I can't be entirely sure, but I'm almost positive I saw a pig fly last week.
I understand the practical impossibility of airborne pigs. On the other hand, last week was one of those weeks when the impossible became the possible.
On Monday, the province confirmed it would pay $2.75 million to settle in the class-action lawsuit launched on behalf of Crocus Investment Fund shareholders.
Prior to that startling announcement, Premier Gary Doer maintained the province would never pay a penny to settle because his government had no role in the collapse of the fund. Last week, however, Finance Minister Greg Selinger said government lawyers estimated it could cost up to $3 million to fight the lawsuit. Selinger said there is no admission of liability in this settlement, which caps the province's exposure and ensures there is more money for shareholders.
As soon as Tory Leader Hugh McFadyen saw that pig go airborne, he reacted with appropriate horror and disgust. The settlement was indeed a profound reversal of position for the NDP, as McFadyen noted.
Whether it's evidence the Doer government has "something to hide," as McFadyen has suggested, is not entirely clear. But by settling now, it appears Doer is wagering he can ride out the initial shock over the flip-flop while the class-action lawsuit winds down. What is certain is this is a cynical strategy that will serve to enhance the anger of shareholders.
However, that was not the only pig launched last week.
Following a court hearing last week, Vancouver lawyer David Klein, the point man for the class-action team, actually suggested that despite the modest settlement amounts, it appeared shareholders "will be coming out with pretty close to what they invested."
That is a pretty big change in tack for a lawsuit pegged by its authors as a $200-million claim, and predicated on the allegation the Crocus failure had eviscerated the retirement savings of 34,000 Manitobans. If all it took was $12 million to cover the losses of shareholders, why file the class action at all?
Using Klein's arithmetic, if you add the estimated $12 million in out-of-court settlements negotiated to date, the estimated $88 million in assets under management by the receiver and the enhanced tax credits shareholders received at the time they invested, you're pretty close to break-even.
In fact, if you analyze Klein's numbers closely, what becomes readily apparent is that the only group coming out ahead is the class-action lawyers. Although they have refused to talk hard numbers, industry standards indicate they could consume up to 50 per cent of the $12 million in settlements -- up to 30 per cent in legal fees and the rest for "disbursements" or expenses.
With the modest settlements, and its own bill yet to be submitted, the legal team is desperate to disown the $200-million price tag attached to the lawsuit at its inception. Many shareholders will remember Winnipeg lawyer Paul Walsh claiming in 2005 the suit was seeking $150 million in general damages and $50 million in punitive damages. Last week, Klein said he had "no idea" where the $200-million figure came from, a disingenuous tactic, to be sure.
Klein's nifty backtrack was endorsed by lead shareholder Bernie Bellan, who has verbosely defended the lawsuit as a legitimate tool to not only restore shareholder value, but also to uncover what really happened at the fund.
Bellan has taken great joy in needling anyone foolish enough to question the effectiveness of the class action, repeatedly noting how the suit is "achieving results" and that it would do what no journalist has the courage to do: get to the truth. Last week, however, when asked if he was disappointed it appeared the suit would never go to trial, Bellan told a local television reporter that "a courtroom is hardly a place where you're going to get to the truth."
(That sound you hear is the squealing of another reluctant pig being flung into the air.)
Bellan and the class-action lawyers would rather you forgot the promises made when the suit was filed. The Doer government, meanwhile, would rather you forgot about its promise not to settle.
Fortunately, shareholders don't need naysaying journalists to explain the difference between $200 million and $12 million. And they don't need us to spark their profound disappointment about how the province has handled itself in the Crocus debacle.
And there aren't enough pigs in Manitoba to change that.
dan.lett
@freepress.mb.ca
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