The Income Trust Insider Trading Scandal: Someone talked
We know have a major financial figure telling the press that he received a call from someone in Ralph Goodale's office, hours before the market closed and the official announcement was made not to tax income trusts.
This is shaping up to be a major story about the Liberals and how seriously they treat the rules that govern the rest of us.
From CTV:
Finance Minister Ralph Goodale denies anyone in his office leaked word of changes to income trust policy, even as one man told CTV News he was tipped off in a phone call from one of the minister's senior advisors.
In the hours before Goodale announced that the federal government was increasing the tax credit on corporate dividends two weeks ago, there was heavier-than-usual trading in income trusts and dividend-paying stocks. That has fuelled speculation that some investors profited from an early warning.
Goodale has insisted all along that no advance word came from his office. "The Finance Department is very meticulous about these matters," he said Tuesday. "There was no specific advance notice whatsoever."
The man who claims to be have been tipped off was an associate executive director of Canada's Association for the Fifty Plus, William Gleberzon.
"The day they made the announcement they phoned us and said something is going to be said," the associate executive director of Canada's Association for the Fifty Plus, William Gleberzon, told CTV News.
Gleberzon said the call came from a senior policy advisor in the finance minister's office.
When asked what exactly he was told, Gleberzon indicated the specifics were vague, but the underlying message was clear.
"They said something was going to be announced later in the day. And we assumed that if they told us that ... it would probably be something we'd be happy with."
In years past, when someone in a minister's office was caught doing something scandalously wrong, the minister would be honour-bound to resign, since he has ultimate responsibility over his ministry.
The last time I recall a major political figure willingly resigning on a point of honour, as opposed to being hounded and finally dragged out kicking and screaming, was when Sheila Copps resigned her seat in 1996 when the Liberals refused to honour their 1993 election pledge to axe the Goods and Services Tax.
What little honour there was left in the Liberal Party evapourated when Copps immediately ran for re-election and won. She was put back into cabinet by Jean Chretien. Nothing had changed, the GST remained, and instead of making a point, Copps made a mockery of the notion of resigning on a matter of principle.
If these allegations concerning insider trading prove to be true, does anyone seriously believe that Ralph Goodale would leave politics?
Skew my story on Skewz.com
Rate political news for their bias, read related stories, and leave your own skewed commentary
Search for more opinions from Canadian bloggers on these related keywords
Sphere presents related news articles and blog posts
Sphere It!
Comments
He should not only resign but be charged and sent to jail. Fat chance.
Posted by: kelly at December 8, 2005 01:00 PM
Keep it up Angry. Outlets like the Globe and Mail are doing their best to bury this for the Libs (they ran a story today, the subject wasn't so much the leak but the fact that Harper was "trying to capitalize" on the news).
You and those like you are the only alternative sources that Canadians have to the Liberal media establishment.
Posted by: mitch at December 8, 2005 01:06 PM
I just posted this to my site. Check out this story from Bloomberg dated Nov 23
http://www.bloomberg.com/apps/news?pid=10000082&sid=a12SRmVFENoo&refer=canada
Posted by: Len at December 8, 2005 01:07 PM
Is anyone pressing the OSC or the Quebec commission to investigate?
Posted by: Murray at December 8, 2005 01:16 PM
mitch, Angry has done nothing but repeat a story from the very media you deride.
Posted by: FDS at December 8, 2005 01:21 PM
Um, Sheila Copps "willingly resigned"? Not until the Globe and Mail ran a daily editorial simply headed "Resign" which restated (and restated and restated) Copps' declaration she would resign if the GST was not eliminated.
The editorial ran for nearly a month before Copps acquiesed.
Did she jump or was she pushed?
You be the judge.
Cheers!
Posted by: PolarBear at December 8, 2005 01:27 PM
Two sets of rules - one for the Libranos and their buddies; another for the rest of us. Absolutely disgraceful. MSM makes a big deal out of the new Alberta Securities Commission Chair filing a late insider report over a less than $200 option trade with "pundits" screaming for his resignation (including the Alberta Liberal leader). Where are these people, including Kevin Taft, when we have a much more serious issue where thousands of investors suffered at the hands of a few Librano insiders?
