Corporate rule

Here's a question; why has our government worked so hard to make a "deferred prosecution agreement" (DPA) available to SNC-Lavalin?

Here's another one; why has no mainstream media outlet ever investigated how hedge fund sharpie Gerald Schwartz was able to more than double the value of Husky Injection Molding in less than four years?

And another; why was Hunter Harrison universally lauded as a hero in our mainstream Canadian media for eliminating over 5,000 excellent working class jobs at CPR?

Here are some tentative answers.

The purpose of a DPA is to allow corporate entities that engage in bribery, bid-rigging, and other nefarious business practices to get off by paying a fine instead of being charged with a crime. Corporations love it! Paying the fine becomes just another cost of doing business, just like the original bribe. The Trudeau government's rationale for having slipped a DPA provision into law last year, in the back pages of an omnibus budget bill, is that Canada needs to have a level playing field vis-a-vis our competitors. Ergo, if the UK and US go easy on corporate crooks, we must too, or we won't be competitive.

Husky was the life's passion of Robert Schad, a German immigrant who started out with a little machine shop in the mid 50's. He famously made Husky one of the most desirable workplaces in Canada by providing not only good wages, but unprecedented employee perks, from free meals to free day-care to on site gyms. Getting on in years, he sold his baby to Gerald Schwartz's Onex in 2007 for just under a billion dollars.

Less than four years later, Schwartz sold Husky on to another hedge fund for two billion. How did Schwartz add a billion dollars in value to the company that Robert Schad had spent a lifetime building up? He ripped out all that feel-good stuff that detracts from the bottom line, that's how. That's what "building value" looks like in the world of hedge fund operators. 

That's appalling, disgusting, scandalous... but Gerald Schwartz is a Very Big Deal who just donated $100,000,000 to the University of Toronto. No newspaper publisher, let alone reporter, is going to touch that story with a fifty foot pole, because it would be their last story.

Canadian news media lapped up every drop of mendacious idiocy that dripped from Hunter Harrison's lips as Harrison and his hedge fund boss Bill Ackman destroyed more than 5,000 working class jobs at the iconic railroad. Harrison was "the new sheriff in town," don't you know. He was going to "change the culture" at CPR.

And he did. He replaced a culture of collegiality with a culture of fear, and he and Ackman walked away with a cool two billion for their troubles. For that, they are regarded as business geniuses by our business press.

That's what corporate rule looks like. There are innumerable case studies to choose from. Eddie Lampert looted Sears Canada to the tune of billions, leaving 16,000 pensioners in the lurch, but our media claim the company failed because of changing consumer tastes and inept management. The same corporate media still proclaim NAFTA a resounding success, even as all evidence shows it decimated Canada's manufacturing sector.

Which brings us to our current Prime Minister. He serves as an invaluable cover for the greedbags who call the shots behind the scenes. All the talk about feminism and diversity and human rights is designed to take our eye off the fact that he's 100% committed to corporate rule.

Here's a bold prediction. SNC-Lavalin will yet get their DPA. Our media, both corporate and the state broadcaster, will keep hammering away at the credibility of JWR and the (completely bogus) claim that 9,000 jobs are at risk.


Corporate rule will prevail.

Who's afraid of George Soros?

That's the title of a less than insightful three-pager in the Insight section of the Sunday Star today. (not to be confused with a story by the same title in the Times of Israel from a few months ago, which pretty much plowed the same ground.)

According to Emily Tamkin, a lot of your up-and-coming populist despots in Eastern Europe are deathly scared of George Soros. They're anti-Semitic of course, as populists tend to be. It's just a thing with those populists.

The take in Israel is a little more nuanced. The Likudniks and everyone to the right of them (and shocking though it may be to fathom, Likud are now "moderates" in the Israeli political spectrum) consider Soros one of the greatest anti-Semites of our time!

So who is George Soros? Anti-Semite extraordinaire or victim of antisemitism?

That's why I think the Star might have done us more of a service if they introduced us to the guy first. Nevermind who's afraid of George Soros... who IS George Soros?

When I google that out here at Falling Downs I get about 14 million responses in .85 seconds. You probably get more in less time if your working from an urban area. And what do you find there?

Well, it looks to me like about thirteen and a half million of those sites (not that I actually looked at that many) belong to hard-core conspiracy types who are hot on the trail of the New World Order; ya, the Illuminati and all that shit.

OH MY GOD THE JEWS ARE TAKING OVER!!!

Of course they are...

Here's why I have grave reservations about George Soros, and it's got nothing to do with his ethnicity. The Open Society shtick sounds good on the face of it. Who's not for open societies? Open societies are a beautiful thing!

