Cadman affair gives new meaning to the words:

“Harper said his government "can't ignore" the allegations because they relate to Mulroney's term in office and they must "always protect the office of the prime minister."

Sorry Steve, Cadman's absolution is absolving Paul Martin, not you

Steve Harper is asking Canadians to rely on Chuck Cadman’s comment that he received no quid pro quo for his vote.

Think about it for a moment.

Cadman voted with the Liberals. Who do you think the reporter was referring to when he asked Cadman whether he received a quid pro quo. The Conservatives or the Liberals?

To the extent there is any doubt in your mind, then there’s Steve’s own admission and self incrimination: “The offer to Chuck was blah blah blah.....”



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Liberal Finance Committee Members call on Auditor General to Examine Government's Claims of Income Trust Tax Leakage

For Immediate Release
February 29, 2008

Liberal Finance Committee Members call on Auditor General to Examine Government's Claims of Income Trust Tax Leakage

OTTAWA - Liberal Members of the Standing Committee on Finance today called on the Auditor General to investigate the tax leakage claims that the government used as the basis for its October 31, 2006, decision to tax income trusts.

"I think that this government's stonewalling has gone on long enough and it's time that Canadians got to see that the Government simply made up its story that income trusts cause federal tax leakage," said Liberal Finance Critic John McCallum.

"Prime Minister Stephen Harper promised to Canadians that he would never tax income trusts. Then he went back on his word, costing Canadians billions overnight and in the wake of his silence on the issue we feel that only the Auditor General can shine some light into this matter."

All four Liberal Members of the Finance Committee signed a letter to Auditor General Sheila Fraser asking her to investigate the matter, particularly the government's unproven allegations about income trusts causing tax leakage.

"This has clearly become much more than just another instance of the government not doing its homework before acting. It has become a full-blown scandal and cover-up," said John McKay, Member of Parliament for Scarborough-Guildwood. "We have tried virtually every tool at our disposal to get the government to show us how they came to their conclusions about tax leakage and the Auditor General may be Canadians' last resort."

An Access to Information request asking for the Department of Finance's assumptions, data and methodology resulted in the release of only 23 pages of documents that are almost entirely blacked out.

A direct request from the Finance Committee to see the data was met with two thick binders of superfluous information that did not contain the data or methodology originally requested.

A written question was placed on the Order Paper asking the government to recalculate its estimate of tax leakage using the 15 per cent federal corporate tax rate that will actually be in effect in 2012, the year after the income trust tax begins, as opposed to the 21 per cent tax rate that was in effect at the time of the announcement. The government's response to the question indicated that that this would be a hypothetical calculation and therefore impossible to do.

"That's not a hypothetical, that's what the federal tax rate will be," said Garth Turner, Member of Parliament for Halton. "If the government can't manage to run the new 2012 corporate tax rate through their calculators then I have no reason to believe they ran the old one through their calculators in October of 2006."

In 2006, Stephen Harper ran on a campaign commitment to never tax income trusts. The Conservative election platform characterized any attempt to impose such a tax as, "An attack on retirement savings."

"That election commitment was obviously a falsehood. Unfortunately the voters who believed it and invested even more money in income trusts lost a significant portion of their nest eggs," said Massimo Pacetti, Member of Parliament for MP for Saint-Léonard-Saint-Michel.

"Even today, 15 months after they broke their election promise, Members of Parliament still hear from the thousands of Canadians whose retirement plans were shattered by this deception. Liberal Members of Parliament continue to stand up for them."

-30-

The full text of the letter sent to the Auditor General is attached.

To see the government response to written question 149 on the Order Paper please visit: www.liberal.ca/pdf/docs/080229_Q-149_en.pdf

Contact:

Office of Hon. John McCallum
(613) 996-3375

Why an insurance policy? Why not cash?

It's obvious. Because it's devious. We are talking about Stephen Harper after all.

A cash payment would be taxable to Cadman. Life insurance policy payouts to his family are not.

A cash payment would “own” Cadman for a fleeting moment in time. An insurance policy would “own” him for the balance of his life.

A cash payment is cold. An insurance policy tears at the heart strings.

Remember. Stephen Harper is be trusted implicitly. Just ask 2.5 million income trust investors.


-

My correspondence from Stephen Harper

Now you know why I never got past the second paragraph of this slimy letter from Stephen Harper dated November 24, 2006, at the point in the letter where the Harpster proclaimed “Canadians must trust.”

What unmitigated nonsense and utter crap: Canadians must trust.

Goodbye Stephen Harper. You are toast-man. Never again will your dark shadow of corruption cast its sinister rays over the future of this country.

Get stuffed and put a sock in it, is my response to both you and your letter. Stop trying to exploit Canadians' predisposition to trusting, as you cynically attempt to pull off your inherently corrupt agenda.

November 24, 2006

Dear Mr. Fullard:

Thank you for your e-mail message regarding the government's decision on income trusts. I am pleased to have this opportunity to respond.

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.


As you know, over the past few months we have seen a clear tax avoidance. trend in the creation of new income trusts. Corporations are converting to these structures and the decisions are based largely on tax considerations. The sheer number and size of the Canadian companies attempting to gain short-term tax benefits was threatening Canada's long-term economic growth. Corporations have used this tax rule to create an economic distortion. This year alone there have been almost $70 billion in new income trust announcements.

Canada's New Government strongly believes that the tax system must be progressive, fair and competitive. It must provide the right incentives to create an economic advantage for companies to invest and grow. The tax system must create an advantage for Canada, not an unfair advantage for some Canadian corporate taxpayers. The current income trust situation is not fair.

When corporations don't pay their share of taxes, this burden is shifted on to the shoulders of hardworking individuals and families. We have taken decisive action to protect the best interests of all Canadians. Our Tax Fairness Plan will restore balance to the federal tax system and level the playing field between income trusts and corporations.

Our plan is the result of months of careful consultation and evaluation. The measures we have chosen represent a major tax reduction. The Tax Fairness Plan will deliver over $1 billion of tax relief annually to Canadians. The plan includes:

1) A distribution tax on distributions from publicly traded income trusts.

2) A reduction of the general corporate income tax rate of one half percentage point effective January 1, 2011.

3) An increase in the Age Credit Amount by $1000 from $4,066 to $5,066 effective January 1, 2006. This measure will provide tax relief for low and middle income seniors.

4) The government will permit income splitting for pensioners beginning in 2007. This will significantly enhance the incentives to save and invest for family retirement security.

The Tax Fairness Plan restores balance and fairness to Canada's tax system. It will ensure that our economy grows and prospers, while bringing Canada in line with other jurisdictions. It is the responsibility of the Government of Canada, not corporate tax planners, to set our nation's tax policy. Taxes must not be shifted unfairly onto the shoulders of individuals and families. We have developed a plan that upholds the value of fairness and delivers major positive changes in tax policy.

Once again, thank you for taking the time to share your thoughts. I invite you to visit the Department of Finance website at http://www.fin.gc.ca/news06/06-061e.html for full details regarding the Tax Fairness Plan.

Sincerely,


The Rt. Hon. Stephen Harper, P.C., M.P.
Prime Minister of Canada

Dominic D'Alessandro and the serendipity of Harper’s income trust tax

ser·en·dip·i·ty /ˌsɛrənˈdɪpɪti/
–noun
1. an aptitude for making desirable discoveries by accident.
2. good fortune; luck: the serendipity of getting the first job she applied for.

We believe you Dominic. The income income trust tax fraud fell from the sky. You played no part whatsoever. How remotely credible was it for your to have testified before Parliament that:

Mr. Dominic D'Alessandro: “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.”

Meanwhile the Globe and Mail had this to say about Paul Desmarais Jr’s unregistered lobbying activities on this file. Believe it or not Dominic, we aren’t quite as dumb and gullible as you take us for, we aren't Judy Wasylycia-Lies, we can actually read:

“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.”

Cadscam trumps adscam.

The corruption in the Harper government is legend. Starting with the fraud known as tax leakage and the Tax Fairness Plan which is better know as the alms for narrow interests plan.

Funny how an insurance policy plays the central role in the recent Cadscam incident. Which blows the doors off Adscam

The fact that Tom "Rasputin" Flanagan is alleged to have played a central role in this along with Doug Finlay is too delicious for words. He of the Leo Strauss school and its philosophy of the permissible "big lie". The fact that Flanagan denies being a follower of Strauss, proves that he is. Along with his own self professed conduct as Harper campaign manager in the 2006 election of lies, along with help from the RCMP and Judy Wasylycia-Lies of the Newly Duped Party.

Sorry, you're toast my friend. Now, more than ever.



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The crazy glue that binds the uneconomic to the unethical: Teachers’ $587 million reverse break fee

By: Brent Fullard, Catalyst Asset Management Inc.

Since when did pension plans start playing Russian Roulette with their plan assets?

Here we have Ontario Teachers’ placing itself in a position where they and their partners have to pay $1 billion "reverse break fee" if they are unable to raise $32 billion in junk bond financing for the largest leveraged buyout in history.......in one of the worst debt markets in history.

What may have been a remote possibility back in June 2007, has become a very real possibility in March 2008. Even though there is still only one chamber that contains a bullett, the 1000 chamber gun of June 2007 has been replaced with a four chamber gun of 2008.

Which makes one wonder, where in the mandate governing Teachers’ is the provision that allows it to play Russian Roulette by taking on large lumpy risks that it has no ability to syndicate, hedge or even manage? Afterall, Teachers’ disproportionate share of this risk is $587 million. I wonder how much of that money is coming from Morgan McCague, the straw horse individual who were are asked to believe holds two thirds of the votes of BCE’s new owner, Holdco.

Maybe the downside to Morgan McCague is that he forgoes the $10,000 a year he gets to participate in this artifice of ownership that allows Teachers’ to do indirectly what Teachers’ is precluded from law doing directly, namely own more than 30% of BCE. Too bad the law also prohibits Teachers’ from doing so indirectly as well.

Perhaps it was premature of me to say that Teachers’ is unable to manage the $587 million risk they have exposed themselves to. By that I mean, Teachers; has no ability whatsoever to affect the state of the global leveraged loan marketplace. However Teachers is probably using moral suasion to the max with its lending syndicate to proceed with a deal that is inherently uneconomic.

On Monday of this week, I made that observation to the Chairman and Commissioners of the CRTC, when I stated:

“Yes. And the risk about this debt financing is not some abstract arcane ‑‑ just read the headlines. I mean any number of leverage buyouts are not getting financed. And so to the extent to which the providers, the brokers; the syndicate of banks is willing to pony up for their risk, they are not the long term holders. Their ultimate goal is to find people who are. And presently this deal from the standpoint of many third parties is an uneconomic transaction that's unlikely to attract long term debt investors.”

That was perhaps more of a bold statement on Monday of this week than it is on Friday of this week, since yesterday TD Bank as one of the members of the Bank syndicate finally admitted the truth and dropped their bold bravado by admitting that they have already taken right downs on this loan amounting to between $165 - $330 million, despite comments by their CEO as recently as two weeks ago that they would do this deal again. Yeah, right. Banking can be this “easy”.

So no doubt Teachers' is running around trying to use all the moral suasion it has to force its syndicate of banks to do what is inherently uneconomic, Lend $1.00 against something that is worth $0.90 or less. Meanwhile, elsewhere in the world, banks are pulllng their loans from similar deals, which is the correct economic thing to do.

Meanwhile, Teachers wants them to press on doing what is inherently uneconomic. By blindly pressing on, Teachers is also calling upon these banks to do a deal that is also inherently unethical. Unethical on at least two fronts, the aforementioned artifice of ownership involving Morgan McCague, whose sole intent is to skirt the regulations of the Pension Benefits Standards Act, as well as fundamental Disclosure 101 rules, which a recent ruling by the OSC, provides that a Bid Circular must contain:

“Information should be disclosed if there is a substantial likelihood that a reasonable shareholder would consider it important.”

BCE failed to disclose the Catalyst Proposal even though it was a fundamentally different choice from the $42.75 cash offer, since it provided the following unique benefits:

Increases dividend by 74%
Market value of between $42.50 and $52.00
70% tax free rollover
Preserves all the upside in BCE
Avoids reinvestment risk
No deal risk, since deal is self financing, requires no CRTC approval and preserves bondholders rights

It's no wonder then, that comments like the following have appeared in the comment sections of recent Globe and Mail articles:

“I sure hope Catalyst’s Plan is still available for shareholder approval. That Plan should have been presented for Shareholder consideration at a minimum - the fact that IT wasn't should be enough to scuttle this outrageous deal.”

“ This whole screw up was the making of Sabia and Flaherty, hidden behind the Income Trust Tax Leakage smokescreen. It's borderline criminal that the catalyst proposal was not presented as an option for shareholders to vote on.”

So here we have Ontario Teachers’ playing Russian roulette with the plan assets they manage which will very likely see them have to pay a $587 million reverse break fee. Alternatively they can proceed with a deal that is inherently uneconomic and thereby ask a syndicate of banks to take their own respective right downs in order that, what?

In order to take Canada’s most widely held public company private and transform Canada’s largest telecom into a debt ridden, crack cocaine equivalent junk bond issuer. The result of which will be to increase phone costs, lessen competitiveness, lay off workers in a knowledge sector and reduce Ottawa’s annual tax collection by $729 million a year?

Where is the sense in all of this? There is none.

