UBScandal

As capitalism melts down the rich always find a way to hide their taxable income. In the best of times and the worst of times. If they don't get the tax cuts they demand c'est lavie. They can always hide their money in Swiss bank accounts courtesy of the Gnomes of Zurich.In this case courtesy UBS. As we found with Enron, capitalism breaks down because those who play in the market know that rules are made to be broken and so they break them.


UBS executive indicted in US

UBS executive charged with aiding tax evasion

The Swiss Banker and 'Toxic Waste'

Gee could that have anything to do with this;

Top Executives at UBS Will Not Get Bonuses

Or maybe its actually because of this;

UBS warns earnings will be squeezed for rest of year

After being Europe's first major credit crunch victim, writing down $37.0 billion in the first two quarters of the year, there has been a shift in focus in the concerns that investors have about UBS. Its balance sheet is looking decidedly less frightening, now that it has shifted $60.0 billion of illiquid mortgage-backed securities into a vehicle created by the Swiss national bank, while it managed a profit in the third quarter.

And before we get all warm and fuzzy about those poor bankers UBS will still pay em heaping amounts of gold, just not all at once....

UBS said its new compensation model would be "focused on the long-term" and "closely aligned with the value creation of the firm." Executive board members whose bonuses had depended on annual performance alone will now be paid according to the new system that tracks their performance and the bank's share price over a three-year period. The two variable parts of their compensation--in cash and equity--will both be performance linked and the chairman of the bank will no longer get so-called "variable compensation."

And like that other Republican Investment Banker; Dan Quayle, who works for Cerebeus, lookee here UBS has one in their pocket too.

Phil Gramm: A Deregulator Unswayed
RGE Monitor, NY - , he left Capitol Hill in 2002 to work as an investment banker and lobbyist for UBS, a Swiss bank that has been hard hit by the market downturn,

You remember Phil he advised the McCain campaign until last summer when he called Americans concerned about the meltdown appearing on the horizon a bunch of 'Whiners'.

In an interview with the Washington Times,

Phil Gramm, a former Texas senator who is now vice chairman of UBS, the giant Swiss bank, said he expects Mr. McCain to inherit a sluggish economy if he wins the presidency, weighed down above all by the conviction of many Americans that economic conditions are the worst in two or three decades and that America is in decline.
"You've heard of mental depression; this is a mental recession," he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. "We may have a recession; we haven't had one yet."

"We have sort of become a nation of whiners," he said. "You just hear this constant whining, complaining about a loss of competitiveness, America in decline" despite a major export boom that is the primary reason that growth continues in the economy, he said. "

Now he says the push to deregulate the market had nothing to do with the current meltdown.

<'>The retired Texas senator claims that deregulation “played virtually no role” in the current economic turmoil engulfing the globe, nor the housing collapse or the credit crisis. The exempting of any regulation of derivatives, including state insurance supervision, reserve requirements or clearing information was not significant to the crisis. The nonfeasance of the Fed in supervising all of the non-bank lenders that lay at the heart of the housing boom and bust was not the cause either (it was “Predatory Borrowing”). And the payola scandals at the ratings agencies — Moodies, S&P, and Fitch — that slapped triple AAA ratings on paper that turned out to be junk would not have been prevented via better oversight.
Gramm said placing any blame on deregulation was simply “an emerging myth.”

The whole UBS scandal comes home to Canada where we specialize in White Collar Crime....Corporate Captialist criminals get away with murder in Canada. We have no single national regulator liie the SEC, and clearly our bank laws are not enforced effectively, if UBS can set up a secret offshore account for wealthy Americans called the 'Canada Desk' because the deals were done on Canadian soil.

Top Firm Accused Of Having Illegal 'Secret' Desk


This scandale has caused the Montreal Gazzette to pick up on the popular slogan of the Communist Party of Canada Marxist Lenninist in its latest editorial; Make The Rich Pay.

Government has obligation to make the rich pay, too
Raoul Weil, a senior executive of the Swiss bank UBS, has been indicted by the U.S. Department of Justice on charges of helping his U.S. clients hide some $20 billion in assets from the taxman. Americans will be glad to see their government pursue this sort of case aggressively.
In Canada, however ....
The Globe and Mail reported last week that Weil was also in charge of a secretive team of senior bankers whose job was to help Canadians hide as much as $5.6 billion from the Canada Revenue Agency, this country's tax collector.
So what has that agency, and the rest of the Canadian government, been doing about these allegations, the outlines of which have long been known? Nobody knows. Maybe nothing. And that's not nearly good enough.
Nothing is more corrosive to the sense of fairness and transparency that society needs to function well than the idea that there are two standards - one for the wealthy and one for everyone else


And in light of this scandal this failure to collect what is due the people of Canada or to prosecute UBS for breaking our banking laws, what does the Government and Revenue Canada do? Wait for it....

Ottawa targets online merchants who pay no taxes

Canada Revenue Agency to focus on so-called 'power sellers' on eBay

Pound foolish, pennyt wise.



SEE:

Crime Pays If You Are Rich

Whining and Dining with the Irvings

Hedge Funds, Junk Bonds, Ponzi Schemes

Criminal Capitalism Business As Usual

Tax Cuts For All

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Steroid Nation

The story of 2007 for the U.S. was not the sub-prime melt down, nor the U.S. presidential race, heck it wasn't even the surge in Iraq. The story of 2007 was how the United States replaced East Germany as Steroid Nation.

It's all about winning. Not competition really, but winning. Winning at all costs, even if it means cheating. We're Number 1, We're Number 1 is the mantra. And the cheating through steroids, human growth hormone, testosterone, etc. is merely a reflection of a culture of cheating that is the moral economy of American culture.

Enron, Worldcom, the economic scandals of the boom economy where tax evasion is considered a good thing, a fine thing, screw the IRS, which led to the accounting scandals that brought down some of America's corporate giants. Like the doping scandals, tax avoidance and accounting manipulation over stock prices, back dating stock, all these schemes are based on the idea that everyone is doing it.

Illegal doping recognizes no national boundaries. It is an inevitable offshoot of a system that stresses winning at all costs, invading every sport, entangling amateur and pro alike. The conviction that everyone else is using these illegal performance-enhancing substances creates a vicious cycle.

That is why Conrad Black wants to become an American, he fits into that mold quite well.And by the time he finishes his jail sentence he will have enough time in to become one.

Whereas in Canada we are embarrassed by such cheating. We denounce it, and those who do it. Look at how we sacrificed Ben Johnson on the altar of good sportsmanship. And we did it promptly. While in America they wait and wait until the inevitable leak reveals that their Olympic medals were won through cheating.

In 2000, Dr. Wade Exum unveiled one of the biggest doping cover-ups in sports history when he released a list of 19 American medalists who were allowed to compete in various Olympic Games from 1988 to 2000 despite having failed earlier drug tests. The list also helped to stir up an old controversy. Track and field star Carl Lewis, who was named on Exum’s list, won the gold medal in the 100M event at the 1988 Seoul Olympic Games because his opponent Ben Johnson was disqualified from the event due to steroid use. Johnson was not too happy to see Lewis’ name on the new list, to say the least.

And by then it is too late, the damage is done. They only admit after the records are broken. Making those records is all important. Making record breaking profits, Olympic medal records, baseball home run records, the Tour de France, etc. once made they can never be expunged from the popular record. Even though they were made by cheating.

The cheater may be defrocked but his or her record stands. And that is all that counts. Winner takes all.And America is all about winning. They can say only dopes use dope, but they cheer them on all the same.

The company may have gone bankrupt but the CEO gets golden parachutes and hired again. Unless they go to jail to make an example that the 'system works'. And the defrocked corporate cheaters like Millikan or Martha Stewart get out of jail eventually and once again are embraced by their old pals.

