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	<title>IGOPPEthics &#8211; IGOPP</title>
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		<title>SAP and IBM Unit Ensnared in $800 Million Quebec IT Fiasco</title>
		<link>https://igopp.org/en/sap-and-ibm-unit-ensnared-in-800-million-quebec-it-fiasco/</link>
		<comments>https://igopp.org/en/sap-and-ibm-unit-ensnared-in-800-million-quebec-it-fiasco/#respond</comments>
		<pubDate>Wed, 18 Jun 2025 14:18:35 +0000</pubDate>
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		<description><![CDATA[Software company SAP SE and an IBM Corp. subsidiary are embroiled in a C$1.1 billion ($810 million) technology boondoggle that triggered both a public inquiry and an anti-corruption investigation in Quebec. The Canadian province’s Treasury Board President Sonia LeBel also ordered Quebec’s procurement watchdog to conduct an “in-depth analysis” of how the government awards technology [&#8230;]]]></description>
		<content><![CDATA[Software company SAP SE and an IBM Corp. subsidiary are embroiled in a C$1.1 billion ($810 million) technology boondoggle that triggered both a public inquiry and an anti-corruption investigation in Quebec.

The Canadian province’s Treasury Board President Sonia LeBel also ordered Quebec’s procurement watchdog to conduct an “in-depth analysis” of how the government awards technology contracts, she announced Monday. The mandate came after the ongoing inquiry revealed cost overruns, potential conflicts of interest and unexplained contracts for a bungled IT upgrade.

[...]

The Quebec project began in 2017, when the province’s automobile insurance board, the Société de l’assurance automobile du Québec, began modernizing its IT system. SAP and IBM’s LGS subsidiary were lead advisers under an entity called Alliance, and the overhaul was initially budgeted at C$638 million.

The result was SAAQclic, a new platform for booking driving tests and renewing driver’s licenses. It crashed when it launched in 2023, leading to long lines in SAAQ offices and sparking outrage across Quebec, as well as a provincial audit.

[...]

Alexandra Langelier, executive vice president with the Institute for Governance of Private and Public Organizations, said the inquiry is an essential exercise in determining whether the board asked “questions at the right time” and understood the complexity of IT implementations.

Read more [1]

[1] https://www.bloomberg.com/news/articles/2025-06-18/saaqclic-inquiry-sap-and-ibm-unit-ensnared-in-800-million-it-fiasco]]></content>
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		<title>Private market investors neglect risk in rush for returns</title>
		<link>https://igopp.org/en/private-market-investors-neglect-risk-in-rush-for-returns/</link>
		<comments>https://igopp.org/en/private-market-investors-neglect-risk-in-rush-for-returns/#respond</comments>
		<pubDate>Wed, 04 Dec 2024 15:16:42 +0000</pubDate>
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		<description><![CDATA[The recent scandal involving Adani Group and Canadian pension fund CPDQ exposes flagging standards as investors rush for private markets across emerging markets in Asia. [&#8230;] François Dauphin, who leads the Montreal-based Institute for governance of private and public organisations, identifies a concerning trend. He notes the investors&#8217; due dilligence is suffering under pressure to [&#8230;]]]></description>
		<content><![CDATA[The recent scandal involving Adani Group and Canadian pension fund CPDQ exposes flagging standards as investors rush for private markets across emerging markets in Asia.

[...]

François Dauphin, who leads the Montreal-based Institute for governance of private and public organisations, identifies a concerning trend.

He notes the investors' due dilligence is suffering under pressure to deploy capital quickly and achieve returns, often in unfamiliar investment vehicules.

''In recent years, there has been an abundance of capital from private funds or institutional funds looking for private investments opportunities to improve their total returns,'' Dauphin told AsianInvestor.

''The appeal of private placements lies in the potential of high returns, but the level of risk associated with such projects is also necessarily higher. This is all more true when distance does not allow for direct monitoring.''

Numerous institutional have rushed past standard risk assessment procedures in eagerness to secure leading investment positions, he added.

''This compromised approach to due dilligence has inevitably, led to adverse outcomes, as evidenced by the current situation in India.''

