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Bob Rae's Secret Life

Written by Wanda Pasz Sunday, 26 November 2006

The Liberal Party of Canada will elect a new leader next weekend. The winner has a good shot at becoming the next Prime Minister. One of the front runners is a guy who I wouldn't trust to lead my dog around the block never mind lead the country. Bob Rae.

Bob Rae: His known shortcomings are well-documented. His disastrous term (1990-1995) as Premier of Ontario was plagued by scandal, controversy and fly-by-the-seat-of-your pants decision-making. After leading Ontario's socialist-oriented New Democratic Party to victory in 1990, Rae disappointed some and horrified others. You'd be hardpressed to find anyone in Ontario who has anything good to say about him.

As law enforcement officials, social workers and social justice activists recoiled in horror (and mobsters rubbed their handed in glee), he rammed through legislation allowing casino gambling in Ontario. So insistent was Rae on his casino-enabling law that he shut down a heated debate in the legislature in November 1993 so that the law could pass before the house recessed for the holidays.

When his free-spending fiscal policy added billions (about $40 billion by the time he was booted out of office in 1995) to the deficit he inherited, he suspended collective bargaining in the public sector - a move that caused a rift among Ontario unions that has not ever really been resolved (the business unions supported Rae's move, while public sector union leaders were outraged). As if that wasn't bad enough, Rae then forced public employees to take 10 days of unpaid leave each year. The much reviled "Rae Days" live on in infamy among public employees many of who voted for the guy.

After promising to introduce public auto insurance - a key campaign plank - he promptly reneged.

He hiked university tuition fees, cut the number of places in medical schools (to decrease health care spending) and made Ontarians the most-taxed people in North America and did many other ill-considered things.

Rae's disasterous administration continues to haunt the Ontario NDP. In the decade following his booting by the electorate, the NDP has virtually disappeared from the public consciousness in Ontario, winning only a handful of the 103 seats in Queen's Park (the Ontario legislature) in subsequent elections.

In a recent article in the Toronto Sun, former colleagues lined up to crap on him.

Former Rae cabinet minister Peter Kormos:

"His left wing stances were ones of opportunism. He enjoyed the trappings of the office of premier more than the responsibilities," he said, adding that he doesn't consider Rae to be someone who relates well to the average union worker.

"Have no fear, Mr. Rae is no socialist. He is very much to the manor born," said Kormos, adding that Rae often appeared uncomfortable greeting workers at plant gates.

Timmins-James Bay MPP Gilles Bisson, an MPP in the Rae administration:

"Our party was fiercely loyal to Bob when he was premier of Ontario. Through the worst times, our party supported Bob Rae to the nth degree, and to be in a position where he has basically turned on all of us and said,'I don't care about that,' I have a hard time trying to say anything nice about him," Bisson said.

Current Ontario NDP leader Howard Hampton:

"Look, Bob Rae is interested in what's good for Bob Rae and I don't think at the end of the day that will provide very good leadership in terms of the issues that we need to address and that was his history in the NDP," Hampton said last week.

"Bob Rae was always interested in promoting Bob Rae, sometimes at the expense of his cabinet colleagues; sometimes at the expense of the whole government; sometimes at the expense of the NDP," Hampton said.

No wonder Conservative Party strategists are rootin' for Rae.

After his resounding defeat at the polls in 1995, Rae slithered off to practice corporate law and, as we will see, to help out his old business unionist pals in their times of need.

There's a whole dimension to Bob Rae that isn't widely known and it's time to change that. Throughout his campaign for the Liberal leaderhship, Rae has implied that he learned some unspecified thing from the misadventures of his Premiership and that he's evolved in some unspecified way since then. I'm not so sure.

In a recent interview in the Globe and Mail Rae smuggly pronounced, "I am what I am".

You sure are Bob. And there's something ugly in your closet that isn't even dead yet.

During his term of office Rae was a favourite of corrupt Ontario business unionists. Leaders of Ontario's construction unions made no bones about their fondness for Brother Bob (a local of the Labourers Union made headlines when union officials were alleged to have used strong arm tactics to "encourage" attendance at a $1500 a plate fund raiser for him). But an even cozier relationship existed between Brother Bob and one Clifford Evans.

