Nettle

2003-08-22T17:29:00.000-04:00

more thoughts about the megatrial.

2003-08-21T10:49:00.000-04:00

Give 'em the old double whammy
Daze and dizzy 'em
Back since the days of old Methuselah
Everyone loves the big bambooz-a-ler.

The megatrials of the bikers, the ones with the patch that represent the 85th Fighters, certainly has been a big bambooz-a-ler, as Richard Gere sings -- and surprisingly well -- in the film Chicago. The public and legal world alike have been captivated -- and with reason. Efforts to undermine organized crime has been messy, laden with unexpected events that have gone so far as perhaps taint the judiciary. Not exactly what the Quebec Ministry of Justice had in mind when took the gamble of holding a large, complex and costly multi-defendant trials.

So many surprising events have taken place that it is nearly Kalfaesque. A judge resigned in the middle of the trial (more on that). Lawyers representing legal-aid clients demanded a raise (which they received) while did jurors the same and weren't so lucky. A defence lawyer was cited for contempt, and others threatened to be cited. Everything that could go wrong seemingly has.

2003-08-20T17:32:00.000-04:00

The most gripping show in town is taking place across a jail, more commonly known as Bordeaux Jail, in a multi-million dollar courthouse in north-end Montreal specially built to accommodate dozens of bikers rounded up in police raids in 2001 and accused of gangsterism.

Captivating the public and legal world alike, and laden with twists and turns worthy of a television courtroom drama, it is growing increasingly evident that the gamble did not pay off.

A wager by the Quebec Ministry of Justice -- who was inspired by the successful blow the Italian justice system dealt to the Mafiosi -- to crush organized crime by holding two large, complex and costly multi-defendant trials is turning out to be a spectacular flop, replete with unlikely and embarrassing setbacks, and surprising and questionable legal rulings that ultimately bring into question the fate – and wisdom -- of holding megatrials.

The situation has become so alarming that the batonnier or head of the Barreau du Quebec (a professional corporation representing lawyers in the province) has nominated a retired judge to act as his "eyes and ears" over the controversial proceedings. Concerned about the “erosion of the public’s faith in the justice system that seems to be provoked by real or imagined slips in the megatrials,” batonnier Pierre Gagnon gave a highly-regarded former Quebec Court judge the mandate of closely scrutinizing the two multi-defendant trials now being held in Montreal and report to the Barreau on a regular basis with his observations.

“These megatrials were put in place hastily and in an improvised fashion, which has lead to regrettable situations we know about,” said Gagnon. “The Barreau decided to take exceptional measures. But it is not our intention is not to meddle in the process. However to analyze the situation with necessary rigour and to be able to draw recommendations the Barreau could not content itself with rumours. It has to see it up close, very close.”

Already under fire for being costly, complex and unwieldy, the trials are proving to be a migraine for judges, no small thanks to the boorish, disrespectful and insolent behavior of several defense lawyers. From the get-go, the two judges overseeing the two Hells Angels multi-defendant trials have had more than their hands full, repeatedly having to remind and threaten lawyers to behave themselves and respect decorum. Not that it appears that the message is getting through. Lawyers have persistently continued to pose questions deemed to be leading, repetitive, superfluous -- and if not, illegal –in spite of the judge’s rulings. Some have been rebuked for their aggressive and cavalier attitude. Others have been reproached for making comments and insinuations in hopes of imparting a message to the jury. One judge was so fed up with the uncivil and impolite conduct of Montreal criminal lawyer Réal Charbonneau that he recently cited him for contempt of court.

The other judge, Superior Court Justice Pierre Beliveau, hasn’t had an easier time of it either. Just recently he stated he is seriously considering referring the conduct of several defense lawyers to the Barreau. “The right of a lawyer’s independence does not give them the right to behave in court in a discourteous or rude fashion,” said Beliveau.

According to well-known Montreal criminal lawyer Jean-Claude Hebert, the strain that has surfaced between the judges and defense lawyers during the megatrials is not really surprising.

"There is no doubt that in a trial that is lengthy, brimming with tension, and that has the same people being forced to co-habitate every day in a realm where discussions and disputes are commonplace will provoke incidents," observed Hebert. "At a certain point in time, people get on each other’s nerves, and it explodes."