Ottawa should pull the plug. Disconnect Teachers’ phone service. They have two ways to do it. The CRTC, acting independently, or Industry Canada. Let’s see if Canada’s New Government can at least get one thing right. Meanwhile, if Teachers had any sense, they would be down on bended knee asking for the same thing instead of sniffing their own crazy glue in a desperate attempt to look like they're "smart money".

Meanwhile Teachers' ignored Catalyst's letter of February 4, 2008, outlining a prudent way out of this train wreck in the making (available at canadiansolution.ca).

Whose version of events would you believe? The dead man or the politically dead man walking?

I vote for the latter:

Scratchy tape begins with Harper request: 'This is not for publication'
Thu, 2008-02-28 21:15.
By: Alexander Panetta, THE CANADIAN PRESS

OTTAWA - The voice on the scratchy tape is unmistakably Stephen Harper's.

It was as unmistakable as his concern that the tape's contents might one day be made public. Harper interrupted a local reporter in 2005 when asked about allegations his party had offered financial enticements to a dying MP to win his support on a critical vote.

"This is not for publication?" Harper asked Tom Zytaruk.

He was told that the interview was intended as fodder for a biography of Chuck Cadman, the late MP from Surrey, B.C.

But the ensuing two minutes, 21 seconds of audio raise questions about apparent discrepancies between what the prime minister said Thursday and what Harper himself said on the tinny tape more than two years ago.

The prime minister said Thursday he looked into claims Cadman was offered financial considerations and determined they were untrue.

The tape suggests Harper was not only aware of a financial offer to Cadman, but that he gave it the go-ahead, while urging party emissaries not to "press" Cadman too hard.

Harper's conversation with B.C. journalist Tom Zytaruk took place outside the Cadman residence just after Harper paid a courtesy visit to the former MP's widow shortly after his death.

"The offer to Chuck was that it was only to replace financial considerations he might lose due to an election," Harper says.

And Harper says of the people who made the offer: "They were legitimately representing the party."

Here's how Harper summarizes his instructions to those party operatives: "I said, 'Don't press (Cadman), I mean, you have this theory that it's, you know, financial insecurity, and you know, just, you know, if that's what you're saying make that case,'but I said, 'Don't press it."'

The Liberals have already sent a letter to the RCMP asking for an investigation into whether the entire incident could violate the bribery provisions in Section 119 of the Criminal Code. The Mounties said Thursday they're examining the request.

Harper is clear on the tape that he never expected the overtures to succeed. Cadman did in fact vote to rescue the Martin government.

"I don't know the details. I can tell you that I had told the individuals, I mean, they wanted to do it. But I told them they were wasting their time. I said Chuck had made up his mind."

-

Transcript of author's tape of Harper sheds light on Cadman case

OTTAWA - Transcript of a portion of author Tom Zytaruk's tape of a 2005 interview with Stephen Harper, then leader of the Opposition, for his biography of the late Chuck Cadman:

Zytaruk: "I mean, there was an insurance policy for a million dollars. Do you know anything about that?"

Harper: "I don't know the details. I know that there were discussions, uh, this is not for publication?"

Zytaruk: "This (inaudible) for the book. Not for the newspaper. This is for the book."

Harper: "Um, I don't know the details. I can tell you that I had told the individuals, I mean, they wanted to do it. But I told them they were wasting their time. I said Chuck had made up his mind, he was going to vote with the Liberals and I knew why and I respected the decision. But they were just, they were convinced there was, there were financial issues. There may or may not have been, but I said that's not, you know, I mean, I, that's not going to change."

Zytaruk: "You said (inaudible) beforehand and stuff? It wasn't even a party guy, or maybe some friends, if it was people actually in the party?"

Harper: "No, no, they were legitimately representing the party. I said don't press him. I mean, you have this theory that it's, you know, financial insecurity and, you know, just, you know, if that's what you're saying, make that case but don't press it. I don't think, my view was, my view had been for two or three weeks preceding it, was that Chuck was not going to force an election. I just, we had all kinds of our guys were calling him, and trying to persuade him, I mean, but I just had concluded that's where he stood and respected that."

Zytaruk: "Thank you for that. And when (inaudible)."

Harper: "But the, uh, the offer to Chuck was that it was only to replace financial considerations he might lose due to an election."

Zytaruk: "Oh, OK."

Harper: "OK? That's my understanding of what they were talking about."

Zytaruk: "But, the thing is, though, you made it clear you weren't big on the idea in the first place?"

Harper: "Well, I just thought Chuck had made up his mind, in my own view ..."

Zytaruk: "Oh, okay. So, it's not like, he's like, (inaudible)."

Harper: "I talked to Chuck myself. I talked to (inaudible). You know, I talked to him, oh, two or three weeks before that, and then several weeks before that. I mean, you know, I kind of had a sense of where he was going."

Zytaruk: "Well, thank you very much."

Speaking of Chuck Cadman, just who exactly did fund Harper’s 2002 leadership campaign?

I use the term “leadership” lightly here, but just who exactly did fund Stephen Harper’s 2002 leadership campaign?

Archer Daniels Midland?

Harper's failed PhD thesis was on the elasticity of truth

Bachelor’s Degree

Master’s Degree


-

The attempted bribery of Chuck Cadman is an allegation......... Whereas the Stockwell Day/Jim Hart bribery is a known fact.

Allegation

Known fact.

Then, there’s what we really need to know.


-

Was it a life insurance policy bribe?

So today we learn that the Conservative Party tried to bribe Independent MP Chuck Cadman back in 2005 to vote along with the Conservatives in order to topple the Martin Liberal government.

And what form did the bribe allegedly take? A $1 million life insurance policy.

Now where would the Conservatives get a life insurance policy from, for a guy who was hardly in the best state of health?

Well my guess is that this life insurance policy came from any number of sources, since a life insurance policy is merely a contract with a conditional payout that anyone can write for any risk they are willing to take on, including someone with a terminal illness.

As such, Stephen Harper is not a leader, unless you consider a leader to be someone who is deceitful, as Harper proved himself to be on his income trust betarayal and his false and unproven reasons for reversing his solemn election promise.

Unlike Flaherty with his speechwriter friend's untendered government contract, do you suppose the Conservative’s shopped around for the best life insurance policy they could find for Chuck Cadman. If so, no doubt they turned to Brian Pallister, broker extraordinaire.

-

Announcing: Jim Had His Chance.ca

Now that we have that budget thingy out of the way and Jim's latest exercise in Trusting Flaherty Spells Anguish (TFSA), we can get down to the real business of Finance Minister Jim Flaherty, which is to assure the citizens of Whitby-Oshawa that they know all that there is to know about their Member of Parliament.

To facilitate that process, we have begun rolling out a series of billboards in Jim's own back yard dealing with a diverse range of topics that ordinarily fall under a Finance Minister's broad mandate.

Issues ranging from "I don't fix potholes" to "it's not my fault" are the topics of but two of these boards.

Then of course there is the website itself entitled Jim Had His Chance.ca

Depending in how well this works out, we have also reserved the URL entitled

SteveHadHisChance.ca

If you have any catchy suggestions or particularly irritating topics for upcoming billboards in Jim's riding, please post your comments below or e-mail us at suggestions@JimHadHisChance.ca

Remember, you only get one chance. Make it a memorable one. Just like Jim himself.


-

With Jim Flaherty, yesterday's sin, becomes today's virtue

Do you suppose the Liberal brain trust and Power brokers like unelected Senator David Smith will be able to connect these two hypocritical dots staring them straight in the eyes?

(1) It’s quite remarkable that at a time when the country was gushing with surpluses, that the Harper government felt compelled to shut down income trusts in order to stem alleged tax leakage on the basis that:

“Well, as Minister of Finance, I have a fiduciary obligation to the taxpayers of Canada today, not tomorrow, an obligation to pay for needed social, environmental and economic programs today, not tomorrow. I cannot, and I will not, fund today's programs from tomorrow's revenues.”

(2) Such corrupt logic is an absolute crock in terms of financial theory, made ever more so by the fact that we are now at risk of budget deficits and Flaherty’s announcement of a TFSA thingy, as reported in today’s Globe and Mail entails an arrangement whereby:

“Staring in 2009, people 18 and older will be able to put up to $5,000 a year in a Tax Free Savings Account and rack up investment gains without paying taxes, even at withdrawal”

I am at my most facetious when I say that no doubt this will lead to articles of condemnation in the Toronto Star by David Olive entitled Income Trusts 3.0 or a fine erudite piece by Eric Reguly in which he declares the TSFA to be the second coming of Capitalism for slobs

No doubt Power Corporation will be able to make the TFSA work for them in a way that they couldn't compete with income trusts and embarked on enjoining the Harper government to kill them on false grounds.

All I know is that Trusting Flaherty Spells Anguish.

Memo to Ralph Goodale

The following memo was delivered in person to Ralph Goodale by the author at a gathering in Garth Turner’s home. There’s no evidence that any of this wise advise has been taken to heart by the Liberals.

Bottom Line: If you’re not part of the solution. You’re part of the problem.




To: Ralph Goodale
Date: Thu, 11 Oct 2007 07:41:53 -0400
Subject: The Liberal's Messaging on Income Trusts

As a person who has spent an inordinate amount of time on this issue (pro bono) and someone who has been proven correct in his predictions (I wasn’t the only one) about the impact of this policy and its many far reaching effects, please allow me to provide you with some unsolicited advice:

In my opinion, your “messaging” on income trusts is in need of work, as evidenced by Dion’s speech in Edmonton yesterday (income trust excerpts below) . In my opinion this messaging is dated and stale and does not resonate with “the larger audience”. Believe me when I say “Who really cares about restoring two thirds of investors’ lost savings apart from the investors themselves?”.

That messaging of restoring two thirds of the lost value yours was great for February 13, 2007, the day you announced your policy position of a 10% tax. It is clearly not great today, as it ignores all the corroborating events that have occurred since that time, all of which are god sends to our cause and in making our/your case . This current messaging will gain you as many voters as it lose voters, witness the editorials following the Calgary consultation a few weeks ago.

You gave the press nothing new or substantive to ruminate over, apart from the fact that you were consulting with affected parties which was then cynically portrayed by the press in strictly political terms. You didn’t attack the core falsehoods of this policy or make the direct causal link to takeovers.

You didn’t mention the blacked out documents released under ATI. The government’s tax leakage analysis is clearly wrong in that it leaves out 38% of the taxes paid on income trusts. It’s a proven and verifiable fact. You know that, I know that. This is a scandal that is being masked. Who benefits from that?

You have to elevate this issue to the level where all Canadians realize this is negative to them and their children's and grand children's’ futures. That’s easy: loss of sovereignty, loss of general tax revenue. The evidence is firmly in place. Use it. Connect the dots.

We’re not making this stuff up or falsely portraying how our issue so readily morphs into vastly larger issues and themes like accountability, transparency, sovereignty, lost tax revenues, hollowing out, betrayal at the hands of government, hidden agenda, gross inequities (pension plan carve out), gross ineptitude (BCE, Prime West) etc.

Make the policy connection. People need to have their “entrenched” views, which have only been established by resonating “intuitive” rhetoric, challenged through the process of “cognitive dissonance” using known facts and subsequent events. Cognitive dissonance is the only way people will rethink their current view on something.

People need to be challenged with an “outlier observation” which is inconsistent with their world view and you then offer them an alternative explanation for the entire ball of wax. There are a vast number of “outlier” observations in our quiver. For example, 7 of the 25 largest takeovers of the last 5 years have occurred in the mere 11 months that this policy has been in existence and as a direct consequence of this policy. Many other foreign takeovers will follow. The arguments against this policy are endless.

Which Canadian is unaware about what the reasons for Harper’s shut down of income trusts were?(BCE and Telus), and what ultimately happened in the short space of 8 months (private equity takeout of BCE and the LOSS of $793 million a year in taxes)? How many Canadians think selling our energy to the middle east is a good idea? Prime West is a trust......hmm?

Cognitive dissonances takes the form of 18 pages of blacked out documents, BCE going private in face of denial to become a trust. Abu Dhabi purchase of Prime West, Prentice’s non announcement about foreign takeovers maybe yes maybe no solely designed to chill the takeovers without addressing the issue itself and designed simply to avoid further embarrassments from Abu Dhabi’s #2 through 250.

The Liberal party simply needs to appeal to the enormous base of support that is latent in the minds of Canadians. Latent yet visceral concerns about issues like foreign takeovers (72% of Canadians concerned according to recent poll). Canadians innate oncerns about accountability and transparency of government as viscerally conjured up by 18 pages of blacked out documents (92% of Canadian think its wrong – Angus Reid poll).

Play to Harper’s weaknesses and attack his presumed strengths. Is there a hidden agenda with this man? (blacked out documents)! Is he a strong leader? ( Abu Dhabi yes/no!) Does he make good policy decisions? (BCE?) Can he be trusted ( income trust mother of all lies). These questions don’t even have to be explicitly asked. When faced with the evidence in the proper way and framed in the correct context, people will ask these questions of themselves. What is more powerful than that?

This issue is a gold mine that is not being mined properly, less so to make a point about the income issue per se, but for you to make the larger issues that resonate with every voter and not just a handful of voters. Our country. Our democracy.

Let me know if you disagree. I would like to help in any way I can. We have a huge vested interest in seeing the Liberals form the next government. So too the entire population, they just need to know why.

A lot of good food is going to waste.


Brent Fullard
President and CEO
Canadian Association of Income Trust Investors
www.caiti.info

647 505-2224 (cell)

BCE: Sure looks Canadian controlled to me?

