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As the Manitoba government tries to entice our brightest and best to consider picking up the iron rice bowl they have created new web-pages and paid for large display ads in the weekend career section of the WFP. Good news for new grads one would think. Manitoba has also quietly implemented a hiring freeze and demanded that each department maintain at least a 5% vacancy rate. You can excuse young university and community graduates for being confused. Does Manitoba truly want to replace its thousands of boomer-aged civil servants before they actually retire? If not, why waste all these advertising dollars on civil service jobs that do not yet exist?

Former C.B. execs launch $105m suit

Divorce is never a pretty sight for outsiders. The sad dissolution of business partnerships seem to be even worse, divorce without even the memory of at least once having good sex. (I will fill in the punchline for you. Yes, someone did get screwed here. The taxpayers, like children everywhere, were merely collateral damage.)

Former C.B. execs launch $105m suit
Pair who worked at Cape Breton Castings make counterclaim against Ottawa parent
Halifax Herald
By LAURA FRASER
Cape Breton Bureau
Wed. Mar 18 - 6:10 AM

SYDNEY — Two former Cape Breton Castings executives have launched a $105-million counterclaim against one of Ottawa’s development arms. Syed Naqvi and Goretti Pereira say that decisions made by the Cape Breton Growth Fund Corp. contributed to the financial woes of the extinct auto parts firm and to two of its parent companies. Although the two defendants filed separate counterclaims last week, Ms. Pereira told The Chronicle Herald that the requested damages were collective. The pair is asking for a total of $15 million to make up for the lost assets of Millennium Precision Machining and Lamco International Die Cast Ltd., two Ontario firms who went into receivership during their involvement with Cape Breton Castings.They are also asking for a total of $15 million in damages to make up for the loss of future growth of both firms. More than $75 million is being sought for expenses or lost contracts the defendants say were accrued by Millennium and Lamco. The information in the court documents illuminate one side of a story that has been buried in red tape since the plant’s inception in September 2003. "After meeting (its) own job creation objectives, (the growth fund) manipulated the situation to seize possession of (Cape Breton Castings) and place (Millennium) and Lamco into receivership, thereby financially paralyzing (them) and preventing them from challenging (the court) action," the statements say. Millennium and Lamco entered into an agreement with the Atlantic Canada Opportunities Agency, Enterprise Cape Breton Corp. and Cape Breton Growth Fund in September 2003. Those three agencies were responsible for the "lead role in ensuring the $16.3-million (plant) would be fully funded by way of flexible preferential financing," the statement says. Those agencies were expected to raise about $13.3 million through federal development programs "for which they had authority and could immediately release funding." The statement says that in May 2003 Millennium and Lamco transferred about $15 million in contracts to Cape Breton Castings. Mr. Naqvi and Ms. Pereira claim they were concerned about the risk involved with this type of financing. The growth fund "promised to ensure that (Millennium) and Lamco’s equity and capital base would not be eroded as a result of their agreement to transfer (those) contracts," the defence statement continues. But the growth fund violated that promise, the defendants allege. Cape Breton Growth Fund cut the budget for the plant by about $3 million from the outset, which forced Millennium and Lamco to fund the difference, the defence statements say. The companies got financing from the Royal Bank of Canada. Rick Beaton, then an executive with Enterprise Cape Breton Corp., told the defendants not to worry about securing financing for daily operations because the growth fund would "secure the needed monies and be responsible for securing any shortfall," the statement says. The defendants say they used their own money to pay for purchase orders and contracts meant for the Cape Breton plant. This meant that Cape Breton Castings had to provide a $5-million guarantee to the bank for a higher level of financing. After further financial wrangling, the Cape Breton Growth Fund demanded repayment of $14.3 million from Cape Breton Castings in August 2005, the statement says. The defendants say that the growth fund then forced Millennium and Lamco to turn over their shares in Cape Breton Castings to the fund. They also allege that the growth fund broke its promise to help secure other financing, saying that Millennium and Lamco had offers from other institutions, including Nova Scotia Business Inc., the Canadian Imperial Bank of Commerce and the Export Development Corp. Mr. Naqvi and Ms. Pereira filed the defence statement after the growth fund alleged that they owe $590,000 in guarantees.
Cape Breton Growth Fund has 10 days to file a response to the counterclaim after it has been received. The lawyer for the fund could not be reached for comment Tuesday. Neither parties’ claims have been proven in court. Cape Breton Castings received about $25 million worth of public money before it was sold to a group of investors in 2007. It has since been renamed Atlantic Castings. The firm has been shut down since December and is looking for other market opportunities.

