The Reminder is making its archives back to 2003 available on our website. Please note that, due to technical limitations, archive articles are presented without the usual formatting.
Crocus anyone? Readers may or may not know that the purple crocus is the floral emblem of Manitoba, or rather it's the wild crocus which the encyclopedias claim is a pasque flower and really not a true crocus at all. At least 35,000 Manitoba shareholders in the disgraced Crocus Fund plus the government and organized labor heavyweights may wish to see us adopt a different and cleaner floral emblem. The Crocus Fund, was a labor oriented venture capital fund started in 1992 which lured investors with juicy extra tax credits, very appealing for retirement savings. A number of us took a look at it and sought financial advice about the benefits. The word was that it was high risk, not a safe guaranteed fund, which you could not touch for 5-7 years. We passed on the fund (lucky for us), but many ordinary working Manitobans did not and are now in grave danger of losing their retirement investments. Venture Capital Funds are designed to invest in local businesses and industries, those that banks and other financial groups are unwilling to finance. The theory is that they provide jobs and will aid the local economy, the backbone of which is small business. Crocus invested in a lot of well known companies such as Canada Inns National Leasing, The Manitoba Moose, the Winnipeg Goldeyes, and Angus Reid Polling. A board of directors, appointed partially by big labor and the government, is supposed to be in charge of those hired to run, promote and sell the fund, and is supposed to keep them on the straight and narrow under Manitoba Securities Commission rules. What happened? Why is Crocus under damaging attack from the Commission, and especially from the findings of the Auditor-General Jon Singleton, whose massive report has probably been a fatal blow for The Crocus Fund. It is rumored that the fund will be taken over by Bill Watchorn's Ensis, or even an outside Labor fund, unless the scandal causes those funds to lose credibility with potential investors? Apparently no one was minding the store, such the C.E.O. Sherman Kreiner who Singleton said had no investment management background, did nothing about management problems, and did not properly inform the Directors. Kreiner was forced out in early December, shortly before Crocus stopped trading and devalued by $46 million. He remains hostile to the Auditor-General's report even though he can't explain how a $10 million loan from Quebec was reported as an asset. Apparently Kreiner's biggest failure was his inability to control the wild spending of his Chief Investment Officer James Umlah, who among other things spent $1.1 million on expenses. Gary Doer's NDP government received a few body blows from the Auditor-General's report. He accused them of ignoring several "red flags" of warning, including an e-mail to the finance minister way back in 2002, and hinted that the government's appointee on the board must have, or should have, told them about brewing problems at Crocus. They deny any knowledge of the mishandling, but insist that they will follow all of Singleton's recommendations and quickly passed regulations they hope will prevent this from happening again. As we know, Gary Doer is a former labor leader, well acquainted with the high-profile labor members on the Crocus board. It is hard to believe that these members and the government appointee would not inform he and his government of problems at the fund Ñ or did they themselves not know? P.C. leader Stuart Murray dominated the Crocus headlines on June 1st. The Tory leader revealed that in early 2002 at the time of the John Loewen Crocus incident, he had been visited by James Umlah and Crocus vice president Mike Bessey who asked Murray to lay off any criticism of Crocus as the valuations were fine and several Conservative-supporting companies and individuals may withdraw their financial support from the party. The P.C. party at that time was in dire financial straits. If threatened with a lawsuit from such as Wellington West Capital, the broker for Crocus, the party would have been unable to defend the case and worse, as they had no proof of wrongdoing at the time, and no apparent way of getting any. Two weeks before, finance critic John Loewen, then and now a Tory front-bencher, had questioned Crocus management, as he had received allegations of wrongdoing from (as it has just been reported) one Bernie Bellan, a shareholder, who is now leading a class action lawsuit on behalf of the investors. Bellan and John had no real proof, and Loewen was forced to back down, and was humiliated by losing his financial critic's position. John was much derided at the time but has been vindicated by the present events. Who knows what would have happened if Loewen and Murray had persisted in their pursuit of misdeeds at Crocus. With no proof and all the 'heavies' against them, they may have just destroyed their party and still not have revealed the truth. By the way, Wellington West Capital, who pressured Murray and Loewen as Crocus's broker, received money for each share sold by the fund. Who was Mike Bessey? Was he intimidating? Mike and Greg Lyle were brought into Manitoba to run Gary Filmon's office shortly after Gary became leader. Mike was from the East, a hockey player and intellectual, who together with Greg did a fine job in carrying out their duties for the leader and caucus. Greg Lyle told me at the time about Mike's checkered career in hockey, and how he was banned for life from the league he was playing in for fighting, rough play, and intimidating opponents. Greg said the league would have folded if Mike hadn't been suspended. When Filmon became Premier in 1988, Bessey quickly rose to a position of power as Clerk of the Cabinet, really the head of the civil service. Mike left the government in the 1990s for Harvard, earning a P.H.D., and returning to Manitoba to work for a large accounting firm. He then became vice-president of the Crocus Fund. I found Mike a very nice person, but he could be very persuasive and intimidating to some. Sadly, Mike Bessey had recurring skin cancer, dying too young in 2003, and leaving a young family. Gary Doer was almost gleeful when Stuart Murray made his admissions, for it would at least temporarily take the Crocus heat off the NDP. He claimed Murray should have told the Manitoba Securities Commission about the meeting and said he has sent the details to the special Ontario prosecutor. Murray asserted that the 2002 meeting was small potatoes compared to the Doer government's inaction for which they should be held accountable. What about the other Manitoba Labor Fund, Bill Watchorn's Ensis? Bill is a straight-up financial guru with a reputation for honesty and integrity. His union sponsor is an out-of province "white collar worker's union", and the fund is carefully and cheaply managed. Bill notes that last year Ensis spent only $63,000 on travel/ marketing expenses, an amount he claims is still too much. Watchorn also noted that "new government regulations" have been followed by Ensis since its inception. Let's hope that Ensis and other labor funds, which are designed to support local small business, are not fatally harmed by the Crocus affair.
