Confessions of a Carpetbagger

Dick Schmeelk of CAI a private equity fund was a real shooter in his day, You could even say he was the Dick Schmeelk of his day. I was introduced to him back in 1987 by Ed Clark shortly after Ed had joined Merrill Lynch from his failed foray in Ottawa as the architect of the NEP (National Energy Policy). Ed Clark was the Mark Carney of his day. NEP has since become the TFP.

Ed introduced Dick Schmeelk to me by joking about Dick having a virtual lock on all Ottawa’s big deals. Ed would know. Dick was with Salomon Brothers then. He has since moved on to the even more fertile pastures afforded him by Canada’s New Private Equity Government in the world of, you guessed it, Private Equity. He helped found CAI Private Equity in New York in 1989 and his private wealth probably rivals that of his best client: Canada.

Here are his gleeful comments on the enormity of the opportunity for private equity created by the Conservative government's slaughter of Income Trusts. This event-driven buying situation was created by Harper and Flaherty, either knowingly or unknowingly. They have handed Schmeelk and his peers in Private Equity the opportunity of a lifetime, as result of artificially devaluing and crippling Canadian income trusts for some yet unproven reason. Apart that is from displacing average Canadian investors in favour of the Schmeelk’s of the world and tranfering $35 billion of Canadians wealth in the process. Try to read between the lines when viewing his video confession.

Oh by the way, the government agrees with Dick’s bottom line assessment. If you were wondering whether our government knew this outcome would occur, just get a load of this internal Finance Department Memo of October 2006. The circle of guilt in tightening like a noose. Soon we hope to be well worn by these most deserving uncivil servants and their masters.

Limited evidence suggests

“Limited evidence suggests”. That was the not so famous enjoinder that accompanied everything that Bank of Canada Governor Dodgy David ever knew or said about income trusts. Not knowing seems to be a realm that Dodgy David prefers to occupy as he resisted at every opportunity to discuss with me the findings of the exhaustive study that was performed by PricewaterhouseCoopers in December 2006 about the impact of income trusts on the economy. Much like the concept of entropy, which argues that nature has an inherent tendency to devolve into the state of maximum randomness, David Dodge actually seeks out the state of least knowledge. Sort of like living your life as a series of interest rate forecasts.

Now we are entering a new realm at the Bank of Canada. Gone will be the days of “limited evidence suggests” as we now enter the world of Mark Carney’s “no evidence suggests”. This realm could just as easily be called the ‘fabricated evidence suggests” since it was Mark Carney and Mark Carney alone who thought it was okay to leave out the 38% of taxes collected by the government from income trust distributions, in his fraudulent and highly intellectually corrupt scheme to rip off 2.5 million Canadians from $35 billion of their life savings, for a whole host of reasons, none of them good. No evidence took the form of 18 pages of blacked out documents that constituted Mark’s idea of accountability and transparency. Central Polit Bureau style.

Speaking of Russia, Mark Carney honed this skill of ripping off large numbers of people from their rightful financial entitlements when he worked in the Moscow office of Goldman Sachs assisting a handful of today’s billionaire Russian oligarchs to rip off Russian citizens of their state’s assets in a process known as privatization. Having served his time in Moscow, Mark then made his way back to Canada to work for Goldman in Toronto to assist Canadian and US clients in cross border M&A and financing activity. It was quite unfortunate for Mark that he arrived at a time when it seemed that every other financing being done was an income trust new issue underwriting that required the services of no US dealer , since it was Canadians buying Canadian through Canadians. This must have been a terrible event in Mark’s young life and he obviously vowed to do something about it. He then trecked off to Ottawa to work for 10 cents on the dollar and execute his grand plan to reassert Goldman Sach’s dominion over Canadian investors and issuers. If not, why would he have been the person behind eliminating the 15% withholding tax on leveraged buyout loans, or the interest deductibility on foreign acquisition debt or the 10% withholding tax on bank loans. It certainly wasn’t to improve Canada’s lot in life.

Mark’s magnum opus however was the Tax Fairness Plan that was designed to raid seniors’ nest eggs. The rest is history. Welcome to the era of no evidence suggests. I’m sure Mark has more work to do in the days ahead under his 7 year mandate. Are BoC Governors subject to Parliamentary reviews as Fed Chairmen are in the US? Can lowly citizens participate? Seven years is along time. Look what Mark has accomplished in less that half that time.

