s most widely held public company, preserve its investment grade credit and maintain its widely held Canadian ownership. Do you suppose that outcome might be better aligned with the Telecommunications Act that is enforced by the CRTC whose stated policy goal is to:

7. (d) to promote the ownership and control of Canadian [telecommunications] carriers by Canadians

Failure in the part of Carol Goar and the Toronto Star to correct the record that has been so abused by them, will place them in good standing to receive the Judith Miller Award for Propaganda in Western Journalism 2008.

Last year's winner was Eric Reguly of the Globe and Mail, who had the temerity to recant his printed words with mere spoken ones and not widely circulated printed ones.

I expect more from all journalists upon being proven wrong otherwise they become culpable in the crime. Derek DeCloet has shown the way recently with his righteous admission of error at year end 2007.

From: Goar, Carol
Sent: Saturday, January 12, 2008 9:45 AM
Subject: RE: Income Trusts

Dear Mr. Marshall,
I understand your sense of betrayal. I've heard from a great many retired Canadians who share it.
Unfortunately, the questions you're asking go beyond the level of detail I can provide. I was worried when Stephen Harper asked voters for their support on the understanding that he would not touch income trusts. The Liberals had tried the same approach and reluctantantly decided to abandon it.
I have no way of telling how many large companies would have converted to income trusts as BCE did, but the finance department evidently believed a dangerous trend had begun.
As for my apparently ill-informed remark about the U.S., here is Jim Flaherty said at the time: "Clearly, Canada is out of step in its treatment of income trusts. The structure being used in this country was shut down in the United States and Australia." (Oct. 31, 2006).
I didn't explore the possibility that he was lying. Perhaps I should have.
Sorry I can't be more help. Thank you for the courteous tone of your message.
Most of the e-mail I've received on this topic has been quite hostile.
Best wishes,
Carol Goar
Toronto Star

Thank god for the House Ethics Committee

It’s a good thing we have the Ethics Committee on the case, now that Harper has so narrowly defined the Public Inquiry into the Mulroneygate affair, such that it immunizes him from being exposed for possible involvement as the target of undue influence by the likes of Lyin’ Brian and the commercial interests Mulroney now represents.

That way the Ethics Committee can deal with the real issues of concern to today’s voters, namely:

The queer intersection of Mulroney's Directorships with major policies of the Harper government

Globe and Mail: How a nasty rumour can ruin an investor's day

In today’s Globe article entitled “How a nasty rumour can ruin an investor's day” we learn how TD Bank found itself on the nasty end of a rumour that TD Bank was exposed to the Sub Prime meltdown, when in fact it was not.

I’m not sure if this is supposed to be some kind of human interest story centered on TD Bank CEO Ed Clark, since his visage is prominently displayed alongside the story of woe that TD suffered for about one heart wrenching day back in December.

Evidently Ed Clark doesn’t like being on the wrong end of a false rumour that affects his personal finacial holdings. If that’s the case, then why is the TD bank so active in its promulgation of the false rumour that income trusts cause tax leakage. That’s a concept that has never been proven to exist, and has in fact been refuted by many credible sources including HLB Decision Economics, PricewaterhouseCoopers. BMO Capital Markets, RBC Capital Markets. Deloittes etc.

My understanding was that TD Bank was consulted by Flaherty before he made his fateful move on October 31, 2006, although I have no direct evidence of that. Who needs direct evidence since it's obvious that TD Bank benefited from the elimination of income trusts since they have no active retail distribution network to speak of which meant they were no where in the income trust “league tables.”

In addition, TD bank sent the following policy statement to its clients where they are of the view that they prefer the "market certainty" that has arisen from Flaherty’s act of betrayal. If the TD Bank is such a big fan of market certainty, what was wrong with the absolute market certainty that prevailed after Stephen Harper got elected into office on the basis of promising to "never tax income trusts”.

Meanwhile the banks are jumbo issuers of what is known as Trust Capital Securities that are publicly listed trusts. Why aren they not being taxed at 31.5% as well?