This intricate spider web of multilevel ownership through various classes of shares was tabled by BCE and Teachers at the recent CRTC Public Hearings in a document entitled: "Reference Materials Regarding Control-in-Fact Issues for the CRTC"

Looks more like a sub prime mortgage conduit diagram to me, which it most certainly is as well. Almost as certain as the intent of the following:

Section 11 of Schedule III of Teachers’ governing regulations provides that:

“the administration of a plan shall not, directly or indirectly, invest the moneys of the plan in the securities of a corporation to which are attached more than 30% of the votes that may be cast to elect the directors of the corporation”.

Meanwhile the CRTC doesn't appear so easily wowed with the actual "control-in-fact" circumstances of this proposed arrangement:

CRTC raises concerns about BCE takeover
The Toronto Star
Ross Marowits
Canadian Press


Hey Flaherty, how about a budget that includes the other 85% of seniors you left out of your earlier income splitting scheme?

In keeping with the lie, conceal, fabricate nature of Finance Minister, his much ballyhooed income splitting for seniors announced at the time Flaherty also reversed his promise to never tax income trusts and never raid seniors nest eggs, he embarked on an equally fraudulent scheme known as income splitting for seniors. The fact that it leaves out 85% of seniors is totally lost on the journalistic community and therefore the public at large.

In this regard the press is acting as accomplices to an inherently dishonest Finance Minister, and love to praise hin for his (misguided) decisiveness.

Here was an e-mail that was written by Yves Fortin, a retired senior member of the Department if Finance, from the days when the department had integrity. If anything Yves assumption about 30% of Canadians having defined benefit pension plans is an exaggeration. Recent studies indicate the number is 25%.


Subject: Re: Income Splitting for Seniors: Who actually benefits?
Sent: Monday, March 19, 2007 9:22 AM

Brent,

How many will actually benefit from Flaherty's discriminatory pension income splitting scheme?

1. Of the 30% of seniors who receive a pension I would say may as many as one quarter are widows/widowers, single, divorced, separated. That brings down the number of eligible seniors to 22.5%.
2. Of the 22.5% who are eligible as many as 25% may have spouses who have significant income of their own and who may be in a tax bracket not too different from the spouse receiving the eligible pension income. In their case there will be little or no tax reduction resulting from pension income splitting. We are down to 16.7% of seniors receiving a pension.
3. Many ot the remaining seniors receiving a pension but who had low paying jobs are in the lowest tax brackets and pension income splitting with a spouse/partner receiving OAS will not mean very much if anything.
4. All factors taken into consideration pension income splitting may not be of any useful benefit to more than maybe 12-14% of seniors.
5. Of those the ones who will benefit the most are seniors with fat pensions and stay at home spouses/partners. A retired federal judge or a retired deputy minister with a pension of over $100,000. with a stay at home spouse with no significant income will benefit handsomely. They will even be able to reduce or eliminate the clawback of OAS.
Question: What will be the real cost of this discriminatory scheme be for the government. ANSWER: Most likely a fraction of the big numbers Flaherty will announce in his budget.

Yves Fortin

A nation of sellouts? I think David Olive needs to speak with his boss and take a look in the mirror

David Olive of the Toronto Star asks the self evident question of the day in today’s paper: “A nation of sellouts?”

David needs to read:

Where is Parliament on the rape and pillage of Canada's largest telecommunications company: BCE?

Since, meanwhile his boss, Rob Prichard , CEO of Torstar is writing to the CRTC (read here) in support of the leveraged buyout of BCE, arguing the sellout in these terms:

“I write to extend the support of Torstar Corporation to BCE Inc.’s application for a change in ownership and control......We are also investment partners with Ontario Teachers’ in CTVGlobemedia. I am a member of that Board of Directors, on which Jim Leech, CEO of Teachers’ is also a member. I have seen him demonstrate as a major investor Teachers’ appreciation for the needs of consumers.”

I guess that means the 240 basis point increase in the cost of BCE’s capital won’t lead to increased monthly phone bills the way the Industry Committee would have us believe:

“A higher cost of capital slows the rate of capital investment and, in turn, the roll out of competitive services

A cost of capital differential of approximately 1.18% exists between Canada’s incumbent telephone carriers and Canadian cable companies. This incremental cost equates to about $1.46 per month per cable subscriber.”

Meanwhile the same journalist, David Olive of Toronto Star wrote an opinion piece in September 2007 entitled: Income Trusts 2.0, an unwanted sequel:

Doesn’t David Olive understand finance? The LBO of BCE is that very Income Trusts 2.0, an unwanted sequel, except in this case the tax leakage is for real and not just a fraudulent argument being advanced by Mark Carney

Perhaps David should bone up on this article from the Financial Post, before he next puts pen to paper:

Flaherty's tax conundrum: BCE Privatization could cost him $800-million

I think the nation of sell outs are the journalists at the Star, to wit:

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

Meanwhile, read about the Star’s complete exercise in non-culpable hypocrisy:


A nation of sellouts?
What hope is there for Canada to be anything but a second-tier, resource-dependent player on the global stage if every time a corporation approaches critical mass, it gets sold off to a foreign buyer?
Feb 24, 2008 04:30 Am
DAVID OLIVE
BUSINESS COLUMNIST

The NDP is a blind faith organization

NDP MP Denise Savoie in a letter to a concerned constituent:

“I have asked Judy Wasylycia-Leis to investigate a number of concerns. I am confident in supporting her position on this matter: “I am confident that government estimates of future tax leakage are solid”"


I have a better idea for Denise Savoie. And that’s to follow the leadership of Green Party leader Elizabeth May, who is more interested in facts, than blind faith.

Since the alleged future tax leakage that you are taking for granted is being questioned far and wide.

What use are the NDP, if not as the Newly Duped Party?

After all, you can’t buy groceries in retirement with lowered ATM fees.

The NDP is simply a blind faith organization, happy to serve up kool aid instead of fact based government.

As such, the NDP is a mere charade of democracy.


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Where is Parliament on the rape and pillage of Canada's largest telecommunications company: BCE?

The first thing one needs to know about the pending rape and pillage of BCE is that the upcoming CRTC Hearings on the proposed leveraged buyout are public hearings on only the broadcasting assets of BCE and not BCE's vast telecommunications assets. In BCE’s own application to the CRTC, they state that the value of the transaction is $39.8 billion, and the value of the broadcasting asset are $0.1 billion.

As such Parliament should not be looking to the CRTC to necessarily look after and enforce the many policy objectives of the Telecom Act or the Bell Canada Act, that if rigorously applied would render this proposed deal a complete non-starter. Therefore it is incumbent on parliament to enforce the will of these Acts, since the absence of action will come at a stiff price to all Canadians, starting with the annual loss of $800 million in tax revenue at a time when $800 million a year in lost tax revenue means an awful lot.

The rape and pillage of BCE arises from the fact that 80% of BCE's purchase price is coming from BCE itself, 10% from Teachers'. 10% from US private equity. Meanwhile Teachers’ is prohibited by its own regulations from holding more than 30% of the votes of any corporation, directly or indirectly. Hence, the leveraged buyout of BCE is a rape and pillage of the foreign takeover variety.


Here’s what the credit rating agencies are saying:

Standard & Poor’s: on BCE’s resultant credit worthiness:

“The multi-notch downgrade reflects our view that BCE no longer possesses an investment grade financial policy, given the likelihood that the [Teachers’] LBO will be finalized in the near term.

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 associated heavy interest burden.”

Moody’s Investor Services: on BCE’s resultant credit worthiness:

“With book debt expected to increase by more than 300%, the company’s risk profile will be profoundly affected by the proposed Teachers’ transaction, and its rating could be adjusted by several notches.”


And here’s what BCE”s financial advisor, Goldman Sachs wrote in its letter to BCE’s board back in June:

“We express no opinion as to the impact of the transaction on the solvency or viability of BCE or the ability of BCE to pay its obligations when they become due.”


Reads more like “Over to you, Alphonse.” Which in fact it is. Canadians are Alphonse. Meanwhile Goldman Sachs gets paid $48 million for being the sub-prime mortgage broker of record....provided the CRTC approves this sub prime mortgage deal.


Back in late June 2007. Michael Sabia was trying to put a brave face on the highly criticized sale process that he had just put BCE through, by saying we should all love the outcome for four reasons. Forty Two Seventy Five. As self congratulatory as that statement was, it needs to be understood that $42.75 is also largely self financing, given that the sources of the funds for this proposed takeout are as follows:

BCE : $34.20
Teachers’: $4.27
Providence: $2.75
Madison Dearborn: $1.53

Total: $42.75

So here we have a situation where for 20 cents on the dollar, these private equity firms are able to bulk up with the upside on the entire company. Problem is, the company gets trashed in the process and its junk bond credit rating comes at the cost of about $800 million to BCE’s existing bondholders and Canada’s largest telecommunications company gets saddled with $40 billion of debt that carries a 240 basis point INCREASE in the cots of capital, for what is now 80% of the company’s capitalization.

So what will that mean for BCE’s “competitiveness and efficiency”, which the Telecom Act is designed “to promote”?

What will that mean for the “ownership and control of Canadian telecom by Canadians” that he Telecom Act is designed “to promote’?

One thing is for sure. We know what 240 basis points increase in cost of capital will mean. One need only read the 2003 Report to the Industry Committee of Parliament to get a sense who will be financing this leveraged buyout:

“A higher cost of capital slows the rate of capital investment and, in turn, the roll out of competitive services

A cost of capital differential of approximately 1.18% exists between Canada’s incumbent telephone carriers and Canadian cable companies. This incremental cost equates to about $1.46 per month per cable subscriber.”

So the question becomes, where is Parliament on the rape and pillage of BCE?

"Bell Canada owns the largest phone company in the country and it is also one of the major players in print and broadcast media. Canadian legislation limits the amount of foreign ownership in these sectors and this takeover of
Bell Canada threatens to violate the intentions of those restrictions. I think Prime Minister Harper should send an unequivocal message to the investment community that he will not allow foreign interests to take control of thesekey economic and cultural development industries." David Cole, President of the CEP union.

“One only needs look at the recent sale of Canadian companies like BCE and Alcan to realize who benefits from these shakeups. While senior executives and shareholders pocketed millions of dollars, employees harvested only worry and anxiety. It’s a one-sided proposition that’s weighed totally in favour of the company.” Robert Bouvier, President Teamsters Canada

"At first blush, we're extremely concerned because it does represent one of the largest mergers of this nature in the telecommunications business in Canada. Canadians are already paying too much for their cell phones and we're
going to have to examine very closely the deal. And certainly we would always reiterate that we believe Parliament has a role to play." NDP Party Spokesman Ian Capstick June 2007

“Mr. Speaker, there are news reports of a hostile takeover of BCE. BCE is one of Canada's oldest and largest corporations in Canada.A foreign equity firm wants to snatch it up from underneath Canadians. The company that wants to do this, KKR, is so aggressive, an author entitled a book on KKR, Barbarians at the Gate. I know the government is predisposed to actually selling off Canadian companies and New Democrats understand that the government feels an empathy to do so, but this is a loophole.
I want the Minister of Industry to guarantee right now that he will close this loophole and protect Canadian jobs and BCE.” Brian Masse, NDP Finance Critic in Parliament March 29, 2007

Or is this just another facile exercise by the NDP in lowering ATM fees? All talk No Action

Meanwhile the Quebec separatist party, the Bloc, thinks its okay that one of Quebec’s leading iconic companies ends up in the hands of foreign private equity and ONTARIO Teachers'? And Quebeckers will pay for it with higher phone bills?

Sounds like a plan.


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Finance Minister Hugh MacPhie speaks

Would this op ed piece below, that appeared in yesterday's National Post by Finance Minister Hugh MacPhie
have been covered by Hugh MacPhie's original $122,340 contract, or was it covered by one of the many subsequent $24,999.99 contracts?

Let's be honest, Jim Flaherty is incapable of original thought, apart from ”It’s not my fault” or “The panel did it”.

Hence Svengali Mark Carney. Hence Hugh MacPhie.

And to think, Hilary Clinton is accusing Barrack Obama of plagiarism for lifting a few lines from a speech by his National Campaign Co Chair.

Meanwhile Flaherty is programmed 24/7 and no one utters a peep?

Dalton McGuinty is Ontario's biggest problem
National Post
February 21, 2008

by: Jim Flaherty?????


Plagiarism Watch: This just in.

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What assurances are there that BCE’s economics won’t end up in the hands of a sovereign wealth fund?

Photo caption: Minister of Finance, Jim Flaherty, met in Dubai with Sheik Hamdan bin Rashid Al Maktoum, Deputy Ruler and Minister of Finance and Industry of the United Arab Emirates, on January 23, 2008. Minister Flaherty is in the Middle East promoting investment in Canada.

What with the pandemic known as the sub prime mortgage meltdown, and the daily speculation that BCE’s new buyers, Teachers’ and three US private equity firms, will have a difficult time raising the 85% of the "purchase price" that takes the form of $28 billion of junk bond debt being raised by the company itself, the question becomes:

What assurances are there that BCE’s economics won’t end up in the hands of a sovereign wealth fund?

By all press accounts, the BCE leveraged buyout is presently being held together with bailing wire, chewing gum and no shortage of hubris.

Apparently great reputations are at stake. So too, the economics of Canada’s largest telecommunications carrier. With 85% of the purchase price taking the form of new debt to be incurred by the company and only 15% of the purchase price being provided by the “buyers”, the economics of who owns BCE resides with the debt holders, and less so the equity holders.

So who are these new debt holders?

Truth is no one knows. Not even the banks whose job it is to source these debt buyers know. The $28 billion of new debt that BCE needs to raise, as distinct from the $12 billion it already has outstanding, will be provided by a syndicate of banks consisting of Citibank, Deutsche Bank, Royal Bank of Scotland and TD Bank.

Citibank itself has gone through an extremely rough patch as a result of the sub prime mess that it played a central role in and which resulted in Citibank writing off $9.8 billion in bad loans. This major hit to Citibank’s capital required an immediate equity injection. So who did Citibank turn to at a time of distress?

You guessed it. Sovereign wealth funds, , namely $6.8 billion from the Singapore government investment agency GIC, and the Kuwait Investment Authority, who bought a $3 billion stake in Citibank.

So where do you suppose this syndicate of foreign banks is going to go to, once they find themselves “long” about $28 billion of BCE debt that traditional junk debt buyers don’t want to own, or the banks want to hold on their books?

Chances are that the sovereign wealth funds will find themselves faced with the distressed opportunity of a lifetime and will buy this BCE paper at a discount to its face value.

Do you actually think Citibank is going to turn down an offer from the Kuwait Investment Authority to off load its share of $28 billion of BCE junk bond debt at 85-95 cents on the dollar, just because such a sale would contravene the intent of legislation enforced by the CRTC. Give your head a shake. Or sheik, as the case may be.

What does Citibank or the Kuwait Investment Office care about the Bell Canada Act policy objective which reads: “The works of Bell Canada are to be for the general advantage of Canada” or the policy goal of the Telecommunication Act, which is "to promote the ownership of Canadian telecommunications carriers by Canadians?"

It certainly didn’t stop the Kuwait Investment Office back in 1988, when they picked up the largest slice of BCE’s IPO of Bell Mobility, after Wood Gundy failed in underwriting that issue. After Wood Gundy (today CIBC World Markets and an advisor to BCE in its proposed leveraged buyout) failed to complete that IPO. Merrill Lynch swooped in with a "bought deal".

IPOs are never done by way of a “bought deal”. Except however when the dealer has a firm lead order form a sovereign wealth fund like the Kuwait Investment Office, which is exactly what happened with Bell Mobility (then called BCE Mobile) and Merrill Lynch, courtesy of the Kuwait Investment Office back in 1988.

Two closing observations:

Merrill Lynch is one of the three US equity investors alongside Teachers. Merrill Lynch also took a bath on their subprime lending involvement. And like Citibank, they also took an equity infusion from the Kuwait Investment Office.

Is this sounding just a little too incestuous already?

Maybe that’s why the CEO of Teachers’, Jim Leech, recently observed:

“I look forward to the day when [BCE] is out of the public eye.''

Out of sight, out of mind?

Or:

Out of sight, out of Canadian control?

CRTC to the rescue?

Afterall, there is a Canadian solution that BCE failed to disclose to its shareholders and is making every attempt at not disclosing to the CRTC.

And yet, everybody wins with the Catalyst Plan?.

What gives? Who's on first? Or has Teachers' become a mini sovereign wealth fund? Sort of like Quebec. A nation within a nation. A sovereign wealth fund within a once sovereign nation?

By Brent Fullard
Catalyst Asset Management Inc.

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Sheila Fraser's pipe dream

Canada's Auditor General Sheila Fraser must be smoking something, with her wild and crazy idea that:

"Parliamentarians need objective fact-based information on how well the government raises its funds", which is her mantra from the Auditor General's website.

Meanwhile, in the real world of Federal Fraud Minister Flaherty:

Ottawa won't show details of income trust figures
January 24, 2007
CTV.ca News Staff

The federal Conservatives are refusing to show key details justifying how they concluded that income trusts were costing the government hundreds of millions of dollars in taxes.

Thirteen pages of calculations, released to a Calgary analyst, are so heavily censored with black marker that only row and column labels remain visible.

BMO Nesbitt Burns analyst Gordon Tait received the documents under Canada's Access to Information Act. He also received another 12 pages which include details of trust distributions but those documents have already been made publicly available.

"Do they feel they can't substantiate the tax loss claims that have been made? I can't find another reason why you wouldn't make it available," Tait, a critic of the trust tax introduced last Oct. 31, told The Globe and Mail.

Income trusts are businesses that pay little or no corporate tax. Instead, corporations that convert to trusts pay most of their cash flows to investors in monthly distributions, who in turn pay taxes on this income.

Under the changes, Ottawa will apply a tax on the money distributed to shareholders by newly formed income trusts, shifting the tax burden to investors.

The blacked-out figures are important since Finance Minister Jim Flaherty used them to justify the new levy. But Flaherty's office blocked the details citing a section of the Access to Information Act which permits the withholding of data that could be dangerous to Canada's economic interests.

The law allows officials to keep secret information "which could reasonably be expected to be materially injurious to the financial interests" of the federal government. Information can also be censored if it can negatively influence Ottawa's ability "to manage the economy of Canada" or if it will be of "undue benefit" to anyone.

A second reason given for the censorship was that Finance was allowed to keep secret advice given to ministers.

Tait said he doesn't think the withheld figures contain huge surprises but he says they'd allow Canadians to judge if the estimates are accurate.

"What we want to know is how they took information and processed it to come up with these losses so we know if it's valid or not," he said.

"If you want your data to be accepted, it has to be scrutinized. It's got to be subject to peer review. You can't just come up with your own little theory and not show anybody how you came to it."

Liberal finance critic John McCallum said the censorship shows the need for the parliamentary hearings that will begin next week on the trust tax.

The hearings, prompted by opposition parties, will challenge the government on its tax leakage estimates, McCallum told The Globe.

How do you spell unaccountable? J i m F l a h e r t y

Let’s be honest. Jim Flaherty is the human embodiment of unaccountable.

Today we learn from our perfect elfin Finance Minister that Dalton McGuinty, and not he, is responsible for the woes in Ontario’s manufacturing sector.

If so, why is Buzz Hargrove calling for Flaherty’s upcoming election defeat and not McGuinty’s?

Flaherty is claiming that Dalton didn’t have sufficient “vision”. This coming from a man who doesn't fix potholes or doesn’t realize how utterly misguided his first 1% cut to the GST was, so he instituted a second 1% cut to the GST.

Here’s Flaherty’s complete disowning of responsibility from today:

Flaherty lashes Ontario for 'lack of vision'
RICHARD BLACKWELL
The Globe and Mail
February 20, 2008 at 10:35 AM EST

Then there was the equally shameful disowning of responsibility on the part of Flaherty concerning the $65 billion in takeovers that were induced by his foreign takeover friendly trust tax. This particular outcome had been predicted by many ever since the evening of Halloween 2006.

Flaherty listen? No

Flaherty acknowledge? No

Flaherty held accountable? You be the judge of this pathetic exercise in accountability:

Trust buyouts not my fault, Flaherty says
TARA PERKINS , STEVEN CHASE and DOUG SAUNDERS
The Globe and Mail
April 3, 2007

Minister rejects criticisms new tax policy is forcing Canadian firms into foreign arms



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Jim Prentice: We believe you. Just like we believe Harper's fabricated claims of tax leakage

Just like Harper's fabricated (and fraudulent) claims of tax leakage.



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Flaherty appoints two new directors to the Canada Pension Plan Investment Board

Today’s CP news article reads:

“The Canada Pension Plan Investment Board operates at arm´s length from governments”?

and

“Jim Flaherty named two new directors to the Canada Pension Plan investment board”?

A more realistic account is however:

Canada Pension Plan Investment Board: Dabbling in cover-ups at the behest of Harper/Flaherty:



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Mark Carney is the nexus of the Globe's two top ROB stories

Story #1:

“China shares blame for crisis, Carney says”


Story #2:

“List of Russia’s superrich surpasses 100 mark”
“List of Russia’s superrich surpasses 100 mark”


Reality:

Mark Carney’s fraudulent tax leakage assertions
are intended to solely benefit Canada’s super wealthy. Folks like Paul Desmarais Jr., Dominic D’Allesandro and Gwyn Morgan,
and the members of Corporate Canada’s Controlling Elite (CCCE)

Mark got his training at ripping off the masses when he worked at Goldman Sachs’ working for many of Russia’ oligarchs of today, in the scam known as "privatization" (at pennies on the dollar).

Reality Check #1:

Deloitte

Reality Check #2:

Green Party



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$62.5 billion? Mere bagatelle.

Let's assume Harper's claim about $62.5 billion in Liberal spending initiatives were true. It's mere bagatelle relative to Harper's income trust losses.

Stephen Harper is trying to defend his record by attacking the Liberals with a sad exercise in fear mongering, claiming the Liberals will cause a $62.5 billion deficit over 4 years. That works out to a $15.6 billion a year spread over 33 million Canadian for a cost of $472.27 each. Compare that to the 2.5 million income trust investors who are down some $40 billion at this point in time. That works out to $16,000.00 each.

$472.00? $16,000.00?

Harper: Leader? Hypocrite?

Furthermore, the $472 will actually buy something, whereas all the $16,000 bought was $65 billion in trust tax related takeovers
and the annual loss of a further $1.4 billion in taxes. Nothing for everybody.

Stephen Harper: Give your head a shake. You are the problem. Look in the mirror. It’s not a pretty sight. We bought your fear mongering, garbage, election arguments once already. To wit:

“You know where the Liberals stand on raiding seniors nest eggs. A conservative government will never tax income trusts”

Here’s the Liberals response. Somehow, and for some reason, they have become the more credible party, than the Harper, been there, done that, CONs.


-

Hey buddy, can you spare a dime?..... $1.4 billion?

Do you suppose another $1.4 billion in annual tax revenue for Ottawa could come in handy now?

The average Canadians who would pay these taxes would be more than happy to continue to pay these taxes. The $65 billion in takeovers that Jim Flaherty and Stephen Harper's ill conceived income trust tax has induced has, according to the accounting firm Deloitte:

Income trust buyouts: Lots of activity, little tax revenue

It’s not like these two morons, Harper and Flaherty, weren’t warned

Trust tax under fire as drain on revenue

As for Flaherty. He is defined more by what he doesn’t do that what he does do, with his statement of February 11, 2008:

"I'm not going to be the finance minister that puts our country back into deficit," Mr. Flaherty told reporters.

How very reminiscent of his statement of November 1, 2006
in support of that rash action of the day:

“We were going to see the two largest telecommunications companies in the country not pay corporate taxes. That's a clear and present danger to fairness in the Canadian tax system. I thought we had to act.”

Had Flaherty been even remotely competent, he would have realized that neither Telus nor BCE were paying taxes as a corporation, and would have paid $3.8 billion more in taxes as trusts over 4 years

Fast forward 18 months later and we see that BCE will pay zero taxes as a foreign leveraged buyout, resulting in the loss of $800 million a year in taxes.

The good new is, however, that $800 million of that $1.4 billion loss in taxes caused by the trust taxation blunders arises from the Teachers "back door" foreign takeover of BCE. That deal still requires CRTC approval, and there are a host of reasons why the CRTC should nix it, the loss of significant tax revenue being just one.

As for the various Acts that the CRTC administers, do you suppose the Bell Canada Act had the tax stripping of Bell's pretax income by foreign private equity and junk bond lenders in mind when they penned the words:

"the works of Bell Canada are to be for the general
advantage of Canada"?

No doubt Teachers'. Providence Capital LLC, Madison Dearborn LLC and Merrill Lynch Capital Partners LLC have 800 million other good reasons why their deal provides such an outcome.

If they do, then it would simply be a break even proposition, at best.

If they don't, they should be told to go to the back of the bread line, and rub their two nickels together to keep warm.


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Déjà vu all over again: Flaherty’s fiscal and integrity deficit

The definition of insanity is to do the same thing over and over again, and expect a different result.

Such is the case with Jim Flaherty, one of the most untrustworthy politicians to ever hold fiscal office in this country.

This is the fine gent who professed he had balanced Ontario’s books in 2003, only for Ontarians to learn upon a change in government that Flaherty had left behind a $6 billion deficit, as uncovered by Provincial Auditor Erik Peters, and reported:

Ontario's former Conservative government left the province with a $5.6-billion deficit, a retired provincial auditor said Wednesday.
The provincial shortfall exceeded earlier estimates, which had been around $2-3 billion.

Peters recommended the Liberal government consider new legislation dealing with fiscal responsibility, including greater transparency in budgets and updates.

When asked if the Tories would have been briefed on the province's financial situation before the March budget, Peters said in the normal course of events, the finance minister would have been informed.

"Ontario has a clear and unvarnished understanding of our financial situation," said Sorbara.

He accused the Tories of "misrepresenting" the province's financial situation.

So now we have Jim Flaherty professing that his recent binge of spending programs and tax reductions, like the most recent cut in the GST, will not imperil the country’s long record of budgetary surpluses,

Why would anyone possibly believe the man?

Remember what the definition of insanity is.

Flaherty is inherently untrustworthy. He lacks integrity and credibility. He is fraudulent by nature.

Need I mention Hugh McPhie & Co.?


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Probe role of RCMP in last vote, probe NDP's complicity

What role did Judy Wasylycia-Lies, Jack Layton and Stephen Harper play in this scam set up with the RCMP? Judy was at her most shrill. Jack at his most duplicitous and Stephen was just the Stephen we have come to know.

Jim Travers' reference to banana republic pretty much sums it up.