Before I go I would like to offer Canadians an alternative era to live under. That era would be known perhaps as the “subsequent events are irrefutable” era. Here’s a summary of the havoc wrecked to date on Canadians by Mark’s handiwork. Almost makes you feel like its Moscow in the spring. Or Abu Dhabi in the fall. Either way, entropy will soon have its way on Canadians meagre lives if something isn’t done to halt this out of control train wreck in progress.

Income Trust Takeover activity to date, excluding BCE for $32 billion
The income trust takeovers below are categorized into “It’s not my fault” domestic pension fund takeovers, and “it’s not my fault” foreign private equity takeovers. The results are however the same. Tax leakage and the crowding out of the 70% of Canadians without pensions in favour of those civil servants, MPs , Senators and others with pensions and those who reside in foreign tax jurisdictions, like BCE”s new owner Madison Dearborn’s Madison Dearborn Capital Partners IV, L.P incorporated in Luxembourg (or the like).

That's
$22.51 Billion in takeovers so far.

And $9.78 Billion in deals pending.

Treating the symptoms. Two Jims in a Jam!

This is almost too choice for words. If Abu Dhabi is the nation of Islam, then Canada is the nation of the misled. Here we have Jim the Apprentice about to impose restrictions on a situation created by Jim the Major Screw-up. That is to prevent Abu Dhabi Energy from acquiring Prime West Energy on the basis that Abu Dhabi is a state owned entity.

That's odd. Wasn't Abu Dhabi also a state owned entity back in May of this very year when it acquired Canadian resource company Northrock Resources from Pogo for $2 billion?

This recent policy proposal is the policy equivalent of a battlefield promotion. Let’s treat the symptoms as best we can in a rudimentary fashion and deal with the real problem once we get the wounded soldier back to the field hospital. I have news for Jim the Apprentice and Jim the Major Screw-up, forget about band-aid solutions to deal with the symptoms, it’s time to acknowledge your self inflicted gunshot wound and treat the disease rather than merely its symptoms.

The disease is ill-named Tax Fairness Plan.

It's not like you weren't warned -- repeatedly. The Tax Fairness Plan is anything but fair, in fact it only serves to tilt the playing field in favour of foreign corporations, foreign private equity and large pension plans. The TFP only served to create an event-driven risk arbitrage that others whom you have exclusively favoured are more than happy to exploit. It’s like $35 billion of unclaimed money sitting on the roadside.

So the mindless Apprentice solution will be to treat the symptoms but not the cause. Brilliant.

If state-owned entities have now become the basis for concern, then how do you or anyone know that Madison Dearborn or Providence Capital are not fronting for state owned entities in their purchase of BCE? Did it even occur to you to ask?

Private equity firms are black boxes. Nothing about whose capital they manage is known or reported on. Nor is anything reported as to what they presently own or whom they are affiliated with. Lest anyone think this is a far-fetched concern, let me point out that China made a $3 billion investment in Blackstone (the firm on whose board Brian Mulroney sits). You can be quite certain some of that money will find its way into Canada. Perhaps all of it will.

But let’s get back to Abu Dhabi and its May 2007 purchase of Northrock and recently announced purchase of Prime West. One was allowed, the other apparently won’t be. A U.S. firm (Pogo) can sell its Canadian Energy firm (Northrock) to Abu Dhabi Energy without a peep from Canada’s New Government, but now Canadian pubic unit holders of Prime West will be denied this value-maximizing option.

Canada's New Government must truly hate Canadian trust investors with a passion. It could hardly be more obvious. This government has no concern for Canada’s economic sovereignty. They care only about the egg on their face from their horrific income trust policy. That’s the disease, everything else in symptomatic.

Flaherty was warned by numerous financial experts and some in the press about the symptoms that would be unleashed in the few short days after his surprise Halloween drive by. He didn’t listen. He didn’t acknowledge. It appears he didn’t even care.

