Caisse losses focus Quebec's anger

There are good reasons to object to Michael Sabia's appointment

CDPQ - Où va Michael Sabia?

"How the hell did we get here?" That's the question he Daily Show's Jon Stewart blurted out angrily at Jim Cramer, host of CNBC's Mad Money, about a crisis for which no one in the business world seems willing to stand accountable.
This week former Bank of Canada chief David Dodge predicted Canada and the world face a long and deep recession. Down south, the anger focuses on those fat bonuses greedy heads of enterprises like AIG paid out, rewarding incompetence. Yesterday in France, in a rare move, private-sector workers joined unionized ones to march against mounting layoffs and their government's inaction.
In Quebec, the anger targets the Charest government. Many feel they were lied to when it swore until recently they'd be no deficit, no recession, or that it knew nothing of the colossal $40-billion the Caisse de dépôt et placement lost in 2008.
The second target is the way the Caisse was managed. Out of this loss, at least $10 billion resulted from mismanagement. But former CEO Henri-Paul Rousseau says he knew nothing about the risks of holding $13 billion in toxic commercial paper, or even how much the Caisse had. Last year he walked away with a $380,000 "transition" to tide him over as he headed for a multimillion-dollar salary at Power Corp.
Last week, La Presse Affaires revealed that the managers of Coventree, a Toronto firm that sold much of that commercial paper in which the Caisse was a major shareholder, also paid themselves $9.2 million in salaries and bonuses in 2007 and 2008 and just handed a $1-million goodbye bonus to its outgoing director Dean Tai.
Former Caisse board members Claude Garcia and Alban D'Amours also say they knew nothing. Which all raises the question: Who the heck was minding the store? Many also fell off their chairs when they learned that in the past few years, the Caisse went from investing 46 per cent of its assets in Quebec to only 17 per cent in 2007.
Then came the nomination of Michael Sabia as the Caisse's CEO, which instantly provoked a chorus of criticism from all quarters - from Quebec Inc., the leftist Québec solidaire, the right-wing Action démocratique du Québec, sovereignist and federalist opinion leaders, political and financial columnists, former premiers, and former heads of the Caisse.
One reason is that Sabia's track record at BCE is controversial at best. At his press conference last Friday, he also confirmed that he doesn't favour increasing the Caisse's investments in Quebec.
The second reason is process. In 2004, the Charest government changed the law governing the Caisse and asked its board to pick the CEO. But with a chairman of the board named only a week before, half of the board members still unnamed and no other candidate than Sabia having been interviewed for such a crucial post, it became obvious that Sabia was mostly the premier's pick. This was the real "politicization" of the Caisse.
The third reason is appearance of political favouritism. Sabia comes from the Mulroney-Tory club. He worked at the Privy Council under then boss Paul Tellier, who later took him to CN. Charest's own chief of staff, Dan Gagnier, also worked with Tellier at the time. Even longtime Quebec Liberals are reported to be angry at this obvious Tory connection.
Surely by coincidence, one week before his nomination was made public, Sabia wrote an opinion piece in the Globe and Mail on leadership. Citing the global confidence crisis in financial leaders, it is politicians, he said, who must lead us out of this mess. But for this, he wrote, leadership will matter if it "establishes credibility through honesty" and if leaders have "a plan that shows how actions taken now can help reshape a post-crisis world."
True leaders, he wrote, also need a "special kind of political communication" and "listening is the magic that connects." Anything less, Sabia concluded, is just "low-grade political management trying to stay one step ahead of the electoral sheriff."
Credibility? A plan? Listening? Those happen to be the three qualities many voters don't see anymore in their premier. Ironically, he lacked all three when he named Sabia head of the Caisse.

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