Probe role of RCMP in last vote
Feb 16, 2008 04:30 AM
James Travers
The Toronto Star

"What is known, or at least what informs conventional wisdom here, is that it was the election's tipping point. Before the RCMP repeatedly flashed its investigation to the NDP, Liberals held a lead and Paul Martin was on course for a second minority mandate. But that changed when now defrocked commissioner Giuliano Zaccardelli dumped customary discretion by reporting to MP Judy Wasylycia-Leis that the RCMP was on the case. Surprise, surprise, she rushed to the microphone about as quickly as voters reached the conclusion that Liberals and their ethics were beyond the pale.

Whatever the truth, it's remarkable that Bill Elliott, labouring under the twin burdens of being the first civilian commissioner and old Tory ties, has yet to clear the air. Instead, it's heavy with the spoiled odours of banana republics.

Before the next election, Canadians have a right to know if the RCMP was more than a spectator in the last. Nothing less will do."



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The schizophrenic Globe and Mail

Having done more than its fair share to propagate the Harper government’s lies about tax leakage, as Jim Flaherty’s and Mark Carney’s fraudulent rationale to kill income trusts, the Globe and Mail is now doing its best at fulfilling item 2 of Goldman Sachs' wish list being executed by Goldman Sachs alumni Mark Carney, and that is to advise Canadians who are hungering for high yielding equity investments to "look south", and invest in the US market.

Perhaps they could follow this piece up with a piece on the $480 billion US Master Limited Partnership (MLP) market, since the MLP market is the exact parallel to the Canadian income trust market.

That would be quite the revelation for Globe’s readers, since our Minster of Finance, who doubles as the Minister of Fraud, told Canadians that the US had shut down their income trust equivalent market. Too bad no one in the press did a little deeper digging.

Which only goes to show. Don’t trust politicians. Don’t trust the Globe.

They are both too interested in "shaping the truth" rather than "reporting the truth".

Today’s article entitled “Want some dividend excitement? Look south” is the inevitable follow up story to these virulent gems of the past whose sole focus was to mislead Canadians about the false notion of tax leakage in order to kill income trusts:

Capitalism for slobs.
By Eric Reguly. March 2005 Report on Business

Income trusts are turning Canadian CEOs and investors into coupon-clipping couch potatoes
Income trusts are the glazed doughnuts of the financial world, and the investors who gorge on them are becoming fat and happy. Soon, they will become lethargic, their arteries and brains clogged with trust lard. And what's bad for investors is also bad for corporate Canada.


Trust lobbyists, that's enough of your fury
By Eric Reguly. December 2006 Report on Business

"Someone should encase income trust lobbyists in concrete and fling them off a bridge into deep water. On second thought, forget it; even that wouldn't stop the misguided creatures. Houdini-like, they would somehow break free and call for Jim Flaherty's head the moment their lips broke the surface. They are unstoppable and insatiable.
Still, the trusts lobbyists are lusting for blood, as if it's their god-given right to determine tax policy. They should be ignored."


Trust lobby had no hope against Flaherty
By Eric Reguly. February 1, 2007 Report on Business

If the expanding array of income trust lobby groups were to emboss their stationery, they might consider the image of Sisyphus, the symbol of hopeless labour. The lobbyists keep pushing the rock up to Jim Flaherty's door only to have it roll back upon them with great squishing sounds. Repeat process, repeatedly.
There’s no arguing with the man (Flaherty), and the trust’s disjointed effort only made it easier for him to say no


Of all the venomous comments that the Globe has falsely advanced about income trusts, the worst one of all, wasn't even about income trusts. It was the admonishment that "they should be ignored".

I can't think of a more ignorant and intolerant piece of advice to be handed out in a newspaper, than to ignore the other side of an argument.

What's next? Book burning?

At the Globe and Mail, apparently ignorance is bliss. Both in terms of their readers and certainly amongst the news staff.

That's probably why their investment advice of today and their readership of tomorrow is headed the same direction: ”Look south.”


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Of hula-hoops and leveraged buyout loans

By Brent Fullard, Catalyst Asset Management Inc.

The last time I checked, water doesn’t flow up hill.

And every fad has it’s day in the sun.

Do you think the boys at Wham-O-Toys went into business making hula-hoops in the late 50’s to get stuck with an inventory of millions of unsold hula-hoops when that fad went bust?

No, probably not.

But that’s exactly what happened to the Wham-O boys by not being attuned to the shifting sentiments of the marketplace, as retold here:

Richard Knerr, co-founder of Wham-O toys, dies
International Herald Tribune
January 18, 2008

“in the first year, Wham-O sold as many as 40 million hoops; by 1960, sales were at 100 million, a mark no other toy had ever reached. After too many households had two or three of the hoops, the fad evaporated, leaving Wham-O marooned on a mountain of tubular plastic. Total profit: only $10,000, a result of business inexperience and millions of unsold hoops.”

Now parallel this situation with that involving fads like sub prime mortgage conduits or asset backed commercial paper or even the fad known as leveraged buyout loans, as described in this sober account in today’s Financial Times:

Banks advised to walk away from big deals
Financial Times February 15, 2008
By Henny Sender

In which the statement appears:

“So far, leveraged buy-outs have usually collapsed when the private-equity firms involved – including Blackstone and Cerberus – have withdrawn from transactions.

Such moves have occurred as banks have been working behind the scenes to persuade private equity firms to abandon deals. Such indirect approaches are designed to prevent target companies from filing suits seeking to make sure deals close.

However, the chances of banks abandoning buy-out deals – such as those for Clear Channel Communications, the radio station owner and outdoor advertising company, and BCE, the Canada-based telecoms group – are growing as the market prices for the leveraged loans used in such transactions continue to fall.”

In the case of the BCE deal, the downside risk of a failed financing is a lot greater to the Ontario Teachers’ Pension Plan, than that experienced by the founder of Wham-O-Toys, since Teachers’ will be left with an outcome much worse than a warehouses full of unsold hula-hoops.

Their hubris will cost them a cool $587 million in what is called a reverse break fee. Their 58.7% share of a cool $1 billion fee payable if they along with their partners are unable to come up with the $28 billion in junk bond loans to load BCE up with, before they buy the company with a mere $8 billion of equity.

Talk about scorched earth, for the company since it already has $12 billion in debt. Somehow having BCE capitalized with 85% junk bond debt is supposed to help BCE achieve the Telecom Act policy goal, which is "to promote the competitiveness and efficiency of Canadian telecommunications?"

How does raising BCE's cost of capital by over 200 basis points (2%) do that?

Meanwhile, the risk that Teachers' is assuming is no different than when Lloyds of London underwrites the launch of a satellite. It's large. It’s lumpy. It’s unpredictable. It’s unmanageable. It can’t be hedged. In sum, it’s imprudent, as it may blow up on the launch pad and never get into orbit.

Which leads to two questions:

What's not to dislike about this deal?, and

Why is Teachers’ playing Russian Roulette with the assets they manage?

The cost of this $587 million crap shoot will be solely borne by the plan sponsor of Teachers’: The Ontario Government. And wasn’t it Dalton McGuinty who just ran on a platform of fiscal prudence?

Teachers’ reverse break fee is anything but prudent.

Especially when Catalyst Asset Management handed them a solution to this dilemma in a letter dated February, 4 2008? See Letter to Teachers’, with a cc to Dalton McGuinty

BCE a lesson in M&A froth

Today’s Globe makes the generic observation concerning KCP: “May be one of a raft of buyout targets that are unable to cope with heavy debt loads in the face of the slowing economy.”

Which gives new meaning to Goldman Sachs: (BCE’s financial advisor) in a kiss-off letter to BCE’s Board June 29, 2007:

“We express no opinion as to the impact of the transaction on the solvency or viability of BCE or the ability of BCE to pay its obligations when they become due.”

Goldman Sachs also gives new meaning to the term Love ‘em and leave ‘em.

Except in the case of BCE it’s Lever ‘em and leave ‘em

KCP a lesson in M&A froth
Investors bid loans down to distress levels
BOYD ERMAN
Globe and Mail
February 14, 2008

Standard & Poor’s: on BCE’s resultant credit worthiness:

“The multi-notch downgrade reflects our view that BCE no longer possesses an investment grade financial policy, given the likelihood that the [Teachers’] LBO will be finalized in the near term.

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 associated heavy interest burden.”

Moody’s Investor Services: on BCE’s resultant credit worthiness:

“With book debt expected to increase by more than 300%, the company’s risk profile will be profoundly affected by the proposed Teachers’ transaction, and its rating could be adjusted by several notches.”

Standard & Poor’s: Impact of lower rated debt on BCE’s cost of capital:

“Because an investment-grade rating indicates a safer investment, a speculative-grade company with lower ratings must pay investors more for the greater risk they take when buying non investment-grade debt. Lower credit ratings result in a correspondingly higher cost of capital.”

Telecommunications Act: Explicit policy objective:

“To promote the efficiency and competitiveness of Canadian telecommunications carriers”

Standing Committee on Industry, Science and Technology: April 2003 Report

“A higher cost of capital slows the rate of capital investment and, in turn, the roll out of competitive services

A cost of capital differential of approximately 1.18% exists between Canada’s incumbent telephone carriers and Canadian cable companies. This incremental cost equates to about $1.46 per month per cable subscriber.”

Darren Entwistle, CEO of Telus’ on BCE’s LBO: Censored, since:

"We did insist on a clause that Telus would not be able to disparage other alternatives available to the board, such as private equity" said BCE chairman Richard Currie.

Ted Rogers, CEO of Rogers Communications on BCE’s LBO:

"I believe we should just keep doing what we're doing and don't get diverted by all this high-falutin stuff going on — big suits walking around having meetings all the time." Ted Rogers has no time for the private equity players who have approached his company to partner on a bid for rival BCE Inc. and on other deals in recent months. In fact, the head of Rogers Communications Inc. said Monday: "We told them all to go to hell."

"Meanwhile, the trusts may yet come back."...... Jonathan: we're still waiting?

Earth to investors: Don't blame Ottawa for your investing blunders
It's only a real loss if you sell
Jonathan Chevreau, Financial Post
November 25, 2006

This National Post piece is one of those classics, along with the equally nonsensical piece from the Globe entitled "Trust Investors: Stop your gnawing"

I think these reporters all need a remedial course in ecognawmics or a lesson in Transparency 101

These folks were pleading with is to stop our "manufactured rage" in the third week of November 2006. And here it is February 2008. And to think, their tactic was to shift the blame to the aggrieved and not the aggriever?

Manufactured rage? How about manufactured tax leakage?

Then there's the Neanderthal argument that "it's only a real loss if you sell".

Maybe Jonathan Chevreau (or was it Hugh MacPhie?) can use that line of logic with the holders of Asset Backed Commercial Paper (ABCP). Do you want Purdy Crawford's phone number? I understand he could use some help.

As for your notion of November 25, 2006 that the "trusts may come back":

Let's suppose I were to tax your home at 31.5% as Stephen Harper and Jim Flaherty did with income trusts. How long do you suppose it would take for the "value to come back"?

Never. Right, since it's a permanent impairment in value. Goodbye 31.5% of the income stream. It will now always be worth 68.5% of what it otherwise have been worth. Anyone who thought otherwise would have to be an idiot.....or a shill for the CONs in office.

What if I taxed your home at 31.5%, but didn't tax your neighbour's home whatsoever, because his house is a private home that is owned by a pension fund? Do you suppose I could get away with calling that a Tax Fairness Plan, because that's exactly what Harper and Flaherty did?

Try Tax Inequity Plan or Tax Arbitrary Plan, but most certainly not a Tax Fairness Plan. One thing is looking quite possible however. And that is the this betrayal of Canadians "may yet come back"...... to haunt this CON government in quite a significant and most deserved way.

Jeffrey Simpson of the Globe on Flaherty's "post facto policy rationale" mindset

Thank you Jeffrey Simpson.

"post facto policy rationale"

This is exactly the point we have been making since November 1, 2006 ever since I read the study by HLB Decision Economics entitled Tax Revenue Implications of Income Trusts which made it clear that Flaherty and his sorcerer’s apprentice Mark Carney had deliberately left out the 38% of taxes paid by income trusts held in RRSPs, and turned around and then implemented a policy to double tax RRSPs at rates as high as 64%, meanwhile leaving the pension funds with a special carve out exemption.

Jeffrey Simpson may be an impressive journalist, but let’s see how intellectually vigilant he is in “outing” Flaherty’s first example of “post facto policy rationale” as it pertain to the fraudulent concept known as tax leakage. Since the Globe and Mail has a truly pathetic record when it comes to covering the fraud known as the income trust story, ever since Eric Reguly got on the wrong side of reality with his very erudite piece in 2005 entitled “Capitalism for slobs".

Evidently that’s who they think their readership is at the Slob and Mail.

Time for Jeffrey Simpson to redeem his colleagues in the ROB. (Report on Business), since Eric Reguly’s recanting didn’t receive quite the same profile at ROB, as his endless and factless diatribe against income trusts did in print.

Someone, please, put an end to Mr. Flaherty's voodoo economics
The Globe and Mail
JEFFREY SIMPSON
February 13, 2008

Finance Minister Jim Flaherty says he won't "throw money around" in the Feb. 26 budget. That would be a change.

Mr. Flaherty, working for Prime Minister Stephen Harper, has been a big thrower-around of money. Now that the economy is slowing, and having all but emptied the federal cupboard with foolish tax cuts and provincial transfers, Mr. Flaherty is warning everyone not to expect much.

