Quebecers cannot know precisely where the approximately $1.5 billion that the government has invested in funds over the past few years has gone. This lack of transparency shocks governance experts.
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In addition to directly investing billions of dollars each year in hundreds of companies, the Ministry of the Economy, headed by Pierre Fitzgibbon, entrusts increasingly large sums of money to various funds.
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The government makes public every investment of at least $25,000 made in a company. On the other hand, he flatly refuses to say where the funds have invested his money.
“With regard to the list of companies in which these funds have invested and the amounts involved, it turns out that this information cannot be sent to you for reasons of confidentiality”, writes Investissement Québec (IQ) at Log in response to an access to information request.
“There is a big governance issue here,” laments Saidatou Dicko, professor of accounting at UQAM.
Saidatou Dicko, professor at ESG UQAM
Photo taken from the UQAM website
“There has to be some traceability and some transparency, because it’s public money,” she adds.
More than 1000 companies
Everything that the government wanted to communicate to the Logis that the sum of $1 billion invested since 2014 in some 30 funds has resulted in more than 1,000 companies and that the annual fees paid to managers can reach 2.5% of the capital committed, or approximately $25 million.
Most of the funds to which the government has entrusted money present, on their website, companies in which they have invested – in some cases, these are non-Quebec firms. Impossible to know, however, which transactions Quebec financed.
Some funds have flatly refused to provide the Log a list of companies in which they have invested. This is particularly the case of Evol, and the Quebec Business Transfer Fund (FTEQ), yet managed by IQ.
“In order to preserve the confidentiality of information on the financial situation of companies that have benefited from the FTEQ, such a list cannot be shared,” said a spokesperson for the Ministry of the Economy, Jean-Pierre D’Auteuil.
At Evol, we mention “business strategy reasons” for refusing to provide a list of loans granted to companies.
“Taxpayers have a right to know. The government cannot simply use an intermediary to hide the nature of its investments. Information must flow. For what? Because it’s money that belongs to the people, not to the politicians,” asserts Richard Leblanc, professor specializing in governance at York University in Toronto.
Richard LeBlanc
Photo from York University website
A fund… of funds
Monitoring government investments is even more difficult in the case of some $320 million entrusted by Quebec and IQ to Teralys Capital. This Montreal firm does not invest directly in companies, but in other funds.
“It would be my pleasure to provide you with this list [des entreprises ayant bénéficié de fonds publics]but unfortunately, we have confidentiality agreements with the various portfolio managers,” argues Jacques Bernier, senior partner at Teralys.
Jacques Bernier
Photo taken from the Teralys Capital website
According to Mr. Leblanc, funds and companies that receive public funds have no valid argument for refusing to be transparent.
“If you are a private company and you receive even $1 in public funds, you lose the right to complete confidentiality. If that’s not what you want, don’t take government money,” he said.
Mme Dicko wonders why Quebec is not more demanding.
“What is the decision-making power of the government vis-à-vis these funds? In other words, do you give money and shut your mouth or do you have the right to ask questions about governance, operation, transparency? she says.
“If you want to be a CEO, you shouldn’t be in politics. When you are a politician, you must be accountable. It’s something that people from the business world don’t always understand,” concludes Richard Leblanc.
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Main commitments in funds (Ministry of the Economy and Investissement Québec)
- Teralys $320M
- Novacap 190M$
- National Bank SME Growth Fund $100M
- Cycle Capital $100M
- $100M Eureka Fund