Cliff Evans
Bob Rae's pal former UFCW leader Cliff Evans

When the Rae administration came to power in 1990, Evans was the leader of the Canadian branch of the United Food and Commercial Workers Union and the head of the investment committee of its massive Canadian Commercial Workers Industry Pension Plan (CCWIPP, pronounced "quip"). Evans was about to embark on a bizarre investment spree that would, over the course of the ensuing decade, leave the pension plan badly insolvent and put hundreds of millions of dollars in the hands of a convicted sex offender and a mixed bag of other fly-by-nighters.

Evans was a big supporter of Rae and Rae wasn't shy about showing his fondness for the greasy little union boss.

When Evans retired, in 1992, from his position as UFCW Canadian Director, Rae was a guest of honour at his lavish retirement bash which was paid for with the dues of thousands of union members (who weren't invited).

Shortly thereafter, he appointed Evans to the Ontario Pension Commission which is really shocking considering what Evans would go on to do with the UFCW pension plan.

Shortly thereafter, Rae cut the ribbon at the grand-reopening of a Toronto hotel which had been purchased weeks earlier by Ronald Kelly, a defrocked Catholic priest and ten-times convicted sex offender. (See "Mind your fingers, New HoJo's Opening, Ribbon Cutting Ceremonies", The Toronto Sun, January 20, 1993). The hotel and the UFCW's pension plan launched Kelly's ill-fated real estate empire. Thousands of UFCW pension plan members would pay the price.

Cliff Evans
Sex Offender Ron Kelly - Rae cut the ribbon at the opening of his hotel

Maybe Rae was blissfully unaware that Ron Kelly had a history of climbing into the beds of his young parishioners or that he would sometimes slip an altar boy a fiver for a blow job (although he usually got those for free), but he should have been. By 1992, Kelly's deviance was a matter of public record. In 1989, Canadian journalist Michael Harris devoted an entire chapter of his bestseller, Unholy Orders, to Kelly and his predatory activities in the remote community in Newfoundland where he'd been the parish priest. By 1990, reports about Kelly, who had by that time become a big player in the Archdiocese of Toronto, appeared in the Toronto media.

If Rae knew about Kelly's past, it evidently didn't bother him enough to prevent him from partaking of a photo op in front of his hotel. Nor would it appear that Evans' recent (at the time) and well-publicized uprooting of democracy in the Canadian UFCW caused Rae any discomfort. Why would a guy interested in leading a democratic government care about democracy after all?

Is it all ancient history - some of that stuff that Rae has supposedly learned something from? 'Friad not.

In 2002 the Financial Services Commission of Ontario began a lengthy investigation of the UFCW's CCWIPP. A report, issued in 2005, found massive non-compliance with pension legislation and millions of dollars pissed away in high risk business ventures (over $200 million alone in the pervert Ron Kelly's business schemes). It also reported that during the period of the investigation, the pension plan trustees were busy trying to offload their various not-so-hot investments.

Some of those ended up in the portfolio of a labour sponsored investment fund called Retrocom, a labour-sponsored investment fund whose sponsor was the pension plan of the International Brotherhood of Electrical Workers, another bunch of Rae-cronies from the good old days when he was running Ontario into the ground.

In early 2004, Retrocom set up a Real Estate Investment Trust (REIT). Rae became Chairman of Retrocom Mid-Market Real Estate Investment Fund.

Retrocom REIT's initial prospectus, issued in January 2004, listed a number of commercial and industrial properties that made up its portfolio. Among these were two of the UFCW pension plan's beleaguered investments - Millwoods Mainstreet Shopping Centre in Edmonton Alberta and Woodbine Place, an office building at 135 Queens Plate Drive in Toronto.

The prospectus noted that the shopping mall was "acquired for $21,770,950 plus adjustments and was financed by way of an $8,200,000 owner advance and the assumption of a mortgage in the amount of $13,595,057." A further note statesdthat, "the advances from owner, Canadian Commercial Workers Industry Pension Plan, are unsecured, non-interest bearing and have no specified repayment terms."

A similar kind of arrangement was revealed in land titles documents in relation to Retrocom's purchase of the Woodbine Place property. The building at 135 Queen's Plate drive - home to a rabbit's warren of Evans' cronies and their businesses - was jointly owned by the UFCW pension plan and a crew of lawyers who did work for the pension plan (and had borrowed a few million from the pension plan to finance their purchase of the building years earlier. Evans was the President of the company, I.F. Propco Holdings (Ontario) 18 Ltd., that held the pension plan's mortgages on the property.