Perhaps the Globe can write a real article about a much larger rumour that has been promulgated by the likes of TD Bank that has now persisted for the better part of 14 months:.

Perhaps the title could be: “How a nasty rumour can ruin an retiree's life”

Meanwhile my tears for the falsely maligned sub prime offending TD Bank will only be crocodile tears. TD Bank: Where Banking can be this self serving

Dear Mr. Marshall,

Thank you for your recent email addressed to Mr. Ed Clark regarding the
Federal Government’s income trusts proposal and the Tax Fairness Plan.
I understand your concern about the changes affecting income trust
investments, as this is an issue that has been raised by others as well.

As you already know, the Minister of Finance’s plan is based on the
assertion that the federal treasury has lost millions in tax revenue,
and the belief that the growing popularity of income trusts would likely
result in greater future losses of tax revenue to the federal treasury.
As I’m sure you are aware, the Government of Canada began a review of
the income trust sector in September, 2005, leading to a great deal of
uncertainty on this issue. TDBFG considers the fact that there is now a
greater measure of certainty in the marketplace on this issue as being
positive.

I would like to thank you for taking the time to share your perspective
with us.

Sincerely,

Sarah Kendall
Manager, Executive Response Team

Will the Toronto Star ever find its inner Woodward/Bernstein?

Although belatedly, I am pleased to see that the Toronto Star has finally found its inner conscience on the income trust issue with today’s acknowledgment by Carol Goar of:

“Then there was the income trust fiasco. Harper's contradictory signals left investors reeling and seniors clutching shrunken nest eggs.”

Actually it is most charitable and diplomatic of the Toronto Star to refer to Harper’s signal as being contradictory. There was nothing contradictory about it whatsoever, when Harper pandered far and wide with the promise: ”You know where the Liberals stand on raiding seniors nest egss. A conservative government will never let that happen. A conservative government will never tax income trusts.” If that wasn’t clear enough, then there was the Harper Editorial of October 26, 2005 in the National Post entitled "Questioning income trusts puts seniors at risk" and that little thing called pages 8 and 32 of the Conservative’s 2006 Campaign platform.

Now that the Star seems to have found its inner conscience. Can it find its inner mind? Can it find its inner Woodward/Bernstein, since when it comes to the Government's allegation of tax leakage, the question still remains, Where’s the proof? In the absence of proof where are the Woodward/Bernsteins who are in pursuit of the truth. ? In 2008, there are still inquiring minds that need to know the answers to mere assertions made by governments

If the Toronto Star actually believe that government’s should be transparent and accountable, them i'ts time for the Star to join in the Green Party’s call for a Public Inquiry into alleged tax leakage and to report on the following Liberal motion before the Finance Committee:

"That this committee as soon as possible launch an inquiry into the unproven allegation by the Finance Minister that income trusts result in a loss of tax revenue to Ottawa, in light of reports that 70% iof all recent trust purchasers are tax-exempt, while individual Canadian investors lost tens of billions of dollars, and therefore pay less tax, as a result of the government trust decision."

The Toronto Star has recently taken a strong editorial stance on dealing with poverty. I have news for the Toronto Star: The trust tax is taking matter in the opposite direction. Unlike the reporters and staff of the Toronto Star, 75% of Canadians don't have pensions and need to preserve essential investment options like income trusts. The resultant loss of income from this policy isn't confined merely to parties directly affected, but adversely affects all Canadians through the loss of $1.4 billion in ANNUAL taxes to date from takeovers. $793 million a year is from BCE’s alone, which can be averted by the CRTC’s preference for the Catalyst Proposal .

I recommend that you let the Editor of the Star’s Editorial page know your thoughts. Bob Hepburn at bhepburn@thestar.ca

When I met with the Editorial Board of the Toronto Star on April 12, 2007 I was completely unimpressed when they actually were defending the issuance of 18 pages of blacked out documents as evidence of tax leakage.