René Turcotte, a criminal law professor at the Université de Sherbrooke, is not nearly as forgiving. Nor by the way are his colleagues at the university who are so outraged that they have written to the Batonnier expressing their concerns and demanded an investigation into the conduct of several of the defense lawyers during the megatrial.

Turcotte is convinced that the defence lawyers in the megatrials would conduct themselves appropriately if the trial was conducted only before the judge as it would be in their interest to secure a “bit of empathy” from the judge.

As it stands, it’s evident that the defence lawyers are playing up to the jury, and are systematically attempting to induce the judge to commit errors that would lead to a successful appeal, says Turcotte.

"They are trying to make the judges lose their cool so that they commit gaffes and errors that could possibly even lead to a recusal of a lawyer if cited for contempt,” said Turcotte. “And if that happens and it was done illegally, the fundamental rights of an accused are breached.” Hence the grounds for an appeal.

"That they are trying to attack and undermine the value of the evidence is fair game; I have a problem with their attitudes which strikes me as being incompatible with the role of a lawyer who after all is an officer of justice."

2003-08-18T12:26:00.000-04:00

Canada’s corporate pension plans are not the only ones under siege since the stock market has floundered.

Almost without exception, all Canadian workers compensation boards have experienced a drop in investment income due to the uncertainty and volatility of the investment markets. Indeed, the numbers are disconcerting. In B.C., investment income plummeted by $200 million – or 25.4 per cent to $586 million in 2001 – a scenario that will repeat itself in 2002. In Alberta, the story is similar, with investment income dropping by 23 per cent or $98.4 million in 2001. The Workplace Safety and Insurance Board of Ontario did not fare better either as its total revenues of $3.5 billion for 2001 were $408 million lower than in the preceding year – again, because of a sharp decrease in investment income. And the list goes on and on, with New Brunswick and Nova Scotia suffering a similar fate.

A good thing that most, if not all workers’ compensation boards, use a neat accounting trick to spread its losses and gains over a five-year period. As one actuary put it, that has a "smoothing effect" on income as it delays and understates the impact of increasing or declining market returns. Otherwise it would really get ugly. But sooner or later somebody’s got to pay the price, concedes Sid Fattetad, vice-president of finance and information services with B.C.’s Workers’ Compensation Board. "The delayed impact of losses being amortized into the future is going to put some pressure on costs and rates."

It’s already begun to happen. Most employers across the country are going to be bearing the brunt over the coming year. At least six compensation boards, including B.C, Alberta, Saskatchewan, Ontario, New Brunswick and Nova Scotia, have announced hikes in premium rates, ranging from a modest 1.2 per cent in B.C. to a painful 12.5 per cent increase in Alberta.

"In big picture terms, investment income is an important part of managing the workers compensation program for it’s an opportunity to reduce the direct cost of the program – which is the employer premium rate," points out John Neal of Nexis Actuarial Consultants. In short, most compensation boards reduced premium rates while the investment market was riding high. At the WSIB, for instance, the average premium rate for Schedule 1 employers was reduced by 29 per cent for a six-year period ending in 2002. The same holds true In British Columbia, which decreased its rate for a period of four years until 2001. "Employers got a great ride but now they’re going to be paying a little more over the next few years," remarked Fattetad.

Chances are that employees too are eventually going to have share in the burden, particularly since healthy investment income helps programs to be more rather than less generous. If labour were sufficiently cynical, says Neal, they might be concerned that the drop in investment income would be used as an excuse for downsizing programs. They are that cynical. In light of what’s happened at B.C., where the organization has slashed nearly 400 jobs in the past year, they appear to have good reason to be concerned. In Quebec, employer groups such as the powerful business lobby organization the Conseil du Patronat du Quebec are now clamouring for a reduction in workers’ benefits, from the 90 per cent of net wages they currently receive to 85 per cent as is the norm in the rest of Canada. "With what’s going on, the organization should be on a more restrained diet just like any organization when things are not going as well – and it shouldn’t only be employers who do their share," says Lebel. What, though, will likely happen – and some labour organizers are saying is already beginning to take place -- will be far more insidious. The temptation to discreetly tighten up policies while scrutinizing claims far more carefully will prove to be too tempting – all in a bid to contain costs.

