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Norbourg probe beset by politics at Que. agency

But regulatory watchdog says enforcement head's resignation was unrelated to case

MONTREAL -- The investigation into allegedly improper transactions at Norbourg Asset Management Inc. took place against a backdrop of turmoil at Quebec's regulatory watchdog that culminated in the recent resignation of the agency's enforcement officer, sources say.

Claire Lewis, who took over as head of enforcement at the Autorité des marches financiers last year, quit in mid-July, AMF spokesman Philippe Roy confirmed yesterday.

But he said her departure was not related to the AMF's probe of Montreal-based Norbourg.

Last week, a provincial securities tribunal ordered Norbourg to cease all activities in the wake of allegations by the AMF that about $70-million of the asset-management firm's cash came from embezzlement.

Quebec Finance Minister Michel Audet has appointed Ernst & Young to run Norbourg and try to recover the $70-million in missing investor funds.

Norbourg's president and controlling shareholder, Vincent Lacroix, had his right to sell securities suspended, but he has said he will co-operate with the recovery efforts.

The AMF's investigation into dealings at Norbourg was hampered by instability and political interference in the executive ranks of the enforcement and compliance division, said a source close to the events.

Mr. Roy said that Nathalie Drouin, head of the AMF's legal affairs branch, has taken over Ms. Lewis's duties until someone is found to replace her. In addition, a Quebec City civil servant from the justice department, Giselle Gauthier, will step in to provide assistance to the new head of compliance, he said.

A second source said the sudden departure of Ms. Lewis after only one year reflects the state of near-paralysis at the AMF. "It was clear she wasn't being given any power. The upstairs people interfere," he said, pointing out that it was the white-collar crimes unit of the RCMP that ended up taking the lead on the Norbourg investigation, with raids it spearheaded on company offices last week.

Yves Roussel, an officer with the RCMP's Integrated Markets Enforcement Team, refused to comment on events related to the Norbourg investigation.

Meanwhile, the former head of the powerful Caisse de dépôt et placement du Québec, Jean-Claude Scraire, confirmed in an interview yesterday that he recently accepted an invitation by Mr. Lacroix to head up a special advisory board to Norbourg that was scheduled to have its first meeting next week.

"He contacted me," Mr. Scraire said. "He wanted to explore ways of bringing in more outside directors and improving corporate governance."

Mr. Scraire would have been joined by at least two other people on the board -- Nathalie Bourque, a spokeswoman for CAE Inc., and Jean Morissette, a former executive with mutual fund distributor Groupe Financier Partenaires Cartier Inc.

Mr. Scraire said Mr. Lacroix gave no indication that he knew he was about to be removed from his duties at Norbourg and its operations taken over by an administrator.

© 2007 The Globe and Mail. All rights reserved.

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