Subsequent events to that meeting, such as the raft of foreign takeovers of trusts like the $5 billion takeover of Prime West Energy Trust by middle eastern oil giant Abu Dhabi Energy and the resultant loss of taxes from the similar 40 trust takeovers should have motivated them to swallow their misguided pride and find their inner Woodward/Bernsteins. However that presupposes that knowing the truth still counts with the Toronto Star, even though there's no doubting that the truth still matters dearly to its readers.

Here was the e-mail I sent as a follow up to that meeting:

From: brent.fullard@rogers.com
Date: Thu, 12 Apr 2007 20:17:23 -0500
To: bhepburn@thestar.ca
Subject: Jack Mintz Quote

Bob:

Thank you for the opportunity of meeting with the Editorial Board of the Toronto Star. In our meeting today and in response to a question that you raised with me, I made reference to correspondence I received from Jack Mintz that directly contradicts what he is saying in the public and the basis upon which the tax leakage numbers he has been advancing in the public have been based. Here is what he confided to me in an e-mail dated November 28, 2006:

“I do want to point out that there is a serious flaw in some analyses especially on the taxation of pension and RRSP accounts. Finance was not right to treat the impact as zero”

As I pointed out to you, this is the very basis upon which “tax leakage” turns. Wrongly excluding these taxes results in tax leakage. Correctly including them results in tax neutrality. Attached is a press release issued by Dennis Bruce of HLB Decision Economics following the testimony he gave at the Public Hearings. The operative phrase is: "While federal budgeting is done on a current basis, federal policy analysis is done on a life-cycle basis. Accounting for the life-cycle effects of tax changes, namely deferred taxes, is appropriate in the consideration of tax policy."

Canadian Bankers Association now calling for bank mergers....good grief.....why am I not surprised?

Globe and Mail: No-merger rule ‘out of step,' bank group says



Sure, why not strike when the iron is hot?.........Harper is in the business of wrecking the country and passing out favours... what the hey....he takes all his marching orders from the bank/lifeco dominated CCCE anyway.

Just as was the case when the CCCE got their way on the income trust issue and the reversal of the interest deductibility measure. (Opposing changes to interest deductibility was a complete exercise in hypocrisy, since preserving interest deductibility is simply preserving the right to service interest on debt with pretax cash flows. Corporations want desperately to preserve that feature, but certain of their kind are hell bent on preventing the parallel arrangement to exist with income trusts.)

Apart from the banks themselves, (read: shareholders and employee stock option holders), this has got to be good for Manulife and Power Corp who can parlay this bank merger thingy to their benefit and expand into banking themselves. Goodbye the former " four pillars " of finance. Let's have bank mergers followed by massive layoffs in a field of high paying jobs, with high multiplier effects. That way it’s easier for Goldman Sachs and Wall Street to fill the newly created void. Do you suppose Mark Carney is supportive? He’s a newly minted banker now.

Hey, here's a really dumb idea. Let's consolidate more risk into the hands of fewer institutions , that way CIBC can bring the economy to the brink instead of just themselves every five years or so, along with the other added virtues of less competition and less need for innovation. Who knows, maybe ATM fees can even go up? That should give Jack L’ATM-fee a real sense of accomplishment. Jack does some of his best work for the CCCE, even though he's too thick to even realize it, or attempt to understand it .

Here’s a novel thought. If we've had five major banks for the past 30 plus years, and the country has grown by 50% over that time, why do we need fewer banks going forward? Doesn't compute. Meanwhile how do Canadians possibly benefit from the argument for bank mergers, that they need to be able to expand internationally? What does that do for the Canadian back on the farm, apart from expose our Canadian banking system to the ways of international banking. Subprime mortgage lending anyone? Enron off balance sheet lending anyone?

Has anyone in Ottawa ever heard of the concept of "if it ain't broke, don’t fix it?".

Soon Flaherty's work will all be done. Meanwhile Canada will have gone down the drain. Here's an idea. Why don't the banks dividend out their excess earnings to shareholders who can reinvest it in our own country in the manner they think best serves their needs? Oh yeah, they're only the owners and not the omnipotent managers.