Read more [1]

[1] https://igopp.org/wp-content/uploads/2024/12/ASIANI1.pdf]]></content>
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		<title>Indian billionaire Gautam Adani, former Caisse execs facing charges in the United States</title>
		<link>https://igopp.org/en/indian-billionaire-gautam-adani-former-caisse-execs-facing-charges-in-the-united-states/</link>
		<comments>https://igopp.org/en/indian-billionaire-gautam-adani-former-caisse-execs-facing-charges-in-the-united-states/#respond</comments>
		<pubDate>Fri, 22 Nov 2024 03:21:36 +0000</pubDate>
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		<description><![CDATA[Caisse de dépôt et placement du Québec opened an office in India in 2016, betting that the country’s favourable demographics would fuel returns in renewable energy and transportation infrastructure. Now, the Canadian pension giant has become entangled in what U.S. authorities call “an elaborate scheme” to pay hundreds of millions of dollars in bribes in [&#8230;]]]></description>
		<content><![CDATA[Caisse de dépôt et placement du Québec opened an office in India in 2016, betting that the country’s favourable demographics would fuel returns in renewable energy and transportation infrastructure. Now, the Canadian pension giant has become entangled in what U.S. authorities call “an elaborate scheme” to pay hundreds of millions of dollars in bribes in the Asian country.
Federal prosecutors in New York unveiled charges [1] late Wednesday against Indian billionaire Gautam Adani and seven other individuals, including three former Caisse executives. They allege the 62-year-old tycoon and managers from energy subsidiaries of his business conglomerate conspired in a scheme to pay roughly US$250-million in bribes to Indian government officials. The payments were allegedly to help secure favourable contracts tied to a major solar energy project.
As part of the indictment, the U.S. Attorney’s Office in Brooklyn, N.Y., charged Cyril Cabanes, a former CDPQ managing director of infrastructure for the Asia Pacific region, with conspiracy to obstruct justice. Saurabh Agarwal, former managing director of CDPQ India, and Deepak Malhotra, a former director of infrastructure for South Asia at the Caisse, were charged with the same offences.
The Caisse itself has not been accused of any wrongdoing. But observers say the charges raise questions about how aggressively the Montreal-based pension fund manager is pushing into new countries, how deeply the executives it hires to represent it in those countries are vetted and whether its processes for making investment decisions are robust.
In all, the Caisse had US$7-billion in investments in India as of the end of 2023. Caisse-controlled Azure Power, a renewable energy developer in India, is near the centre of the U.S. allegations.
“This appears to be a culture of bribery and collusion at the very highest levels of this company in India,” said François Dauphin, chief executive of Montreal’s Institute for Governance of Private and Public Organizations. “Private placements can generate high returns, but it is situations like these that fully illustrate the level of risk associated with such projects.”
Prosecutors allege that the three former Caisse executives tried to thwart an investigation by deleting e-mails and presentations that summarized the bribes, and misled investigators from the Federal Bureau of Investigation, the Justice Department and the U.S. Securities and Exchange Commission (SEC).
The allegations have not been proven in court.
The scheme was concealed from U.S. banks and investors, from whom the defendants raised billions of dollars, according to the allegations. Mr. Adani is one of the world’s richest people, with an estimated net worth of nearly US$70-billion, according to Forbes, and he has close ties to Indian Prime Minister Narendra Modi.
Read more [2]