We subsequently learned from the "honorable" Finance Minister that it wasn’t even his fault. Truly pathetic on all fronts. Take a bow. Had he consulted with the public and affected parties beforehand as the Liberals wisely did, he would have known the damage he was about to wreck on investors, our tax base, our economy and our capital markets. Unfortunately, he was too self important to consult or even heed our subsequent warnings. The Finance Minister actually thought he knew what he was doing, after all it was the very captains of Canadian industry who put him up to it. That must have been a real heady experience for Harper and Flaherty, Never before had they experienced such attention. How could they say no? Impressionable losers!

Meanwhile as we said at the time of the Northrock sale by Pogo, this is an asset that would have normally fetched maximum disposition dollar through an income trust IPO which would have seen taxes maximized to our government and would have been the continuation of a long trend over the least ten years to repatriate Canadian energy assets from foreigners, courtesy of income trusts and investors appeal. Western Oil Sands was another such wasted opportunity brought about by our government which saw this asset go into the hands of foreign big oil rather than Canadian retail investors.  

And now this government of ours is trying to parse the issue as being between buyers who are state-owned and buyers who are, on the surface of it, not. That only defines the issue on the periphery. It is an intellectually weak way of parsing the issue and avoids confronting the true causal reality.

This government is only concerned about saving face, not in saving our country’s economic sovereignty. To wit: the SPP. They realize the political embarrassment that this $5 billion Prime West sale represents in terms of revealing the horrific Tax Fairness Plan and all its consequences for what they truly are. That’s their only concern. Hence the band aid solution.

This problem is festering, Our predictions are being realized, sooner than even we imagined. BCE and Prime West are the two book ends of a grossly flawed policy. Loss of sovereignty and the loss of $7.5 billion in annual taxes are only two of its inevitable consequences. The other consequences are the effects on people lives which seem to be of no concern to this government, The open wound has gone gangrenous. Time for surgery. Amputate the Tax Fairness Plan in all its festering totality, and let’s get on with life. Life is tough enough as it is without the need for  government imposed self inflicted gun shot wounds that go by the fraudulent name of tax fairness. If that’s fairness, we need less of it, or give me a new government (lower case). Ditto the NDP, and Jack in the box, without whom we wouldn’t be having this conversation or loss of economic sovereignty and tax revenue. He’s got his mind on bigger matters of economic significance in the global economy. ATM fees.

Medic!

The enemy within

Meet Jim Flaherty, the enemy from within. Canada’s New Government© has been utterly co-opted by the interests of foreign private equity, foreign big oil, corporate Canada, and oh yes, the Government's own pension plan. We said so from the beginning. When will the press acknowledge reality? $2 billion in annual taxes to Ottawa have been lost due to the "unintended consequences" arising from so-called Tax Fairness Plan?

Perhaps some time before we totally concede economic sovereignty of this country and before we incur the full $7.5 billion loss in annual taxes someone in the mainstream media will connect the dots. We can only hope.

We also correctly predicted that TAQA would buy the trusts after it initially set foot in Canada a mere two months ago. Today they announce the $5 billion acquisition of PrimeWest Energy Trust.

Our country is run not by leaders but by misleaders. Harper is nothing but a follower, a shill for offshore economic interests.

We wrote an editorial on this circa March of this year for the National Post in response to an article written by Diane Urquhart in that same paper. She held the opposite view about the potential "gutting out” that would result from Flaherty’s misguided policy. She said we were being alarmists. Well, now that the horse has bolted, and the barn door is still wide open, does it not seem time to sound the alarm?

Interestingly, after agreeing to publish our op-ed piece as a rebuttal, editor Terry Corcoran renegged saying that he had “checked with some people” and that Diane was “more right" than me. Who did he check with, the Department of Finance? That unpublished rebuttal is contained below in a piece entitled “Independent Analyst is unencumbered by the facts.”

In the news today is the following. Another in a long list of takeovers that coincided with the enactment of the Trust Tax Grab. Coincided, but by no mean a coincidence.