No-merger rule ‘out of step,' bank group says
STEVEN CHASE
Globe and Mail Update
January 10, 2008 at 9:47 PM EST

http://www.theglobeandmail.com/servlet/story/RTGAM.20080110.wrmerger0110/BNStory/Bus iness/

Pallister quits politics so he can spend more time with his Pallister Insurance and Financial Services

Brian Pallister was the Chairman of the Finance Committee at the time of the Public Hearings into Income Trusts back in early January 2007.

After adamantly opposing the holding of hearings , Brian Pallister didn’t have the ethical wherewithal to have recused himself from these hearings on the basis that the income trust tax was a bespoke tax policy designed to favour the large lifecos like Manulife and Great West Life and London Life owned by Power Corp whose CEOs Dominic D’Alessandro and Paul Desmarais Jr. selfishly lobbied for, and in light of the fact that Brian Pallister is the owner of Pallister Insurance and Financial Services.

Instead Brain Pallister conducted the hearings like a kangaroo court in a third world country. Welcome to Swahililand.

Here is a good example of Brian Pallister’s utter disregard for due process and parliamentary democracy:

The testimony of William Barrowclough at the Hearings:

“Mr, Chairman, two days ago I received a telephone call from another person on the witness list for today’s hearings [editors note: Diane Urquhart]. I had never before had communication with this person, who proceeded to preach an hour long sermon on the evils of trusts and then attempted to get contact information on the other individual investors [who are testifying before this committee], while at no time did this witness directly counsel me to change my testimony, what I heard was a diatribe which through its content, tone, and timing, two days before our appearance here, was clearly an attempt to influence my testimony before this committee. That fits my definition of witness tampering Mr. Chairman, and I hope it fits yours. Thank you.

Pallister: Thank you sir, we move to questions. Mr. McCallum, five minutes”

Just like water off a duck’s back under the Chairmanship of the highly conflicted Brain Pallister Insurance and Financial Services CON MP for Portage-Lisgar.

MISSION OF PALLISTER FINANCIAL:
"To assist our clients in the creation and development of comprehensive retirement, estate and financial plans; utilizing the finest products
and techniques available; while bearing in mind that the future of our company depends on the financial success of our clients."

Conservative MP Pallister to leave politics
Wednesday, January 9, 2008
CBC News

BCE objects to Catalyst being allowed to intervene at CRTC hearings into sale

Wednesday, January 9th, 2008
Ross Marowits
CANADIAN PRESS

MONTREAL - Canada's telecommunications regulator should review all alternatives to the proposed sale and privatization of BCE Inc. (TSX:BCE), the head of failed BCE bidder Catalyst Asset Management said Wednesday.

"This deal as presently constituted defies many of what the Telecommunications Act's policy objectives are," Brent Fullard said in an interview as it engages in a battle with BCE to present his case directly to the CRTC.

"Because it is a suboptimal outcome for the CRTC, it's incumbent on them to ask, were there other possible outcomes that were available contemporaneously to the company that were in fulfilment of not only the company's goals but in greater fulfilment of its policy objectives."

Fullard sent a letter to the federal regulator, dated Jan. 8, arguing the proposed sale to a consortium led by the Ontario Teachers Pension Plan is not in the interests of Canadians because it fails to achieve the legislated objectives of the Bell Canada Act and Telecommunications Act.

The way in which BCE conducted itself was designed to frustrate other viable transactions what would have better met the policy objectives of the two acts, he wrote.

It would also cost the federal government nearly $800 million in annual taxes.

On Jan. 4, BCE filed its objection to Catalyst's intervention at Feb. 25 hearings scheduled by the Canadian Radio-television and Telecommunications Commission.

BCE argued among other things that the grounds for Catalyst's intervention are beyond the scope of the inquiry, its allegations are best dealt with by the courts and securities regulators, and the regulator should not second-guess the appropriateness of the winner of a bidding process.

It also accused Catalyst of pursuing its intervention for "collateral purpose."

"The nature of a recapitalization proposal that was rejected by a validly constituted board of directors is entirely irrelevant to both the current proceeding and the Commission's statutory mandate...," wrote David Elder, vice-president regulatory law.