All of which is prompting some to question the wisdom of Canada’s workers’ compensation boards to invest "so heavily," as one put it, in equity markets. As little as a couple of decades ago, compensation boards used to invest heavily in so-called safe havens such as government bonds. Not anymore. Compensation boards have followed worldwide market trends, investing more in equities. A case in point is the CSST which invested nearly $5.1 billion in stocks compared to $2.7 billion in bonds in 1999; the year before the investment mix was nearly 50-50. Compensation boards across the country "surfed a nice wave for a while and now they’re paying the price," says Cathy Walker, the health and safety director with the Canadian Auto Workers.

Not quite. With the sagging fortunes of the investment market, it’s not only workers’ compensation boards who are paying the price. Everybody is, including employers and employees.

2003-08-16T13:50:00.000-04:00

Some mottos have the luck of forging itself into the collective conscious. Freedom 55, the slogan conceived by London Insurance Company, is one. It speaks of the dream to be financially independent at an age young enough to enjoy the fruits of life. But for a great number of workers, be it blue-collar or white-collar, that dream may become just that -- a dream. Thanks to stock market woes and plunging interest rates, North American corporate pension plans are in a worrisome state, with most accumulating multi-million losses.

A new study by credit rating agency Dominion Bond Rating Service Ltd. revealed that out of 263 corporate pension plans across North America, a staggering 83 per cent had a funding deficit at the end of 2002. More troubling, 25 per cent of the pension plans had assets worth less than 70 per cent of obligations.

The forestry and mining sectors – staples of the Canadian economy – have been particularly hard hit due to underfunding in the past. Labour-intensive industrials also did not come out unscathed. A case in point is aeronautics giants Bombardier Inc. Its pension plan had assets totaling $3.2 billion last year, meeting only 54.3 per cent of the company’s projected obligations of $5.8 billion. Quebecor World Inc., the printing multinational, too has a troublesome record, with pension assets worth barely 50 per cent of its obligations.

The head of DBRS, Walter Schroeder, asserts that the situation is not worrisome for the majority of workers. With 51 per cent of pension plans underfunded by 20 per cent, a funding balance could be achieved with a 30 per cent rise in the stock market. However, he concedes that the remaining 49 per cent of companies whose funding rate stands at below 80 per cent would be compelled to make bigger contributions to make up the shortfalls -- and that is something easier said than done.

It will likely mean, among other things, a "return to reality," as one consultant put it as companies can no longer rely on investment income to prop up pension plans. Instead, corporate America will have to put up part of their profits into pension plans, and that in turn will have an impact on their stock performance. Those that can't will have to seek other means of financing, at greater cost as credit agencies such as DBRS and Standard & Poors are downgrading the credit ratings of companies facing pension problems. A case in point is Boeing, the world's largest airplane manufacturer.

But the situation extends itself to the public sector as well. Canada's Superintendent of Financial Institutions, declared recently that legislators can no longer completely guarantee the security of Canadian pension plans.

It's no wonder that another expert described the long-term outlook for pension funds as "grim."

2003-08-15T03:32:00.000-04:00

Elections have come and gone. Several months have passed by since the people of Quebec voted in a new government, refusing to hand the Parti Quebecois -- a party once brimming with passion for a new nation -- a third consecutive mandate. The Liberal Party are now at the helm, and its leader, Jean Charest, the former leader of the Conservative Party of Canada, holding the reins.

After bearing witness to events for the last several years, Charest has an opportunity to shape events over the following four years. He has already begun, in a way reminiscent of Brian Mulroney, the former Canadian prime minister who steered the nation towards a new path. Charest is forging ahead with ideas that affect Quebecers young and old. Armed with an agenda leaning to the right, he has begun slashing services in earnest while giving the go-ahead for instance to state-controlled Hydro Quebec to increase its rates. A trial balloon -- a media-event usually sparked by the party in power to gage public reaction towards a policy -- was launched to determine just how far the government could go with hiking day care fees, an explosive issue if there ever was one. Charest is leading, the people said he could, at least for a while.

Not all leaders are meant to lead. Time will tell where Charest will stand.

