TORONTO, April 16 /CNW/ - Ontario Premier Dalton McGuinty should take any advice he gets from investment bank Goldman Sachs and put it "straight in the shredder," the president of the Ontario Public Service Employees Union says.
"The U.S. financial watchdog said today that investors lost a billion dollars because of an elaborate fraud committed by the same company Premier McGuinty has hired to advise him on how to sell off our Crown corporations," said Warren (Smokey) Thomas. "I don't see how the Premier can trust that any advice he gets from Goldman Sachs will be in the best interests of the people of Ontario.
"This company loves to make its profits on the misfortunes of others, and today's fraud charges illustrate that perfectly," said Thomas. "The government must immediately sever its relationship with Goldman Sachs."
In charging Goldman Sachs, the U.S. Securities and Exchange Commission said the company sold an investment product that it knew was likely to lose value, but failed to tell investors - except the one billionaire who profited from it.
In 2007, a hedge fund operated by billionaire John Paulson wanted to place a bet that investment products built on sub-prime mortgages would go down in value. Paulson worked with Goldman Sachs to put together a selection of precarious-looking products. They called the whole package Abacus 2007-AC1, and Paulson bought a piece of it. Paulson made $1 billion, according to Forbes.com, while Goldman Sachs earned $15 million in fees.
But in marketing the product, Goldman Sachs failed to tell investors that Paulson had helped design the product to lose value and was betting that it would.
The McGuinty government announced last November that it had hired Goldman Sachs and CIBC World Markets to develop proposals to sell off all or part of the LCBO, Ontario Lottery and Gaming, Ontario Power Generation, and Hydro One. The four Crown corporations bring in more than $4.1 billion per year in steady income for Ontario taxpayers.
OPSEU represents more than 7,000 union members at the LCBO and OLG.
For further information: For further information: For comment: Warren (Smokey) Thomas: (613) 329-1931