Steroids and Corporate Greed share a common morality, a common set of values, that truly reflect the American cultural psyche far more than any claim to family values or Christian morals. And after all professional sports is a business.



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Conservatives Clemency For Canadian Criminal Capitalist

While the our Law and Order Government is planning to extradite Karlhaus Schrieber to Germany to face charges of swindling and fraud they are lobbying for the return to Canada of another criminal swindler. Who just so happens to be a millionaire. And they want to transfer him to a Canadian prison to serve out his sentence.

His family fears he faces death in the Bulgarian prison. Luckily for him, Bulgaria like Canada no longer has capital punishment. Wait a minute didn't they deny a clemency appeal for a Canadian on death row in the U.S. and any hope he had of transfer to prison in Canada.Oh yeah he ain't a millionaire and he ain't a white collar criminal. Spot the contradiction.

Europe condemns Canada over change in clemency stance

Bulgaria is one of the post soviet kleptocracies, a mafia-capitalist state bent on the privatization of everything. Our Canadian capitalist took advantage of that situation and got himself in trouble. And unlike Canadians on death row, or Karlhaus Schrieber, he has friends in the Harper government.

And of course Kenney and Harper being from Alberta are familiar with crony capitalism and the One Party State. Just like Michael Kapoustin understood that Bulgaria was a kleptocracy and took advantage of the crony capitalism occurring in that country to make a profit.

Prime Minister Stephen Harper and two of his most trusted ministers have for more than a year been quietly pressuring the Bulgarian government to transfer home to Canada a former millionaire Canadian businessman jailed overseas since 1996 on charges of fraud and embezzlement, CanWest News Service has learned.

Despite numerous diplomatic efforts - including a meeting in Sofia last year between Bulgaria's top prosecutor and Secretary of State Jason Kenney, at which Kenney pleaded for the return of 55-year-old Michael Kapoustin - Bulgaria refuses to transfer a man it once labelled an international swindler.

As a result, Canada is turning up the heat, invoking for the first time an international treaty that forces the unco-operative Bulgarian government into mediation talks.

On Thursday, a Canadian delegation will square off against Bulgarian officials in Strasbourg, France, headquarters of the Council of Europe - a European human rights body created in the wake of the Second World War to oversee, among other things, prisoner-transfer rules among the countries of Europe, Canada and the United States.

The mediation process follows months of failed intervention by Kenney and Harper - who has lobbied the Bulgarian president on the Kapoustin case - and by Public Safety Minister Stockwell Day, who is responsible for prisoner transfers to Canada and is also the MP for Kapoustin's British Columbia-based family.

Such efforts are a marked contrast to the Harper government's treatment of some other Canadians imprisoned abroad.

Since last year the Conservatives have denied the transfers of at least 17 Canadian citizens jailed in the U.S., even though their transfers to Canadian prisons were approved by U.S. authorities.

The government is also refusing to advocate against the death row sentence of Ronald Smith, an Albertan convicted of murder in Montana.

Kapoustin's repatriation, however, is "a priority for our government," said Kenney in a letter last December to Bulgaria's prosecutor general, adding, "Our government is determined to robustly defend the interests of Canadian citizens abroad."

Kapoustin was born in Yugoslavia but grew up in Toronto and Vancouver after his family immigrated to Canada in the 1950s. He became a high-profile entrepreneur in Bulgaria during the 1990s, as capitalism replaced communism following the breakup of the Soviet bloc.

"Michael was a very high flyer in Bulgaria in the post-Soviet period," says Gar Pardy, Canada's former director general of consular affairs, who has taken up Kapoustin's case in retirement. "He was running a bunch of companies and there was a lot of money on the go.

Bulgarian officials charged him with tax evasion, money laundering, fraud and embezzlement. Authorities shut down Kapoustin's companies and seized assets he claims were worth more than $11 million.

In 1996, he was arrested during an airport stopover in Germany and extradited to Bulgaria.

In 2002, after six years in detention, a Bulgarian court finally convicted Kapoustin on a new charge of embezzlement and sentenced him to 17 years in prison.

Pardy says that for years he and other Canadian diplomats worked hard to secure Kapoustin's transfer to a Canadian prison, where he would soon be eligible for parole - but never got anywhere with Bulgarian officials.

On Tuesday, Canadian law firm Amsterdam & Peroff announced that it has produced a website about its pro-bono client Michael Kapoustin, a citizen of Canada who has been languishing in a Bulgarian prison since he was convicted to 17 years in prison on what his defense team insists were false charges of embezzlement, fraud, tax evasion, and money laundering.

The website has been created to coincide with a new level of government talks about the prisoner transfer treaty between the two nations.

Article 23 of the Council of Europe's Convention on the Transfer of Sentenced Persons to initiate mediation has been invoked by Canadian Prime Minister Stephen Harper who, after over a year of constant contact, has not been able to secure Kapoustin's release and extradiction to Canada.

The website allegedly shows violations of Kapoustin's basic due process and fundamental rights in the trial, torture, solitary confinement, cruel and unusual treatment in prison, and the irresponsible conduct of a number of former government officials.

"For so many years, the family has been told to keep quiet about these injustices while numerous promises to bring Michael home were repeatedly broken. The time has come to speak up," said international lawyer Dean Peroff of Amsterdam & Peroff.

Michael Kapoustin's wife, Tracy, has been raising their 14-year-old son alone for most of the boy's life as a result of the imprisonment.

Kapoustin, now 55, was a millionaire entrepreneur. He became very influential in Bulgarian business circles in the early 1990s as Communism collapsed and Capitalism began to flourish in the Eastern European nations.

Bulgaria: A Hard But Lucrative Place for SMEs
03.08.2007 For the past seven years, Swiss entrepreneur André Felder has been working in Bulgaria. Despite some unpleasant experiences, he does not regret his decision to move there. At a forum during the latest Credit Suisse field trip to Bulgaria, he warned investors and business people against having unrealistic expectations.

What was Bulgaria like seven years ago?
Chaotic. The mafia were also rampant. The gray economy was bigger than the "regular" economy. But it was a time of optimism and a new direction, and perhaps a dose of "Wild West" capitalism is simply part and parcel of that sort of pioneer era.

What exactly do you mean by Wild West capitalism?
We lived by the laws of the jungle. My original partners very nearly forced me out of the business, for example - without providing any form of compensation. And institutional sloppiness and arbitrariness nearly drove me to bankruptcy.

Do you think that would still be possible today?
Organized crime remains active - but it's in retreat. And obviously corruption is still an issue. But recently in particular, a lot of things have changed for the better. The reform process is beginning to take effect, and there is broad agreement among people about the need for reforms in the administration and justice system.

ROMANIA AND BULGARIA

The EU's Unpopular Expansion

In its latest progress report, issued in December, the European Parliament expressed shock at the "audacity of organized crime" in Bulgaria. According to Western observers, the economy is pretty much controlled by shady insider dealing. Recently, Susette Schuster, a judge from Cologne, was sent to Bulgaria on an EU mission and came back with "alarming" findings: The legal system is tangled, judicial reform is chaotic, the trust of the citizens in the state is weak, and corruption is widespread.

In addition, officials at Eurojust, the EU body that coordinates the member states' judicial systems, have also discreetly contacted parliamentarians in Brussels. They are afraid that their fight against terrorism and the trafficking of drugs, weapons and children would be made more difficult once Bulgaria's criminal gangs' informers in government gain access to all of the files. People who once dealt in drugs at the behest of the Communist state apparatus, now hold key positions in the police, the judiciary and politics. The same people will soon find themselves in control of €2.3 billion that the Bulgarians are due to receive in subsidies from Brussels over the next three years.

