After my father died in Victoria in 2008 at the age of 91, my sister opened his safety deposit box and discovered $5,000 in shares in the British Columbia Resources Investment Corp., better known as the BCRIC, universally pronounced at the end of the 1970s as the “brick.”
When I say $5,000 in shares, of course, that is a description of what he paid. By 2008, they were worth nothing of the sort. In fact, they were worth nothing at all. Zip, zero, zilch.
My father, and many other naïve small investors like him, may have believed that their BCRIC shares were somehow backed by the B.C. government — they had certainly been promoted by it — and were therefore as good as Canada Savings Bonds, another thing of the past.
He may also have felt buying BCRIC shares was a patriotic thing to do; I know he wanted to support local jobs. He certainly understood companies of great value were owned by the BCRIC.
How my father came to be fleeced by the sharp operators in the B.C. Government who created the BCRIC, and their friends in business who ran it for them, is a cautionary tale worth repeating in the Alberta of 2020.
That’s because Jason Kenney, the something-like-Social-Credit Premier of Alberta, has been talking about doing something that sure sounds like the BCRIC to me, right here in Alberta.
On Feb. 29, the Globe and Mail reported on how Mr. Kenney had mused before a business crowd in Edmonton about what the newspaper described as “the potential of the public purse being unzipped to buy oil and gas projects.”
“Jason Kenney wants public ownership of Alberta oil and gas, and Albertans could buy shares,” enthused the Globe’s headline writer.
“We are prepared to do what is necessary to ensure a future for this province’s economy,” Mr. Kenney told the business types as they grazed. “And I think Albertans are smart, they’re patriotic, they understand that there’s great value in these resources.”
What happened in B.C. in the early 1970s is a complicated story, but it’s still worth recounting the broad strokes, because it bears some similarity to what is happening in Alberta now.
First, there was a recession that saw many natural resource-based industrial companies fall into financial trouble, threatening many jobs.
Then there was a one-term NDP government, led by a premier named Dave Barrett, that saved those jobs for a spell by buying the troubled companies and running them as Crown Corporations. (That is something the NDP government elected in Alberta in 2015 would never have dared to do.)
In 1975, the Social Credit government led by Bill Bennett — the son of the William Bennett Mr. Barrett had defeated in 1972 — returned to power. The younger Mr. Bennett was an early version of what today we would call a neoliberal, and he did not like the idea of the government picking winners and losers, let alone running them.
Being a clever man, Mr. Bennett justified re-privatizing these recently nationalized assets in a clever way — he came up with a scheme he said would help ordinary people become investors and grow to appreciate the way our modern market capitalist system works.
Arguing that the private sector always does a better job than the public sector of running things, Mr. Bennett’s something-like Social Crediters took all the enterprises nationalized by the New Democrats, rolled them into one big resource company and gave five shares to every adult in the province.
Then — and this was the really clever part — they offered to sell additional shares to members of the public who had faith in the government and the value of its former assets.
Alas, the very smart businessmen Mr. Bennett trusted to take over these valuable public assets made some very bad miscalculations. They sank quite a bit of the money in the North Sea, where there was oil that wasn’t fetching very good prices at the time. They dropped more down a mineshaft that turned out not to have a bottom.
Small investors like my dad who had put thousands of their hard-earned dollars into the BCRIC saw their investments drop like the company’s namesake. Before long, their thousands were worth only a few pennies.
By then, of course, the company, with its nearly worthless shares, wasn’t called BCRIC any more. It had a conveniently inoffensive new corporate title: Westar Group Ltd. No need to remind folks that this was Mr. Bennett’s brainchild!
In 1997, Westar was re-re-privatized. That is to say, the shares were taken private. Westar ceased to be a public corporation, subject to public reporting rules, and became private property. Small investors were told there was a “compulsory buy-out” of their shares.
In other words, the wealth that had been put into BCRIC by small investors was privatized. The small investors were given 10 years to cash in their considerably devalued chips.
The buy-out officially ended on June 30, 2007. After that, the shares – which had once traded for as much as $9 each – had no value at all.
Investors like my father, who were too sick, too old, or too forgetful, got nothing.
And the money those small investors had paid for a share of the BCRIC, well, that went somewhere…
Now Mr. Kenney has a similar scheme — although it sounds as if it will be dependable market fundamentalists from his United Conservative Party who will nationalize the assets with the intention of reselling them later, not New Democrats bent on “a risky experiment,” as we say nowadays in Alberta, to save jobs.
Premier Kenney advised his friendly Edmonton business audience to “stay tuned.”
They should. And so should we.