September 24, 2007
PrimeWest Energy Trust Agrees to C$5.0 Billion Sale to TAQA Subsidiary
CALGARY, ALBERTA--(Marketwire - Sept. 24, 2007) - PrimeWest Energy Trust (TSX:PWI.UN) (TSX:PWX) (TSX:PWI.DB.A) (TSX:PWI.DB.B) (TSX:PWI.DB.C) (NYSE:PWI) ("PrimeWest" or the "Trust") is pleased to announce that it has entered into an agreement (the "Arrangement Agreement") with 1350849 Alberta Ltd. ("Purchaser") and TAQA North Ltd. ("TAQA North"), both of which are wholly-owned subsidiaries of Abu Dhabi National Energy Company PJSC ("TAQA"). The Arrangement Agreement provides for the acquisition by Purchaser of all of the issued and outstanding trust units of PrimeWest (the "Units") and all of the issued and outstanding exchangeable shares (the "Exchangeable Shares") of PrimeWest Energy Inc. for a cash consideration of C$26.75 per Unit, all pursuant to a plan of arrangement under the Business Corporations Act (Alberta) (the "Arrangement"). The cash consideration payable for the Exchangeable Shares will be calculated on the basis of the exchange ratio in effect at the time the transaction is completed.

Using a Canadian to U.S. dollar exchange rate of 1.00, this cash consideration equates to US$26.75 per Unit. The actual U.S. dollar equivalent cash price per Unit will be based upon the Canadian to U.S. dollar exchange rate on the effective date of the Arrangement.

The aggregate value of the Arrangement, including the debt carried by PrimeWest and its subsidiaries, is approximately C$5.0 billion on a fully diluted basis. The consideration per Unit pursuant to the Arrangement Agreement represents a 26.5% premium over the 30 day weighted average trading price of the Units on the Toronto Stock Exchange up to and including September 21, 2007.

----

Too dangerous for the National Post? Here's our op-ed piece that they invited us to write then refused to publish.

Independent analyst is unencumbered by the facts

Yesterday’s opinion piece in this paper featured an article by Diane Urquhart that started by stating: “Brent Fullard of the Canadian Association of Income Trust Investors is wrong to think that Ottawa’s trust tax threatens to sell out Canada.” She then goes on to incorrectly cite various US tax matters to make her flawed argument.

Proof can often be found in the pudding. Here is the pudding that Finance Minister Flaherty is cooking up for Canada as a result of his “hollowing surprise” to tax income trusts at a rate of 31.5%, when he himself acknowledges that the average effective tax rate of Canadian corporations is only 6.2%, and for many like BCE, it is zero, as it has been for some time.

The announcement of Flaherty’s new tax had the effect of reducing the value of the income trust market by $35 billion overnight, an average of $140 million per trust . For those acquainted with capital markets, this created what is commonly known as an “event driven” buying opportunity, where the value of a publicly traded security artificially trades at levels below its true value for reasons unrelated to the business itself. Foreign private equity managers flush with capital are scouring the world looking for such opportunities. Flaherty has handed them a $35 billion bonanza. By simply acquiring these trusts, private equity managers can instantly recapture this lost value by (1) reverting them to corporate form and pay no trust tax, (2) removing the business from Flaherty’s growth limitations, and (3) funding the acquisition with mostly debt, whose interest as a corporation will be tax deductible in Canada and flow totally free of Canadian taxes into foreign tax jurisdictions. This corporate debt leveraging, not income trusts, will lead to immediate tax leakage.

As to the proof, one need not look too far as there have been no less than seven trust takeouts announced in the last two months and six of them involve offshore buyers, mostly private equity buyers with names like Rain and Harbinger and hailing from as far away as Bombay and Switzerland. These six deals amount to $5.5 billion, however they are only a harbinger of what is to come if this legislation is passed into law, as then the torrent of takeovers will freely rain down upon the once vibrant income trust market, leading to the inevitable hollowing out of this important sector of the economy and inducing the very tax leakage outcome the policy was ostensibly intended to avert. Good policy? Unintended consequence? Too late to change?

Concerning Diane Urquhart’s arguments about not having to worry about US takeover interest in the Canadian income trust sector, in particular our energy trusts, her logic is only as good as her knowledge of US tax law. The mistake that she makes is her failure to acknowledge is that certain U.S. IRAs are tax exempt, not tax deferred like RRSPs. That’s why the U.S. taxes income received from MLPs held in otherwise non taxable IRAs. In contrast, the Canadian government does indeed collect taxes from RRSPs and therefore Flaherty’s tax amounts to the double taxation of RRSP accounts holding income trusts.

