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.

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.

Ted Nugent and the cancellation of the Ontario spring bear hunting season

Since the Michigan Madman keeps popping up in the news I'd like to refer back to when he was making headlines in the Toronto Star.

For many years Terrible Ted used to bring his extended family across the Saint Clair River every spring for a spot of bear hunting. Ted was a rich and reasonably famous dude and his hunting party spent tons of money in the rural Ontario economy.

Then, back in '99, Premier Mike Harris, out of the blue, cancelled the spring bear hunt.

Now, on the face of it, you'd think Mike and Ted would have quite a bit in common. Mike was one of those hard right guys who would feel right at home at a Tea Party tea party. A slash and burn union-busting redneck all the way.

So the cancellation of the spring bear hunt was a bit of a shock. People took a second look at Mean Mike. If he cared enough about those cuddly bear cubs who lost their mommies to the spring hunt, he really couldn't be such a bad guy, could he?

Of course the more liberal reaches of the media couldn't help but soften their approach to Harris after that. That most liberal of liberal Canadian newspapers, the Toronto Star, invoked the Nuge in its attempt to whitewash Harris.

You see, of all the critics of the cancellation, the Motor City Maniac was the most vocal, and that's just the foil that the Star needed to discredit all the other critics.

Like, if a self-proclaimed "greasy gun-loving guitar player" from Michigan is against this, it's obviously a good idea. Case closed.

They didn't dwell too much on the back story. A big Harris financial backer by the name of Robert Schad had a soft spot for cuddly bear cubs. Over brandies one night he says to Mean Mike, "hey pal, I'm thinking of another six-figure contribution to your re-election fund, but how would you feel about doing me a little favor? I've just been so worried about all those homeless motherless bear cubs we see every spring because of that darned spring bear hunt..."

And the rest is history.

The rest of the history includes more reports of nuisance bears every year all over rural Ontario, to the point that they're becoming a threat to campers and cottagers, but that's another story.

Sooner or later the spring hunt will be back and so will Ted and his high-spending posse.

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.