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Mutual Fund News

Norbourg head puts blame on ministry

Also alleges Caisse had role in firm's fall

MONTREAL -- The founder of failed mutual fund company Norbourg Asset Management Inc. has alleged that dubious activities by employees at the Quebec Ministry of Finance and the Caisse de dépôt et placement du Québec were among the events that preceded his company's demise.

Vincent Lacroix made the allegations in lengthy testimony provided last fall as part of a bankruptcy trustee's investigation into the disappearance of $130-million of Norbourg investors' money.

Mr. Lacroix alleged that officials at the Caisse used their influence to speed up regulatory approval of a transaction involving Norbourg. He said that in 2003, he had told Caisse officials and managers of an internal fund they wanted to sell to Norbourg that the transaction was being held up by the provincial securities watchdog. He said he was told they would look after it.

The testimony was only recently filed in the Quebec Superior Court as part of bankruptcy proceedings in the Norbourg case.

The Caisse said in a statement late Wednesday that the allegations, which have not been tested in court, are "completely false."

"The information, data and facts gathered or brought to the attention of the Caisse in no manner support the statements made by Mr. Lacroix to the trustee. Mr. Lacroix's untrue statements regarding the Caisse are merely a repetition of the false information he has been conveying for several months in an attempt to pass himself off as a victim."

The Caisse also cited statements made last year by Mr. Justice Robert Mongeon, who said in a Superior Court ruling that Mr. Lacroix admitted he had stolen from the mutual fund unitholders and that he lied to taxation authorities.

Also in his testimony before the trustee, RSM Richter Inc., Mr. Lacroix alleges that he paid a $120,000 bribe to a provincial Ministry of Finance employee. The employee is alleged to have been directly involved in assessing Montreal-based Norbourg's requests for tax credits.

A ministry spokesman declined yesterday to comment on the matter.

Mr. Lacroix got his start in the Montreal financial community with a stint as an asset allocation analyst at the Caisse after graduating from the University of Sherbrooke in 1991. He went on to found Norbourg in 1998.

The mutual fund company was shut down in 2005 over allegations of fraud and embezzlement of company assets. The provincial financial services regulator, the Autorité des marchés financiers, has charged Mr. Lacroix under securities legislation with fraud, falsifying documents and misappropriation of funds.

An investigation by the RCMP continues and several lawsuits have been launched.

There have been partial refunds to some of the 9,200 unitholders who lost money -- their life savings, in some cases -- in the financial scandal.

Among the revelations in the case over the past 1½ years are the hiring by Mr. Lacroix -- when Norbourg was still active -- of two former employees of AMF and its predecessor, the Commission des valeurs mobilières.

And, just before Norbourg was shut down, former Caisse chief executive officer Jean-Claude Scraire had accepted an invitation from Mr. Lacroix to head up a special advisory board at the mutual fund firm.

© 2007 The Globe and Mail. All rights reserved.

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