lfraser@herald.ca

Cape Breton: Liberal MP's Family Does Good

Some faithful readers (all three of you) will remember a thread of interest I followed a few years back. Cape Breton Island is a place somewhat unlike Manitoba. Almost anything that Manitobans would consider being scandalous or a conflict of interest would not even cause a ripple there. When Mark Eyking, the local Liberal MP, and his friends and family swooped in and purchased a Magna supplier’s state of the art manufacturing plant for nothing but a handshake and a $2 million dollar promissory note I found that interesting at the time. A Google search recently led an unhappy businessman to my website. What he told me was fascinating indeed. Two years later the company has been shut down, its high tech assets are being boxed for delivery to India, sold for cents on the dollar, the $2 million promissory note was never paid and $2 million in cash on hand has disappeared. I recently received a cc of an e-mail sent to local media from that same insider. While he is certainly no disinterested party this issue deserves a lot more attention than any out –of-province blogger could possibly bring it. Happily for him, a local newspaper is now following this up. The local CBC is on the case. Stories often begin with e-mails to reporters like this. I thought you might like to read it. I have removed both the sender and recipient’s names. - Dave

Taxpayer funded equipment sold as scrap to Canadian competitors in India
Thursday, November 19, 2009 11:55 PM
From: XXX
To XXX
Subject: Taxpayer funded equipment sold as scrap to Canadian competitors in India
Date: Fri, 20 Nov 2009 00:53:08 -0500

You have been following the Cape Breton Castings for some time. I thought that you may be interested to know that Atlantic Castings has quietly filed for bankruptcy, using a US based agent to sell all the equipment for less than scrap value.
You may remember that the owners who had no knowledge or experience in the business, got the state-of-the-art plant we built, together with nearly $2 million in liquid assets for $1.00 from ECBC. What you may not have known is that we had given ECBC a much higher offer at that time which they refused.Further, I have just learned that the new owners used the equipment as collateral to raise further funds from the province of NS.After running the plant into the ground, the company filed for bankruptcy and left the taxpayers and an empty building which ECBC owns. (Not sure if the bankruptcy was voluntary or the province initiated it. Perhaps the court documents will reveal this.) I spoke to the Chicago based agent who informed me that all the equipment has been sold for less than their scrap value to companies in India. As with so many issues with this plant, this is the biggest irony. The equipment was sold to Indian manufacturers who are directly competing with Canadian companies for the business this equipment (paid by Canadian taxpayers) generates.
This is exactly what we were feverishly working against when we set up the plant. We put our heart and soul into bringing back the work that had been sent overseas - that was the strategy that was the driving force behind the creation of the state-of-the-art plant which in turn was accepted by our customers. In fact, ECBC justified their decisions on our ability to convince our customers to repatriate jobs that they had outsourced to India and Korea.
I think as taxpayers, we want to know why ECBC refused to work with us and then turned around and helped our competitors by selling them the state-of-the-art equipment paid for by Canadian taxpayers for pennies on the dollar.
I am told that one piece of very expensive equipment (more than $300K new) is being offered for $12.5K. Again, an irony. This equipment that belonged to our Mississauga facility was transferred to Cape Breton because ECBC did not want us to have the capability to continue to service a contract we had negotiated for that plant. This along, with a complete diecasting cell and peripheral equipment that we had financed through a $2 m RBC lease were removed from our Ontario facility by ECBC appointed consultants. KPMG, the Ontario receiver, subsequently reported in court proceedings, that they could not get ECBC to provide any information about the transfer of the assets.
Through these types of actions the Federal agency eliminated more than 100 jobs in Ontario and now the 64 jobs in Cape Breton. However, I note that all those responsible for these decisions at ECBC have received promotions.

