One standard political tactic is to get your opponent so focused on one thing that they don’t notice what you’re really doing somewhere else until it’s too late and you’ve accomplished your goal.
In my case I’ve been so intent on going through the restructuring documents that I didn’t even glance at the rest of the Convention report – particularly the one from ABC District.
It just so happened I saw this on page E.54:
REPORT 14: Alberta-British Columbia District
The ABC District CEF and DIL Situation
Faced with a funding shortfall, the Alberta-British Columbia District and related entities obtained an initial order from the Court of Queen’s Bench of Alberta under the Companies’ Creditors Arrangement Act (the CCAA) on January 23, 2015. The Court appointed an external Monitor—Deloitte Restructuring Inc.—to oversee restructuring efforts by the District.
To quote SP Bugbee – “let’s be honest here” – what happened in ABC’s CEF was no more a “funding shortfall” than a ponzi scheme had a “funding shortfall” of suckers to get money from before its true nature became known.
The ABC BOD struck a Task Force after CEF’s situation became public. Their analysis of ABC’s funding history showed that:
TF Note: According to financial statements, it appears that 2008 is the last year that CEF had more revenue than expenses prior to adjustments and transfers between funds. After 2008, it appears that CEF made no actual gains as a result of investments. It appears that interest paid after 2008 was from new deposits / depositors rather than actual interest income. (TF Report pg 49)
This is accountant-speak for “this looks an awful lot like a ponzi scheme.”
CEF’s “funding shortfall” was a logical consequence of investing funds in a manner not in keeping with CEF’s stated purpose in what can only be called a speculative real-estate / business venture. Compound that with the fact that the ABC CEF had neither the experience nor the background in the senior-care industry nor the management chops to run such an operation and repeatedly breached conflict of interest rules along the way and the result can hardly be surprising. In fact, one could argue that it was a continuation of the same questionable behavior that saw CEF take a $1M loss from an investment they made in 1992 (TF Report page 19).
What’s more, the CEF Audit Chair took people’s trust and goodwill for granted to the extent that the Chair actually proposed asking them to throw good money after bad in an effort to delay the inevitable:
November 2012 Report to DSFM from the Chair of the Audit Committee: The auditors questioned liquidity of District. EnCharis has not made regular loan or interest payments and is $7M in arrears. It would take EnCharis over 25 years to repay the principal alone, let alone the interest. “This would put us at a significant liquidity problem.” “Our history has shown that we have the ability to raise money in CEF without places to invest” so the Chair’s opinion was that District should be able to remain liquid. (TF Report page 67-68)
Let the reader understand – what the Chair was suggesting here was to have CEF run a fundraising campaign for the sole reason of injecting funds to prop up District and keep it liquid – not to invest in any church or school building projects. Given the losses that District was experiencing compounded with the near-certainty that POP would never pay back what it owed, someone in the Audit Chair’s position had to know that a fundraising campaign would not be in the best interests of anyone who responded. Not only that, anyone that made a deposit would inevitably suffer loss sometime in the future and the Audit Chair either knew or should have known this.
There’s also strong indications that CEF broke a number of securities laws along the way. While inquiries to the AB and BC Security commissions have met with “no comment” a review of similar situations revealed that in those case the result was jail terms for the people involved.
I leave it to you the reader to decide whether or not you think what happened was a “funding shortfall” and if / how the author of this report should be held accountable for this statement.
We now return you to your regularly scheduled program…