2002-12-08T23:58:00.000-05:00

A bakery that went by the stodgy name Boulangerie St-Laurent, a haunt called Café Sarajevo -- a charming name that sings, harking back to the days when the city was synonomous with all things cosmopolitan until it was cursed by wretched beings thirsty for whatever people in power are thirsty for -- and Warshaw, a grocery store now part of a dying breed, a store that was supposed to be a commemoration to the great Polish city but was mispelt by painters etching the name on the store's signage. Landmarks all of them, having blessed the city for a passage of time with its familiar vista, heartwarming smells, and unique individuals. Gone, all of them. Oddly out of place in a part of the city that highlighted the magic behind Montreal: cosmopolitain, vigorous, embracing all -- young and old, English, French and newcomers. No matter. St. Laurent Boulevard was all things to all people. And now it will be all the poorer, making way for something that hopefully will have as much heart Warshaw, Café Sarajevo and Boulangerie St-Laurent.

2002-12-06T21:54:00.000-05:00

Vilar is a small village, with a population of no more than a hundred or so, not far away from the resting place -- at least acccording to legend -- of the apostle St. James in Santiago de Compestela. It is a small village, Vilar, the kind that do not sprout anymore, not at least in these parts of the world. The kind of small village that people fled, but always called home. Like my father and his brothers, and others before them. Fishing was the way people made a living, still do. A way to start making ends meet. At least for a while, before fleeing.

The death of El Caudillo changed that, to an extent. Vilar the small village that never ruffled feathers when General Francisco Franco ruled found new life, a new vocation, when the dictator passed away. It’s as if Vilar, the small village that is but a five-minute walk away from the Atlantic, discovered once again that beautiful beaches lined its coast. Or perhaps it was because travellers from this and that part of Europe reminded the people of Vilar that a treasure lay by their side. The point being, Vilar the small village found new riches. People stayed, no longer tempted as much by the need to flee.

That may change now. Vilar may now have to find yet another calling. The "Prestige," the vessel that cracked in two like an egg, spewing its thick black, nauseous-smelling gook has reached the shores of Vilar. The aging rust bucket as one put it leaked some 10,000 tons of fuel oil, blackening 50 miles of beaches and threatening the rich fishing grounds in the Western Spanish province of Galicia – with Vilar at the epicenter of the environmental time bomb. The people of Vilar are in despair. My father’s nephew called the other day. The only work to be had is by the beaches, to clean up the mess. Fishing plants across the region have been shut. And with it a way of life has been placed on the edge.

2002-12-04T00:08:00.000-05:00

Playing with fire
Canada's Auditor General released her annual compendium of government mismanagement today. Perhaps the most glaring example of unaccountable government spending is the controversial gun registry program. Originally estimated to cost $85 million, the Canadian Firearms Program is now expected to cost taxpayers a staggering $1-billion by 2004. Most disturbingly, says Fraser, Canada's Parliament was kept in the dark about the astronomical cost overruns.

Aside from that fiasco, not much else new is reported by the auditor general. There are the usual round of suspects like Public Works who manages to spend $1.7 billion annually but still can't figure out -- or can't be bothered -- to assess its actual needs. And of course, there's the multinationals who manage to avoid hundreds of millions in taxes through financial loopholes. But that's nothing new. That's why they hire accountants.

Fraser has been doing this for the past four years -- poring over government books, writing tomes brimming with financial misdemeanours, garnering a lot of ink, and hoping that it will prove to be a catalyst for action. But does anything come out of it? Besides the headlines. Because that doesn't last long. By the day after tomorrow most people will have shunted aside the quickly drawn sketches of goverment waste, and be left only with a lasting contempt for politicians.

Fraser knows this, which is all the more reason why government watchdogs must watch their step and not overplay their hand. In this era of budget cutbacks and mounting scorn towards politicians, auditors overseeing public spending are burdened with even greater responsibilities, once told me a public accounting professor who teaches civil servants. "With the public being as skeptical as they are towards polititicans, the public looks to auditors as somebody who is neutral. It has become a position that has become highly visible, and that visibility gives them a power they otherwise would not have," he said.

That's something Fraser candidly acknowledges. "As Auditor General, it is my role to promote greater government accountability and a more effective public service. Canadians are increasingly demanding both," she said after releasing her latest report.

Fraser also knows that the dramatic, albeit troublesome, examples cited in her report will inevitably draw public attention and perhaps compel the federal government to some action. But as the accounting professor points out, the use of colourful anecdotes auditors now resort to highlight flagrant cases of mismanagement ends up more often than not "trivializing the privelaged position of the auditor while burying the more compelling aspects of his report." In other words, bark too often and too loudly, and nobody pays attention. Fraser, and her colleages, would do well to remember that.