Catalyst's 11-page letter to the CRTC addresses each of BCE's objections.

Although BCE accused Catalyst of potential gain, Fullard said senior management, directors and others will earn hundreds of millions of dollars from the deal.

He charges that BCE failed in their securities obligations to disclose the Catalyst offer to shareholders.

BCE's objections are "self-serving and further evidence of their attempts to obfuscate the existence or a superior transaction," he said.

BCE shareholders have endorsed the all cash $42.75 per share offer by Ontario Teachers and its partners.

The deal, which is now slated to close in the second quarter of 2008, somewhat later than originally expected because of the hearing, is subject to approval by the CRTC and resolution of a lawsuit filed by two disgruntled sets of bondholders.

"At the risk of being defrauded by insurance companies":

fraud noun

1. intentional deception resulting in injury to another person
2. a person who makes deceitful pretenses
3. something intended to deceive; deliberate trickery intended to gain an advantage








The Problem:

from:http://www.barackobama.com/issues/

Insecure Retirement Savings: Retirement savings are near a historic low and 75 million working Americans lack employer-based retirement plans. Too many companies have dumped their pension obligations, leaving workers in the cold.

Income Security: With skyrocketing health care, energy and housing costs, and the risk of being defrauded by insurance companies , too many seniors do not have the resources to live comfortably.

Eliminate Income Taxes for Seniors Making Less Than $50,000: Obama will eliminate all income taxation of seniors making less than $50,000 per year. This will provide an immediate tax cut averaging $1,400 to 7 million seniors and relieve millions from the burden of filing tax returns.

The risk of being defrauded by insurance companies:

London Life/Great West Life owned by Power Corporation:

Globe and Mail: November 2, 2006: “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.”

Manulife Financial:

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.

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."



Thanks so very much. Very good of the two of you to have your own interests strictly at heart. Meanwhile in your Machiavellian efforts to make Canadians more captive to your life insurance wares such as life annuities and Income Plus, you played an instrumental role in the ongoing loss of $35 billion sustained by Canadians in the value of their hard earned life savings and a material diminution in their standard of living in retirement resulting from the loss of income.

To date, the trust tax has induced $65 billion in takeovers resulting in the loss of$1.4 billion in ANNUAL tax revenue to Ottawa.

All this being done on the pretense of an alleged $500 million in tax leakage?

So where is the proof? Do you suppose I could collect on a life insurance policy without a death certificate? Do you suppose 18 pages of blacked out documents would suffice for Manulife's or Great West Life's claims departments?

Didn't think so. They would probably consider that to be insurance fraud.

Stephen Harper and Barack Obama couldn’t be more black from white

Lest you think a racial distinction is being made here, it is not. Rather, Stephen Harper is the agent of darkness and Barrack Obama is the agent of light.

The dichotomy is between Stephen Harper's politics of divisiveness for personal gain and the Barrack Obama politics of inclusion for society’s gain.

A night and day distinction between the tired old politics of Stephen Harper’s attempts to have us all deny reality and Barrack Obama’s welcomed acknowledgment of reality as the means to move society forward. A diametrical distinction between a politician who professes to know all, when in fact this only serves to prove he knows less that the politician who claims he doesn’t have all the answers.

Having said that, Barrack Obama has a very extensive policy platform indeed from which to begin his personal march to the White House, American voters be willing.

A number of the issues facing America have parallels to our own country. Take for example the issues of lobbying and the financial security of seniors and an aging population nearing retirement. In the case of Harper these two issues are inextricably linked, as he willingly sold off seniors to curry favour with the likes of Gwyn Morgan and Paul Desmarais Jr. He claims that it was a "difficult" decision to renege on his solemn election promise and to actually institute a policy that could have been so easily and equitably crafted so as not to “raid seniors nest eggs”. It would have simply involved a concept known as "grandfathering". How appropriate. How very absent. How utterly delinquent.

Indeed, who were these nameless lobbyists that the Globe wrote about on November 2, 2006, when they reported that:

“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.”