[1] https://www.theglobeandmail.com/business/international-business/article-former-caisse-executives-face-us-charges-in-alleged-bribery-scheme/
[2] https://igopp.org/wp-content/uploads/2024/11/Former-Caisse-execs-charges_The-Globe-and-Mail_Nov2024.pdf]]></content>
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		<title>Former CEO gives Gildan Activewear board a dressing-down</title>
		<link>https://igopp.org/en/former-ceo-gives-gildan-activewear-board-a-dressing-down/</link>
		<comments>https://igopp.org/en/former-ceo-gives-gildan-activewear-board-a-dressing-down/#respond</comments>
		<pubDate>Wed, 17 Jan 2024 22:44:01 +0000</pubDate>
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		<description><![CDATA[Former Gildan Activewear Inc. chief executive Glenn Chamandy fired back at the company’s latest accusations concerning his leadership, saying the board is seeking to unfairly harm his reputation and cast aspersions on his performance. The company on Tuesday took aim at Mr. Chamandy’s leadership, alleging he had become disengaged from his job, and that he had an [&#8230;]]]></description>
		<content><![CDATA[Former Gildan Activewear Inc. chief executive Glenn Chamandy fired back at the company’s latest accusations concerning his leadership, saying the board is seeking to unfairly harm his reputation and cast aspersions on his performance.
The company on Tuesday took aim at Mr. Chamandy’s leadership, alleging he had become disengaged from his job [1], and that he had an undisclosed relationship with an unnamed investor that’s now demanding he be rehired.
“It is with regret that I observe the board’s current focus on a strategy seemingly aimed at undermining my reputation and my record through insinuation and distortion of the truth,” Mr. Chamandy said in a statement Wednesday morning.
The board’s latest release “barely warrants a response,” Mr. Chamandy said. “It continues to reflect an approach that is misguided, misleading, and value-destructive, prioritizing the obsession of board members with their own reputations above all else.”
[...]
Over the past 10 days, they’ve sharpened their justifications by attacking his day-to-day leadership, saying he’d become distracted by personal pursuits such as the development of a golf course in Barbados. According to Gildan directors, Mr. Chamandy was rarely in the office, held few management meetings and sent on average “no more than a handful” of work e-mails a day.
The board is also probing Mr. Chamandy’s activities around the time he was dismissed, poring through his files and electronic information because of what they’ve called his “questionable behaviour.” Directors say what they’ve uncovered so far underscores the broken trust between the board and the former CEO toward the end of his employment and the need for new leadership.
[...]
It’s very rare for the board of directors of a Canadian public company to be so aggressive when faced with activist shareholder campaigns, said François Dauphin, chief executive of Montreal’s Institute for Governance of Private and Public Organizations. This suggests they’re digging to defend their position.
“The very people who launched the attack are now under fire,” Mr. Dauphin said of the dissident shareholders. “The latest revelations show that a link clearly existed between Mr. Chamandy and activist shareholders well before his termination. This raises questions about the sharing of privileged information, but also in terms of conflicts of interest.”
In his statement Wednesday, Mr. Chamandy declined to address specifics about his ties to investors. He said only: “Over the years, Gildan’s executive team and I dedicated ourselves to fostering relationships with our stakeholders, grounded in confidence and trust. These efforts were instrumental in establishing a company that is not only respected, but also deeply trusted by its shareholders, customers and employees.”
Directors have said they’re unanimous that Mr. Chamandy’s continued employment would have jeopardized the company’s future. Shareholders including U.S. hedge fund Browning West LP and Montreal investment management firm Jarislowsky Fraser say Mr. Chamandy has delivered in spades for investors over the years and want him back.
Read more [2]

[1] https://www.theglobeandmail.com/business/article-gildan-cites-lack-of-interest-and-transparency-in-dismissal-of-ceo/
[2] https://igopp.org/wp-content/uploads/2024/01/Former-CEO-gives-Gildan-Activewear-board-a-dressing-down-The-Globe-and-Mail_January-2024.pdf]]></content>
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		<title>South African prison scandal raises concerns over Caisse’s G4S connections</title>
		<link>https://igopp.org/en/south-african-prison-scandal-raises-concerns-over-caisses-g4s-connections/</link>
		<comments>https://igopp.org/en/south-african-prison-scandal-raises-concerns-over-caisses-g4s-connections/#respond</comments>
		<pubDate>Mon, 01 May 2023 19:26:06 +0000</pubDate>
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		<description><![CDATA[[&#8230;] Even before this latest scandal, questions were being raised about why a Canadian corporate pillar like the Caisse would jump into the security industry and, later, associate itself with a company like G4S, which has a checkered recent history. Critics say the pension giant, which administers the retirement funds for thousands of public-sector employees, has no business [&#8230;]]]></description>
		<content><![CDATA[[...]
Even before this latest scandal, questions were being raised [1] about why a Canadian corporate pillar like the Caisse would jump into the security industry and, later, associate itself with a company like G4S [2], which has a checkered recent history. Critics say the pension giant, which administers the retirement funds for thousands of public-sector employees, has no business being in the security sector and that the risks outweigh the returns. Others say it should use its muscle to push Allied harder on cleaning up G4S – and be fully transparent about its concerns.
“Doing something means either leaving or trying to be an agent of change,” said Yan Cimon, a specialist in corporate strategy and governance at Quebec City’s Laval University. “It’s clear that the status quo is not enough. You cannot sit back and wish for that G4S experience in South Africa to go away.”
Pension fund investments around the world are coming under increased scrutiny as environmental, social and governance (ESG) standards gain importance. Observers are asking whether it’s appropriate to direct retirees’ money into shares in gun manufacturers, oil and gas producers, and other companies often seen as offside on human progress efforts.
The Caisse has a policy on responsible investment in which it cautions it might invest in sectors that “may appear problematic from the standpoint of social responsibility.” It says it approaches those investments in part by taking a “collaborative approach” with the companies it holds in its actively managed portfolios, which includes communicating directly with a company’s executives or directors to discuss concerns.
The Globe and Mail sent the Caisse a series of questions about the South African controversy, and Allied’s ownership of G4S. The fund manager did not directly answer those questions but spokesman Conrad Harrington said it was following the situation in the country closely and takes any human-rights allegations “very seriously.”
Caisse “is one of the world’s most respected investors when it comes to ESG criteria – which we apply rigorously and consistently,” Mr. Harrington said in an e-mailed response. “There is no exception with this investment and we have an active ongoing dialogue with the company across a number of strategic matters. When Allied acquired G4S, they communicated plans to evaluate options for certain non-core businesses and these conversations are ongoing.”
The Caisse bought into Allied Universal in 2019 in a deal that valued the security company at US$7-billion, citing the industry’s organic growth and consolidation potential. It held a 27.7-per-cent stake in the company as part of $402-billion in assets under management at the end of 2022, according to its latest annual report; and it has two directors on Allied’s 11-member board. The largest shareholder in Allied is a group of funds controlled by New York-based private equity firm Warburg Pincus LLC.
Some say the Caisse should consider selling its investment in Allied. They argue staying in reflects poorly on the pension fund’s own reputation, particularly if the U.S. company remains in the business of private prisons through its G4S ownership.
[...]
Caisse has a responsibility to ensure that its investment complies with laws and international standards on corruption, Mr. Baker said. “Given controversies like the one G4S is currently facing in South Africa, and the poor investment performance for the private prison industry, it is unclear why CDPQ, Allied Universal and G4S are still in the private prison business,” he said.
Others have a different view. Pulling out of Allied altogether is the “easy” route, said Patric Besner, vice-president of Montreal’s Institute for Governance of Private and Public Organizations, a think tank. Staying in and pushing to influence the company to have better metrics and better governance is a harder path but the one that might yield better outcomes in the long term, he said.
“The problem is that if they pull out, there will be no force to encourage these corporations to act better and improve their ESG and improve their environmental rules and regulations,” Mr. Besner said.
[...]
Pension funds in Norway and New York have divested themselves from G4S in recent years. Norges Bank Investment Management, which manages Norway’s government pension funds, sold its shares in G4S after its ethics council decided there was an “unacceptable risk” that the company is responsible for “serious or systematic human-rights violations.”
Read more [3]