An agreement dated March 19, 2004 and filed with the Toronto Land Registry office sets out the terms of the purchase of the building by Retrocom. Although it is very clear that Retrocom will be assuming $2.9 million in mortgages on the property, CCWIPP and the rest of the vendors agreed that they will continue to be the "principal debtors".

Both properties were a nice deal for Retrocom - too nice - an interest-free unsecured mortgage with no specified repayment schedule for the shopping centre and a mortgage that somebody else is on the hook for on the office building. Sweet. But why would the vendor (the Evans' controlled UFCW pension plan) enter into such an arrangement?

Maybe Evans was just doing a little favour for Brother Bob or maybe Brother Bob was doing a little favour for Evans: Allowing the UFCW pension trustees to make it look like they were offloading their troubled investments - to appease the Financial Services Commission of Ontario which was at this time sticking its nose into the pension plan's myriad of bizarre investments.

At the time the deal went down, the Retrocom Board was comprised of Bob Rae, Chairman, Joe Fashion, Secretary Treasurer of IBEW Local 353, Ralph Tersigni, a former trustee of the Electricians Trust Fund and Evans' crony, and Patrick Lavelle, a former international trade official with the Ontario government and Bob Rae crony.

When members of Local 353 learned that 5% of their pension plan's portfolio was going to be invested in Retrocom and would involve the purchase of shopping malls that included controversial retailer Wal-Mart as an anchor tenant, the pot boiled over. A bizarre defence of the local's ivestment in Retrocom appeared in a union publication in the spring of 2004.

Let's Talk Retrocom

Now for the facts. Retrocom provides union jobs. How many you ask? Well 3 million man hours! Yes each one of those hours worked by a union member. Which union member? Who cares!

Also Retrocom has now hired former Ontario Premier Bob Rae to head a REIT (Real Estate Investment Trust). Mr. Rae is a strong union supporter with a winning track record. This can only mean better returns.

Not satisfied? Here's a fact. It's ONLY 5% of our investments. Geez! Can't we talk about something else?

The new REIT now has 4 Wal-Mart anchored centres in its portfolio. This will force the giant to use Union workers.

When was the last time you as a member of Local 353 built a Wal-Mart? Well if it wasn't for Retrocom you'd never build one.

Despite Bob Rae's winning track record (whatever it was) and the easy repayment terms on the mortgages on his pal Cliff's buildings, things did not go well for Retrocom REIT. The returns were not good at all.

In December 2005, in the face of a stampede of bailing investors, Retrocom froze redemption payments to some 21,000 investors.

LSIF's make headlines again - more trouble ahead?

A flood of redemptions has forced a Toronto labour-sponsored venture capital fund Retrocom Growth http://www.retrocom.ca/ to freeze almost $50-million, yet another negative surprise for this troubled asset class. This lossy fund took the nasty step of suspending redemption payments on Dec. 23, 2005.

After a stampede of small and large investors wishing to exit its real estate development fund. The redemption freeze affects about 21,000 investors in this 3.25% MER fund, including a handful of institutions that have each invested a minimum of $1 million. The 10-year old labour-sponsored fund (LSF) holds interests in bowling alleys, ice rinks, residential developments and the underperforming Retrocom Mid-Market Real Estate Investment Trust. The fund changed auditors in May, 2005, moving from KPMG to Smith, Nixon and Company LLP.

No doubt this fund will be a costly and frustrating investment for unitholders. Small investors are also expected to lose millions because of the alleged mismanagement of another LSIF, Manitoba's Crocus Investment Fund. Source: K. Damsell, Labour fund freezes payouts: Retrocom blames Ontario tax change for $50-million hold, Globe and Mail, Jan. 12, 2005 [Thankfully, the fund is not available in BC, AL, SA, MA, PQ, NF, PEI, YK, NWT and NUV; it is sponsored by the International Brotherhood of Electrical Workers, Building and Construction Trades Department, Ontario Pipes Trades Council, Construction Counsel of Ontario]

In October 2005 Rae bailed from his post as Chairman of the Board (although he stayed on as a trustee for a time). Coincidentally, it was in October 2006 that his old pal Evans bailed from the board of trustees of CCWIPP, amid growing media attention about the CCWIPP's dire straits.

By February 2006, Retrocom announced that it was looking for a buyer or other merger partner. By that time Retrocom CEO Michael Steplock had bailed out. A recent media release indicates that Retrocom is still seeking a merger partner to rescue it from its troubled straits.