I guess we’ll never know, since that other widely touted election promise of 2006 , namely the Accountability Act has proven itself to be stillborn after a two year gestation period of utter inaction. Stephen Harper now thinks that lobbyists should in essence be self regulated , as his Ministers are too busy to keep records of their contacts with lobbyists. Apparently Stephen Harper doesn’t think there is the same “value for money” in maintaining such a system as there is in spending $31 million a year in serial polling of the impressionable masses.

Here’s Barack Obama’s position on lobbyists:

“I am in this race to tell the corporate lobbyists that their days of setting the agenda in Washington are over. I have done more than any other candidate in this race to take on lobbyists – and won. They have not funded my campaign,
they will not get a job in my White House, and they will not drown out the voices of the American people when I am president.” -- Barack Obama, Speech in Des Moines, IA, November 10, 2007

When do you suppose that Stephen Harper will be making that speech to Ken Boessenkool ?

Having willingly succumbed to the temptations and the siren call of the lobbyist crowd on the impending need to raid seniors nest eggs, lest Paul Desmarais Jr. have a difficult time selling more of his life annuities in the ongoing presence of income trusts or be curtailed in his abilities to make non-accretive acquisitions like Power Corporations purchase as a corporation of down in the dumps Putnam Investments, Stephen Harper thought he could assuage aggrieved seniors by offering the burnt offering known as Income Splitting. As only Stephen Harper could parse the matter, income splitting was more an exercise in word splitting since it only benefits 14% of seniors, and in all probability those seniors least likely to own income trusts, since all the members of the lucky 14% are members of defined benefits pensions plans who are free from retirement worry in a protrcated low interet rate environment. You know, the defined benefits pension plans that Jim Flaherty and Stephen Harper are proud and deserving members of. Some form of compensatory amelioration.

Meanwhile here’s Barack Obama’s idea of fair and equitable tax relief for seniors. Do you want to tell Steve, or should I? It’s all here in black and white :

The Problem

Insecure Retirement Savings: Retirement savings are near a historic low and 75 million working Americans lack employer-based retirement plans. Too many companies have dumped their pension obligations, leaving workers in the cold.

Income Security: With skyrocketing health care, energy and housing costs, and the risk of being defrauded by insurance companies, too many seniors do not have the resources to live comfortably.

Eliminate Income Taxes for Seniors Making Less Than $50,000: Obama will eliminate all income taxation of seniors making less than $50,000 per year. This will provide an immediate tax cut averaging $1,400 to 7 million seniors and relieve millions from the burden of filing tax returns.

Brian Mulroney and other such proverbial pigs at the trough.

It is a good and proper thing that we begin 2008 at exactly the point where we left 2007, namely charting the depths of Brian Mulroney’s influence peddling from the time he occupied office. There is much to be learned about how our democracy functions from such a potentially informative exercise, despite the posturing of late from Stephen Harper who would have us believe that Canadians have lost interest in the Schreiber/Mulroney matter. No doubt this is the line of logic he will be using on David Johnston in an attempt to shut down the public inquiry that Stephen Harper made clear that he never wanted in the first place. Quite frankly, at this point David Johnston is a politically moot point, since the situation facing Stephen Harper is a lose lose proposition. Call an inquiry and Harper loses. Don’t call an inquiry and Harper loses. Pick your poison.

As for Brian Mulroney, he casts a very dark shadow over the Stephen Harper government. Less probably for what Brian Mulroney did circa his time in office, and more during the nascent life of the Stephen Harper government. One need only look at Brian Mulroney’s directorships in public companies to get a sense of which policy objectives he was likely advancing with Stephen Harper. No less than No less than five of Brian Mulroney directorships formed the basis for five questions that the Liberal Opposition party asked of the Harper conservative government during Question Period on December 5, 2007. Each of which was asked in the context of a particular policy taken over the past 20 months by Stephen Harper. Those five directorships were: Quebecor Inc., Blackstone Capital, ADM (Archer Daniels Midland) , Trizec and Barrick Gold.