[1] https://www.lapresse.ca/affaires/2020-06-22/la-caisse-et-les-dangers-de-la-securite-privee
[2] https://www.theglobeandmail.com/business/article-gardaworld-ceo-blasts-the-caisse-for-backing-allied-universal-in-bid/
[3] https://igopp.org/wp-content/uploads/2023/05/South-African-prison-scandal-raises-concerns-over-Caisse’s-G4S-connections-The-Globe-and-Mail_May-2023.pdf]]></content>
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		<title>Companies should disclose board members’ spoken languages to investors, Quebec group Médac says</title>
		<link>https://igopp.org/en/companies-should-disclose-board-members-spoken-languages-to-investors-quebec-group-medac-says/</link>
		<comments>https://igopp.org/en/companies-should-disclose-board-members-spoken-languages-to-investors-quebec-group-medac-says/#respond</comments>
		<pubDate>Thu, 29 Dec 2022 18:51:57 +0000</pubDate>
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		<description><![CDATA[A leading investors’ rights group in Quebec is pressing publicly traded Canadian companies to reveal what languages their board members speak, saying the disclosure is needed to ensure rising expectations for corporate diversity are being met. The call comes from Montreal-based Mouvement d’éducation et de défense des actionnaires, known as Médac. The group says the [&#8230;]]]></description>
		<content><![CDATA[A leading investors’ rights group in Quebec is pressing publicly traded Canadian companies to reveal what languages their board members speak, saying the disclosure is needed to ensure rising expectations for corporate diversity are being met.
The call comes from Montreal-based Mouvement d’éducation et de défense des actionnaires, known as Médac. The group says the information should be made public in the circulars sent to investors ahead of companies’ annual meetings.
Médac is making a shareholder proposal to that effect this year for each of the 21 companies in which it is invested, including Canada’s big six banks and pillars of the Quebec corporate community such as Alimentation Couche-Tard Inc and Dollarama Inc. and it has submitted the suggestion to the federal Finance Department as part of recent consultations on improving diversity in federally regulated financial institutions.




“We think this is a blind spot for companies in terms of diversity,” said Willie Gagnon, Médac’s managing director. “We want the disclosure of languages spoken, starting with the official languages of course. But we also want the other languages when it’s pertinent.”