In Mr. Flaherty's 2006 budget, he sliced the GST by one point. Last November, he announced another one-point reduction. These two points will cost $10-billion to $12-billion a year in revenue, or perhaps $70-billion to $84-billion over seven years.

In that same time frame, the government will be shifting an additional $39-billion to the provinces to solve the mythical "fiscal imbalance," a measure announced in last March's budget.

Together, the GST cut and the "fiscal imbalance" will cost Ottawa in the broad range of $110-billion to $120-billion over the next seven years. To say, therefore, that money is tight is true only because of the Harper-Flaherty policy of the last two years.

The tragedy - no, the scandal - of these measures is that they did so little for the long-term competitiveness and productivity of the Canadian economy, on which, more than anything else, the country's long-term prosperity depends.

Years ago, a Progressive Conservative government led by Joe Clark promised "long-term gain for short-term" pain, and was defeated for its efforts. The Harperites stand the slogan on its head: short-term gain for long-term pain, and hope to be re-elected for their efforts.

Mr. Flaherty has been bragging that the second GST cut was clairvoyant, because it added stimulus for an economy now slowing.

This observation is laughably bogus. The government did not see the slowdown coming. The second one-point cut was entirely political. To link it to today's slowdown is to rewrite recent events, ascribe motivation where none existed, and create a post facto policy rationale for a move denounced by almost every economist in Canada, then and since.

Yes, the slowing economy, a phenomenon centered in the United States, will cause a tightening of Canada's fiscal position. Ottawa's fiscal position will be more stringent than Mr. Flaherty might have anticipated just a few months ago.

This recent tightening pales by comparison with Messrs. Harper and Flaherty's actions in their first two budgets. Those efforts also featured tax incentives (or political bribes) to small slices of the electorate (transit users, kids' athletics) and almost no restraint on the government's operational spending.

Last November, after the GST announcement, the government still anticipated $7-billion in surpluses over the next three years, plus $3-billion per year for debt reduction. This $7-billion will now be squeezed by lower-than-anticipated revenues.

Since this budget might precipitate an election nobody wants, the opposition parties would be doing the country a favour if they focused on what the Harper-Flaherty team have done to the country's finances, rather than offer a series of costly promises built on surpluses that may or may not exist many years from now.

A serious opposition party would point out the Harper-Flaherty hole in federal finances. They would then promise to replace at least half, if not all, of the GST giveaway with more productive, targeted personal income-tax reductions for moderate-income people. Other money should be used for spending on infrastructure and human capital development.

The NDP ought to lead this charge, but they are scared of their shadow when it comes to calling for "higher taxes," which is how the Harperites would label any restoration of the GST. All the NDP can think of on the tax side is to call for an end to corporate tax reductions.

The Liberals, whose leader keeps braying for an election, should be judged more than anything else on their courage.

If they promise to rescind the GST cut and do something more sensible with the money, they will merit confidence as a serious alternative. If they call for more spending hither and yon (Stéphane Dion has a list of six big-ticket items) but leave the GST cut intact, they will be no more worthy of confidence than the Conservatives.

Do I detect a cover-up? Now you see it. Now you don’t

Now you see it:

Ottawa won't show details of income trust figures

Now you don’t:

Ottawa seeks return of trust tax documents

What could they possible be hiding?

Is it that Flaherty’s tax leakage analysis is fraudulent?

Now we’ve even got the Canada Pension Plan Investment Board playing silly bugger at Flaherty’s behest.

There’s only one way to find out:

That’s to heed the Green Party’s call.

Meanwhile the Liberals have to keep banging away on this gold mine of an issue.

After all, every Canadian is going to pay on at least one level. Actually two levels.

Do you want to be saddled with Flaherty's mistakes? I know I don't.

A proud moment in Canadian social justice: Flaherty's policy of jailing the homeless

Talk about a loose canon.

It's most instructive to parallel Flaherty’s policy thought process on “jailing the homeless” with his policy of “taxing income trusts”, as described in the two articles "below:

(1) Income-trust crackdown: The inside story
When the telephone rang, Flaherty knew he had to act [or was it panic?]
The Globe and Mail
November 2, 2006

“You have to either leave it alone or fix it,” Mr. Flaherty shrugged Wednesday. “We were going to see the two largest telecommunications companies in the country not pay corporate taxes. That's a clear and present danger to fairness in the Canadian tax system. I thought we had to act.”

[Heads we act, tails we don’t?]

(2) Scourge of the homeless
The Globe and Mail
February 16, 2002
EDITORIAL

"Ontario Finance Minister Jim Flaherty was looking for publicity, and he found it. When quizzed by reporters, he had no idea what his policy of dragging the homeless off somewhere, anywhere, would cost. He just wanted it done. He wanted to solve a complex social problem by sending out special police squads.”

Pretty much sums it up. Flaherty thinks he can solve complex multifaceted issues with draconian measures and blind decisiveness. That certainly makes a person fond for the prudent ways of one of Canada's best Finance Ministers.

And to think, they called him Mr. Dithers. Sheesh!

Flaherty's Harry Potter logic: do as I say, not as I do

Question of the day: Could Jim Flaherty get any more hypocritical if he tried?

Answer: No, since you will recall that exercise of blatant political posturing and exercise in populist pandering back in October when Jim Flaherty trumpeted the clarion call of “Standing up for Consumers”.

We haven’t seen such nonsensical pandering since Jack Layton and Finance Lunatic (sorry, Finance Critic) Judy Wasylycia-Lies felt that all of Canada’s economic woes would be solved by lowering ATM fees. That was another exercise in futility that Flaherty never delivered on, despite all his best huffing and puffing.

Back in October were we implored by the Finance Minister to shop around and get the best deal. Well, duh. And this from a man whose household is run by two elderly retired folks. When did Jim Flaherty last shop for groceries? Who knows, shopping around could save a few bucks.

"If consumers don't think they are getting a fair deal, they should compare prices and shop around." were Jim’s wise words as Minister Flaherty Stands Up for Canadian Consumers

Unfortunately this is where the blatant hypocrisy comes in, since we are implored by Jim O’Flaherty to shop around for the best deal on a Harry Potter book, but when it comes to his own fictional speech writer, Flaherty is absolved of such mundane tasks as calling such a lucrative contract for tender, before granting a $122,000 contract to his old pal, Hugh MacPhie,, from the bad old Harris days in Ontario. After all it ain’t his money. Just schmuck taxpayer’s money, from his perspective.

We are assured that “the government received value for money””. However, what does that even mean?

Keep in mind this very “value for money” speech writer wrote a speech for Flaherty entitled Aspire, that neglected to even realize that Canada extends west of the rockies, leaving an entire province out of his aspirational nonsense message that came in at about $22.79 per word. Maybe the “value for money concept” precluded BC from being ackowledged.

Reprimand Flaherty over contract, opposition urges

Great read...yeah, just like a crime novel

To: Bruce in Calgary:
From: CAITI
Subject: Great read!!!!

I'm glad you enjoyed the blog article entitled "Saturday, February 9, 2008 Canada Pension Plan Investment Board: Dabbling in cover-ups at the behest of Harper/Flaherty

Maybe Harper could respond by saying that even though the CPP Lost $300 million, the pension plans were supportive of the trust tax and Flaherty’s fraudulent scheme of alleged "tax leakage" and bogus notion of "leveling the playing field."

Well of course they were, since they were the beneficiaries of a special “carve out” that allowed them to own income trusts and not pay the 31.5% tax and not be subject to growth constraints, but average schmuck Canadians are not so advantaged.

Somehow that constitutes a “tax fairness plan”. One question: How does that solve the alleged problem of tax leakage, assuming it even exists?

Given that Flaherty construct his argument based on the notion that pension funds are “tax exempt” and that he can't fund today’s social programs with tomorrow’s taxes, then such a "carve out" would only serve to make things worse. But that’s Flaherty’ s main claim to fame. Making things worse.

Meanwhile, thses highly opportunistic government sponsored pension plans are exploiting this gross inequitable arrangement and are acting in a predatory manner to buy out these trusts at their depressed values. This is called an arbitrage.

The word arbitarge is derived from the same latin word as arbitrary, arbitrarius, as in the Tax Arbitrary Plan or the Tax Arbitrage Plan:


Definition of arbitrage: Attempting to profit by exploiting price differences of identical or similar financial instruments, on different markets or in different forms. The ideal version is riskless arbitrage.

In this particular "arb", which the government has made riskless on behalf of foreign private equity and pension plans, the seller has been placed in an economically disadvantaged position. The buyer meanwhile has not. The buyer exploits the seller. The government set this up. The first out of the gate was the pension plan of the very crooks who thought this would be a fun way to placate the pension plans who were “in the face” of Goodale back when he undertook his public consultation review of the matter of income trusts in fall 2005.

The civil servants who gave this carve out to their own pension fund were engaged in the practice known as self dealing. The fact that the Tax Arbitrary Plan also involved the granting of pension income splitting as some exercise in amelioration, is just more self dealing, since pension income splitting only applies to pension income and not RRSP income.

Every civil servant will benefit from both income splitting AND the tax arb associated with their pensions preying on the assets of others, The Public Sector Pension Plans was the first out of the gate. The PSP is also the pension plan of the RCMP. In the attached you will see that 66% of the $29.4 billion in trust takeout activity is foreign and 34% domestic, with pension funds representing a full third of domestic buyers. If you properly add BCE to the mix, then the trust tax takeout numbers grow to $65 billion with 57% being foreign and 43% domestic of which pension funds are two thirds of domestic buying activity and a third of all buyout activity.

It's no wonder that Teachers was all ready to issue this press release on November 1, 2006. Man, they sure are a quick study. Or did they know in advance?


Teachers' response to new federal income trust policy
November 1, 2006

The Ontario Teachers’ Pension Plan has advocated for a taxation policy on income trusts that does not discriminate against pension funds, and we are pleased to see that this is the case with the government’s announcement yesterday (October 31, 2006).

The reality is that, in a protracted period of low interest rates, it is important to find alternate investments with yields that help make up the difference. Income trusts have allowed us to do that in recent years. The challenge will be to find the investment vehicles that will replace the income and cash flow that income trusts have represented to us, but we are confident that our investment team will find them. The four-year implementation period for this new policy will enable us to gradually make any necessary adjustments to our portfolio.

There is good news for pensioners and other seniors over age 65 in this new policy, which will help take the sting out of the new tax policy on income trusts for them: the age exemption tax credit will be increased by $1,000 and income splitting will be permitted.

Contact:

Deborah Allan
Director, Communications and Media Relations
Ontario Teachers' Pension Plan
(416) 730-5347
deborah_allan@otpp.com

A Note to Elizabeth May

E: If you aren't allowed to compare Harper's inaction to Chamberlain's appeasement, then why can Van Loan call the Liberals, Taliban?

Elizabeth:

Concerning Conservative House Leader Peter Van Loan:

He can only get away with it, if the public let's him get away with it. Maybe the National Post would like to set the record straight after making false aspersions about the comparison that you were drawing between Harper's inaction on the environment to Chamberlain, as the best modern day example of the enormous downside of blind appeasement, which you (and others around the world) are simply citing as it pertains to the environment.

One could easily speculate that the Post was only attacking your position on the environment in a displaced manner , as opposed to actually believing in the fanciful theory that you were somehow making the point that they ascribed to you which somehow involved Hitler (?) and the holocaust (?).

Maybe reporters think only they can draw analogies. Tortured ones at that.

I once made the “mistake” of comparing Flaherty’s utter incompetence and gross negligence to that of Stan Koebel of Walkerton water infamy, and some lame fools in the press actually thought I meant that Flaherty was responsible for Canada’s water quality. Not that I would ever drink water approved by Flaherty, I think it was clear to anyone that I was referring to Flaherty’s utter negligence and gross incompetence in public office and how even basic services like prudent financial management of the economy can’t be taken for granted.

I guess we'll know the definitive answer to that question about the National Post, after we read their editorial attacking Van Loan for calling the Liberals, the Taliban. Or not, as the case may be.

The absence of such editorial commentary, will only prove that the Post is applying double standards as it pertains to the point they were ostensibly making about your rhetoric, as opposed to your position per se.

As you and I both know, it isn’t the rhetoric or the analogies that matter. And it most certainly isn’t the utterly misleading spin like “tax fairness” and “leveling the playing field” that matter, it’s just the facts that matter.

How can any policy aspire to be good and just if it isn’t based on facts?

Never more so than for a policy where the facts are readily attainable and irrefutable in nature, like alleged tax leakage as the basis to inflict a $35 billion loss on Canadians and eliminate an essential investment choice from the 75% of Canadians without employer pensions. Not to mention the $300 million loss sustained by the CPP or the $1.4 billion a year by Canadian taxpayers at large.


Brent


On 2/9/08 10:17 PM, "Elizabeth May" wrote:


> I am not allowed to call anyone anything! I noticed that and
> wondered how he thinks he can get away with it!!
>
> Thanks for noticing the hypocrisy!!
>
> E
>
> At 11:43 AM 2/9/2008, Brent Fullard wrote:

E: If you aren't allowed to compare Harper's inaction to Chamberlain's appeasement, then why can Van Loan call the Liberals, Taliban?