To garner a sense for how potentially fruitful this line of questioning begun by the Liberals could prove to be, one need only have looked to the article that appeared the very next day in the National Post that was authored by Brian Mulroney’s former speech writer, L. Ian MacDonald. Evidently Mr. MacDonald was so intent on his mission to protect Mr. Mulroney’s good name, that we are all to take for granted, that he failed to even fact check his own article, which read as follows:

“What is ADM ? Only the largest company of its kind in the world. Its founder, Dwayne Andreas, is one of the most respected business leaders in America”.

Mr. MacDonald. Along with those whose interests he represents would have us believe that Dwayne Andreas is a very upstanding individual and that ADM is as well. If one were to subscribe to this line of reasoning, they would have to overlook the fact that Dwayne Andreas as the CEO of ADM was assessed with one of the largest antitrust fines in US history, namely a $100 million fine for price fixing in 1996. This was the point in time when Brain Mulroney came onto the board in order to help clean thiungs up. Dwayne Andreas is no stranger to the political classes, as we are informed by Wikipedia that; “as part of the investigations surrounding illegal campaign fundraising linked to the Watergate scandal, Andreas was charged with (but acquitted of) illegally contributing $100,000 to Hubert Humphrey's 1968 presidential campaign. In 1972 Andreas unlawfully contributed $25,000 to President Nixon's re-election campaign via Watergate burglar Bernard Barker. Other recipients of Andreas's "tithing" — as he puts it — have included George H. W. Bush, Jimmy Carter, Bill Clinton, Bob Dole, Michael Dukakis, Jesse Jackson, and Jack Kemp.

ADM is one of the largest processors of food in the world in which they refine raw food ingredients into food products for which they earn a profit. To the extent to which their cost of ingredients were to go down, their profit would go up, and in turn their share price and management’s stock option gains. Brian Mulroney holds approximately $3 million in shares of ADM and is paid $xxx annually as a Director of ADM. Meanwhile, ADM is one of the largest processors in the world of wheat and barley into food products. A vast proportion of the wheat and barley that ADM procures is from the Canadian Wheat Board.

Meanwhile, against all possible logic to the contrary, Stephen Harper, immediately upon occupying officr set upon a personal mission to dismantle the Canadian Wheat Board. This defies all possible logic, since those who most benefit from a marketing co-operative like the Canadian Wheat Board would be the growers of a commodity product like wheat and barley. This is why the Wheat Board was established in the thirties, in order to bring together the collective strength of all Canadian wheat farmers whi could act in a co-ordinated and organized manner to bring about the highest price and greatest market certainty for their wheat harvests. Absent a Canadian Wheat Board, the only way for individual wheat farmers to differentiate their product to their customers is through price. Such a market dynamic involving a fractured market of sellers, means that the market price will devolve to the lowest common denominator. That’d the worst possible outcome for farmers. And the best possible outcome for Arcger Daniels Midland.And which side of this equation is Stephen Harper firmly and adamantly aligned with? Archer Daniels Midland. It defies all possible logic. But such is the case with most all lobbying activity. Take the example of income trusts,

Stephen Harper exploited income trusts to the maximum extent possible in the last election and successfully aligned himself to this large constituency by promising to never tax income trusts. As between the absence of competency and the absence of integrity, it is hard to know why he reversed his election promise, although one thing is certain. He did so at the first possible plausible moment and he did so in the most draconian and manner possible. You sir had a choice, and the choice he made was the one which was most beneficial to those who lobbied him for change. Lobbying the Prime Minister was something the was completely denied all those Canadian who were adversely affected by this policy, namely all Canadians, since it resulted in the unprecedented loss of $35 billion in Canadian’s retirement savings and the eventual loss of $7.5 billion in annual taxes to Ottawa.

Stephen Harper’s income trust policy, like his Canadian Wheat Board policy is just another example of pigs at the trough. Dare I say corporate pigs? In testimony before the Finance Committee on the matter of income trusts, The CEO of Manulife would have us believe that: “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.”

If that version of reality is to believed, then I guess this exercise in finger pointing that appeared in the article Income-trust crackdown: The inside story on November 2, 2006 is just a fictional account of the actual events:

“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.”