The request plays into an ever-sharpening focus in Canada on corporate governance standards, including expectations that boards have more members from traditionally underrepresented groups than they did in the past. It also reflects the thorny issue of language in Quebec [1], a province shaken by several linguistic controversies that have spilled into the business world in recent months.
Arguably the biggest of these was Air Canada chief executive Michael Rousseau’s verbal faux pas [2] in November, 2021. Following a speech he made in English to the Chamber of Commerce of Metropolitan Montreal, Mr. Rousseau said he had managed to live in Montreal for 14 years without speaking French, and suggested he was too busy to learn the language.
His comments shocked politicians in Quebec City and Ottawa alike, and triggered more than 2,500 complaints to the office of Canada’s Commissioner of Official Languages. In the ensuing storm, SNC-Lavalin chief executive Ian Edwards called off a largely English-language speech he was set to give just days later. Attention also turned to other Quebec-based companies with perceived linguistic shortcomings, including Canadian National Railway Co., whose board lacked any French speakers for a time.
[...]
The Canadian government has since 2020 required companies incorporated at the federal (but not provincial) level to report to shareholders and Corporations Canada yearly on the representation of women, visible minorities, Indigenous peoples and people with disabilities on their boards and in senior management. The requirement does not include any disclosure related to language.
That is an omission that needs to be corrected, according to Médac. The group argues diversity can’t be reduced to matters strictly related to biology, or other things that don’t bear on competence.
François Dauphin, president of the Institute of Governance for Public and Private Organizations, said it makes sense for companies to disclose the language skills of their executives and directors because it would show they understand the different contexts and geographies in which their businesses operate. But he said it should be a voluntary disclosure, rather than one forced by regulation.
“It has to be relevant to the strategy of the organization itself,” Mr. Dauphin said. If, for example, a third of a company’s shareholders are native French speakers, it would be nice to have someone who speaks French on the board, he said.
“Just as much as diversity in general, where we want to have minorities on the board, we need to have that representativeness in a way to retain employees or to confer some kind of legitimacy with stakeholders in general,” Mr. Dauphin said.




In 2021, Médac made a separate shareholder proposal on language that it presented to its portfolio companies, in which it asked that the official status of French be expressly written into their corporate statutes. The idea was rejected by all of them.




Read more [3]

[1] https://www.theglobeandmail.com/canada/quebec/
[2] https://www.theglobeandmail.com/business/article-air-canada-ceo-sets-off-firestorm-in-quebec-over-language-comments/
[3] https://igopp.org/wp-content/uploads/2023/01/Companies-should-disclose-board-members’-spoken-languages-to-investors-Quebec-group-Médac-says-The-Globe-and-Mail_December-2022.pdf]]></content>
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		<title>Regulations to rein in short-sellers must not overlook the good they do</title>
		<link>https://igopp.org/en/regulations-to-rein-in-short-sellers-must-not-overlook-the-good-they-do/</link>
		<comments>https://igopp.org/en/regulations-to-rein-in-short-sellers-must-not-overlook-the-good-they-do/#respond</comments>
		<pubDate>Wed, 29 Jan 2020 19:49:23 +0000</pubDate>
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		<description><![CDATA[A thick hide is a necessary qualification for the job of activist short-seller. When Spruce Point Capital Management released a negative report on Canadian Tire Corp. Ltd. in late 2019, it prompted Yvan Allaire, the executive chair of the Institute for Governance of Private and Public Organizations, to fire back in the Financial Post: “What [&#8230;]]]></description>
		<content><![CDATA[A thick hide is a necessary qualification for the job of activist short-seller. When Spruce Point Capital Management released a negative report on Canadian Tire Corp. Ltd. in late 2019, it prompted Yvan Allaire, the executive chair of the Institute for Governance of Private and Public Organizations, to fire back in the Financial Post: “What one never finds in these short-seller hatchet jobs is concern for anything other than a quick profit.” This was followed with several suggestions for reining in short-sellers.

Mr. Allaire is not the only one proposing restrictions – indeed, there appears to be an upswing in such calls from a number of sources recently. The danger here is that the urge to impose new regulations could go too far and choke off the good things that academic studies have found short-sellers provide to financial markets.

Only seven campaigns were launched in Canada by activist short-sellers in 2019, according to financial data firm Breakout Point. This was the lowest tally since financial analytics firm Activist Insight began keeping records in 2015: In most of those years, the number of new campaigns ranged from 19 to 22. It appears some short-sellers may have gone to the sidelines during 2019 to wait out the bullish tide flowing through the stock market.

[ ... ]

Even though Canada’s activist short sales plunged last year, the count was still higher than in other countries, excluding the United States. Indeed, Canadian firms have been disproportionately targeted for several years: From 2015 to late 2019 there were 76 campaigns, compared with 17 in Australia and 57 in the European Union.

Activist short-sellers on the ropes

Perhaps the most notable of recommendations to curtail-short sellers came in a November report released by law firm McMillan LLP. It claimed that the regulatory framework in Canada for short-sale trades was “out of step” with other countries and some tightening up was needed to make it more difficult to engage in abusive transactions, particularly naked short-selling (which can result in illegal situations where the number of short sales exceeds the actual number of tradable shares).