Diane also neglects to mention that these same tax exempt accounts also cannot claim the “favourable” withholding tax credit that taxable U.S. accounts can claim

With respect to the “special” tax that is paid by IRAs owning U.S. flow through entities, she again only mentions half of the story and ignores the rest. Distributions paid by flow through entities to tax exempt accounts are generally considered unrelated business taxable income (UBTI) and this income is subject to federal income taxes. But there is a $1,000 annual UBTI exemption. And more importantly, U.S. tax amendments in 2004, mean mutual funds can now own flow through entities without penalty. Tax exempt accounts can own shares of a mutual fund without encountering UBTI issues.

Therefore: (1) you can’t compare all IRAs to RRSPs because some have completely different fundamental tax treatment, (2) you can’t say all U.S. investors have favourable tax “incentives” because many of those “incentives” are not available to tax exempt accounts, and (3) you can’t say that tax exempt accounts are treated similarly to RRSPs after the proposed changes because U.S. tax exempts have a $1,000 annual exemption for UBTI and they can own MLPs indirectly through mutual funds.

And finally (4) to the extent that the intricacies of US tax code have any bearing on the decisions Canada makes, I hope Diane Urquhart is not dispensing her advice to any decision makers in Ottawa on this matter which affects Canadian economic sovereignty.

Game On

Ostensibly the 31.5% income trust tax and the double taxation of income trusts is all about “leveling the playing field” between two business models. Strange then, that so many other business models have been conveniently left out of this exercise: Capital Trust Securities, Private Family Trusts, Private Income Trusts and Private Limited Partnerships to name a few.

Income Trusts that play in the Large Pension Fund League are also excluded from this exercise for some unknown reason. They along with their team owners (governments and unions) are effectively immune from this tax. Be that as it may, it is quite revealing that a sports analogy has been used to describe the goal of this policy, as if to suggest fair play is the governing principle. To get insight into whether there is any fairness in this game of theirs, we need only evaluate the means that they have used to achieve their goal.

Everyone involved, from the “Players” on the ground to the media cheerleaders on the sidelines deserve game misconducts and league suspensions.

From the very outset, this game has been characterized by high sticking, elbowing and no end to tripping and checking from behind. Team Owner Stephen Harper and Captain Jim Flaherty should be the co-recipients of  the Todd Bertuzzi good sportsmanship award. Unfortunately this will even sully Todd’s fine reputation for good sportsmanlike conduct.

Now on to the highlights:

(1) Blind-sided checking from behind Promised never to tax income trusts. Opposing team members rushed to hospital, still suffering nine months later. No apology, No remorse. Still maintain it was the right thing to do. Wouldn’t change a thing.

(2) Tripping Provided 18 pages of blacked-out documents as "proof" of tax leakage. The referees saw this offense in plain daylight, but ruled it conforms to the new league rules of "transparency" and "accountability". Cheerleaders in total denial. Claim they want to remain neutral as they throw their pom-poms in the air. Neutral?

(3) High Sticking Stacked the Public Hearings and employed all of the dirty tricks contained in the team’s 200 page Dirty Sportsmanship Manual including being hostile to the witnesses, fawning over government witnesses and other attempts to pre-judge the outcome and control public perceptions through a compliant media, whose coverage was equally biased and orchestrated. (Note: this matter has been referred to Canadian Broadcasting Standards Council)

(4) Slashing Advanced false statements and theories such as the supposed non-existence of the US $480 billion Master Limited Partnership market, the tax leakage impact of BCE’s sale to Private Equity via a leveraged buyout ( costing the government $793 million PER YEAR, enough to build several new stadiums) and other falsehoods consistently promulgated by the Goon Squad, but never supported by any facts.

So there you have it sports fans. This is our government’s idea of Fair play, as they pursue any means to achieve their ultimate goal of making Canada a better place for Manulife, PowerCorp, their own private pension plan and of course US private equity. The final score?

Income trusts: Minus 31.5% (resulting in the loss of $35 billion and an essential investment choice in the future)

Corporations Minus 6.2% (average corporate tax on an apples to apples comparative basis)

Great, in less than four years we’ll be back to just one team on the field. The sluggish and coddled corporations of Canada who stifle competition by taking advantage of an ignorant or duplicitous government. With no competition they’ll always be sure to win..........that is, until the world comes knocking on our door. Sorry Jimbo, that’s the big league. That’s when we will wish we had allowed this new and highly competitive low cost form of capital to flourish and not die prematurely as the result of his totally false diagnosis. By the time most people come to this realization, the whole sector will have been carried off on a stretcher, and our teams moved south of the border.