IBEW members, fearing losses for their pension plan (which had some $48 million sunk into the REIT), went public with their concerns:

Retroscam has been bad news from its inception. JF has been using retroscam as a tool to try and create union jobs, by pumping money in from our pension fund. That is a misuse of our funds.The pension fund must be invested in such a way as to maximize the return in order to keep the fund at a healthy level.

We keep subsidizing the fund with more of our hard earned money because our officers do not have a clue on what they are doing. Now BS wants to keep his cards close to his chest and keep the membership in the dark so that we are misinformed by them and the actuaries.We want to know now how much money we have lost.

JF and his cronies have caused every member of this local undue financial hardship which is against the constitution of the IBEW and should be charged. He is irresponsible and has no knowledge whatsoever of union economics.

How will we ever survive the next 2 years?

At the next election, if we make it there we should make tee shirts with "survived Joe F. and his flakes" printed on the front and a middle finger on the back.

In August of 2006, another Retrocom tentacle, the Retrocom Growth Fund, declared belly up. An informative history of the rise and fall of Retrocom can be found in a recent article on wwww.canadianbusiness.com, Misplaced trust by John Gray.

Perhaps the outraged IBEW members can identify Bob Rae as one of the flakes under whose watch this debacle unfolded. As Chairman of Board of Retrocom, I'd say he owes a lot of people, includng thousands of members of the IBEW, some answers. Follow their online conversation.

Back at the UFCW pension plan, Rae's old buddy Evans is facing 15 charges under the Ontario Pension Benefits Act in connection with the mismanagement of the UFCW's pension plan. Nine other trustees face multiple charges as well. Rae owes UFCW members some answers as well. How does he feel about having appointed Evans to the Ontario Pension Commission? What has he learned from that? Just what was going on when Retrocom purchased those two properties from their pension plan, on terms so easy that, well, you never have to pay up?

More than a few UFCW pension plan members aren't getting a warm feeling about Bob's relationship with Ontario Finance Minister Greg Sorbara (in whose company, Royal Group Technologies, CCWIPP funds were also invested) and whether it had anything to do with the leisurely pace at which the Financial Services Commission of Ontario (an agency of the Ministry of Finance) proceeded with its investigation of the UFCW pension plan. Sorbara has been a high-profile supporter of Rae's bid for the Liberal leadership. IBEW members are wondering how thoroughly the FSCO will examine the Retrocom matter - given the Sorbara-Rae coziness.

The workers at the hotel where you cut the ribbon fourteen years ago would like to know when Bob's coming back. They were all laid off - victims of the investment misadventures of his buddy Cliff. They're wondering when someone might tell them what went wrong. Perhaps Bob can get Cliff Evans to provide some answers or if he could get Ontario Finance Minister Greg Sorbara to explain why his FSCO was so accommodating with Evans and the pension trustees who sold the place from under them.

Cliff Evans
2737 Keele St. Toronto. In 2005, 150 workers were laid off at the hotel where Rae cut the ribbon in 1992.

For the rest of us, Bob Rae should explain why we should trust a guy who sleeps around with dogs like these and what he's learned from these experiences. I've no doubt that Bob Rae evolved into something following his ignominious term as Premier of Ontario. But I don't think it's something I'd want running the country.

Delegates to the Liberal convention should know: He is what he is. And it's no secret anymore.

More about the UFCW's troubled pension plan:

Regulators' Reports
FSCO Report on CCWIPP May 2005
FSCO Addendum December 2005
Alberta Pension Commission Report on CCWIPP, 1999
Media Reports
Toronto Star feature on CCWIPP July 2005
Union Pension Fund Debacle Canadian Grocer, December 2005
RCMP Scrutinizing Pension Fund Report, Toronto Star, February 13, 2006
Official Says Union Downplaying Report, Toronto Star, February 13, 2006
Regulator Slams Pension's Paperwork, Toronto Star, February 14, 2006
Pension Plan Wants Accuser Identified, Toronto Star, February 14, 2006
MFD/uncharted on CCWIPP
CCWIPP Full Disclosure: Part 1
CCWIPP Full Disclosure: Part 2
The Haunted Houses of Labour
Workers Betrayed by Pension Gurus
Pension Gurus Damned Again
Beaver Tales
Regulator in the Sack with UFCW Pension Crew?
Sins of the Commission
Open Letter to the Financial Services Commission of Ontario
CCWIPP Trustees Speak Out
CCWIPP Press Statement, May 2005
UFCW Our Union Magazine, September 2005
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