23.01.06
Кристиян Кирчев
The so called people's representatives - the politicians onf Bulgaria are just business men people in suits working in the parliament, geting payed by the national taxes collected off the people. Those Bulgarian businessmen - called Government Deputies (GD) - are trading with national goods. Whenever money come from the European Union (EU), the GD's are spreading them amongs themselves. They think and act as they think: "Those are money for our associates, their firms, and our companies. Let's split them, and screw the republic. This Is Capitalism!" Post-communistic looting of the the country. All closed factories, all farms forced to bancrupcy, all MAIN sectors of transport, comunication, and energy are privatised, and/or sold out to foreign investors in suspicious secret deals, are dooming a nation to be the employer of his own looter.

Luchezar Boyadjiev interviewed by Geert Lovink

The first interview was conducted during the opening of Hybrid Workspace in June 1997, the temporary media lab in the margins of the big art show Documenta X in Kassel (Germany).

> Could you explain us the current situation in Bulgaria from your point of view? For a long time, the Bulgarian communists have stayed in power, after having changed their faces. Recently, a lot has happened in South-East Europe... student demonstrations in Serbia, the first non-communist government in Romania, anarchy in Albania... What is the reason of the apparently unique position of Bulgaria?

The more time passes after 1989, the more differences there are between each country in Eastern Europe. In the past, Bulgaria had a privileged position, in terms of being one of the closest allies of the Soviet Union. The country enjoyed an almost free supply of raw materials, crude oil, electricity. A utopian situation, having no worry about how to produce and make a living for its citizens. Now, it looks as if time has stopped after 1989. We realized this only recently. On the surface, a democratic reform took place. A free-market economy was introduced, of which I am not a fan, but which seemed to be the only way out of the deadlock. As it turned out, there is no capitalism, so consequently, there is no opposition to capitalism. This applies also to the social situation. A redistribution of the old money of the regime is now taking place among its loyal followers who are now top bankers or mafia leaders. This is not capitalism, it is Monte-Carlo money. Easy come, easy go, no re-investments.

Bulgaria

Violina Hristova of Sofia, senior reporter for Standart News specializing in reporting on organized crime:

What distinguishes my country are the extortion rings controlled by groups of ex-athletes, especially wrestlers. They also control narcotics traffic, smuggling, counterfeiting and prostitution. They call it the "Wrestlers mafia. " The wrestlers' weapons are always baseball bats, and they use "security organizations" (protection agencies) as their cover.

Although many people talk about connections between the Bulgarian and Italian mafia, there's no proof. Some experts estimate 4,000 people are involved in this kind of organized crime. These groups launder money and bribe public officials and police. The businessman who does not go along may be beaten severely or even murdered. Sometimes the wrestlers make mistakes. For example, last summer in Sofia they kidnapped a businessman's mother-in-law instead of his wife. Many of these wrestlers are former members of government security forces.

Some people estimate the wrestlers control 50% of the nightclubs, 70% of the gambling and 80% of the cigarette and alcohol trade in Bulgaria, and are partners or owners of six casinos. The Wrestlers mafia originated after the change of the political system, as big groups of shady operators began employing the ex-weightlifters, ex-wrestlers, ex-boxers. Also employed were former police officers and the security services. Many believe these profits from illegal activities are being invested in the privatization process and legitimate businesses will emerge from them.

Crime and Democracy in Bulgaria
By Robert Kaplan | Saturday, June 23, 2001

In Bulgaria, I found a society that was regarded as a democratic success abroad, but was really under siege from criminal clans. Organized crime is, of course, a common feature of former Soviet bloc societies.

Romanians seem to be adapting to global capitalism in the same aggressive manner they once adapted to communism.

By the 1980s, communist parties had evolved largely into large-scale mafias which, when the system collapsed, simply divided into smaller mafias that purchased politicians in all those new and weak democracies. Common, too, are allegations of a new Russian imperialism by way of European-wide crime connections and energy monopolies like Gazprom.

Quasi-legitimate enterprises

Nowhere, however, were such phenomena so transparent as in Bulgaria when I visited in 1998. Is is a poor, small country in which democratic institutions have been fighting valiantly against Russian attempts at "re-satellitization" by criminal stealth. Bulgaria illustrates how the potential evils of the new century are ominous precisely because of their ambiguity. It is no accident that here the word "groupings" is used instead of mafias.

These networks include legitimate enterprises — audited by Western accountants and, increasingly, linked to Western multinationals — as well as legitimate entities. They engage in activities such as compact-disk pirating, illicit-drug activity, money laundering and extortion. One foreign diplomat told me, "These groupings engage in violent intimidation and corrupt politicians. Yet, their genius is to cover their tracks to an extent that they are quasi-legitimate."

Transition economy crime stories

The breakdown of Bulgaria's Communist state provided numerous opportunities for people close to power to cash in.

Bulgarian crime has no centuries-old tradition like Italy's, or even one of heroic thieves and warrior clans as in Russia, Serbia, or Albania. Nor is there the colorful ethnic ingredient here that distinguishes criminal circles in the Caucasus, particularly in Georgia and Chechnya, with their family mafias and highwaymen. The Bulgarian groupings essentially are the result of the transition from communist totalitarianism to parliamentary democracy.

Cashing in

The breakdown of the Communist state provided numerous opportunities for people close to power to cash in. Some Olympic wrestlers, for example, gained control of motels along Bulgaria's international highways and at border checkpoints.

These motels provided revenues from prostitution and currency dealing and helped give them access to the car-theft business. This involved the theft of both local vehicles and those stolen in Western Europe, which passed through Bulgaria to the former Soviet Union by ship across the Black Sea.

A Russian satellite for crime?

In Bulgaria, Russians as a people are very much liked, even if Russian communism is not.

Not surprisingly,a strong bond exists between Bulgaria's groupings and Russia. Political party connections evolved into economic connections when Bulgaria was still a subservient satellite state. Strong links between the KGB and Bulgaria's communist-era security service became crime connections. And the countries' similar Slavic languages helped nourish social connections among criminals.

But what makes Bulgaria particularly vulnerable to Russian organized crime is that unlike other formerly communist states such as Hungary and Romania, here — for linguistic and historical reasons — Russians as a people are very much liked, even if Russian communism was not.

Not all that glitters is gold

Thus, even with a stable democracy, Bulgaria may not become a civil society if it continues to be undermined by this new and subtle Russian imperialism. As former president Zhelyu Zhelev told me, "The political parties could easily evolve into masks for mafia structures, with crime groups financing election campaigns."

The West could then leave Bulgaria to its fate by declaring it a "democratic success story." Since the Washington establishment typically prefers to simplify its problems by accepting official truths this seems a possibility. Bulgarians are right: They are in danger of being forgotten.

Hope and misconceptions in Romania and Bulgaria

What the man on the street fears

Many Bulgarians and Romanians fear, however, that prices will rise after 2007 and that they will no longer be able to afford the basics, such as a heated apartment, a kilo of pork and a cinema ticket. Nothing sets of older people, farmers, and other ordinary citizens like the concept of EU accession. They worry that the EU will interfere too much in agriculture and that home-brewed schnapps will be made illegal.

Less than two years before they are due to join the EU, the feared rise in the cost of living is already beginning. At the end of September, a new tourism law was passed in Sofia: from now on the prices for Bulgarians and for foreign visitors should be comparable. Up until now, as in many other Eastern European countries, foreign tourists in Bulgaria paid many times more than domestic tourists for taxis, hotels, or museums. Thus the average Bulgarian fears that EU accession spells the end of annual holidays to the Black Sea. With an average income of €140 a month, Bulgarians cannot compete with tourists from the rest of the EU.