The regulator in charge of trading rules, the Investment Industry Regulatory Organization of Canada, however, has pointed out that its studies have found little evidence of abusive short-selling in Canada. Moreover, assessments of IIROC’s regulatory framework by the International Monetary Fund and World Bank concluded that it met international standards.

Several other sources have forwarded their own proposals. They include bringing back the uptick rule (short sales can only be made on an uptick in share price), giving companies civil remedies to combat “short and distort” campaigns, and having institutional investors cut back on lending securities to short-sellers. (Companies can currently sue short-sellers on a criminal basis but civil remedies would be preferable because of their lower burden of proof.)

Read more [1]

[1] https://igopp.org/wp-content/uploads/2020/02/Regulations-to-rein-in-short-sellers-must-not-overlook-the-good-they-do-The-Globe-and-Mail_Januray-2020.pdf]]></content>
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		<title>Limiting the damage of short-sellers</title>
		<link>https://igopp.org/en/limiting-the-damage-of-short-sellers/</link>
		<comments>https://igopp.org/en/limiting-the-damage-of-short-sellers/#respond</comments>
		<pubDate>Fri, 13 Dec 2019 15:56:40 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
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		<guid isPermaLink="false">https://igopp.org/?p=12198/</guid>
		<description><![CDATA[When any individual investor or fund comes to the conclusion after careful analysis that a company is over-valued, it may very well sell short the shares of that company. Fair enough. If the analysis proves right, facts on the ground will confirm it eventually and the stock price will drop. But that’s not the game plan [&#8230;]]]></description>
		<content><![CDATA[When any individual investor or fund comes to the conclusion after careful analysis that a company is over-valued, it may very well sell short the shares of that company. Fair enough. If the analysis proves right, facts on the ground will confirm it eventually and the stock price will drop.

But that’s not the game plan of “professional” short-sellers. These funds produce a wholly negative report about a targeted company, which they broadcast widely to media, analysts, and investors in the hope of producing a stampede of shareholders exiting the  company’s stock. The result usually is a sharp drop in price as a kind of self-fulling prophecy. The short seller then buys the stock back at this much lower price and sails into the sunset with a bundle of cash.

Several countries (Japan, France, Germany, Italy) are considering ways and means to curtail the ability of activist funds to inflict damage to their industrial structure. Japan’s huge Government Pension Fund has suspended all loans of shares to short-sellers; if all Canadian institutional funds were to adopt such a policy, it would drive way up the price of borrowing shares to short-sell and make it more difficult to carry such operations profitably.

France is proposing to lower the threshold for reporting holdings of shares in a company from 5% to 3%. (Canada is a laggard and an outlier in this respect with a threshold of 10%; USA=5%; UK=3%). Furthermore, in the UK, short sellers must make their position public when it reaches 0.5% of outstanding shares and must include all derivatives in the computation of that ratio.

In the U.S., the SEC has clamped down on “naked” short selling, the practice of selling shares but delaying the delivery of the shares for as long as possible in the hope of buying back the shares at a much lower price without incurring the cost of borrowing shares from other holders. The SEC has instituted a “Hard T+3 Close-Out Requirement” imposing a three-day limit on stock delivery after a sale. No such restriction has been put in place in Canada.

Also, short selling could not be carried out if the last transaction had not been executed at a price higher than the previous transaction (the “uptick” rule). This rule was dropped in the U.S. in 2007 and in Canada in 2012. However, in 2010, the SEC introduced a modified tick test that is triggered for the remainder of the day and all of the following day if the price of a security falls by more than 10 per cent. This modified tick test was never adopted in Canada. (Activist short-sellers are increasingly targeting Canadian companies — is Canada ready? Financial Post, Barbara Shecter, October 6th 2017

Canada is thus a benign place to practice financial/casino capitalism. The features of this sort of capitalism are in full display at Spruce Point Capital, the American hedge fund and serial aggressor of Canadian companies. This fund practices the dark art of short selling. Barely a year ago in October 2018, Spruce Point Capital launched a virulent campaign against Dollarama. It produced a report to buttress its claim that the stock price of Dollarama should or would drop from $46 to $28; the stock price actually leveled off at $31 in December 2018 from which level it soared back to above $45.

It is fair to assume that Spruce Point Capital bought back shares it had short-sold at $46, making a hefty profit of some $15 per share in a period of some 2-3 months! But what about those shareholders who believed Spruce Point’s “demonstration” and sold their shares on the way down only to find that they had been helping  unwittingly) a financial scheme, losing a large amount of money in the process. Should they not have a claim, a basis for a class action, against Spruce Point Capital? Why are activist hedge funds permitted to publicly and with impunity disparage any company, to spread innuendoes (“possibly misleading accounting”, “potential shenanigans”), and to carry “ad hominem” attacks on officers or
board members?

The same process, the same modus operandi, is on display at the most recent Canadian target of Spruce Point Capital: Canadian Tire is “An Antiquated And Structurally Non- Competitive Brick And Mortar Retailer With No Clear Focus And No Competitive Advantage” claims Spruce Point in a report of 108 unreadable pages made public on the morning of December 5th (“Kicking the tire down the road”).

Although there may be kernels of truth in their analysis, the report throws everything but the kitchen sink at the reader and in the process throws mud at an Executive Vice-President and the Chairwoman of Canadian Tire.

What one will never find in these hack jobs is any concern for the environment and the society at large or for stakeholders other than shareholders. Yet, almost all institutional investors have now adopted strategies that put a high priority on Environment and Society, on long-term investment horizon and due consideration for all stakeholders of a company. Given this solemn commitment, why would these institutional investors support and abet the shenanigans of activist hedge funds whose sole focus is on short-term profit?

Large institutional investors with a significant position in a company have, or should have, the analytical wherewithal to assess public claims made by short sellers against this company. If they find those claims to be ill-founded or even false, they should state so publicly instead of, as is the case now, letting the company fend off the attack by itself. And these large institutional funds should not lend their shares to short sellers of the Spruce Point Capital ilk.

Canadian securities authorities and institutional fund managers should adopt some ways and means to limit the nefarious activities of activist funds, particularly the short-selling kind: more transparency, better regulations, enhanced constraints, self-discipline by institutional investors.

The author is solely responsible for the opinions expressed in this article.
]]></content>
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		<title>Judge rules SNC-Lavalin to stand trial on fraud, bribery charges</title>
		<link>https://igopp.org/en/judge-rules-snc-lavalin-to-stand-trial-on-fraud-bribery-charges/</link>
		<comments>https://igopp.org/en/judge-rules-snc-lavalin-to-stand-trial-on-fraud-bribery-charges/#respond</comments>
		<pubDate>Wed, 29 May 2019 15:02:19 +0000</pubDate>
		<dc:creator><![CDATA[IGOPP Site web]]></dc:creator>
				<category><![CDATA[IGOPP in the Medias]]></category>
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		<guid isPermaLink="false">https://igopp.org/judge-rules-snc-lavalin-to-stand-trial-on-fraud-bribery-charges/</guid>
		<description><![CDATA[A Quebec judge has ruled that SNC-Lavalin Group Inc. can stand trial on bribery and fraud charges, prolonging the Canadian engineering giant’s legal pain and keeping the case in the public eye in the run-up to this fall’s federal election. Justice Claude Leblond of the Quebec Court ruled Wednesday that there is enough evidence to [&#8230;]]]></description>
		<content><![CDATA[A Quebec judge has ruled that SNC-Lavalin Group Inc. can stand trial on bribery and fraud charges, prolonging the Canadian engineering giant’s legal pain and keeping the case in the public eye in the run-up to this fall’s federal election.

Justice Claude Leblond of the Quebec Court ruled Wednesday that there is enough evidence to move ahead with a trial.

The SNC case has sparked a prolonged political controversy for the federal Liberal government, which has come under fire over accusations Prime Minster Justin Trudeau’s staff applied inappropriate pressure to have then attorney-general Jody Wilson-Raybould overturn a decision by prosecutors not to reach a settlement – called a deferred prosecution agreement (DPA) – with the company.

Ms. Wilson-Raybould was eventually demoted, and then resigned from cabinet altogether. Her successor, David Lametti, told reporters Wednesday that a DPA was still “a legal possibility,” while declining to comment on the case.

Mr. Trudeau has denied applying inappropriate pressure for a settlement, and has said his only concern was with preserving thousands of jobs at risk if the company is found guilty.

“One of the things that is very clear is that we respect the independence of our judiciary and we’re not going to comment on an ongoing court case,” Mr. Trudeau told reporters in Ottawa on Wednesday. “But as I’ve said many times, we’re always going to try and fight for Canadian jobs in ways that uphold the rules.”

Legal experts, as well as the company itself, had predicted this outcome because the threshold required to move past a preliminary inquiry in Canada’s justice system is low. While the judge has sole authority over whether to order a trial or dismiss a case after the evidence is heard at this stage, the prosecution has discretion over whether to continue with a case or drop it.