Die has been cast for troubled Northside plant

Die has been cast for troubled Northside plant
November 23, 2009
CHRIS HAYES
The Cape Breton Post

NORTH SYDNEY — The final chapter is being written for a die-cast manufacturing plant in Cape Breton. The story started with a good news announcement in 2004. A company called Cape Breton Castings Inc. was being established in the Northside Industrial Park to manufacture die-cast parts for the auto industry.
Cape Breton Castings received $24.7 million in government assistance before its assets were sold in 2007 for a $2-million promissory note to a group of mostly Cape Breton business people in a company called Atlantic Castings. Now, Atlantic Castings Ltd. is in receiverships and its assets are advertised for sale on a website.Greg MacKenzie of the Sydney company MGM, which is handling the receivership, said he has arranged for the assets to be sold by a company called Die Cast Machinery, LLC, of Waukegan, Illinois., which specializes in this kind of sale.
MacKenzie said as of Monday, about one-third of the assets had been sold to Canadian and U.S. die-casting companies for about $500,000 to $600,000, and it appears a deal is pending to sell one-third to a company based in India.“Nothing leaves the plant until the money is in our account, but it has been spoken for and we understand we will be getting the money for that second third probably within a couple of weeks.“The final third we are still in negotiations and talking to people.”
MacKenzie said he can’t disclose what dollars figures are being discussed with the potential buyers.Atlantic Castings went into receivership on July 10 with three creditors each of whom were secured for about $2 million, he said. Secured creditors include the Nova Scotia Department of Economic and Rural Development, which is first in line to receive money from the sale of the assets, a company formed by the former owners called Atlantic Castings Holdings Ltd., and Cape Breton Castings Inc. a company owned by ECBC/ACOA, said MacKenzie.
MacKenzie noted that the Atlantic Castings machinery is on the market at a time when the die-cast industry and the automotive industry it supplies are in a downturn. He wasn’t optimistic about the likelihood all three of the secured creditors will receive any money from the sale of the assets.“If the province gets all of their money they’d be pretty lucky, I think.”
The announcement in 2004 that Cape Breton Castings would be established in the Northside Industrial Park making die-cast parts for an auto parts plant next door was hailed as a good news story for the area’s economy. Over the years, the project received $24.7 million of repayable assistance from the Cape Breton Growth Fund, which was set up to create development to cushion the blow of the loss of the Cape Breton coal industry, and from ACOA and ECBC. The growth fund took control of the plant in March 2006 when the project proponents encountered difficulty and surrendered their shares. The assets were sold to a group of mostly Cape Breton business people in November 2007 for $2 million, payable by way of a promissory note. The owners were to also immediately inject $2 million of working capital into the operation, ECBC noted at the time of the sale, followed by an investment in new equipment.The directors of Atlantic Castings include Irving Schwartz, Harold Schwartz, Jim Kehoe, Sean Burke, John Eyking, Theodore Eyking, Jean Dugas and Allan MacPhee, of Dartmouth.
Heather Deighan, a spokesperson for Economic and Rural Development, said Monday the department has not received any repayment yet on its investment in Atlantic Castings but it expects to receive money from the sale of the assets.
D.A. Landry, an ECBC spokesman, said the agency has not received any of the $2 million in the promissory note.

chayes@cbpost.com
24/11/09

COMMENTS

Publius Clodius from NS writes: Pump and dump? You decide.
Posted 24/11/2009 at 1:17 AM

paul m from cb writes: We ,the taxpayers, paid over $29 million to start this thing. Then a group from Sydney buys it for $2 million, but never pays the $2 million. What kind of a deal is that ??? So, how much more that this $29 million has been wasted like this on Cape Breton, and don't forget to throw in the old lobster pound that used to be at Auld's Cove that the taxpayers bought and then it gets torn down a year later; or that mushroom place on the 105 , or that museum in Cheticamp that cost over $1.2 million that sits vacant, while we build a second one within 10 km . Gov't is good at sending out press releases when they lend money, but never send any out to say when they are owed money and have taken legal action , which by the way is often involving going to court . Oh, maybe they don't treat these big businesses as tough as they'd the little guy.
Posted 24/11/2009 at 4:02 AM

mummer me from sydney mines, ns writes: good old cape breton,the island where you can come in a pauper and leave a millionaire and not invest a penny of your own money,theres' definately something wrong with this picture
Posted 24/11/2009 at 7:26 AM