Faith in the EU-friendly political classes also suffers on account of corruption and crony-capitalism, both alive and well in Bulgaria and Romania. The biggest Bulgarian weekly paper, 168 chasa (168 hours) broke the news at the end of September that the young and ambitious Minister of State, Nikolai Vassilev, has, it is alleged, virtually exclusive control over the distribution of the money from EU Structural Funds. Meanwhile, according to the Romanian English-language daily paper Nine O’Clock, the Romanian President, Traian Basescu, has suggested a year long “abstinence from corruption” to his people at the end of September. This is theoretically supposed to wipe out corruption…

The Mafia is delighted

In the midst of this, Bulgarian and Romanian politicians are breaking into a sweat in order to fulfil their election promises: primarily, the longed-for EU accession in the year 2007. Bulgaria is behind in law reform, with 22 draft bills still waiting to be passed. Similarly, according to the Associated Press, the Romanian Prime Minister, Calin Tariceanu, pointed out at the end of September that his parliament had “still around 100 bills” that needed to be passed before EU accession.

The Mafia is delighted at the delays. The volume of human trafficking in the region is alarming, reports Richard Danziger from the International Organisation for Migration (IOM) in this year’s report on South Eastern Europe. General Boyko Borissov was, until recently, the General Secretary of the Bulgarian Ministry of the Interior and “Enemy No.1” of organised crime. In an interview with the Bulgarian magazine Egoist, he says that the fight against trafficking in drugs and people, money laundering and credit card fraud, as well as extortion, has had more success over the past few years. But unfortunately, he often finds that his hands are tied by the contradictory legal environment. Bulgarians and Romanians alike hope that these things will change with EU accession

Two Types of Post State-Socialist Capitalism
Following the disintegration of state socialism, a market system based on private ownership and production for profit has been constructed in all but three of the former state socialist societies.

There is no chance of a return to state socialism. The measures of reform have secured a high level of irreversibility: the planning mechanism has been destroyed, and the lynchpin of the political system, the Communist Party apparatus, dissolved. Whether these countries have moved to a modern capitalist system is open to question. The consequences of transformation have led to three blocks of post state socialist countries: two of which are market orientated and have large private sectors and one small cluster of countries which preserve statist economies (Uzbekistan, Belarus and Turkmenistan, which are ignored in the following discussion). Despite the significant policies of destatisation, the post-communist societies all share in common a higher level of state control than market capitalist countries and most have stock market capitalization at the levels of very low income countries. In terms of social development, the post-communist states have fallen in the world rankings of human development.

Weber’s claim that modern capitalism is distinguished by ‘the pursuit of profit and forever renewed profit, by means of continuous, rational, capitalistic enterprise’ applies more to the first group than to the second. The first includes the central European countries – Slovenia, Czech Republic, Poland, Hungary, Slovakia and Estonia – all new members of, and having borders with, the European Union. These countries are approaching the levels of OECD countries with respect to marketisation and privatisation, they also have a very positive participation in the global economy. This group is closest to the continental type of market capitalism, though it is more state led. They all have a low level of stock market capitalization and more developed welfare states, making them distinct from the Anglo-American countries. What is particularly important, from the point of view of the transition to a self-sustaining capitalist system, is that a high level of accumulation of capital is sustained. The figures cited above (Fig 3-2 and Table 3- 3) is the exceedingly low levels in all the former state socialist societies. Some, but not all, have very high exposure to the global market which acts as an exogenous source of economic change.

They resemble, and are likely to identify with, the continental European system as they all have embedded welfare states derived from the state socialist period. Economic coordination here is not through stock exchange capitalism, but is dependent on the state and also on companies with an international presence. Tutored by the conditionality requirements of the EU and the IMF, they have developed not only the economic preconditions of capitalism, but also the political and societal: an appropriate type of government, a civil society and an emerging bourgeois class structure.

A second model is that of a hybrid state/market uncoordinated capitalism. This is a relatively economically poor group which has had an unsuccessful period of transition: Russia, Ukraine, Kazakhstan, Georgia, and Moldova. These countries have exceedingly high income differentials, and high levels of poverty and unemployment. They have the characteristics of low income, primary sector exporting countries, with a very low integration into the global economy. They have particularly low levels of domestically sourced investment, though those with a large energy sector (such as Russia) have significant and disproportionate foreign direct investments.

The form privatisation has taken may lead to relatively few owners in extractive industries, such as oil, giving rise to great wealth on the one hand and, because of relatively low employment rates and ineffective redistribution policies, to poverty on the other. Economic policy should be concerned not only with efficiency, but also with equity. The move to the market and private ownership has significantly diminished equity in the post-communist states – though less so for those bordering on the European Union.

Bulgaria

Country Reports on Human Rights Practices - 2005
Released by the Bureau of Democracy, Human Rights, and Labor
March 8, 2006

Bulgaria is a parliamentary democracy of approximately 7.7 million persons, and is ruled by a coalition government headed by Prime Minister Sergei Stanishev. Multiparty parliamentary elections in June were deemed generally free and fair despite some reported irregularities. While civilian authorities generally maintained effective control of law enforcement officers, there were some instances in which law enforcement officers acted independently of government authority.

The government generally respected the human rights of its citizens; however, there were problems in several areas. The following human rights problems were reported:

• police abuses, including beatings and mistreatment, of criminal suspects, prison inmates, and members of minorities
• harsh conditions in prisons and detention facilities
• arbitrary arrest and detention
• impunity
• limitations on freedom of the press
• some restrictions on freedom of religion
• discrimination against certain religious minorities
• widespread corruption in executive and judicial branches
• violence and discrimination against women, children, and minority groups, particularly the Roma
• trafficking in persons
• discrimination against persons with disabilities
• child labor

SEE:

Crime Pays If You Are Rich

Bulgarian Women Abused

Albania's Hero

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Tainted Trial

These guys were not just acquitted they were declared innocent. Something the court did not do for Stephen Truscott.

Superior Court Justice Mary Lou Benotto ruled yesterday that New Jersey-based Armour Pharmaceutical Co. and the four doctors, including a former top Canadian Red Cross official, behaved responsibly in distributing HT Factorate.

"There was no conduct that showed wanton and reckless disregard. There was no marked departure from the standard of a reasonable person," she told a packed University Ave. courtroom. "On the contrary, the conduct examined in detail for over 1 1/2years confirms reasonable, responsible and professional actions and responses during a difficult time.

"The allegations of criminal conduct on the part of these men and this corporation were not only unsupported by the evidence, they were disproved," she said. "The events here were tragic. However, to assign blame where none exists is to compound the tragedy."

While in other countries corporate officers and politicians went to jail over the tainted blood scandal in Canada the government passed legislation to forgive government ministers and politicians and bureacurats responsible for the tainted blood scandal. So the Judge ruled accordingly. What is good for the goose is good for the gander. And the rest of us be damned.

In his 1997 report on the country's tainted blood scandal, Justice Horace Krever strongly criticized Canada's reaction to the AIDS crisis. Krever said the decision by Red Cross officials to exhaust their supply of untreated blood products before switching fully to safe heat-treated concentrates in 1985 was especially careless.

Victims of tainted blood reacted with seething disbelief. "People were infected and people died," John Plater of the Canadian Hemophilia Society said outside the courthouse, his voice rising in anger.

"How that could possibly be considered reasonable behaviour is beyond us."

Mike McCarthy, who contracted hepatitis C from tainted blood, went further, saying the judgment was a "miscarriage of justice." He called on the Crown attorney to appeal the acquittals.

