Wednesday, June 15, 2005

Doer Government Circling Wagons on Crocus

Manitoba is living through the biggest provincial investment scandal ever. The socialist NDP government of Gary Doer mismanaged a provincial investment fund and ignored all the warning signs along the way. Winnipeg lawyer and political activist Jeff Niederhoffer weighs in with some insight into this socialist boondoggle.

How the mighty have fallen! Crocus Investment Fund, a Manitoba-based investment fund that was once an industry leader, is now a brand name synonymous with plummeting share values, managerial incompetence, alleged criminal conduct, and pending litigation.

If Auditor General Jon Singleton’s recent report on Crocus has done nothing else, it has provided a behind-the-scenes glimpse into the anarchy and ineptitude that until recently characterized the management of the fund. Of course, as the report also makes clear, there was plenty of anarchy and ineptitude to go around. The provincial government was empowered by statute to supervise the fund – but despite warning signs that Crocus was in trouble, the Doer government made no attempt to investigate, did not even make the most basic inquiries.

And there were certainly ‘warning signs’. Over the past four years, at least, the provincial government received a steady drumbeat of warnings about Crocus from officials in the Industry and Finance Departments. In 2001, the Industry Department provided the government a detailed analysis of Crocus’ cash-flow problems, going so far as to predict that the fund would eventually face a liquidity crisis. And in January 2002, an official in the Finance Department independently wrote an email memo warning of possible mismanagement at Crocus. On top of all this, at some point in 2002, then Industry Minister Maryann Mihychuk had been briefed by Industry Department officials as to the difficulties they were having in monitoring the fund. Throughout 2002 and 2003, as Mihychuk now recalls, she and her staff had repeatedly discussed the need for new legislation to improve provincial monitoring of Crocus.

In the face of these warning signs, the Doer government’s response was to do nothing. Tory Industry Critic John Loewen has criticized the Doer government on its failure to monitor the fund. “Quite clearly here, we see they had warnings,” Loewen rightly notes. “And for some reason which they’re going to have to justify, they refused to act.” Loewen speaks for a good many Manitobans; he is certainly reflecting the concerns of the nearly 34,000 Crocus shareholders who have seen their investments decimated. Manitobans have every right to wonder why the government dropped the ball in terms of its oversight responsibility.

It is difficult to believe, as Doer & Co. want us to believe, that these warnings about Crocus never made it beyond a handful of bureaucrats and an Industry Minister. It is laughable to suggest that Mihychuk, as her department was making plans to draft legislation, would not have brought Cabinet up to speed. Nevertheless, past and present members of the Doer government maintain that Cabinet was collectively out of the loop, and, in particular, that Premier Doer was never informed. This is, to put it mildly, difficult to swallow. What is far more likely is that Premier Doer’s Ministers and advisors, much like ‘the President’s Men’ of three decades ago, are instinctively hunkering down. They are circling the wagons. In the final analysis, Doer’s ‘men’ seem prepared to be the quintessential loyal soldiers who will do whatever it takes to protect their boss – and, not incidentally, their own political futures.

Jeff Niederhoffer is a Winnipeg lawyer and political activist.

0 Comments:

Post a Comment

<< Home