Fast & Curious: Short Takes on Random Things

McKenna & Co

I was going to call Brookfield Asset Management (BAM) a many-headed hydra but that’s the wrong metaphor, it is decidedly more of an octopus, with tentacles everywhere in everything—railroads, ports, real estate, nuclear power—but just one head, as the Southern Investigative Reporting Foundation reported back in 2013:

Brookfield bears a pyramidal control structure, a design that U.S. regulators have frowned on since the 1930s. Simply stated, this type of structure lets a small group of shareholders exercise control of a business without putting a proportionate amount of capital at risk.

The hubris of the Toronto-headquartered “alternative asset” manager is illustrated by the tagline on its website—”Pioneers of long-term impact”—which could be true only if you refused to acknowledge the long-term impact of say, the Big Bang, the discovery of fire or the invention of the wheel.

I promised you a few interesting Brookfield facts this morning, and here’s the first one: former New Brunswick Premier Frank McKenna is not only board chair (a position he’s held since 2010), he’s one of three people “granted the authority to govern and direct the actions of the BAM Partnership” in the event of a “fundamental disagreement” within that Partnership. The Partnership was formed recently as part of the creation of a new entity, Brookfield Corporation, and it’s too complicated for me to explain—or frankly, understand—but seems designed to ensure control of the corporation remains firmly in the hands of that small group of shareholders mentioned earlier. (Seeking Alpha provides a good explanation here.)

My second fun fact about Brookfield involves another high-profile Canadian, Mark Carney, former governor of the Banks of both Canada and England and erstwhile advisor to British PM Boris Johnson (may he rest in the Caribbean). Carney joined Brookfield in 2020 as vice chair and “head of transition investing.” He got himself into trouble almost immediately by telling Bloomberg Live in the lead-up to the COP26 climate summit that Brookfield had reached “net zero” thanks to its “enormous renewables business” and “all the avoided emissions that come with that.”

Climate experts immediately jumped on this, pointing out that “avoided emissions”—meaning, we invested in wind turbines so avoided the pollution that might have been produced had we invested in coal—cannot be used to meet net-zero claims and that Brookfield has investments in coal and other fossil fuels. Carney later tweeted:

I have always been—and will continue to be—a strong advocate for net zero science-based targets, and I also recognize that avoided emissions do not count towards them.

Next fun fact: Brookfield’s chief legal officer is named Justin Beber, and yes, it’s spelled differently (the singer is Bieber) but it’s still close enough to be funny:

If you like your fun facts with a hint of Satanism, you’ll be pleased to know that it was Brookfield that bailed out Donald Trump’s son-in-law Jared Kushner by signing a 99-year lease on the office portion of 666 Fifth Avenue, an “ageing skyscraper” for which Kushner Companies had paid $1.8 billion in 2006 and which Vanity Fair described as an “albatross” around the family’s neck.

Mind you, Brookfield never does anything by itself, and in the case of the 666 Fifth lease, it had an assist (supposedly unwitting) from the Qatari Investment Authority (QIA), which invested $1.8 billion in Brookfield’s real estate fund, Brookfield Property Partners, in 2014. The deal went down in 2018, at which point the Kushners had owned 666 Fifth Avenue for 11 years and had spent two years, according to that Vanity Fair article quoted above, “trying to get new partners or financing to no avail.”

At the time, Kushner, in his role as an advisor to Trump, was supporting a Saudi-and UAE-led blockade of Qatar, so the arrival of a Canadian asset manager with serious backing from Qatar to save the day looked, to some, like “a foreign government trying to influence policy by greasing the president’s son-in-law’s wheels.” Brookfield claimed Qatar “had no knowledge of the deal before its public announcement” and the Qatari government also felt the need to declare publicly it had “absolutely no involvement” with the deal.

Since then, Qatar has patched up its differences with UAE and Saudi Arabia, Brookfield is planning to expand into Saudi Arabia and all traces of Satan have been wiped from 666 Fifth Avenue which, after a $400 million re-design, is now 660 Fifth Avenue. So, happy days, I guess.

My final fun fact is less fun if you, like me, are a Ramones fan: Brookfield has entered into a $2 billion deal with Primary Wave Music to buy music copyrights including Joey Ramone’s.

Punk is well and truly dead.

 

Update on Bridging Downfall

It looks like the cops have been called on Bridging Finance.

According to the Globe and Mail, the RCMP has launched a criminal investigation into the Toronto-based private debt specialist that lent Membertou Corporate $6.8 million to invest in Albert Barbusci’s Sydney harbor container terminal project. This represents a small corner of Bridging’s business—the company claimed to have $2.1 billion under management when it went into receivership in April 2021—but the one of most interest to me. Membertou and Bridging Inc were announced as partners in Barbusci’s Novaporte “consortium” in January 2020.

Citing sources who did not wish to be identified, the Globe said that investigators with the RCMP’s Integrated Market Enforcement Team had been “interviewing witnesses and seeking records” in the case, although it’s not clear which aspect of the scandal the RCMP is examining.

Bridging went into receivership amidst allegations of self-dealing and fraud involving the company’s leaders, David and Natasha Sharpe. Much of what we know about the allegations comes from an investigation by the Ontario Securities Commission (OSC), particularly from Sharpe’s own testimony which the OSC disclosed publicly. In March, the Capital Markets Tribunal found this was a violation of Sharpe’s privacy rights, but declined to provide the remedy sought by his lawyer, namely, a stay of the proceedings against Sharpe.

Bridging’s receiver, PricewaterhouseCoopers (PwC), has already broken the bad news to investors that it expects to recover, at most, 41% of their money but Investment Executive reported on Thursday that the receiver can’t start returning what’s left of their funds to investors until a decision is made about the order in which they are to be repaid, and that’s not expected until the new year.

 

Robo Copy

I’m getting a new flavor of spam these days.

In addition to the usual “We can fix your sad, broken website” and “Can we pay you to post an article with links to our betting site?” emails I’m getting offers to automate my content production (or “writing” as we used to call it). Here’s a sample:

Hi, capebretonspectator.com I hope you are doing well with managing your website And I Know How much it is time-consuming to write a good blog post for your website

But Did you know you can automate your website with a robot? You can write a blog post automatically without writing a single paragraph.

For example, let’s say you want to write a blog about Make Money Online. In the software write ( write me content about Make Money Online in 2022) Done, the robot gives you an entire blog post, and it is plagiarism-free

I mean, what’s not to love? Instant, poorly written, badly punctuated, oddly capitalized copy on a subject I would never in my lifetime choose to address?

I was promised a “free trial” of the software and was actually going to try it out of sheer curiosity but balked at providing payment information (I am the type of person who forgets to cancel her free trials), but I think the introductory email is probably pretty indicative of the caliber of the copy I could expect to receive.

Part of me is tempted to try one all-sponsored and/or robo-generated copy issue just to remind everyone (including myself) why human-generated, subscriber-supported copy is best, but I’m afraid I might wipe out seven years’ worth of hard-won credibility in one fell swoop.