Posted by: test at December 8, 2005 02:33 PM
I note the splitting of the Liberal Party in this election as the really big story. This is the issue that the MSM DO NOT WANT TO TALK ABOUT. Note Warren Kensella's comments at http://www.warrenkinsella.com/musings.htm as a good example.
There are a lot of Liberals who are pro-Trudeau and pro-Chretien. These people are not happy with Martin because of the Gomery inquiry and the limits placed on it by Martin which left Chretien vulnerable while protecting Martin and the current government. Many of these "Liberals from the other camp" will not vote for Martin in this election and Martin knows this. Many of them are in Ontario. So look for Martin to basically give up Western Canada from now on and concentrate almost exclusivly on Ontario.
I predict that this strategy will fail.
I predict that the result of this will be a CPC win with the Liberals and NDP fighting it out for official opposition.
Any bets?
Posted by: John Crittenden at December 8, 2005 02:54 PM
I should have added that I think that, although some will go to the CPC, many of those dissatisfied Liberals will move their vote to the NDP.
Posted by: John Crittenden at December 8, 2005 03:39 PM
CBC is burying this one too. The Star's Jim Travers alluded to this phenomenom in the Canadian media: if one outlet scoops it, everyone else will try to bury it so as not to remind readers/viewers who gets credit; where-as, American media feed off the last scoop in an attempt to out-do one another.
This one's an obvious no-brainer. This was tipping pure and simple. The spikes in these stocks was no accident nor no coincidence. Sadly, it happens all the time in this country. Stocks of takeover candidates almost always spike prior to the announcement.
Like our horrendous hypocracey regarding CO2 emissions in this country. Canada has dirty hands and self-serving sanctimony won't change that.
Posted by: Pat in Toronto at December 8, 2005 03:44 PM
Medisys Health Group Income Trust lobbying...
Go to the website of Prime Minister Martin's personal private physician - Medisys Health Group. This nationwide group of private clinics also has all of Canada Steamship executives as clients (not to mention all of Paul Martin's family) Read for yourself how they were lobbying to overturn Goodale's musings, and what this musing had done to the value of their trust...Optics?? (www.medisys.ca - Investor Information)
Posted by: William at December 8, 2005 03:55 PM
2005 (Paul Martin's personal physician)
T H I R D Q U A R T E R R E P O R T
MEDISYS HEALTH GROUP (from their website - 3rd Quarter Results of the Income Trust)
L E T T E R T O O U R U N I T H O L D E R S
FROM THE CEO
Dear unitholders,
As we finish our 3rd quarter as an income trust, we continue to execute our strategy of organic and
acquisition-related growth. When we announced our conversion into an income trust, our objective was to use this new platform to distribute a stable income stream to unitholders, while continuing to pursue the significant growth opportunities available in the Canadian health sector. Since converting to a trust, we have completed four acquisitions, and have distributed approximately $3.9 million to unitholders, while raising distributions to their current level of $0.945 per unit per year on an annualized basis, from an initial level of $0.80 per unit per year – an 18% increase in just nine months.
During the third quarter of 2005, we continued to see strong organic revenue growth in each of our core operating segments, Corporate Health Services and Medical Imaging, winning new executive health & disability management customers, and broadening our referring physician base to provide timely medical imaging services to more patients.
From an acquisition standpoint, the last few months have been quite active for us – announcing and completing the acquisitions of ATR and TRS, two medical imaging clinics in Toronto, as well as two new acquisitions within our Corporate Health Services segment – Merit Assessment Centres, a leading provider of independent medical assessment reports in Ontario, as well as the executive health division of MDS. These
acquisitions are all compelling from a financial standpoint, but the last two also serve to position Medisys strategically as the provider of choice for executive health services and independent medical assessment services across Canada. During the third quarter, in addition to completing these acquisitions, we’ve focused
on the integration process, which usually takes one or two quarters for new acquisitions to become fully integrated and operating at anticipated levels.