But David Scott, a lawyer for a senior Health Canada official who was acquitted, said "these charges should never have been laid. It was a mistake from the beginning and people's lives have been brutally affected by them."

Eddie Greenspan, lawyer for the former head of the Red Cross blood program, described the ruling as "absolute vindication and complete exoneration" on a scale that is rarely seen.

"The bottom line is that there was no criminal conduct by anyone who was in charge. The bottom line is that Canada was well served by people who made these decisions."

Defence lawyers said that, given the exoneration, they will seek to have the legal fees of the accused reimbursed and may even launch lawsuits for malicious prosecution.

Proving once again that the courts in Canada uphold the state and business interests against the public interest.

In our free enterprise system, there is no legislation to oblige an employer to remain in business and to regulate his subjective reasons in this respect . . . . If an employer, for whatever reason, decides as a result to actually close up shop, the dismissals which follow are the result of ceasing operations, which is a valid economic reason not to hire personnel, even if the cessation is based on socially reprehensible considerations.

If Conrad Black had been put on trial in Canada he would have been acquitted.



Find blog posts, photos, events and more off-site about:
Canada,Mary Lou Benotto, Regulation, Lord-Black, crime, corporate-crime, corporation, Armour Pharmaceutical Co, Conservatives, Liberals, Canada, politics, Krever, Conservatives, AIDS, Tainted Blood, red cross,

Crime Pays If You Are Rich

Capitalism originated in plunder, the primitive accumulation of wealth, its origin lay in the evolution of class of mercantile bankers who hired mercenaries to expand their markets. As Arrighi points out in the Long Twentieth Century, the transition from Catholic Feudalism to capitalism was the creation of free trade private navies with marines in the service of merchant capital who created the bourse; the modern stock exchange.

Today capitalism still engages in economic criminal activities which are socially sanctioned. It is called tax avoidance. Where the law or regulations are silent, or allow for a wide interpretation of what is allowed or not, the speculator, the CEO the venture capitalist, etc.etc. will take advantage to get around the law or regulation. Until they are caught or bankrupt the company. Then new laws are created by the state to level the playing field, and the whole process comes full circle.

The one thing criminal capitalists can count on is being welcomed back to the old boys club with open arms by their ruling class chums. Heck they are proud of their reputation as the black sheep. And their class applauds their valiant efforts.

Of the more than 1,200 wealthy individuals that have appeared on Forbes's annual list of the 400 richest Americans over the past quarter century at least 13 have been convicted of serious crimes or jailed.

They include some well-known names: Wall Street's, Ivan Boesky and Michael Milkin from the Gordon Gecko junk bond era, the silver-speculating Hunt brothers, media diva Martha Stewart and the late Leona Hemsley, the hotelier.

SEE


A Day in the Life of Corporate Criminals

It's the company you keep

Agribusiness Bad Boys

Criminal Capitalism-West-Jet

Money Laundering Canadian Style

India Is Now A Capitalist State

Too Greedy

White Collar Crime Reporter 1

Criminal Capitalism The Story of 2006

Hedge Funds, Junk Bonds, Ponzi Schemes

Bring Out Your Dead

Money Laundering Canadian Style

Criminal Capitalism Redux

Credit Card Fraud

Golden Parachutes

1666 The Creation Of The World

Dirty Laundry Business as Usual

Calgary Fraud Funds Dubai Boom

Casino Capitalism

Are Income Trusts Money Laundering

Unproductive Capital

More Criminal Capitalists

Income Trust Fraud

Criminal Capitalism: Office Romance

Yeltsin's Legacy

Contracting Out Is A Crime



Find blog posts, photos, events and more off-site about:
CEO, pay, golden parachutes, Corporations, fatcats, rich, super rich, America,
hedge funds, ponzi, risk, capitalism, bubble, Junk bonds,
criminology, corporate-crime, white-collar-crime, sociology, hedge funds, scandal, criminal-capitalism, workers, employees, theft,

Purdy Crawford Rescues the Market

The capitalist state rides to the rescue with a corporate governance model for the credit market in Canada. Don't here no crying about market interference by the state. Nope. Can't over all the applause from the vested interests.

Another nail in the coffin of the myth of the free market. It's a market and it ain't free, it's controlled by them in power. Despite all their monetarist ideology when the crisis hits they run to their nanny state.

It began in August when Quebec based National Bank, not the Central Bank, bought back its loans and shored up its Mutual Fund Altamira. Because investors, consumers, you and me, are ignorant of the market risk of some their investments.

National Bank's news release on behalf of Altamira funds may have been most educational from the investor's perspective. The bank noted that Altamira money market funds offer no assurances they can maintain their net asset value and protect against losses. It also pointed out that money market funds are not insured by Canada Deposit Insurance Corp., as are high-interest savings accounts and guaranteed investment certificates.

In shoring up the money market franchise for the mutual fund industry, National Bank has also highlighted the fact that these funds are not risk-free. This brings us back to high-interest accounts, a corner of the financial marketplace where there happens to be some stiff competition these days. The rates are higher than money market funds, fees are non-existent and federal or provincial deposit insurance offers a safety net. What a deal.

It was followed this week by the Bank of Canada joining with the private/public investment and banking sector to develop a bail out plan for institutions.

And when they say they are protecting investors ferget about it. They are protecting their investment. They are speaking of commercial investors like our pention funds and private equity as well as mutual funds.

After all the Ruling Class takes care of its own, and their investments.

A plan to rescue about $35-billion of illiquid asset-backed commercial paper moved a step forward yesterday as holders of the debt formed a committee to oversee how the proposed restructuring would happen.

And, in another sign that Canadian money markets may be inching towards stability, the Bank of Canada yesterday announced it was restoring standard collateral conditions for providing liquidity to financial institutions on an overnight basis. "While money markets continue to experience difficulties, there has been significant progress in the functioning of the overnight market," the bank said in a statement.

During the height of the recent stock-market turmoil in mid-August, the bank widened the kinds of collateral it would accept against lending to include such instruments as provincial securities and commercial paper, as well as the standard government of Canada paper.

Meanwhile, the committee overseeing the commercial paper rescue plan will be chaired by Osler, Hoskin & Harcourt lawyer Purdy Crawford and will include representatives of Canaccord Capital Corp., Canada Post, National Bank Financial and the Caisse de depot et placement du Quebec.

"Our investor committee will be looking to implement a solution that addresses the best interests of investors generally, and at the same time allows for a successful restructuring and a return to market stability for these investments," Mr. Crawford said in a statement.

Under the so-called "Montreal Proposal" troubled asset-backed commercial paper (ABCP) would be converted into longer-term debt with maturities stretching out in some cases several years into the future as a way to improve chances that investors will get their money back. Details of how the conversion will happen will likely be sorted out by this new committee.

Canadian investors stuck with illiquid asset-backed commercial paper should hang on to their investments while an investor committee attempts to find a solution that will get their money back, said the head of a committee overseeing a rescue plan.

``Hopefully if everybody stays cool and somebody doesn't start pulling plugs, this thing will work out without them having any losses,'' Purdy Crawford, who was named yesterday to lead the committee, said in a telephone interview today. ``If everybody stays cool, that's the key.''