Tim Hortons anyone?

The lambs lie down on Bay Street

Personally, I am presently ashamed to say that I worked on Bay Street for the better part of the last 20 years, as I watch Bay Street tacitly allow the 2.5 million lambs who bought income trusts be taken off for slaughter. For lambs they truly are. These are honest hard working people, the backbone of our country, people who were deluded by the highly opportunistic falsehoods of their Prime Minister that their investments were safe from any future capricious acts of HIS government. Harper’s government actively encouraged people to believe this was an asset class that would be free from cavalier fiscal changes. All of that proved to be an outright falsehood and blatant lie.

Even worse, than the original sin of misleading people was the vastly greater sin of the fabricated reasons why the promise had to be broken. There’s no two ways about it, every segment of the Canadian society would have been better off if BCE had become an income trust rather than suffer the fate that ensued. We were predicting that inevitable fate the very first week of November 2006, so to say it wasn’t foreseeable would only be the statement of a highly incompetent or dishonest person. This is where the sin of omission of Bay Street comes in. The enormity of their silence carries with it the profound guilt of similar acts of silence of the past. To say they didn’t know better or know at all is a totally vacuous defense, both professionally and morally. Who better than our five chartered banks to know about finance? Who better than our five chartered banks to ascertain the truth about the false proposition known as tax leakage? Who more than our five chartered banks would want to uphold the integrity of our capital markets in the eyes of investors, both domestic and foreign? Who more than our five chartered banks would want to preserve this unique and vibrant ”made in Canada” market that brings Canadian investors (their clients) together with Canadian (also their clients), without the need for the Goldman Sachs’s?.

The banks’ complete silence on this matter of considerable enormity (a loss of $35 billion in Canadians’ life savings) has brought disrepute to the Canadian financial system and the faith we perhaps naively place in these people and their institutions. This is wholly unacceptable. They have taken sides on this matter by their profound and conspicuous silence. That is shameful to the extreme. Some like TD have totally crossed the moral divide by saying that they prefer the “certainty” that Flaherty’s new tax has brought to the market. Don’t kid yourself, if they liked certainty, they would have loved the certainty that Harper’s promise brought. What they’re saying is that they love the policy. I’ll let you figure out why. The “league table” below might help explain their totally self serving agenda.

Before condemning Bay Street completely, it needs to be made absolutely clear that there are a handful of analysts who have not been shy about the outright falsehoods of this government and the consequences that these falsehoods will bring to the financial security and economic sovereignty of our country. But then, none of them goes by the name of Nixon, Clark ,McCaughey, Waugh, or Downe, do they? Think of these latter individuals as Slaughterhouse Five. Where banking can be friendly. The clientele merely lambs.

Apparently, I am not alone in these views. Here is what Seymour Schulich had to say yesterday on BNN:

“No disrespect to Bay Street, who made billions of dollars selling these things and put them in all their clients’ accounts,. And abandoned everybody. No disrespect to those people. There are two and a half million people who own these things” He then went on to say how the Conservatives are throwing away the upcoming election because of this issue.

Lets examine Seymour Schulich’s statement about Bay Street:

(1) 2.5 million Canadians who own these things? Correct
(2) Abandoned them? Any one hear a pin drop yet?
(3) Made billions? Here are the underwriting fees from income trust new issuance for the last 10 years ending Halloween 2006. This excludes secondary trading commissions which would be equally immense:

CIBC $1,332,250,000
RBC $948,200,000
Scotia $749,900,000
BMO $526,900,000
TD $349,500,000
National $200,600,000

Total $4,107,350,000

Unlike Seymour Schulich, I do have considerable disrespect for these people in charge.. It’s time that the financial leadership of this country show some leadership and moral back bone. It is incumbent on them to act and not to cower in silence. That is unacceptable. If they keep up this of Silence of the Lambs routine we’ll know them for who they truly are. Ruthless, voiceless, apologists as they tacitly endorse the policies of Boutique Jim Flaherty to the detriment of all Canadians who previously had faith in their major institutions. I am sorry to report. There aren’t sides to be taken when it comes to the truth. The truth in this instance is a discernable fact. !8 pages of blacked out documents is not my version of the truth. Question: Why have you allowed it to become yours? Bad endings, by definition, start with bad beginnings. Don’t say you weren’t warned.