2002-11-30T10:01:00.000-05:00

Tales of deceit

It’s the accounting scandal no one ever talks about. It's the precursor to the Enrons and Worldcoms of the world, with their woeful tales of deceit.

It is also one of Canada’s longest and most complex cases against an accounting firm accused of failing to properly audit a real estate lender that collapsed with $1.6 billion debt a decade ago. And it involves a Montreal firm, headed by a tall and distinguished former German banker blessed with a name that matches his aristocratic bearing -- Wolfgang Stolzenberg.

Stolzenberg, who had a taste for the life of the jetset, founded a company called Castor Holdings, an unregulated financial intermediary that made its money by raising capital for commercial real estate projects. It was a profitable enterprise, at least so it seemed. In 1990, the last year the privately-held firm produced audited financial statements, Castor showed a loan portfolio of $1.7 billion with net earnings of $31.2 million.

Two years later, in 1992, Castor surprised everybody by going belly-up, leaving a litany of Canadian and international financial institutions and wealthy investors in the lurch. Turns out that Castor was collecting nearly no interest on the monies it had lent. Creditors allege that the loans were made to companies clandestinely controlled by Stolzenberg.

The debacle led to more than 40 lawsuits against Coopers & Lybrand, alleging that the former accounting giant was negligent in the preparation of financial statements and the evaluation of Castor’s shares. A forensic accountant’s report submitted to a Montreal court castigated Coopers & Lybrand for failing to “adequately” plan the audit of Castor, which proved to be “a root cause of the audit failures that occurred in each of the years 1987 to 1990.”

A decade later, and the case is still before the courts. At least 30 lawsuits totaling $800 million are still pending against the accounting firm by scores of disgruntled investors, including credit unions in British Columbia and Saskatchewan, European banks and DaimlerChrysler Canada Inc. The courts, however, are hearing only one lawsuit, involving former chairman of John Labatt Ltd. Peter Widdrington, after it was decided that the case will set a precedent for the 30-odd similar suits.

An untimely judicial appointment, however, by the Quebec government has now thrown a wrench into the Widdrington test case. The case, which began in 1998 after years of years of discovery, is now in turmoil after key defence lawyer Clement Gascon was recently appointed as Quebec Superior Court judge. As a result, the trial has been put on hold, and the delay could last months – the time until a new lawyer becomes intimately familiar with the case. Gascon played a key role for he was in charge of the cross-examination of Keith Vance, the chief executive officer of accounting firm BDO Dunwoody. So far, Vance has testified for more than 200 days, and he was expected to remain in the witness stand for several more months.

“This additional delay, coming after a series of other delays encountered over the years, is a source of concern,” Leonard Flanz, the lead attorney for the plaintiffs, told me recently. “The trial is very costly, very time-consuming, and at a given point you wonder whether the plaintiffs will continue to keep banging on the door.

“A lot of the plaintiffs are large, serious financial institutions and they cannot really understand how the people responsible for appointing judges would overlook the fact that that they are appointing somebody who was the leading the cross-examination of a witness and overnight they appoint him to the bench without considering the consequences and impact on the trial. It’s inconsiderate to the litigants and does not cast the administration of justice in the best of light. There was no reason why this appointment could not have been delayed.”

While displeased about the delay and the loss of a key member of his team, Yvan Bolduc, the lead counsel representing Coopers, says that there is no reason why the trial still cannot forge ahead. Bolduc suggests that a way to get around the prickly situation is for the plaintiffs to bring up other witnesses in lieu of Vance on the stand until the new lawyer becomes acquainted with the case.

In any event, the case is going to be before the courts for at least another two years, and that’s not taking into account appeals that will undoubtedly be filed. The trial has so far heard only the plaintiff’s side of the story – and they have not finished presenting their case.

As for Stolzenberg, who is believed to be living in Germany, he faces 41 counts of fraud, covering approximately $200 million in losses suffered by Canadian investors. An international warrant was issued for the arrest of the former Montreal businessman but since there is no extradition treaty between Canada and Germany, Stolzenberg is still at liberty.

The Castor debacle should have sounded off alarm bells to the accounting world but unfortunately no one paid attention, says Flanz.
“A lot of the problems you see surfacing in the Castor case with respect to the audit you see in Enron, WorldCom and the other cases,” noted Flanz.