Remember, even if oil were a business with a future — and there’s a strong case to be made it’s not — you’re smart never to trust clever, smooth-talking right-wing politicians with your retirement savings.
Not unless you really want to come to appreciate the way our modern market capitalist system works, that is.
If you’ve got money in a government pension fund on which Mr. Kenney and his finance minister, Travis Toews, are casting covetous eyes, that is an even more troubling prospect.
At least if you’re an investor in the stock market, you have the choice.
And if you have a few thousand to invest, my advice to you is this: Don’t do like my Dad did!
I would love to have AIMCo available for the general public to invest in, just so I could tell Kenney supporters to invest all of their retirement funds in it before they criticize me for complaining about Jason Kenney stealing my pension.
Socialism for the rich, brutal unregulated capitalism for the rest of us. Will Albertans wake up to the fact, especially those with a pension, that Kenney’s idea is to take current pension funds invested in productive assets and funnel them to unproductive assets? This is a pay off to his funders that allows them get rid of things that otherwise no one would buy likely at inflated prices. Yes people you are being fleeced and not just those with a pension because that money will run out. He is certainly picking the winners and the losers.
The Kons embody a form of utter degeneracy. During the period of the Glorious Revolution, when people like Dinning and McCaig were setting up considerable portions of the province’s economy to serve essentially as a stable of whores to speculating Kon insiders, we were told that government had no business being in business. And the current crop of grifter-yokel pimps in the Legislature still peddle this line with regard to every aspect of the economy except oil and gas now that the fluky winfall provides our rulers with significantly less power over the rest of us than it did ten years ago. If these semi-literate clowns are going to remodel the school curriculum, they could start by making Kevin Taft’s works compulsory for whatever education stream still learns to read in our public schools.
https://www.amazon.ca/Shredding-Public-Interest-One-Party-Government/dp/0888642954
https://www.amazon.ca/Follow-Money-Where-Albertas-Wealth-ebook/dp/B0106CBFW8
https://www.amazon.ca/Oils-Deep-State-petroleum-undermines/dp/1459409973
People in this province who lack insider status need to understand that the “business people” do whatever they can until they are caught. The argument that they will behave in a way that benefits others because it makes good financial sense is pure rubbish in most circumstances. The underlying ethos of business is always “do unto others, then split”. It’s why massive corporations whose ranks are filled with the most educated people in our society happily pay meagre fines doled out by judges with similar insider status, and carry on merrily doing whatever they feel like doing to everybody else.
https://www.tni.org/files/download/corporate_planet_crimes_and_fines_website_table_with_sources.pdf
I find it amazing that in our so called Democracy, which is nothing but a joke, some thug gets power and decides on how to use a pension fund. Thousands of people will be affected by some sicko that believes that market fundamentalism was given to us by God and apparently has 19 million dollars in the bank – Nice especially when I cannot understand where that money came from.
These funds should be off limits of any politician regardless of who they are. This is not public money to start with.
Unfortunately, like other bad rules in our capitalist system, the game is always in favour of those that have power or money.
Well, it will not be a case where the public “can” buy shares in this Alberta company. The public will be *forced* to buy shares, whether through the bulk of their pension funds or tax revenues that could be better used elsewhere.
It’s a scam through as through.
As for that shifty character, Bennett, he was one of the actors behind and enormous scam that cost investors millions. Of course, he and others made bank, but who cares about the people they lied to?
Later, Bennett was subject to a penalty that barred him from leading a public company for the rest of his life.
Too little, too late. Which is usually the case in these matters.
What will the issued share capital be? I think 100M. This seems to be Kenney’s favorite number. If anyone’s interested, I did some scientific research and found out why. Hint: myriads of myriads. I’d bet my sweet bippy on it.
Before he abandoned his own foray into higher education, Tailgunner Jay proved too Catholic for the Catholics. They are not folks who read the scriptures. Biblical literalism is more up the alley of the Ontario grifter-kooks who come to Alberta to harvest the fruits of the myriad evangelical bible colleges set up in lieu of real education institutions in Alberta back in the good old days. Your Stockwell Days, Harpos, Chandlers, etc.
There’s a word for what Kenney is doing with Albertans’ pensions. Some might call it stealing on a grand scale!
First, he made a law that enables him to control how and where AIMCO invests, and then he took control, via AIMCO, of the AB teachers’ pension fund, along with AB professors’ pension fund, and the public sector workers pensions.
These retirement funds were well managed and made good returns for the members, and now they serve as a private piggy bank to prop up the Oil & Gas industry.
If we allow such plundering of workers’ pensions, then maybe all those retirees and future retirees deserve to lose their pensions. What’s will be left to steal next -provincial parks perhaps?