New Democratic Poodles

Poodle was the term aptly coined by the British press to excoriate Tony Blair for his blind faith support of George Bush’s pretext for the invasion of Iraq, namely the existence of WMD. The British press has a way with words. It also has a way with investigative journalism. Only in Britain does it appear there are investigative journalists. Pity. Tony Blair’s blind faith belief in WMD was revealed by the British investigatove press in the Downing Street Memo affair (www.downingstreetmemo.com) which revealed the pact with Bush was based solely on blind faith.

The Canadian political scene is not without its own lap dogs. In fact there is an entire party devoted to being subservient and wholly compliant lap dogs. It’s known as the Newly Duped Poodle party of Canada. Neutered Doggie Party of Canada would be an equally descriptive name, since the NDP are seemingly emasculated in their ability to do any investigative research of their own and will glom onto any "information", no matter how false, if it supports their political dogma (poodle dogma that is). A perfect example was when Finance Critic Judy Wasylycia-Lies went off in a tirade in the House of Commons about how CAITI had supposedly donated $282,000 to the Liberal Party over the last 13 years, even though at the time CAITI had only been in existence for 4 months! Oooops! Stepped in that one didn't we Judy? Check your facts much? For the record, CAITI has a strict policy against making any political contributions whatsoever, directly or indirectly. Meanwhile, what does the concept of "due diligence" actually mean to the NDP?

This is only one example of Poodle Judy's made up facts and broad sweeping assumptions in her nonsensical pursuit of dogma. Her fallacious argument of income trusts being “Ponzi schemes” comes to mind. The biggest ponzi scheme is however the one of her own making and is contained in the many letters that her fellow Poodle Party members are sending to the vast number of concerned constituents who write to them in the belief that the NDP still represents the interests of the little guy. This form letter reads. “Dear constituent: I have spoken with Judy Wasdlylycia-Leis, our party’s Finance Critic, she is confident that the government’s estimates of future tax leakage are accurate.”

Confident? On what possible basis? Poodle logic or hard facts? Due diligence or doggie do? Given that the assertion of tax leakage is the central rationale for the double taxation of public income trusts (however no other trusts, including those public trusts being opportunistically purchased by pubic sector pension which for then only are exempt from this punitive tax), and given that 2.5 million Canadians have lost $35 billion in their life’s savings and an essential investment choice going forward,

I have one question for Jack and Judy: On what basis? Blind Faith? Wishful thinking? Heel boy? Does the NDP believe in an open and transparent government or not? Was it not the NDP that sought an investigation into the alleged leak of information in September 2005 that had the effect of moving the market in the hours before Goodale’s income trust announcement.? Judy Wasylycia-Lies was all over the RCMP, the SEC and the OSC demanding an investigation into this one day trading blip when the Liberals were in power. Now that Canada's New Masterful Government (TM) hold the leash, she’s in total lap dog mode. From pit bull to poodle. Who neutered Judy,and why? Who in the end was the sole alleged guilty party who was charged by the RCMP? Correct, Serge Nadeau, Director General of Tax Policy. Face it Judy, Ottawa has its fair share of corrupt bureaucrats in high places. Not to mention intellectually corrupt politicians. Is it not possible that these same corrupt folks are the ones with something to hide behind the 18 pages of blacked out documents? Isn't your innate sense of political curiosity aroused just a little, when these same bureaucrats send letters requesting these blacked out documents be returned immediately?

Jack and Judy: what are you people made of and what do you really stand for? So far your performance is an abysmal farce. Do you really want to go down in history as the two top dogs in Canadian politics, Poodle division?

Enjoy it while it lasts, as you're sure to be dog meat in the coming election. We know that it was your new masters in Corporate Canada who threw you this bone. However, Canadians don’t need lap dogs in office. Lap dog politicians like the two of aren’t man’s best friends. Now go lie down. You've done enough fetching to last a lifetime. Measured in man years