[ ... ]

But Michel Nadeau, executive director of the Institute for Governance of Private and Public Organizations in Montreal, says the Prime Minister is unlikely to risk striking a deal unless he wins another mandate. “I think it’s dead,” he told Radio-Canada on Wednesday.

The fallout of the government’s handling of the SNC file led to the resignations of the country’s top bureaucrat and Mr. Trudeau’s principal secretary, and saw Ms. Wilson-Raybould and former cabinet minister Jane Philpott ousted from the Liberal caucus.

Read more [1]

[1] https://igopp.org/wp-content/uploads/2019/05/Nicolas-Van-Praet_Judge-rules-SNC-Lavalin-to-stand-trial-on-fraud-bribery-charges-The-Globe-and-Mail_June-2019.pdf]]></content>
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		<title>What was the story behind SNC-Lavalin&#8217;s supposedly &#8216;excellent&#8217; corporate governance regime?</title>
		<link>https://igopp.org/en/nota-bene-what-was-the-story-behind-snc-lavalins-supposedly-excellent-corporate-governance-regime/</link>
		<comments>https://igopp.org/en/nota-bene-what-was-the-story-behind-snc-lavalins-supposedly-excellent-corporate-governance-regime/#respond</comments>
		<pubDate>Thu, 21 Mar 2019 23:16:18 +0000</pubDate>
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		<description><![CDATA[Excerpted and translated from “Le fiasco SNC-Lavalin: crime, culture, governance?” by Yvan Allaire, executive chairman of the Institute for Governance of Private and Public Organizations, published in Policy Options March 18, 2019.  The tragedy of SNC-Lavalin was in the making between 2000 and 2012. To outside observers, these were years of quiet profitability for the [&#8230;]]]></description>
		<content><![CDATA[Excerpted and translated from “Le fiasco SNC-Lavalin: crime, culture, governance?” by Yvan Allaire, executive chairman of the Institute for Governance of Private and Public Organizations, published in Policy Options March 18, 2019. 

The tragedy of SNC-Lavalin was in the making between 2000 and 2012. To outside observers, these were years of quiet profitability for the company. And yet, these years were teeming with fraudulent and corrupt activities carried out by some managers and executives of SNC-Lavalin. For reasons that are little understood (but should be), a culture of duplicity, greed, and flouting of ethical norms had taken root in the management of the company — with the board of directors totally unaware, it seems.

Yet at the time, SNC-Lavalin was highly rated for the quality of its governance. According to the annual ranking of some 250 Canadian companies for the quality of their governance published by The Globe and Mail, SNC-Lavalin got top ranks: 1st in 2005 and 2009, 2nd in 2006, 3rd in 2008, 7th in 2003, 2011 and 2012. How could it be that such “excellent” corporate governance did not detect any sign of malfeasance nor trigger any alarm?

All boards of directors rely on the information that is passed on to them by management, which is assumed to be honest and reliable. That is the Achilles heel of governance.

So, if management lies to the board or provides false information, how can the board be blamed? This argument, although legally valid, is not fully satisfactory. What could SNC-Lavalin’s board of directors have known? What questions should have been asked of management of the company at the time?


For instance:



— Who decides, and on what basis, to seek contracts in countries with exotic political mores?

— Who has the authority to approve sales agent contracts and assess that the amounts paid to them are appropriate?

— How does the company manage to be so successful in these countries?

— What is the opinion on these matters of the seven (out of 12) board members who indicated on the Skills Matrix that they “are familiar with the geographic areas where the company operates”?

The board of directors at the time may have raised these issues and management might not have been forthcoming. Except for its somewhat limited curiosity, the board observed all the rules of “good” governance (according to The Globe and Mail). Boards of directors, in the traditional form of governance, are always a bit like skaters making arabesques on a frozen lake, unaware of the teeming activities under the ice. This form of governance must be changed…

Has the company sacked or sued all the managers responsible for this corrupt culture in the years 2000 to 2012? The Canadian anti-corruption law makes that a key factor in deciding whether to come to a deferred prosecution agreement with an indicted company.

If no such factors can be invoked, it is difficult to understand why the prosecutors of the Canadian justice department refuse to come to an agreement with SNC-Lavalin.

Indeed, the Canadian anti-bribery legislation should be modified and stipulate that a corporation is liable to criminal charges if its board of directors has authorized or endorsed criminal acts or failed to put in place all necessary safeguards and exercise appropriate oversight of management. However, this argument has not been raised so far in the present case.

Read more [1]

[1] https://business.financialpost.com/opinion/nota-bene-what-was-the-story-behind-snc-lavalins-supposedly-excellent-corporate-governance-regime]]></content>
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