A Pan Canadian Committee Chaired by Mr. Purdy Crawford has been formed today to oversee the proposed structuring process of the Third Party ABCP. This Committee, which includes investors who were signatories to the Montreal Proposal plus other significant holders, brings a broad cross section of investors with a national perspective, relevant experience and associations with each of private business, institutional investors, government agencies and crown corporations. Comprising this Investor Committee are now:

<< - Mr. John Crichton, President and Chief Executive Officer, NAV CANADA. - Mr. Alban D'Amours, President and Chief Executive Officer, Desjardins Group; - Mr. Gordon J. Fyfe, President and Chief Executive Officer, PSP Investments; - Mr. Doug Greaves, Vice President Pension Fund and Chief Investment Officer, Canada Post; - Mr. Rowland Kelly, Interim CEO, Credit Union Central of British Columbia, representing Credit Union Central of Canada; - Ms. Karen Kinsley, President and Chief Executive Officer, Canada Mortgage and Housing Corporation; - Mr. Mark Maybank, President & Chief Operating Officer, Canaccord Capital Corporation (Canadian Operating Subsidiary); - Mr. Dave Mowat, President and Chief Executive Officer, ATB Financial; - Mr. Ricardo Pascoe, Co-President and Co-Chief Executive Officer, National Bank Financial Group; - Mr. David G. Patterson, Chair and Chief Executive Officer, Northwater Capital Management; - Mr. Henri-Paul Rousseau, President and Chief Executive Officer, Caisse de dépôt et placement du Québec; - Mr. Jim Scopick, President and Chief Executive Officer, Credit Union

And Purdy Crawford is a player. After all he founded the Atlantic Institute for Market Studies (AIMS), which is the East coast clone of the right wing think tank the Fraser Institute.

Purdy is an excellent example of the modern member of the capitalist ruling class. They secure their positions of power through interlocking boards of directorships. He adapted his corporations during the mean and lean eighties and then in the booming nineties to create large cap companies capable of predatory take overs or become subject of take overs themselves. He adapted corporations into a new tax shelter; Income Trusts.

He recognized the current condition of capitalism; mergers and acquisitions in the age of modern financial globalization. This resulted in large scale accumulation in a single company, selling off parts of itself to global flows of capital.

It resulted in the selling off of Canadian companies to foreign investors in order to mass enough capital to take over someone else, or be gobbled up in the process if your gamble fails as was the case with Inco ,which Purdy was a director of .

And as he did with Imperial Tobacco severing it from Imasco. Which was finally bought out by its parent, the notorious cigarette smuggling BAT.

As a spokesperson for big tobacco he defended targeted marketing at youth. This qualifies him to speak on; Ethics, Values and Business Success - Purdy Crawford (May 11, 2006)

As a securities adviser he promotes his ideal of market consolidation with a single Securities commission in Canada. In a way this melt down in the market has proven his point and in rescuing the paper market will lessen the objections to it by provincial mandarins.

Does it all really matter as far as small investors are concerned? My hunch is, not very much. Of course we would all welcome a lean, mean federal commission spearheaded by a home-grown Eliot Spitzer to keep Bay Street in line. However, that is far from what Mr. Crawford and some of the other reformers have in mind. Their blueprint calls for another bureaucratic restructuring rather than a caped crusader.

Take a look at the Crawford Panel’s proposals. We are to have a new agency composed of 13 provincial and federal representatives, each having a single, equal vote, which would approve all the rules and select the regulators. In other words, the existing 13 commissions would be gathered under one roof and given equal power. The mind boggles. Can you imagine Ontario, Quebec, and Alberta all being consistently on the short end of 7 to 6 votes?

Our Global Capital Markets Plan has four key building blocks.

• First of all, enhancing regulatory efficiency by creating a common securities regulator that is principles-based, proportionate and tailored to the unique makeup of Canada’s capital markets.

• Secondly, strengthening market integrity by enhancing investor protection, pursuing the highest standards of governance and enforcing our laws more vigorously.

• Thirdly, by creating greater opportunity for business and investors by pursuing free trade in securities with the United States and other Group of Seven (G7) countries. And I’ll come back to that in a moment about where that is at in terms of our discussions internationally.

• And fourth, improving investor information by promoting financial literacy, particularly for young Canadians, by developing new financial education materials.

So these four building blocks make up the foundation of our Capital Markets Plan. None are mutually exclusive. They all support one another, and I would like to take the next few minutes to focus on one building block in particular, and that is strengthening market integrity, which begins with enforcement.

With Purdy's connections to Montreal the city and the exchange, as well as having a home there and being on the Board of McGill. Gee where do you think they would put a national Securities commission.

Canadian Securities Commission,
Calgary, Alta (or Montréal, PQ?)

PORTRAIT OF A CAPITALIST

Purdy Crawford COUNSEL Toronto Office Email: pcrawford@osler.com Tel: (416) 862-5869 Year of Call Fax: (416) 862-666 Ontario 1958 Nova Scotia 1

Purdy is a native of Five Islands, Nova Scotia, and a graduate of Mount Allison University, Dalhousie Law School and Harvard Law School. He pursued his legal career with Osler, Hoskin & Harcourt LLP, practising primarily in the corporate/commercial area. He left Osler to join Imasco as C.E.O. in 1985 - retiring as C.E.O. in 1995 but continuing as non-executive Chairman of Imasco Limited, CT Financial Services Inc. and Canada Trustco Mortgage Company until February 1, 2000.

Purdy rejoined Osler as Counsel in March 2000. He sits on the boards of several large Canadian and U.S. public companies. Purdy is Chair of the Five-Year Review Committee, appointed to review securities legislation in Ontario, and former Chair of the Securities Industry Committee on Analyst Standards. In 1996 he became an Officer of the Order of Canada. He was inducted into the Business Hall of Fame of Nova Scotia in 1997 and became a Fellow of the Institute of Corporate Directors in 1999. In 2000 he was inducted into the Canadian Business Hall of Fame and named Ivey Business Leader of the Year. He is Chancellor Emeritus of Mount Allison University.

He was the Chairman of the Atlantic Institute for Market Studies (AIMS), Chancellor of Mount Allison University, and Chairman of AT&T Canada Corporation. He was a corporate director for SEAMARK Asset Management Ltd. and is currently a member of the board of the Canadian National Railway Company. He is a Governor of the University of Waterloo.

Timeline: Purdy Crawford

Toronto
Born Nov. 7, 1931, in Five Islands, Nova Scotia
Allstream chair, corporate governance advocate

1958: Starts practising at law firm Osler, Hoskin & Harcourt; specializes in corporate-commercial area. Becomes senior partner in 1970.

1985: Joins tobacco giant Imasco Ltd. as president and COO. Is named CEO in 1986. Transforms it into a diversified holding company.

1995: Retires as Imasco CEO, but continues as non-executive chair until February 2000, when Imasco is bought by British American Tobacco.

G7 Summit, Halifax, Purdy Crawford, co-chairman of the summit sponsorship committee.

1999: Joins AT&T Canada as a director. Becomes chairman a year later. Oversees its transformation into debt-free Allstream.

2000: Rejoins Oslers as counsel. Chairs Ontario minister of finance's five year review committee, which examines securities regulations.

He is chairman of the Ontario Government's Crawford Panel on a Single Canadian Securities Regulator.

Director MTS/Allstream

Purdy Crawford Named Conference Board's 2003 Honorary Associate

The CPP Investment Board has hired Toronto lawyer Purdy Crawford as an external adviser on conflicts of interest and ethical conduct, providing a new contact for whistleblowers.

John MacNaughton, chief executive officer of the CPP Investment Board, said yesterday no other federal Crown Corporation has created a similar position with an outside, independent person in the job.

The CPP Investment Board was formed in 1997 to manage the assets of the Canada Pension Plan.

It is currently responsible for overseeing $31-billion in equity, real estate and infrastructure assets, and will also assume control of a further $35-billion in bonds and cash investments over the next few years.

