Ontario Liberals are paying big bucks for advice on privatizing Crown corporations from disgraced U.S. giant Goldman Sachs.
Toronto (20 April 2010) - Ontario Premier Dalton McGuinty should take any advice he gets from American investment bank giant Goldman Sachs and put it “straight in the shredder”, says the Ontario Public Service Employees Union (OPSEU/NUPGE).
The company has been charged with fraud by the U.S. Securities and Exchange Commission (SEC).
“The U.S. financial watchdog (says) that investors lost $1 billion because of an elaborate fraud committed by the same company Premier McGuinty has hired to advise him on how to sell off our Crown corporations”, says Warren (Smokey) Thomas.
“I don’t see how the premier can trust that any advice he gets from Goldman Sachs will be in the best interests of the people of Ontario. This company loves to make its profits on the misfortunes of others, and today’s fraud charges illustrate that perfectly,” said Thomas. “The government must immediately sever its relationship with Goldman Sachs.”
In charging Goldman Sachs last week, the SEC said the company sold an investment product it knew was likely to lose value and failed to tell investors – except for one billionaire who profited from it.
In 2007, a hedge fund operated by billionaire John Paulson wanted to place a bet that investment products built on sub-prime mortgages would go down in value. Paulson worked with Goldman Sachs to put together a selection of precarious-looking products. They called the whole package ABACUS 2007-AC1 and Paulson bought a piece of it, eventually making $1 billion, according to Forbes.com. Goldman, meanwhile, collected $15 million in fees.
In marketing the product, Goldman Sachs failed to tell investors that Paulson had helped design the product to lose value and was betting that it would, the SEC says.
The McGuinty government announced last November that it had hired Goldman Sachs and CIBC World Markets to develop proposals to sell off all or part of the Liquor Control Board of Ontario (LCBO), Ontario Lottery and Gaming (OLG), Ontario Power Generation (OPG) and Hydro One. The four Crown corporations bring in more than $4.1 billion per year in steady income for Ontario taxpayers.
OPSEU represents more than 7,000 union members at the LCBO and OLG.
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE