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General News · 30th October 2012
Mario
There’s nothing wrong with commerce and industry. Within reasonable limits, these are activities that create significant quantities of life value for regular people. Still, the mayhem which people who play with abstract numbers and call it business can create is astounding.

There’s a maxim in law that says “let he who will be deceived be deceived”. That’s to say in law deception isn’t wrong, and still in law fraud is. Oh, the hairs that some people have to split to sleep at night.

What does this all have to do with little Cortes Island? Well, there are examples of these deceptions happening right here. You may know that Weyerhaeuser purchased the Cortes corporate forest lands from MacMillan Bloedel in the late 1990’s. Seven years later, they sold what was left of those lands to Island Timberlands.

Now that all may sound straight forward, but when one scratches below the surface, one finds a seething mess of deceptive entanglement. For a lot of the 1990’s MacMillan Bloedel was controlled by a conglomerate called Brascan, and then when Weyerhaeuser sold their Cortes holdings, the subsidiary Island Timberlands was created by Brookfield Asset Management to hold those lands. So what?

So, the full reality of the situation is still hidden from you by the number of names involved. Shortly after the turn of this century, Brascan changed its name to Brookfield. When they did it, many stock market analysts asserted that they had a bad image they were trying to lose.

“It’s mine - now I give it to my friend - quick, look over there! - now my friend gives it back to me – no, that’s not me after all, just someone who looks like me – you were confused thinking it was me – nothing to see here!”. The names change, the assets get juggled, and small investors take big losses along the way. It’s like a big game of musical chairs.

Brascan, and Edper before it, had a reputation on Bay Street for what was politely called “aggressive accounting”. They created a pyramidal structure of companies that some experts have called “the most complicated corporate structure ever designed”. They didn’t just make money from commerce and industry, by making things like beer and lumber; they seemed to make money by spinning a myriad of companies, assets and liabilities through the process of bankruptcy. Yet, in that kind of game, when the music stops somebody needs to lose in a real way for someone else to win. In that kind of game, there often is a net negative of life value in the equation.

Brookfield has been accused of playing the same kind of game. Recently, they “bought” the troubled Fraser Pulp and Paper by acquiring Fraser’s debt – that’s different than paying cash. Within a couple of years, they formed a new corporation called the Two Rivers Paper Company, and while operating the same industrial plants, got out from under more than a third of what the old company owed to pensioners and who knows how many other debts while pissing off a lot of people in New Brunswick and Quebec at the same time as you can see here.

That’s probably not the whole story though. It will be interesting in the future to see if any bankrupt companies interrelated to Brookfield will take with them more of the debt which they acquired from Fraser. It’s just corporate debt you see - just numbers on a ledger, sweep it over here and then sweep it over there, some of it may fall through the cracks along the way.

Bankruptcy is not fraud. I don’t know what “planned bankruptcy” is, or if people even pay attention to those distinctions. One thing is for sure, it’s not nice.

Since the individual reality is so harsh, with the elderly and their families being dispossessed of their promised due, what they worked their whole lives for, this whole affair is truly just sad and even disturbing. Still, on a national level the juxtaposition involved is so surreal, it makes one want to laugh. Big pension funds love to invest in Brookfield (the British Columbia Investment Management Corporation owns something like 49% of Island Timberlands) because Brookfield offers such high rates of growth. That monetary “growth” is in part due to the way they deal with debt, to behaviours like vastly reducing the amount of pensions that Brookfield’s subsidiaries are paying out.

How’s that for counter-productive? Try making money by getting a cut from someone who is taking the wad out of your back pocket. The situation reminds one of a snake eating its own tail – in the long run maybe it’s better to be just a little hungry for a while than go down that road.

Yet, it’s all part of the game. If one chair gets pulled from circle, while you dance around holding the remote control that stops the music, then predictably someone else will be left standing while you keep playing the game. At some point you are guaranteed to keep playing and keep winning, as long as you maintain control and with just a little slight of hand, just a little deception, add new chairs and new people back into the game periodically. If you keep changing your name as you go, it would be hard for people to even figure out how good you were at it.

Is your head spinning yet? Is your stomach churning? I think it’s meant to be complicated and confusing, but then too, maybe I just haven’t explained this lucrative although rank aspect of our economy all that well. At least, I sleep well at night.