Clearwater Seafoods Income Fund, the Board of Directors of CS ManPar Inc. (the managing partner of Clearwater Seafoods Limited Partnership),

CRAWFORD, Purdy, O.C., Q.C., B.A., LL.B., LL.M.; b. Five Islands, N.S. 1931; e. Mt. Allison Univ. B.A. 1952; Dalhousie Univ. LL.B. 1955; Harvard Law Sch. LL.M. 1956;

Member of the Board of AT&T Canada
Member of the Board of Avenor
Member of the Board of Camco Inc.
Member of the Board of Canada Trustco Mortgage Company
Member of the Board of Canadian National Railway
Member of the Board of CT Financial Services Inc.
Member of the Board of Dominion Textile Inc.
Member of the Board of Foot Locker
Member of the Board of Imasco Limited (as Chairman, 1985-2000)
Member of the Board of Inco Limited
Member of the Board of Maple Leaf Foods (1973-)
Member of the Board of Nova Scotia Power
Member of the Board of Petro-Canada
Member of the Board of Trinova Corporation
Member of the Board of Woolworth (-1997)

Governor Emeritus, McGill Univ.; Chancellor, Mount Allison Univ.; called to Bar of N.S. 1956, of Ont. 1958; student with Osler Hoskin & Harcourt 1956, Assoc. Lawyer 1958, Partner 1962, Sr. Partner 1970-85; cr. Q.C. 1968; Special Lectr. Osgoode Hall Law Sch. 1964-68, Univ. of Toronto Law Sch. 1969-71, Bar Admission Course 1969-72;

Co.-Secy. Atty. Gen.'s Comte. on Securities Leg. 1964-65; Chrmn. Ont. Taxation Sub-sec., Cdn. Bar Assn. 1966-68; Treas. Nat. Taxation Sec. 1968-70; Past mem. various comtes. on taxation and of Bd. Govs. Cdn. Tax Foundation 1970-72; Cdn. Inst. of Ch. Accts. Special Comm. to Examine Role of Auditor 1977-78; Accounting Rsch. Adv. Bd. 1977-79;

Chrmn. & C.E.O., Imasco Ltd. 1985-95;

Officer, Order of Canada 1996;

United Church;

recreations: bicycling, golf, skiing;

Canada's National Ballet School, Honorary Circle Members

Shannon School of Business

The National Centre for Business Law UBC

Canada's Outstanding CEO of the Year™ Advisory Board

Canadian Institute of Chartered Accountants Advisory Board

Board Member; Dalhousie University, McGill, University of Western Ontario, UPEI.

Clubs: Mount Bruno Golf; Parrsboro Golf (N.S.); Mount Royal; Forest & Stream; Granite; Toronto; Devil's Pulpit Golf & Country; York Downs Golf & Country; Caledon Ski; The Club Pelican Bay (Florida);

Homes: Five Islands, N.S. (summer) Belfountain, Ont., Toronto, Ont. and Westmount, Que.;

Office: Toronto, Ont.

------------------------------------------------------------------------------------------------

I want to thank Purdy Crawford for his introduction. Purdy is truly a great Canadian. I speak for a whole generation of leaders in many different spheres across Canada – who would say that Purdy Crawford made a difference in their lives. If you had to choose one role model, Purdy Crawford would be, for many of us, our first choice.

Ed Clark, President & CEO, TD Bank Financial Group
Remarks at the 2007 Mount Allison University Convocation.

Of course for workers, Purdy is less of a role model, as he sits on the board of CN. No doubt in part it was thanks to his government connections that helped push the Federal Government to legislate away CN workers right to strike this spring.
So explain to the CN workers about how E. Hunter Harrison's compensation made off their backs, is judged 'equitable'.

65 Means Freedom to Start a Whole New Career - March 15, 2006

Then there's Purdy Crawford. At 74, he serves on several corporate boards and is currently heading the initiative aimed at creating a single national securities regulator.

"I guess I'll slowly retire as I feel less energetic, but retirement is not the way I think about it," says Mr. Crawford, the former chief executive officer of Imasco Ltd.

Canadian workers should prepare to work beyond 65 while Purdy and pals use their pension funds for capital investment and promote extending the age of retirement.

Indeed, on a superficial level the notion of "holding corporations accountable" must seem rather appealing to a relatively broad cross-section of society, including many social and community advocates who have jumped on the corporate governance bandwagon. The language of "social responsibility" is often invoked in discussions of governance reform. Those calling for tighter control over corporate managers are often called "activists." But to whom are they asking that corporate managers be held accountable? And on what criteria? These are important questions not always addressed by those, including those on the left, beating the drum for new governance standards.

While discussing the high falutin ideals of directors control over the corporation, and its impact on CEO compensation he leaves out the need for more civil society representation on the board, from union elected directors to environmentalists, consumer adovcates, non-lawyers, etc.

Early on, the boards I was on were public boards of companies I was the lawyer for. That's a no-no today, and properly so. Boards then, depending on the circumstances, were quite the creation of the CEO. You still get quite a bit of that in the US, but here that shouldn't happen very much anymore. At least it doesn't happen where I'm involved.

Over the last eight or nine years, boards have taken much more control of companies, and CEOs are much more beholden to boards.

When I joined Imasco, I thought I'd been around so I didn't have a lot to learn. That was true of a lot of areas, but it wasn't true of operations. It was an exciting learning curve to understand how Shoppers Drug Mart operates and start adding value.

The same was true with Imperial Tobacco. I became a great believer in great operators. Business schools pay a lot of attention to strategy, but they don't pay enough attention to execution.

I went in at Imasco to become the CEO. I wouldn't have gone to become a lawyer. I might have done that today, by the way--the legal general counsel office reporting to the CEO has become much more significant. The remuneration is comparable to a fairly outstanding lawyer in a law firm. There are no pension plans with a law firm.

"The importance of good governance for confidence in Canadian capital markets" by Purdy Crawford

In the wave of corporate scandals that followed the burst of the bubble on the stock market, confidence in the business community has been badly shaken across North America. And in the subsequent wave of recriminations, business has been confronted with unprecedented scrutiny from government and regulators. Business leaders have been forced to ask about the nature, purpose and value of their enterprises beyond their bottom lines. Purdy Crawford, former chairman of Imasco and Canada Trust, was an advocate of corporate governance long before it became a flavour of the month. He looks beyond the recommendations of the Bennett- Broadbent Report and the Saucier Report in Canada, as well as the Higgs Report in the UK, and offers some simple rules for corporate governance, particularly for enhancing the independence of corporate chairs and directors.

BOARDS OF DIRECTORS - MONITORING FOR
ETHICAL STANDARDS
Purdy Crawford
Counsel to Osler, Hoskin & Harcourt LLP
Thursday October 21st, 2004
Purdy Crawford addressed the
October luncheon on the topic of
fiduciary governance. Mr. Crawford
used the Globe & Mail published
rankings of Boards of Directors
of companies that comprised
Canada’s benchmark S&P/TSX
composite index as the springboard
for his analysis on certain problems
in governance rating systems. He identified the inherent
weaknesses of this “tick the box” type approach to measuring
corporate governance and expressed his personal belief
that good long-term financial performance, or an outstanding
C.E.O., should rank higher than any ranking of the
Board of Directors. Mr. Crawford went on to talk of the
distinction between what he named fiduciary governance
(governance designed to police the integrity of the firm)
and value creating governance, and was of the view that
Canadian corporations have performed far better than those
in the US in terms of the former. Despite the current trend to
regulating fiduciary governance, Mr. Crawford expressed a
firm belief in the importance of sound leadership and
discussed the ethics and integrity program at Allstream
Corporation as an example of a solid and effective
approach. Mr. Crawford concluded his remarks by
emphasising that a culture of ethics and integrity is critical
to market credibility and maintaining confidence in the
leadership of the organization.