Financially, the impact of the continued organic growth and accretive acquisitions has resulted in an increase in Q3 revenues by 22% to $19.3 million, as compared to $15.8 million in the third quarter of 2004. EBITDA
for the third quarter of 2005 increased 56% to $2.1 million as compared with $1.3 million in the third quarter of 2004, driven largely by strong organic growth and the impact of accretive acquisitions in the Medical Imaging Segment.
We believe our greatest growth opportunities reside in the corporate health services and medical imaging markets. Medisys is uniquely positioned as a national provider of corporate health services in Canada. Our nation-wide presence provides us with the necessary scale to effectively manage large executive health and
occupational health and disability management contracts, providing companies that have national operations with a single-source solution for their corporate healthcare needs. Through our entry into the medical imaging market, we have established a solid platform from which to expand and capitalize on organic and acquisition-related value-creation opportunities. We are confident in our business outlook and remain focused
on building increased unitholder value in 2005 and beyond.
Given the recent volatility in the Income Trust sector as a result of the Federal Government’s decision to suspend advance tax rulings, we’ve seen our unit price decline by close to 20% from its pre-September 19th levels. As our financial results demonstrate, our revenues and EBITDA continue to increase nicely, by following our strategy of organic growth and accretive acquisitions. We believe that this recent unit price volatility has largely been the result of uncertainty regarding the pending outcome of this consultation process.
From a theoretical perspective, our understanding is that the tax system works on the basis of neutrality and integration. Clearly, there has been an advantage for corporations to convert into the income trust form – both in a fiscal sense and from a capital markets perspective – otherwise we would not have seen the rush of conversions or new issuances that has dominated the capital markets for the last number of years.
So – what to do? Much has been written about the foregone tax revenues or “leakage” and “tax-exempt” investors. From our perspective, the discussion has largely ignored the capital gains that investors pay on the conversion to an income trust, the additional consumption-based tax revenues and more fundamentally, the
fact that so called “tax-exempt” investors are mostly “tax-deferred” investors – namely pension funds and individuals through their RRSPs. Against a backdrop of under-funded pension plans and aging baby boomers, our personal belief is this tax revenue is not being lost, merely deferred, which in that context is not
a terrible thing.
In either case, we do not believe that the solution is to “throw out the baby with the bathwater” and to penalize this vibrant asset class that has, broadly, but speaking strictly from a Medisys perspective, led to the
creation of new jobs, increased capital investment, and increased shareholder value. We believe that the trust structure provides tremendous discipline to management decision making that, combined with the rigor of
capital markets, fuels productivity, growth and innovation.
As others wiser and more versed in the intricacies of taxation law than us have proposed, we would echo that
the most equitable solution to the current “Income Trust Issue” is to eliminate the double-taxation of dividends by offering an enhanced dividend tax credit. At that point, we will have neutrality between the corporate and income trust form from a tax perspective, while giving investors and management the flexibility to choose the form that best suits their personal and corporate needs.
We would encourage our unitholders, whether individuals or institutions, to contact their MP’s to voice their support of income trusts, and to propose the enhanced dividend tax credit as an equitable solution.
Irrespective of the outcome of this consultation process, with a comprehensive healthcare solutions offering, a national platform that has reached critical mass and a focused growth strategy, Medisys is well positioned to
build on our positive momentum and continue enhancing value for our unitholders.
On behalf of the Trustees and Medisys employees, thank you for your continued support.
Sincerely,
(signed) “Dr. Sheldon Elman”
Dr. Sheldon Elman
Chairman, President & CEO
Medisys Health Group
www.medisys.ca
Montreal
Toronto
Guelph
Calgary
Vancouver
Posted by: william at December 8, 2005 04:07 PM
 
|
|
