Jim Flaherty's worst nightmare

Posted: September 07, 2008, 2:47 PM by Diane Francis
Income Trust Debacle, Greed, Canadian Politics


Canada's Finance Minister, Jim Flaherty, has made a number of foolish policy decisions during his tenure and his nemesis, investment banker Brent Fullard, is taking a run at him in this Oct. 14 election. The sparks will fly and Mr. Flaherty had better bone up on his debating skills and go to school on the economics, taxation, forex, stock market and investor implications which he obvious did not do before making two egregious errors:

1. First and foremost, the income trust fiasco (which wasn't necessary and damaged 2.5 million Canadians Conservatives who invest in the stock market; damaged the junior oil sector by eliminating an important player and damaged Canada's taxpayers by sparking a leveraged buyout mania of income trusts. Damage will be long-lasting because the buyers are private equity and foreigners which have borrowed heavily and will write off all the cash flow against debt service costs, thus avoiding taxes for decades.

2. Scrapping withholding taxes to foreigners who are using Canadian-generated cash flow to service their foreign debts. This is a made-in-Goldman-Sachs policy which enhances the hollowing out of Canadian corporations.

Rumors are also that Buzz Hargrove will run against Flaherty in the car-heavy riding, but massive grants to GM may forestall that. Besides, his candidacy might split the vote which would otherwise go to the angry Mr. Fullard.

Here is Brent's press release and contact information:

WHITBY-OSHAWA, Sept. 7 /CNW/ - The Whitby-Oshawa Federal Liberal Riding Association today announces that Brent Fullard will be the candidate for theriding of Whitby-Oshawa, subject to confirmation at a candidates meeting scheduled for Tuesday September, 9, 2008.

Known for his tireless enthusiasm and dedication, Brent Fullard has devoted considerable time on a strictly volunteer basis as the CEO of Canadian Association of Income Trust Investors / Taxpayers, a group he founded to advocate for accountability and transparency from the Harper government and to reveal the government's lies about so-called tax leakage.

In 1979, immediately upon graduation from Queen's University, Brent began work at the General Motors Car Assembly Plant in Oshawa.

Thereafter, he spent over 20 years in Canadian capital markets, recently as Executive Managing Director and Head of Equity Capital Markets for BMO Nesbitt Burns and presently as the Head of Catalyst Asset Management, who were active in their opposition to the junk bond leveraged buyout of BCE before the CRTC and the Supreme Court of Canada.

Brent's experience also covers the Canadian oil and gas industry in the time he worked at Dome Petroleum in the early 80's.

Brent Fullard stated today: "I look forward to campaigning in Whitby-Oshawa against the practices and policies of the Stephen Harper government and outline why I believe Ontario is a great place to live, work and invest, and how we can make it even better."

Brent has been married to Christina for 20 years, and together they have three teenaged children.

For further information:
Brent@JimHadHisChance.ca
(647) 505-2224

Related:
Jim Flaherty challenge: debate income trusts - Diane Francis

Canada's rich guys damage others for profit - by Diane Francis

The injustice goes on: $35 billion in damage was done to small investors because of a tax which destroyed income trusts based on faulty information and a behind-closed-doors campaign by tycoons such as Power Corporation's Paul Desmarais Jr., BCE's Michael Sabia, Manulife's Dominick D’Alessandro and EnCana's Gwyn Morgan. Their lobbying was pure self-interest: Two own insurance companies which directly compete against income trusts by selling annuity products. Sabia and Morgan ran companies which competed against income trusts in the marketplace.

A fix: Tycoons with shlep should register as lobbyists

David and Lorraine Marshall of Ontario are two of an estimated two million Canadian income trust victims and they wrote last year to the Office of the Registrar of Lobbyists to make a formal complaint about Desmarais Jr. and Morgan. Both lobbied hard to destroy income trusts because Desmarais’ Great West Life competes against income trusts and Morgan fought against trusts while a CEO and huge shareholder of EnCana.

“It would appear that Mr. Desmarais lobbied Mr. Harper [about income trusts] on a plane trip to Mexico according to newspaper reports,” wrote Mr. Marshall to Ottawa officials.

“The second person, Gwyn Morgan, stated he went to Ottawa on October 30th and met with Mr. Harper and Mr. Flaherty to convince them to attack income trusts.”

“Are these two gentlemen registered lobbyists? I am respectfully asking that this matter be investigated. If it is determined that rules were broken, I am asking that penalties be applied to the full extent of the law,” he added.
So far, this letter has not even been acknowledged by the bureaucracy. Read the entire article...


Related:
CAITI articles on Gwyn Morgan, Former CEO of Encana

"Michael Sabia dropped an early-morning bombshell on Canadian investors: His company, BCE Inc., was planning to follow the lead of archrival Telus Corp. and transform its storied telephone operations into a $27-billion income trust."

"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."

"Mr. Flaherty and his team had been fretting about the rampaging advance of trusts. They had caught wind of rumours that Suncor Energy Inc. and EnCana Corp. were each modelling trust conversions that could be valued at close to $40-billion, opening the door to mass conversions in the oil patch." The Globe and Mail, November 2 2006

Canada Under Seige: Thanks Harper and Flaherty - Diane Francis

Canadian policies are facilitating the buyout of Canada. Canadian energy trusts are bought with 100% financing borrowed from foreign lenders or entities. Interest payments are made from Canadian cash flow which used to be distributed to trust unitholders and taxable.

The interest payments to foreigners are also exempt from the 15% withholding tax. This means that taxable cash flow has become tax-free mortgage payments to buy energy assets. More...

Related:
Jim Flaherty's Folly