2002-11-28T16:59:00.000-05:00

Caisse de depot revisited

Days after it was revealed that Quebec's pension fund manager is in the final stages of completing a glass tower that will cost taxpayers a staggering $300 million, three times the original estimate, it now appears it will lay off between 130 and 175 employees, about fifteen per cent of its labour force. Spin doctors, not surprisingly, are now hard at work. The Caisse de dépôt et placement du Québec is asserting that the layoffs have nothing to do with the 600,000 square-foot white elephant. Not quite. Certainly other elements come into play. Its injudicious and expensive participation in the $5.4 billion takover of a local cable company is one. So is the collapse of the high tech market. But to deny that the massive cost overruns of its headquarters is not a factor is inane. Indeed, even Quebec's auditor-general is now getting into the act, having just launched an investigation at the prompting of the provincial government.

2002-11-27T15:56:00.000-05:00

You would think they’d know better. But health centres have among the worst health and safety records. Now it seems that McGill University has taken a cue off the hospitals.

Personnel and students have been complaining for years that something is amiss at the McIntyre pavillon, a facility that houses research laboratories. People have been suffering from a variety of ailments including respiratory problems, frequent headaches, and dizzy spells.

But the university only took action after it was threatened with legal action by the Commission de la santé et de la securité (CSST), otherwise known as Quebec workers’ compensation board. After conducting an investigation, the CSST ordered McGill on November 7, 2002 to immediately stop using some twenty-odd chemicals at McIntyre’s research laboratories because the building’s ventilation system circulated the toxic vapours throughout the edifice. McGill did not, at least not immediately. In what it is now describing as a mix-up, the university took a week to ban the use of dangerous toxic substances. McGill was also ordered to follow up on thirty-three recommendations, something it did without a whimper.

Toxic materials are nasty, but so are onerous working conditions – and it’s taking its toll in many Quebec hospitals, with nurses especially bearing the brunt. After years of budget cuts, hospital closures and public-sector buyouts that have cost 4,000 nurses their jobs, nurses on the job are overwhelmed. And the situation will likely deteriorate, at least in Quebec. Though 58,750 nurses are now working in the province, there is an estimated shortage of at least 2,500. With the average age of the Canadian nurses being 43.3, retirements (and overall frustration with unforgiving working conditions) will likely lead the dearth to soar to 17,500 by 2015 — a time when baby-boomers will need increased hospital care, according to the Quebec Health Department.

“We are now paying the price for our penny-pinching ways and the bureaucratic vision that has been imposed on the Quebec health care sector," notes André Duquette, a professor of nursing at the Université de Montréal.

Because of an emphasis by hospital administrators on economic values such as hyperproductivity and hyperperformance, nurses are undergoing an identity crisis, questioning whether the fatigue, low pay, and stress are worth it, particularly since the caring component of their profession seems to have been put by the wayside.

Widespread discontent and concern about the quality of patient care is so pervasive, more than half of Quebec’s nurses (56 percent) are afflicted with severe psychological distress, a condition whose symptoms are associated with anxiety, depression, aggressiveness and cognitive difficulties, according to a recent study. In the general population, that figure hovers at 20 percent.

It’s unfortunate, said one union official I spoke to, but things only move along when we go public. But that can only take you so far.

2002-11-26T14:03:00.000-05:00

Turns out that yet another city that recently merged has proven to be more than generous with its municipal counsellors. Longueuil, a municipality with a population of 385,000 long considered to be a Montreal suburb, merged with eight towns a year ago. Thanks to the merger, the number of elected members dropped from 84 to 43. Not, though, its overall budget for salaries.

In 2000, the year before the merger, the salaries for eight mayors and 76 municipal counsellors totalled $2.2 million. This year, the 43 elected representatives will collectively earn $2.8 million -- a 29 per cent increase, according to a story in today's La Presse (Alas, the story does not appear in the electronic version of the paper). "43 counsellors for a city that size makes no sense," said Paul Leduc, the former mayor of Brossard, one of the towns that was swallowed by the new city. The city of Laval, another Montreal suburb with a population of 352,000, has only 22 elected representatives, points out Leduc.

2002-11-26T09:22:00.000-05:00

A couple of definitions to begin with:

estimate: 1. An approximate calculation or judgment of the size, value, amount, cost, etc. of something.

2a : To judge tentatively or approximately the value, worth, or significance of.

2b : To produce a statement of the approximate cost of.