But what does it mean? Open to who and to what? What I find profoundly disconcerting is that time and time again Soros "philanthropy" aligns itself seamlessly with the National Endowment for Democracy and similar US government sponsored and funded "Non Government Organizations."

That's always been a bit of a mind-fuck for me; how the hell are you an NGO when you get all your funding from the US government?

But anyway, the fact that Soros and the US State Department have had many joint ventures across decades should be a giant red flag, at least to my way of thinking.

Then there's the question of how Soros makes his money. He's widely touted as one of the world's most successful investors. There are investors and there are investors. Some invest in socially positive initiatives that do more than enrich the investor. Other investors are out to loot and pillage and the public good be damned. (Which reminds me; when is somebody going to write a book about Gerry Schwartz's investment adventure in Husky Injection Molding?)

What kind of investor is George Soros? The kind who makes billions in the most sophisticated currency speculation schemes imaginable. And he's really really good at it!

Alas, that does not quite bring the same suite of benefits to humanity as, say, being a really really good brain surgeon or scientist or school-teacher. But it does keep George rolling in billions, which he can then dole out to "democracy activists" in various states where he could conceivably, some day, find himself betting against the currency of that sovereign state in order to make even more billions!

But that's just my theory.

If you've got a better one, let me know.

In praise of an honourable capitalist

Yes, I truly believe they can be found. Unfortunately it's the sleaze-bag "activist investors" and self-dealing hedgies who get most of the accolades.

But Robert Schad is one of the good guys. Schad was one of that generation of post WW II European immigrants who spent his life building up a company from nothing. The company he built, Husky Injection Molding, was known far and wide as a leader in corporate social responsibility.

In 2008 Schad sold the company for some 800 million to one of the above, who made it more efficient by stripping many of the benefits that Schad had provided his former employees, and then sold it on to another group of hedge funds for two billion.

Long before he sold out Schad had started a joint venture with a First Nation  community in Ontario. The current owners of Husky have since forced the closure of that operation for reasons that seem to have more to do with spite than anything legitimate. Reading the story of Mr. Schad's contribution to that native community underlines just what a mensch he is.

Mr. Schad is also the guy who gets credit for ending Ontario's spring bear hunt, which I once did a satirical take on. I've recently heard another version of the same story, in which far from being pals with Premier Harris, Schad supposedly told him that if he didn't cancel the hunt he was going to donate a million dollars to the Liberal party.

Regardless of which version is true, that cancellation is one of the few blots on an otherwise saintly resume.

Or not, depending on how you feel about bear hunting.

What I want to be when I grow up

Robert Schad was one of that generation of Europeans who came across in the years after the war. He started a little machine shop in Toronto in 1953. Mr. Schad worked his ass off for over fifty years. His little machine shop became Husky Injection Molding, the global leader in building the machines that mass produce all the plastic crap you buy. For many years the biggest market for injection molding machinery has been China. They buy our machines and then sell us back the crap.

Schad was a forward looking guy. He wasn't the sort of entrepreneur to maximize profits on the back of the workers. His company became almost as famous for their generous employee benefits as for their machinery. Subsidized meals in the company cafeteria. Subsidized on-site daycare. Doctors, chiropractors, and massage therapists, all right there at the worksite, and either free or heavily subsidized by the company.

Getting on in years, and not having anyone in the family interested in carrying on the business, Schad sold his company late in 2007 to a hedge fund. The price was just under a billion dollars, and Schad's share of the loot   was about 400 million. A princely sum, to be sure, but perhaps a justifiable reward for a lifetime of hard work, creating thousands of jobs, supporting many worthy causes, and so on. I suppose lots of people work hard all their lives and don't fare out nearly so well, but I'm prepared to give the system the benefit of the doubt.

I say, good for Mr. Schad.

But apparently Mr. Schad had been more a machinist and not that sharp of a businessman. The pointy pencil guys at the hedge fund were miraculously able to double the company's net operating revenue in a mere three years. Then they sold the company for over two billion dollars. Reuters reported that they had "reduced waste and shed non-core and non-performing assets". That's biz-speak for stripping out anything that isn't going to contribute to the bottom line in the next quarter. I'm wondering how many of Mr. Schad's beloved employee benefits were non-core or non performing?

If you are a young person considering a career path, this is an instructive example. You can see that there are opportunities to start a business, to grow a business, to contribute to your community. A good work ethic, an engineering degree, maybe an apprenticeship in something useful would be the tools you need to get on your way. With a bit of luck, fifty years later you can cash out with princely riches.

Or, you could do an MBA, start a hedge fund, never build anything, never create a single job, never give anything back to your community, and make twice as much money in three years as Robert Schad made in his lifetime.