PDG from ns writes: Very surprised the Post even published this story. We usually have to check the Herald for details of this sort. Now maybe CBC will dig deep and land an interview with one of the Eyking clan. Perhaps Steve Sutherland will use his hard-nosed journalistic skills on the MP himself. Not gonna happen. Two peas in a pod.
Posted 24/11/2009 at 9:49 AM

http://www.capebretonpost.com/index.cfm?sid=305550&sc=145#commentsview

Pirate Social THIS Sunday at Lo Pub

Green-minded Winnipeggers are helping Matey Dave fundraise for his trip to Australia to serve with Captain Paul Watson on the Sea Shepherd Conservation Society's ship, the Steve Irwin. This is his 4th term serving on the ship in the Antarctic Ocean. They basically harass the Japanese whaling fleet and limit how many whales they can actually kill.
Have you ever been to sea, Billy? If not, can you drink beer and dress like a Pirate?

The Pirate Social is THIS Sunday, November 22nd at the Lo Pub
330 Kennedy Street
from 7 PM - 12 PM.
Aharrr!!

Old Growth Forest and New City Trail Compromised

A walk with the City Naturalist on the banks of the Seine River Wednesday afternoon resulted in an unfortunate discovery. The proposed City trail in South St. Vital between Southglen and Creek Bend Rd. goes behind several condominium sites. One building site currently for sale had heavy machinery on site and was clearing out an old growth forest of oak, ash and elm trees as we there. Unfortunately they had not put in any stakes and they were evidently removing trees from the City property and the path Right-Of-Way. One of the most scenic parts of the trail, the walk through the old growth forest, has been compromised by a day’s work for a Drott operator. The City Naturalist is investigating.
(Post-script - The heavy machinery is now off site. Over a half dozen large City-owned trees were felled between the path and the river. Will keep you all updated.)

Et tu, Winnipeg?

Winnipeg Free Press - PRINT EDITION
Keeping cities clean
By: Editorial
16/11/2009 1:00 AM

THE province of Quebec will introduce legislation this week to hold civic governments more accountable for the way they award contracts or engage in real-estate transactions. The crackdown follows a series of scandals in Montreal, where civic land was sold for less than market value to a company that had received numerous contracts from the city. There are also allegations of kickbacks, favouritism and influence peddling by Quebec’s tough-as-nails construction industry, which has long enjoyed a special relationship with municipal officials across Quebec.
Similar, if unproven, allegations have been made in Winnipeg over the years and comparable complaints are probably heard in cities around the world. It's really not a big surprise, since large cities negotiate literally hundreds of deals with developers and contractors who want to buy, sell, build or demolish something…

http://www.winnipegfreepress.com/opinion/editorials/keeping-cities-clean-70172172.html

Hmmm. A Free Press reader with a memory that stretches back further than 2 years e-mailed me to note that the WFP has only to go into its own archives to “prove” similar allegations in lily-white Winnipeg.

Winnipeg Free Press - PRINT EDITION
Covert meeting cited in judgment
By: Staff Writer
28/05/2007 3:55 AM

A secret meeting in August 1987 at a cottage in Gimli between senior members of the City of Winnipeg's planning department and developer Jack Levit formed a key component in a $4.7-million judgment against the city.
Evidence at the trial found that after receiving mortgage funding, Lakeview started construction of a large strip mall on Pembina Highway without the necessary building permits. Lakeview officials pressured the city to issue a building permit, but the project didn't have enough room for the required number of parking spaces. Construction should never have started. ..

http://www.winnipegfreepress.com/historic/32250249.html