Montreal·In Depth

What you need to know about the Rona affair

Hearings began this morning at the National Assembly to unravel the controversy surrounding the sale of Rona to American hardware giant Lowe's. Here's what you need to know about the political firestorm that led to resignation of Jacques Daoust.

Sale of Quebec company ultimately led to Jacques Daoust's resignation

Rona was acquired by the U.S. chain Lowe's earlier this year, triggering a political firestorm that resulted in the resignation of cabinet minister Jacques Daoust. (Nathan Denette/Canadian Press)

Hearings are being held at the National Assembly to unravel the controversy surrounding the sale of the Quebec hardware company Rona to its American competitor, Lowe's.

The fallout from the deal ultimately forced Jacques Daoust to step down as Quebec's transport minister and give up his seat in the National Assembly.

Here's a breakdown of what you need to know about the sale and the political fallout. 

Jacques Daoust, seen here with Premier Philippe Couillard, announced his resignation last week. (Jacques Boissinot/Canadian Press)

Why the sale matters

Last February, the U.S. home hardware chain Lowe's announced it was buying Rona in a friendly takeover valued at $3.2 billion Cdn.

The sale was slammed by Quebec opposition parties. They argued the Liberal government shouldn't have let one of Quebec's flagship companies be sold to an American competitor. 

Founded in 1939, the Boucherville, Que.-based company has long been celebrated as a symbol of Quebec entrepreneurialism.

In 2012, Jean Charest's Liberal government opposed Lowe's first bid to take over Rona, saying it "wasn't in Quebec or Canada's interest."

Following the failed takeover bid, Investissement Québec (IQ), the provincial development agency that falls under the authority of the economy minister, acquired 10 per cent of Rona to protect it from another attempted buyout.

However, it was revealed recently that IQ sold its holdings in Rona to Lowe's in 2014, stripping the government of an ownership stake in the company and paving the way for the deal finalized two years later.

Jacques Daoust's undoing

Daoust, transport minister until his sudden resignation on Aug. 19, repeatedly denied that he was consulted before Rona was purchased by Lowe's while he was serving as minister of the economy.

But an auditor's report and a series of emails have cast doubt on that claim.

  • The minutes of an IQ meeting show Daoust was present when the board received ministerial permission to sell the stocks in December 2014.

Last week, emails from earlier in 2014 emerged that showed IQ executives asking Daoust's chief of staff whether the minister was OK with it selling its Rona shares to Lowe's.

The chief of staff, Pierre Ouellet, replied "OK" after saying he would check with his boss. 

Pierre Ouellet is Jacques Daoust's former chief of staff. (Radio-Canada)

What we can expect from the hearing

The hearings began at 9:30 a.m.

In a letter sent earlier this week to the head of the parliamentary hearing, Ouellet said he will "set the record straight" about the controversy during his appearance.

During his testimony, Ouellet said Daoust was, in fact, consulted before the sale, and offered a chronology of events leading up to the sale.

Other former employees from IQ, including Mario Albert, Jean-Claude Scraire, Yves Lafrance and Louis Roquet, were also expected to testify, along with Auditor General Guylaine Leclerc. 

Daoust will not appear before the committee.

with files from Radio-Canada's Danielle Beaudoin