Then, in 2002, in the aftershock of Enron, and following investor demands to tighten up shoddy financial reporting practices, US Congress introduced the Sarbanes-Oxley Act and Canadian regulators later responded with their own set of rules. As John Carchrae, CA, chief accountant at the Ontario Securities Commission, explains, this brought greater prominence to the COSO and COCO frameworks which, although already in place, were not yet in widespread use. (For more details, see “Internal control in evolution” below.)

Purdy Crawford, who was president and CEO of Imasco Ltd. from 1986 to 1995 and a board member of several large public and private companies, is one of those who witnessed the changes in the internal auditor’s role first-hand. More than 10 years ago, he says, “the internal audit function in big companies tended to be sleepy. They were laid back, they were not a strong group.”

Eight or nine years ago things started to change, says Crawford, who is presently counsel at Osler, Hoskin & Harcourt LLP and is a member of the Canadian Business Hall of Fame. (He also sits on Manitoba Telecom Services Inc.’s board.) CEOs at the helm of corporate giants like General Electric began recruiting “swat teams” of talented internal auditors to be the eyes and ears of the company, uncovering weaknesses and helping management devise solutions to improve processes. “Today, SOX and proposed Canadian-equivalent requirements have certainly underlined the importance of the internal audit function,” he says. “One big role of internal auditing is to ... help external consultants or financial people to set up control mechanisms if they don’t exist or if they need to be strengthened.”

Not only are highly regarded lawyers such as Purdy Crawford, Q.C., and Jean Fraser, of Osler, Hoskin & Harcourt LLP, Garth Girvan at McCarthy Tétrault, and Les Viner at Torys reading about leadership these days, they are thinking about it, talking about it and taking action. Purdy Crawford, who has rejoined Oslers after most recently serving as Chairman of Canada Trust Financial Services and non-executive Chairman of Imasco, says even before he stopped practising law in 1985 to go to Imasco, he found the Harvard Business Review more interesting than the Harvard Law Review. Les Viner debates theories from the latest management literature. And James Riley at Ogilvy Renault extracts lessons in organizational growth, competition, and strategy from John Keegan’s The Face of Battle and other such military classics. They articulate such psycho-management terms as 360° feedback, EQ, and the importance of “vision”. What has the world come to?! These are supposed to be hardened, no-nonsense corporate lawyers.

“There is a revolution brewing,” exclaimed Tom Peters in 1989. That revolution, the Information/Technology Age, has since arrived and has far exceeded Peters’ predictions in terms of how massively and pervasively it would impact on the rules of economic wealth and growth, what competitive advantage is, and how people live and work. There is another revolution brewing today: in professional services. As global legal services converge and consolidate, as multidisciplinary practices enter the market, as corporate mergers escalate causing even more consolidation in the business client base, and more and more work is transacted cross-border, Canadian law firms find themselves in a difficult position. By all accounts, business is booming.

Of course not everyone is so enamored with Mr. Purdy's defense of corporate Canada when it comes to white collar crime.

---

ASC Chairman Bill Rice and Other Securities Regulators & Experts
Ignore Today's Canadian Press-Decima Poll

Add Alberta Securities Commission Chairman Bill Rice to the list of Canada's securities regulators and legal experts trying to convince us there are few high profile white collar crimes in Canada and that Canadians are less aggressive in the pursuit of law and order than Americans. Bill Rice, David Brown (former OSC Chairman and Current Chairman of the RCMP Restructuring Task Force) , David Wilson (current OSC Chairman) and Purdy Crawford (Bay Street securities lawyer and recognized architect of Canada's current securities enforcement system) are out of sync with the knowledge and standards set by Canadian society, as they are expressed in today's Toronto Star - Canadian Press report on the Canadian Press - Decima poll of Canadian attitudes towards the U.S. Conrad Black verdict and his expected jail sentencing.
"The survey of more than 1,000 Canadians found that only 8 per cent think the American jury was too severe in convicting Black on four of 11 charges earlier this month. Forty-eight per cent say the jury got it about right and 22 per cent said the verdict was not severe enough.
"Decima found that most respondents  69 per cent  would like Black to see jail time in addition to paying a fine. Just 10 per cent believed a fine is ample punishment. Some 29 per cent felt he should be sentenced to 10 years or more in prison, with another 40 per cent feeling that one to nine years would suffice."

Meanwhile, this is what Bill Rice, David Brown, David Wilson and Purdy Crawford have had to say about white collar crime in Canada:
"There's always room to improve, admits Alberta Securities Commission chairman Bill Rice. That includes changing the perception that Canada doesn't aggressively pursue rogue executives. Rice, a former securities lawyer, feels Canada too often is an easy target. Without a trial to match the visibility of Enron or WorldCom, regulators here come up short by comparison. The reality, he says, is that aggressive, U.S-style punitive action isn't the Canadian way when it comes to stock market scandals. "There is an extreme cultural difference in our approach to criminal law enforcement. We certainly don't send people away for 25 years for these kinds of things. "I happen to think our public would be horrified by it."
(Calgary Herald, "Business Scandals dog Canadian markets," dated May 28, 2007)


"David Brown, past chair of the OSC, said, "Canada's come a long way ... I think all of the pieces are in place now. We all need to give it a little more time." And he added that the lack of high-profile convictions in Canada could have something to do with a lack of high-profile crimes. "We don't seem to have seen here in Canada the high-profile failures that they have in the U.S.," he said." (Toronto Star, "Soft on White Collar Crime," May 29, 2006)



"But a small minority of firms and individuals prey on investors. Unfortunately, this small group has a disproportionate impact on the perception of Canadas capital markets. I understand the challenge of trying to close a gap between perception and reality." (OSC Chairman David Wilson Speech, "A Common Objective: Strong Investor Protection," April 26, 2007)


"Purdy Crawford, a lawyer who headed a commission that urged the creation of a single national securities regulator, said he was disappointed Canada didn't take the initiative to prosecute Black before he went to trial in the United States. "The best thing that ever could have happened to him would have been to have been prosecuted here," said Crawford, although he added the U.S. authorities' "no holds barred" approaches are also overzealous to a fault."
(Canadian Business Online,"Securities Enforcement Still Lacks Teeth Experts Say," July 17, 2007)
Canadians are well aware that economic crime is a serious problem in Canada, so the efforts of Bill Rice, David Brown, David Wilson and Purdy Crawford to coverup this fact are falling on deaf ears. The longstanding efforts of these men to coverup white collar crime and to mitigate Canada's prosecutorial response to it can only be interpreted to be a breach of trust to the Canadian people.

In a recent survey (EKOS Survey, Wave 3, 2005-2006), Canadians said economic crime was the most serious problem in Canada at 67%, gang violence rated second at 66%, and gun crime and organized crime both rated third at 54%. Terrorism rated last at 14%. When asked about what type of crimes Canadians were personally more concerned about, those polled rated economic crime first at 68%, gang violence second at 59%, gun crime third at 51%, property crime forth at 48%. Terrorism rated last at 30%.

(RCMP Integrated Market Enforcement Teams Accountability Framework - Fiscal Year Ending March 31, 2006)

On April 26, 2007, the National Pensioners & Senior Citizens Federation (450 clubs and chapters with 1,000,000 members), the United Senior Citizens of Ontario (1000 clubs with 300,000 members) and the Small Investors Protection Association jointly requested a national inquiry on the malfunctioning of Canada's securities and accounting regulation and white collar crime enforcement system.



Diane Urquhart

Independent Analyst

See:

Sub Prime Exploitation

Canadian Banks and The Great Depression

Wall Street Deja Vu

Housing Crash the New S&L Crisis

US Housing Market Crash

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Scandal in the Alberta Stock Exchange

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