Manitoba's opposition parties arecalling for ministerial resignationsand a new investigation,saying a leaked cabinet document that surfaced over the weekend shows the NDP government ignored red flags about the Crocus Investment Fund in 2000, years beforeit collapsed.
The opposition Liberals and Conservatives say former auditor general Jon Singleton did not have access to the leaked cabinet document — which they called a "smoking gun" — when he conducted his audit of the beleaguered fund in 2005.
The cabinet document, released by the provincial Liberal party on Friday, waswritten by Finance Minister Greg Selinger in 2000. It discusses changes Crocus wanted to make inthe face of looming "liquidity problems" and raisesthe issue of the fund's ability to pay investors who wanted to redeem their sharesover the next few years.
In a report issued in May 2005, Singleton found serious weaknesses in the fund's operations and governance. The report also found that the NDP government missed warning signs that the fund was headed for trouble.
Selinger has always said Singleton's report did not hold his government responsible, but Conservative Leader Hugh McFadyen said Singleton did not have access to this document.
"I phoned[Singleton] at home and he said that he had no recollection of seeing that document; if he had seen it he would have remembered it, because it was a very significant document," McFadyen saidMonday.
"He went on to say that they, in the course of their audit, at the time believed that Crocus could perhaps be revived, and so they were trying to conduct the audit as quickly as they possibly could."
McFadyensaid Singleton's report referred to e-mails within the government raising red flags about Crocus in 2002. It was no wonder the finance minister has always said he never saw those e-mails, McFadyen said.
"We now know that they didn't need to get the e-mails because they had already been briefed more than a year before the e-mail in question," he said.
Calls for resignation
Both opposition leaders are calling on Premier Gary Doer to insist Selinger resign.
Liberal Leader Jon Gerrard said if Manitobans knew what the government knew in November 2000, they would not have invested in Crocus.
"The NDP government promoted Crocus as a sound investment; perfect for the average Manitoban to entrust their savings in," Gerrard said in a release.
"When the NDP learned about problems at Crocus, rather than re-examine the fund and alert Manitobans of the concerns, what was their course of action? Sell more! It’s absolutely disgraceful the government abused its authority in this way."
But Selinger said the fact that the government was talking with Crocus about potential liquidity problems in 2000 is not new or significant.
There was no suggestion there were any problems with the way the fund was being operated at the time, he said.
Selinger stands by his actions in 2000: he refused to allow Crocus to make the changes it sought.
"At that time, that cabinet submission would have made the problem millions of dollars worse for taxpayers," he said Monday.
The Conservativessay they will formally ask the current auditor general, Carol Bellringer,for a new investigation in the coming days.Bellringer sat on Crocus' board of directors in 2005.
'We hope that other documents will surface'
Bernie Bellan, secretary of the Crocus Investors Association, believes the leaked document provides evidence there is liability on the part of the province.
"It's pretty close to a smoking gun in terms of how it will affect the lawsuit. It's about as good a document as we could have hoped for," he said Saturday.
"We hope that other documents will surface, that we know do exist, that point to the government's role in keeping Crocus alive past the point where it should have been put to rest."
Bellan's association filed a $200-million class-action lawsuit in July 2005 against Crocus, the fund's officers and directors, two brokerage houses and the Manitoba government. The government said last year thatit will defend itself against the lawsuit.
About 34,000 Manitobans had more than $150 million invested in the labour-sponsored venture-capital fund, which promoted its mandate to invest in companies in the province. It stopped trading on Dec. 10, 2004, over concerns about the true value of its shares.
In April 2005, the fund dropped the value of its shares to just below $7 — almost one-third less than their value when trading was halted.
The fund went into receivership in June 2005. The remaining investments in the fund are being administered by a receiver.