The latest offering from Fischer-Price: The Cover-me-up-Harpo doll

The Cover-me-up Stephen Harpo doll will allow your children to learn all about the world of politics and important life lessons on how they can profess to be transparent and accountable and yet be nothing of the kind in reality. The Cover-me-up-Harpo doll will allow your pre-school child to learn about all the friends in Harpo’s world that he has been successful in doing his bidding. Some of them include:


David Denison of the CPPIB, famous for saying “it’s not my focus”

Jimmy Flaherty of the CCCE, famous for saying “it’s not my fault"

Then there’s Peppermint Patty of the PMO also known as Ms. Speaking Sandra Buckler.

Or Gary Lunn, Robin to Harper’s Isodope man.

We can’t forget Carnival Mark Carney of the three ring circus known as CCCE/Goldman Sachs/DoF.

Or Brian Ernwein, the Senior Director of Competence from the Department of Financial Incompetents who famously/infamously testified: "I guess, if we were incompetent, we wouldn't admit to it."

Which begs the question, would you admit to fraud?

It's so easy to lose track of all these cover-ups, I almost forgot about The Chin.


Stay tuned as the Cover-me-up Harpo Doll has become a real hit with preschoolers everywhere. No more so, than with the Main Stream Misleadia, who have as deep an understanding about alleged tax leakage as Gary Lunn does about nuclear science.

The main stream misleadia have a thing or two to learn about investigative journalism from the The Green Party of Canada who aren't nearly so green behind the ears as "experienced" Canadian business journalists have proven themselves to be.

Since when is it left to the politicians like Elizabeth May to do the heavy lifting? Oh yeah, ever since Cover-Me-Up-Harpo became a best seller on store shelves and news stands everywhere.

Canada Pension Plan Investment Board: Dabbling in cover-ups at the behest of Harper/Flaherty

Obviously there are those who are well served by preventing Canadians at large from realizing that Stephen Harper’s income trust tax did more that simply raid the nest eggs of the 2.5 million Canadians who own them, since in reality every Canadian had their personal nest egg raided by Stephen Harper’s ill conceived income trust move, namely their CPP.

All of which could have been simply avoided by shutting down trusts and grandfathering the existing trusts. That way the losses to the CPP would not have occurred, Stephen Harper wouldn’t have broken his promise and these trusts wouldn’t be picked off by foreigners as we have witnessed in spades.

Since when has a government ever acted in a way that has put a $300 million permanent hole in the Canada Pension Plan? Premeditated and deliberate no less. I have learned from top sources that this truth of Harper’s imprudent actions of October 31, 2006 is something that the CPPIB and the PMO are desperate not get out.

When CAITI innocently posted this reality concerning the loss sustained by the CPP on the news ticker tape of our website, which at the time was half the loss it is today, we received no less than three incoming overtures from the CPPIB to take this offensive truth off our website. How accountable and transparent is that?

It’s obvious this request came from the very top of the CPPIB, namely David Denison. since the first contact came from the most junior person working in the CPPIB’s “Communications” Department. Keep in mind, the CPPIB is not the CPP. Canadians are the CPP. The CPPIB is charged with managing the assets of the CPP on Canadians behalf. It appears that they also dabble in cover-ups at the behest of Harper.

That’s the way cover-ups always work. Let’s get the most innocuous guy to make the request.....after which the real players quickly reveal themselves as their temperature level starts to boil. Here was that first foray. I think it is incumbent on the Canadian Media to start making inquiries from the top down. I’ll make it easy for them. Here’s the derivation of the pension plan’s $300 million loss. Here’s David Dension’s contact info. And here’s the first attempt at suppression that I fielded (see e-mail of October 30, 2007 below)

No doubt the CPPIB wil try to blow off the media with the line that I ultimately got, which is that income trusts are not a “focus are for the CPPIB”. How convenient. How irrelevant and completely arbitrary, since money is money, and since when does owning over $1.3 billion of a single asset class, not constitute a “focus area”? Perhaps only after the government in power has reduced its value by $300 million to mere $1.0 billion. Here’s part of my response:

“The CPPIB may be of the view that ”this is not a focus area” for it, however I do believe the loss of pension assets which you manage of this magnitude by the pension beneficiaries, namely all Canadians, is. Particularly, since this material loss was the direct result and sole consequence of a tax policy that was enacted without any public consultation and misleadingly proffered up as “strengthening Canada’s social security system for seniors and pensioners” in the enabling legislation, the Ways and Means Motion.

Not sure which pensioners they had in mind, however certainly not the ones who you manage money on behalf of."


From: "Pedrosa, Manuel"
Date: October 30, 2007
To: contact@caiti.info
Subject: Re: CPP has lost $158 million


Good Afternoon,

I would like to speak to someone about your scrolling marquee on your Web site that declares that the Canada Pension Plan has lost $158 billion as a result of Haper’s broken promises.

The only contact information on you Web site is this e-mail address.

Regards,

Manuel

------------------------------------------
Manuel Pedrosa
Specialist, Communications
Communications and Stakeholder Relations
CPP Investment Board
One Queen Street East
Suite 2600
Toronto, ON M5C 2W5

Show down in Drayton Valley.......Stelmach rides with Steve the Gunslinger

Voters give leaders rough ride
Jason Fekete
Calgary Herald
Friday, February 08, 2008

But when his bus pulled into Drayton Valley for a chat to about 100 townsfolk at the 55+ Recreation Centre, he faced some tough questions from oil and gas workers upset with his royalty plan.

Ken Cameron, a 52-year-old co-owner of an oil and gas services company, told Stelmach that industry workers have been crippled by the soaring Canadian dollar and Ottawa's decision to tax income trusts. But "the final nail in the coffin" has been Stelmach's new royalty framework.

Stelmach gets to be the first politician to “test drive” Harper’s brand new 2006 TFP 4x4 off road vehicle............he didn’t get what he bargained for......a 4x4 across his retroactively taxed forehead! Can’t wait for Harper to take his TFP out on the political test track for a spin......a true demolition derby in the making for sure. Think of it as an exercise in real world polling. Steve loves polls in the same way we exact accountability via electoral defeat.

Fish or cut bait, Steve, we have a surprise in store for you and your corrupt gain of thugs in the CON party of Canada.

You are the quintessential Prime Minister of Big Hat, No Cattle.

Now ride out of town little dogey.

Harper’s lies are costing Canadian taxpayers $1.4 billion a year. It gets worse. Here's your complete program guide:

Loss sustained by taxpayers: $1.4 billion and counting

Loss sustained by Canada Pension Plan: $300 million of your money

Loss sustained by those who trusted Harper in last election: $35 billion

A 10% solution means we still have a 90% problem: Main stream misleadia , or is it simply brain dead misleadia?

Inside Boy Wonder: Mark Carney

Public face: Jim Flaherty

Public Menace: Stephen Harper

Proof of Tax Leakage: Missing in action

Missing in action: Auditor General

Prime Minister’s Prime Motivators: Gwyn Morgan, Paul Desmarais Jr, Dominic D’Alessandro and the CCCE

Worst Performance before the Standing Committee of Finance by an Ex-Goldman Sachs Investment Banker: Mark Carney

Essential Enablers: NDP

Recent Enablers: Bloc Quebecois

In full pursuit of the truth: Green Party

Seniors’ advocacy for sale or rent: CARP

Turning a complete blind eye: Canadian Banks

Turning the screws: TD Bank

Hypocrite du jour: John Manley

What’s most at stake: Our democracy and trust in our elected representatives

What can you do as a Canadian: Vote wisely , Tell your friends, family and co-workers

Send them a video: a You tube video , before we all go down the tubes. Since it will be Our tubes and not theirs. Of that you can be certain. Bank on it.

Please consider voting for CAITI's Lie Conceal Fabricate video, featuring the dulcet tones of Deceivin' Stephen, one time PM

To view and vote, Click here
Media Release
February 4, 2008

Voting Begins in Liblogs Video Contest
Two winners will be chosen by online voters and a panel of experts

Toronto, Ontario – Liblogs.ca, the unofficial list of Canadian liberal bloggers, is beginning voting in its online video contest (http://liblogs.ca/news.en.cgi?99). Liblogs is offering $250 prizes for the two best videos in support of Canadian liberalism.

“Since our contest began, online liberals have been creating videos for this contest,” explained Jason Cherniak, President of Liblogs. “With 15 solid entries, including one in French, it is time to begin voting and see whose video is the best.”

The Liblogs Video Contest will be judged by two methods. One video will be chosen by voters online. The other video will be chosen by an expert panel including Senator Jerry Grafstein, Warren Kinsella, John Duffy and Ian Davey.

“I am very pleased with our panel of experts,” said Mr. Cherniak. “It includes senior political strategists for Prime Ministers Pierre Trudeau, Jean Chrétien and Paul Martin. It will be very interesting to see how their judgement compares to that of the online voters.”

Liblogs is the operating name of a non-profit organization, Blogger Support Services. None of the prize money is contributed by any federal or provincial organ of the Liberal Party.

- 30 -

For more information, please contact:

Jason Cherniak
President, Liblogs
416-807-3389
jason@jasoncherniak.com

Consistent with its owners' wishes, the Globe and Mail is oblivious to the CRTC:

I guess it's difficult to report accurately on the takeover of BCE by Teachers’ when you work for the Globe and Mail, or any part of the larger CTVglobemedia empire.

After all, this acquisition involves the takeover of one your 20% owners by another 20% owner. If that doesn’t seal your fate as an independent reporter, then the fact that the CEO’s of the other two owners (Torstar Inc and Woodbridge) each have written letters of support to the CRTC endorsing the sale of one of their partners to the other partner.

No doubt they are both looking to add to their CTVglobemedia positions after the sale goes through and BCE has a $38 billion mountain of debt to contend with, for which their stake in CTVglobemedia will be the first to go, along with Jean Monty’s grand vision of “convergence”.

If that wasn’t enough, the CEO of CTVglobemedia also sent in a letter of support to the CRTC.

The fact that none of these letters from Ivan Fecan, Geoff Beattie or Rob Prichard even touched on the issue and policy objectives of the Acts of Parliament that the CRTC is duty bound to uphold, only shows the low regard these folks hold for the CRTC and the greater public good that is involved.

If they are so fond of BCE becoming a junk bond debt ridden issuer, then they should immediately follow suit. Apparently it would render them more competitive and able to deliver lower cost services to their customers?

Their letters of intervention amount to comments to the effect that “Teachers’ rocks”. See for yourself

Which brings us back to today’s Globe and Mail reportage , and their denial of the important “gate keeping” role played by the CRTC. How credible is it for Derek Decloet to write in today’s Globe:

“The risks clouding this takeover are three: The bondholders could win their lawsuit in Quebec Superior Court; the buyers, led by the Ontario Teachers' Pension Plan, could walk away; or the banks, led by battered Citigroup, could break their agreement to fund the deal.”

Again, see for yourself

Is the Globe oblivious to the CRTC or just plain oblivious at large? And just who exactly is perhaps "lying'?

DEREK DeCLOET
February 7, 2008
Why BCE deal makers refuse to hang up
Sometimes, the stock market lies.

The market is telling us the BCE takeover is in deep trouble. Even after a rally yesterday, the stock price is $34.90, or $7.85 a share below the offer. The potential profit for arbitragers, if the deal closes in late spring, is better than 60 per cent, annualized.

Mama warned you about returns like these. They never come without risks. But are the hurdles to this deal as great as the numbers suggest?

The risks clouding this takeover are three: The bondholders could win their lawsuit in Quebec Superior Court; the buyers, led by the Ontario Teachers' Pension Plan, could walk away; or the banks, led by battered Citigroup, could break their agreement to fund the deal.

RCMP revamps disclosure policy in wake of controversy over income-trust probe

Disclosure? Income trusts? That’s an oxymoron.

Like Harper and accountability is an oxymoron.

Like Mark Carney and transparency is an oxymoron.

As for Flaherty, he’s just a garden variety moron. Just ask Judy Wasylycia-Lies. It’s her top area of expertise. Second only to her thesis that income trusts are ponzi schemes.

Or perhaps Judy herself is the Pawnzi scheme? Zaccardelli ’s Pawnzi scheme.

Judy Wasylycia-Lies didn’t even have the common decent courtesy to extend her apologies to Ralph Goodale, when it was learned that this leak of sensitive information (it is alleged), came from the Director General of Tax policy, who thought it okay to buy income trusts in advance of the government’s announcement to not change their tax flow through status, as is the case with law firms and accounting firms etc. That find upstanding civil servant was one Serge Nadeau.

We sure fooled Abu Dhabi when we off loaded that $5 billion Prime West Energy Trusts Ponzi Scheme to them. Didn’t we?

I wonder if Judy Wasylycia-Lies has the regional franchise on Manulife’s Income Plus in Manitoba? Or is that Brian Pallister Insurance and Financial Service's franchise area?

RCMP revamps disclosure policy in wake of controversy over income-trust probe
By Jim Bronskill
THE CANADIAN PRESS
February 6, 2008

Canada Pension Plan posts $115 million loss , $300 million of which is attributable to Harper's income trust decision

Canada Pension Plan Board Posts Third-Quarter Loss of $115 million
By Frederic Tomesco
Bloomberg News
February 6, 2008

See also: Mark Carney's fraudulent actions have cost the Canada Pension Plan $300 million and counting

To: contact@caiti.info
Date: October 30, 2007 2:15:48 PM
Subject: Re: CPP has lost $158 million
Good Afternoon,

I would like to speak to someone about your scrolling marquee on your Web site that declares that the Canada Pension Plan has lost $158 million as a result of Haper’s broken promises.

The only contact information on you Web site is this e-mail address.