Kenney’s speedy dismantling of this province is indicative of someone on his tail, nipping at his heels. RCMP perhaps?
Hurry up you guys!
The idea that western Canadians are all hale and hearty free-enterprisers is a joke. We love socialism – provided it comes from a right-wing government that tells us how wonderful we are. We’re doomed.
My two oldest kids are out of university and neither is coming back to Alberta. One lives in Ireland (a country from which some of his ancestors fled) and will probably stay there with his Dublin-born wife. My daughter has a portable job and will follow her fiancee to wherever his high-tech career takes him (yes, they’re both good with this arrangement). My youngest son told us last night that he’s picked UBC to attend next year – and when he leaves in September, we’ll be moving to BC as well.
If I’m going to live under socialism, I’d rather it be run by experts.
It is kind of funny, those Conservative politicians who consistently protested government involvement in business over the years, particularly endeavors that might lead to needed economic diversification, seem to have now become the most enthusiastic recent supporters of government investment in our energy industry. Let’s call this the keeping all our eggs in one basket approach. Its like someone who is afraid of water suddenly deciding to dive into the deep end of the pool naked. I have a feeling this may not go so well.
Maybe it is a measure of the desperation of Kenney to try turn things around when everything he believed in hasn’t worked so far. I suppose there is some historical precedent – RB Bennett, that died in the wool Conservative, seemed to become a bit of a socialist towards the end of his term as the Great Depression dragged on. Also Social Credit which was Conservative about most things, was actually somewhat socialist when it came to credit (and banking), hence the name Social Credit. Mr. Bennett in BC had aspects of that – definitely Conservative, but perhaps with a deeply repressed socialist side that only came out occasionally in case of a political emergency.
I suppose there is even more precedent for this in Alberta – the PC’s owned an energy company and an airline in the 70’s and thank to their Social Credit predecessors, we all still own a quasi-bank. Also, in the 70’s through the 90’s both the provincial and federal governments provided plenty of support for oil sands development. However, I do sense with climate change that “investment” in the energy industry will not be as lucrative over the next 25 years as it was over the last 25 years. Also, particularly with pension money, putting all or more of your eggs in one basket is a risky strategy that is not very wise.
If Mr. Kenney wants to call up EF Hutton or whatever broker who will listen, to buy some shares in energy companies that he thinks are undervalued now – I’m fine with that, as long as it is only his own personal money. However, I don’t think most Alberta taxpayers want to go along for the ride in an investment that in recent years has become much riskier.
“deciding to dive into the deep end of the pool naked”
Dave, I always enjoy reading your posts, and I do think you make valuable contributions to our host’s blog. Unfortunately, today I got to the end of your first paragraph, got a very unwelcome mental image of Jason Kenney, and my eyes would not let me read any more.
I was today reminded of another $Billion socialist boondoggle by a previous govt – not the NDP, the Tories:
https://calgaryherald.com/opinion/columnists/varcoe-sturgeon-refinery
Also carbon sequestration, Magnesium, Novatel.
Off on a tangent, but nonetheless related to CON scams, today it was announced that Kenney is backing Erin O’Toole for the leadership of the CPC. Considering that Kenney’s other endorsements, the soon to be Madame Ambassador, Rona Ambrose, and the comically-troubled and barely closeted, John Baird, have decided to not throw their respective hats into the race, he runs to his last hope, the Tool. No doubt this endorsement will be a huge boost for O’Toole’s foundering campaign, granting him not only donations, but also considerable Socon credibility. As a result, Kenney will continue his premier-abroad role, campaigning for O’Toole and presenting him to various political events. Kenney did the same for Stockwell Day and look at the wonders that happened.
Kenney’s distrust and hatred of Peter MacKay is so extreme, he will back a rival to take him down. I have no doubt that the slush fund called the “War Room” will make a portion of its abundant resources available to finance and promote O’Toole’s leadership bid. When you don’t have FOIP oversight, you can do pretty much anything. And Kenney gets to make the rounds about the CPC’s backrooms, promoting his man and getting the word around that he’s still a political boss.
If there isn’t millions of hands slapping into foreheads across Alberta, it will be proof of its population’s enormous ignorance.
In some ways Kenny is not unlike Bennett and his “restraint” program. Laid off workers all over the province and cut programs. Kenny is closing Provincial Parks, Bennett privitized them all. During Gordon Campbell’s reign, they then took it a step farther and implemented a reservation system. Works wonderfully well for tourist businesses renting rvs but if you’re a family who just wants to go out for the weekend, not so much.
Its a nice game of using public assets to make money for tourist companies, renting r.v.s to Europeans.