3. A judgment based on one's impressions; an opinion.

4. To form an opinion about; evaluate: “While an author is yet living we estimate his powers by his worst performance” (Samuel Johnson).

5. ESTIMATE implies a judgment, considered or casual, that precedes or takes the place of actual measuring or counting or testing out.

***

overrun: 1. To spread or swarm over, especially harmfully, as vermin or invaders; ravage, invade; infest.

2. To run or flow over.

3. To run beyond; pass the limit of.

4. To pass the usual or desired limit.

5. Overruns can occur because of estimating errors , reduction in order size, or attempts to take advantage of excess materials.

***

A couple of examples of these definitions taken to an extreme.

***

It’s been a tough year for Canada’s leading pension fund manager. The Caisse de dépôt et placement du Québec, a provincial agency that manages $133 billion mostly in public pension assets, wrote off more than a billion dollars early this year after an expensive takeover of a local cable company went sour. The deal, which took place two years ago after the provincial agency was swayed by media giant Quebecor Inc. to participate in the ill-advised $5.4 billion acquisition of cable company Groupe Videotron Ltee., also contributed to the Caisse's 5-per-cent loss in 2001, the second largest in its history. That made the Caisse's performance the lowest among large pension funds.

But there’s more. Word now has it that the beleaguered financial institution has overshot its budget for the construction of its new Montreal headquarters by a whopping $200 million. The 600,000 square-foot glass-palace located in the heart of Old Montreal was projected to cost $102.5 million. The tab is now expected to surpass $300 million, or three times the original estimate. That comes out to $750 per square-foot in a city where top-notch office buildings have cost at most $250 per square-foot to construct.

***

When the powers-that-be forged ahead with the controversial creation of the new Montreal megacity on January 2002 and wiped out the island’s 28 municipalities to make way for 27 boroughs, promises were made that costs would be slashed, services improved, and taxes remain untouched.

Not so. It turns out that the overall budget slotted for salaries of elected members has remained pretty much the same, even though the number of elected numbers was dramatically reduced, from 290 to 105. Indeed, in 2001, the year before the mergers were enacted, it cost taxpayers $7.58 million to pay the salaries of 290 municipal counselors and mayors from the island’s 28 municipalities. In fiscal 2002, that figure stands at $6.1 million, excluding $1.35 million in expenses, to pay for the salaries of Montreal’s 105 elected members – a far cry from the promised savings of $2.5 million the provincial government boasted would take place.

Taxes too may rise in order to wipe out a $150 million deficit the city is facing. The heads of the 27 boroughs were told in no uncertain terms to reduce expenses by one per cent in 2003 – something that they don’t want to do as it would undoubtedly spell out a reduction in municipal services. Instead, the boroughs would much prefer to hike taxes. As John Meaney, the head of the Kirkland borough put it recently: “If we problems with our budgets it’s not the time to reduce services; rather we should be increasing taxes.”

Forced mergers in Halifax, Ottawa, and Toronto also failed to live up to expectations.

***

Another story, another fiasco. Plans to build two superhospitals in Montreal are going awry, with costs seemingly running out of control.

The McGill University Health Centre, a conglomeration of five English-speaking Montreal hospitals, is intent in building a “world-class health care” no matter what the cost. The proposed superhospital was projected to cost $1.2 billion, but somehow that figure soared to an astounding $2.2 billion – before the Quebec government intervened and put a cap on spending plans.

Plans over the construction of the proposed French-speaking Montreal superhospital too are raising serious concerns. A government investigation found serious financial irregularities at the Université de Montréal’s superhospital. The investigation was launched after the chairman of the superhospital’s planning committee abruptly resigned, denouncing the waste of public funds in the pre-planning stages of billion-dollar project. Claude Béland, the former head of one of Quebec’s most powerful financial institutions the Mouvement Desjardins, castigated the 200 consultants who worked on the project, not in the least because they were siphoning $400,000 a month on the project with little to show for it. One consultant, an accountant, logged 980 hours at a staggering rate of $325 an hour – more than three times the decreed government rate. Another logged 2,300 hours at a rate of $200 an hour. As disturbing is the fact the investigation revealed that 62 consultants billed 8,590 hours at a cost of $638,000 without preauthorization.

In light of the revelations of financial mismanagement, a growing chorus are calling for the provincial government to pull the plug on the superhospitals and concentrate on renovating existing facilities.

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