Regards,

Manuel

Manuel Pedrosa
Specialist, Communications
Communications and Stakeholder Relations
CPP Investment Board

------------------------------------------

From: brent.fullard@rogers.com
Date: November 1, 2007

Manuel:

Thank you for calling yesterday. I was unable to respond fully to your request as I was en route to Ottawa at the time.

As I indicated to you, I am unable to comply with your request in the name of the CPPIB to remove the reference on the scrolling newswire of our website that reads. “CPP has lost $158 million as a result of Harper’s broken promise” on the basis of your argument that that this is “not a focus area for the CPPIB”.

As I indicated to you, the CPPIB is a legally distinct entity from the CPP itself. The CPPIB may be of the view that ”this is not a focus area” for it, however I do believe the loss of pension assets which you manage of this magnitude by the pension beneficiaries, namely all Canadians, is. Particularly, since this material loss was the direct result and sole consequence of a tax policy that was enacted without any public consultation and misleadingly proffered up as “strengthening Canada’s social security system for seniors and pensioners” in the enabling legislation, the Ways and Means Motion.

Not sure which pensioners they had in mind, however certainly not the ones who you manage money on behalf of.

As I indicated, if you are interested in providing us with your detailed analysis of the effects of this policy on the CPP assets you manage, we would be happy to incorporate that into our website, provided we agree with your methodology and level of disclosure.

Meanwhile, the analysis that underlies our estimation of the loss sustained by all Canadians in the CPP is based on the limited visibility that the CPPIB affords its pension beneficiaries. Please find attached the analysis performed by Les Parsneau of Collingwood as at the one year anniversary of the trust taxation surprise announcement, namely yesterday’s closing values.

The one year anniversary loss sustained by the CPP on this basis is therefore $168 million. We will update our website shortly with this data, unless we receive additional portfolio information from you in the mean time

I am also still waiting for a response to this correspondence sent to the CPPIB on November 2, 2006 concerning comments made by Ian Dale, Senior Vice President - Communications and Stakeholder Relations on behalf of the CPPIB, who judging from your title, you report to.

Thank you,


Brent Fullard
President and CEO
Canadian Association of Income Trust Investors
www.caiti.info

647 505-2224 (cell)

------------------------------------------

From: The Fullards
Date: Thu, 2 Nov 2006 13:52:12 -0500
To:
Subject: CPPIB Supports taxation of Income Trusts?

Based on comments attributed to Ian Dale, I understand that the CPPIB came out yesterday in favour of the new tax to be levied on Income Trusts.

I find it highly unusual that the CPPIB would make such a statement on such a highly politically charged issue particularily when it directly contradicts the position previously taken by other prominent Canadian Pension Funds, namely Teachers. Would the fact that CPPIB answers to Ottawa have anything to do with it, whereas Teachers answers to its pension beneficiaries?

As I analyze it, there only exists two scenarios, either CPPIB presently has an investment in Income Trusts or it does not.

In the first scenario, why is CPPIB shooting itself in the foot by taking such a position, given that over the long term these new rules will result in a permanent impairment in value of some 30% of CPPIB's investment, whilst killing the viability and sustainability of this important asset class ( at least important to some Canadians...namely those seeking stable and consistent income for retirement.)

As perplexing as the first scenario may be, in some respects the second scenario is the most troubling as it calls into question the independence of the CPPIB from the elected officials in Ottawa. If CPPIB has no "skin in the game" why is it supporting these moves when it most negatively affects the income of retired Canadians. Afterall, I thought that's the business CPPIB was also in.

I look forward to your response.

Brent Fullard
Toronto

A political primer on how to ignite the tinderbox of discontent over the income trust tax:

$35 billion is an incomprehensibly large amount of money. It also happens to be the amount of money that 2.5 million Canadians permanently lost when they trusted Stephen Harper and after hebetrayed his promise to never raid seniors’ nest eggs.

Sometimes it’s better to deal with issues on a more manageable scale and by letting people know how it is that every Canadian is adversely affected.

So here is an extremely insightful account of how incendiary this issue can be if politicians take it down to the loss sustained by the Canada Pension Plan. Let the prairie fire of discontent ignite, and the bonfire of Harper's vanity begin, this from an e-mail to CAITI:

"Les Parsneau’s analysis that reveals that Harper’s income trust tax has cost the Canada Pension Plan, and therefore every Canadian, the loss of $300 million in CPP retirement savings , accomplishes what millions of words have not accomplished nor demonstrated in the months since 31 October 2006.

I have forwarded it to dozens of personal contacts, family, friends and past business associates.

Some have responded to say they now understand my (and CAITI's) dogged determination and motivation to seek accountability in the next Federal Election.

It is why we fight.

One of my contacts in Winnipeg challenged my accusations about Harper and the Trust Tax last year when she mailed me an article from the Winnipeg Free Press. I have reproduced it in its entirety in the attachment and added some of my comments at the end. After seeing Les's e-mail Table, she has volunteered to take my comments and the Trust Table personally to the Winnipeg Free Press Reporter Turchansky, the Editor and her Conservative MP whose office is directly across the street from her Winnipeg condo.

She is in a fighting mood after comparing the Trust Table with Turchansky's article - which she believed to be true and accurate at the time. She feels betrayed and is damn mad and

............ she is almost 90 years old!

Although life-long Conservative supporters, her and her husband have pledged to vote Liberal or Green.... but definitely not CON...... in the next Election. Victory two at a time and I'm keeping score.

Not that you all haven't seen similar articles and rhetoric before over and over again, but this October 31, 2007 Winnipeg Free Press article by Ray Turchansky is really why we must continue an unrelenting fight to remove the Harper Government before Canada is completely populated by this type of dangerous journalism. Before long none of us will ever know what the truth is...about anything!

Cheers
NVL
Calgary SW (Harper's Riding)

What BCE doesn’t want you to know about its private leveraged buyout

The following is the text of a full page ad that appears in this week's Ottawa Hill Times (page 5).

Willfully transforming BCE from Canada’s most widely held public company with a low cost of capital and investment grade credit into a highly debt-ridden junk bond credit issuer with a high cost of capital, and narrowly held by four private equity funds, three of them U.S., defies three Acts of Parliament:

1. Telecommunications Act:

“To enhance the efficiency and competitiveness, at the national and international levels, of Canadian telecommunications.” TELECOM ACT SECTION 7

The four private buyers of BCE, Ontario Teachers’ Pension Plan, Providence Capital, Madison Dearborn and Merrill Lynch do not have sufficient investment capital of their own to acquire the $34.2 billion of public equity in BCE. They only have some $8 billion to invest. The balance of the purchase price is coming from the company itself who will incur an additional $26 billion of debt, on top of the existing $10 billion of debt already borrowed by the company, thereby rendering BCE into a junk bond issuer with an extremely high cost of both debt and equity capital.

Telecommunications is a rapidly changing capital intensive business, highly dependent on the cost of capital. As such, the CRTC should deny the proposed sale, since it fails this basic provision of the act, to promote efficiency and competitiveness.

Taking what is Canada’s most widely held public company with over 90% Canadian ownership, and allowing it to be narrowly held by four financial institutions, with only 54% Canadian ownership, funded with $26 billion in new debt obligations that are over 80% foreign-owned, also explains why the CRTC should deny the proposed sale, since it fails:

“To promote the ownership and control of Canadian [telecommunications] carriers by Canadians.” TELECOM ACT SECTION 7

The Catalyst Proposal does however fulfil these policy goals by preserving BCE as Canada’s most widely held public company with an investment grade credit rating and lowest possible cost of capital.

2. Bell Canada Act:

“The works of the Company are hereby declared to be works for the general advantage of Canada.” BELL CANADA ACT SECTION 5

The interest payments that are required to service this $26 billion in new debt to be incurred by BCE are deductible from taxable earnings, which means that BCE will pay no corporate taxes, nor will BCE’s new equity owners. The result is that $793 million in annual taxes will be lost by the Canadian Government annually if this proposed transaction proceeds. In addition the 150,000 member Communications, Energy and Paperworkers union is adamantly opposed. CEP’s President, David Coles stated that such a sale of BCE to private equity is:

“a direct threat to thousands of jobs, to Canadian economic sovereignty and to our cultural heritage. For these reasons, the CRTC should deny the proposed sale, since it fails to result in any advantage for Canadian shareholders, taxpayers, or the government of Canada.”

The Catalyst Proposal does however fulfil these policy goals by preserving BCE for the general advantage of Canada.

3. Order in Council directive to CRTC:

On December 13, 2006, Parliament instructed the CRTC to regulate in a manner that pays greater regard to market dynamics and to:

“rely on market forces to the maximum extent feasible”

On April 16, 2007, BCE publicly announced that it had formed a special committee to review alternative means to maximize shareholder value. In doing so, BCE made the market aware of its intentions, thereby exposing itself to market forces in an formal manner. A deadline of June 26, 2007 was set for submissions by outside parties. BCE received four such proposals. Three were private equity proposals, including the one from Teachers’ and the fourth was a recapitalization from Catalyst Asset Management.

The Catalyst Proposal was unique from the other three proposals since, in addition to maximizing shareholder value, it also preserved the credit worthiness of BCE as an investment grade credit and maintained BCE as a broadly held public company with over 90% Canadian ownership, thereby preserving the $793 million in annual tax revenues to the Canadian government paid by BCE shareholders.

BCE acted to subvert the existence of the Catalyst Proposal by not disclosing it to their shareholders as required by securities law, thereby avoiding having to explain their reasons for not recommending it to shareholders.

BCE also sought to prevent Catalyst from intervening before the CRTC public hearings of February 25, 2008 in a letter to the CRTC dated January 4, 2008.

The proposed sale of BCE to private equity is the result of a process in which market forces were deliberately suppressed by BCE, thereby preventing the optimal solution from occurring: the Catalyst Proposal.

Conclusion: The CRTC should deny the private sale of BCE to Teachers’ and instruct BCE to properly disclose the Catalyst Proposal to its shareholders for their consideration as the optimal outcome for shareholders, all other stakeholders, and therefore the CRTC.

Complete information about the Catalyst Proposal and the submissions by Catalyst Asset Management to BCE and to the CRTC are available at: www.canadiansolution.ca or by calling 647-505-2224.

The ethical nub of the issue: making widows and orphans of BCE’s shareholders

By Brent Fullard, Catalyst Asset Management

On December 13, 2006, Canadian Parliament, by way of Order in Council, instructed the Canadian Radio-television and Telecommunications Commission (CRTC), to commence regulating the Telecommunications Act and Bell Canada Act in a manner that pays greater regard to market dynamics and to:

“rely on market forces to the maximum extent feasible”

Unfortunately, it has come to light that the chosen outcome of BCE’s recent public auction, namely the proposed leveraged buyout of BCE by a consortium of private equity buyers led by Teachers’, was not the product of such a pristine process, known as “letting free markets prevail”.

Quite disturbingly it has come to light that the process was flawed in this essential regard.

It has also come to light that the standards by which the purchaser holds itself to, under such circumstances, were also not adhered to, as a consequence of BCE’s conduct. It is also become evident that there were parties who benefited immensely from certain outcomes and not others, including affiliates of certain directors, senior management. and their advisors.

This leads us to the ethical nub of the issue:

The proposed sale of BCE to Teachers' fails the very standards by which the CRTC has been asked to regulate the Telecommunications and Broadcasting industries, in so far as (but not limited to):

An arbitrarily truncated subset of market forces (i.e. bid groups of Teachers’, KKR and Cerberus, to the exclusion of Catalyst), does not constitute reliance on market forces to “the maximum extent feasible” or, therefore, the public good, especially given that that subset of arbitrarily determined market forces includes only those possible outcomes that serve to maximize the collateral benefits to those responsible for the conduct of the public auction process and responsible for determining which proposal would ultimately be put to a shareholder vote.

This is a matter that should be of grave concern to BCE shareholders, bondholders, Canadian securities regulators and the CRTC, since the Teachers' deal was an outcome whose notional value of $42.75 represented an offer which was highly conditional in nature requiring, successful oppression of bondholders’ rights, approval by the CRTC and successfully raising over $26 billion of junk bond debt, a major challenge under any market conditions.

Meanwhile the Catalyst Proposal. which BCE has attempted to subvert by not disclosing it to its shareholders (nor its reasons for rejecting it) and and by objecting to Catalyst’s intervention before the CRTC, promised to deliver a trading value of $42.50 to $52.00 which equally importantly, was completely unconditional, requiring only shareholder approval.

Put in everyday terms, what kind of real estate agent would recommend to their client that they sell their home under scenario 1 at a price of $42.75 with major conditions attached including subject to financing when Scenario 2 entails selling your home for the equivalent of $42.50 to $52,00, with no conditions attached?

How pleased would you be if your agent did not inform you of the existence of the second alternative known as scenario 2? How pleased would you be upon further learning that Scenario 1 was the scenario that earned your agent the highest commission, whereas Scenario 2 resulted in a significantly lessened commission?

This is exactly what is happening with the denial by BCE of the existence of the duly delivered Catalyst Proposal and its attempts to subvert the Catalyst Proposal cited above. Except in this case the real estate agent agent is the Board and Senior Management of BCE.

Where are the securities regulators on this rip off in the making? Who is guarding the hen house?

Afterall, BCE is widely known as Canada’s most widely held public company. The quintessential “widows and orphans" stock. That term is about to take on a new meaning, if the securities regulators fail to act, namely Autorité des marchés financiers (AMF). Or failing them, the OSC or the SEC.