Having watch the BRIC rip off, one person I knew had invested $30K, his bank manager even more. The citizens of B.C. were ripped off royally, but that didn’t surprise me because the Howe St. gerandiers had given Bennett and his friends “lessons” for decades. For those who don’t know or remember about the stock exchange of that time, its “entertaining”.
At the time “all citizens” were sent I think it was a $5 stock certificate. About 10 yrs ago one of the siblings found it going through old paper work. Our family didn’t buy. never trusted the Bennetts and stock exchanges
Expect Kenney may be floating this around to bring money into the depleted Alberta Treasury so he doesn’t have to raise taxes.
I’m never sure where I have my five free BCRIC shares stashed—I know it’s intentionally in some place where I’m sure to bump into the crisp, never-used certificate eventually, someplace safe from accidental trashing, someplace where this baby can never be thrown out with the bath water.
I actually make sure not to assign it any kind of file-heading because I kinda get a bang out finding it by surprise whether rummaging through old family photos, flipping through notebooks, or searching for an important document; apparently I decided, one time, to press the certificate in a record sleeve in my go-to-the-grave-with-me vinyl stash. Must’ve been on a moving day. I’m not sure exactly where it is right now.
Sometimes I return it neatly to where I bumped into it, sometimes not. —can’t remember if I did, last time—nor where I made the most recent rediscovery of this fascinating bit of con and life-lesson. That’s how I think of it because whenever I run into it—which is not very often, really—after all the associated reminisces flash through my mind while looking at it and feeling it in my hand, and just thinking about it for a few moments, I always go, “Wow!…”
I would never throw it away. It’s worthless in a priceless kind of way. It might not seem to have been such a scam to one who values pricelessness of this kind. One wouldn’t want to bank too much of it, though.
Same thing happens every time: hey! Well, would you look at that… My old “brick shares”! Man!—still looks like brand new!…Wow!…
There’s kind of a thrill. I’ve also heard this snippet of conversation come up over the years, in no particular circumstance : Yeah, I still have my “brick shares”, too. —You do? I have mine, too! —Well what’d ya know!
As far as I can recall, There’s always been a laugh.
If I’m party to it, I always ask if anyone remembers the restaurant owner in East Van who acquired a bunch of the newly-issued “brick shares” by redeeming them as payment for meals at his greasy spoon: a lot of the gentlemen from The American and The Cobalt (single-occupancy hotel rooms with an address to which the five BCRIC shares every BC citizen was entitled to were mailed) soon began coming in to see if they mightn’t negotiate some cash in the matter of a cup of coffee, some Salisbury steak and some peas, the shares being pegged at $6 apiece, the five-share certificate thus thirty bucks each. Soon the restauranteur-cum-stock broker had bought enough of the certificates in this way or that to wallpaper his entire dining establishment—which is exactly what he did when the stock almost immediately (after an initial flurry boosted the price a few bucks and traders creamed a little profit back down to the issue-price) descended below $6, and sank thence, down and down until it was worth virtually nothing—other than wallpaper (stiff like newly-printed bills, it wasn’t even very good for banal uses of low-grade paper). Traded on the VSE, naturally.
The notes are handsomely designed and pressed: some mountains, some hard hats, some family; black offset by red ink on good-quality notes (like certain peri-recognized African jurisdictions used Canadian Tire coupon scrip because of its durable, high-quality paper and difficult-to-counterfeit-locally serial numbers and impressment).
I’ve been meaning to get a T-shirt printed with a facsimile of the obverse —or maybe even both sides, chest and back. I know it’d be a conversation starter for British Columbian citizens who, with their five free shares, had the inside scoop on the deal at the time. It’s amazing such a huge amount of money could vanish without very much of a complaint. I guess when some of BCRIC’s purchases involved some shady plays, citizens—who all together were a substantial proportion of shareholders—simply shrugged in resignation to the same old “same old.” There must be a threshold past which cynicism seems normal. Still, this was a massive scam.
I must admit it’s been a long time since I thought about honest investors who weren’t part of the province-wide super-thin distribution, but who got burned for more than five shares-worth—just because it’s been so long since I last saw my crisp, five-share BCRIC certificate, I guess. It’s around here someplace. But hearing about it now still makes me go, “wow…”
If ever there was a time to take a lesson from this massive scam that made off with huge amounts of public money, it’s now, and it’s in Alberta.
I’ll tell the tale. They finally have the scenario to rehistory (tm pogo) Peter Lougheed. They’re plan is to sewer the pension funds of public service workers in a hail of dollars that they will set alight in a grand display of mendacity! Coastal Gas Link? Poof! Buy me an oilsands lease? Poof! Oh my goodness! There’s a structural deficit of pension under-funding? Poof!