'The fact is that the people who made out like bandits, shoved money into their own pockets by the bucketful, and drove our economy into a crisis, have no apparent shame.' - Larry Brown.
By Larry Brown
National Secretary-Treasurer
National Union of Public and General Employees (NUPGE)
Ottawa (26 Oct. 2009) -It’s pretty clear that for too many Canadians, times are tough. As just one example, Nortel workers and retirees are facing huge losses of their pension plans, their severance, and their disability protection, because to all intents Nortel has gone belly-up.
But not all current or former Nortel employees are facing these problems. The CEO that got Nortel into this mess, one John Roth, still has every penny of the $159 million he was paid while steering the company into the ditch, and the five senior company officials still have the $400 million they got paid between 1999 and 2008. The CEO who finished the job of making Nortel bankrupt, Mr. Zafirovski, still has the $40 million or so he was paid.
After putting the company into bankruptcy, Mr. Zafirovski applied to bankruptcy court for permission to pay eight senior officials about a million dollars each as a retention bonus just before he sold the company off in pieces. One would think the people who got a million dollars to stay with the company are now going to give it back, the company having disappeared and all. Now Mr. Zafirovski is suing the company he drove into the bankruptcy courts, for $12.2 million, including $3.6 million in bonuses he says he has ‘earned’.
But there is no money at Nortel for pensions or disability plans for the employees.
The awful thing is that Nortel isn’t an isolated case. The fact is that the people who made out like bandits, shoved money into their own pockets by the bucketful, and drove our economy into a crisis, have no apparent shame.
Hundreds of thousands of Canadians have lost their jobs in the Great Recession and the lead-up to it. Only about half of those will even get EI benefits. In Canada if you lose your job you are far more likely than in other countries to enter the ranks of the poor. Our poverty levels are increasing as you read this. Food banks can’t keep up, people are going bankrupt, people are losing their homes – and the good times just keep on rolling on Bay Street.
Before we fell off the financial cliff, the top CEOs in Canada had received an average 22% compensation increase in 2008. That same year the average wage increase for everyone else was 3.2%. That bloat at the top, and the squeeze on everyone else, was part of the problem that pushed our economy over the edge. So what have we learned from that?
The bonus money put aside at the Royal Bank of Canada is up by 33% this year, to an obscene $2.74 billion. That’s not a typo, that’s $2.74 billion. In bonuses, over and above regular pay. The Toronto Dominion Bank is badly lagging – they only have $1 billion set aside for bonuses, so far this year.
Of course the taxpayer has helped these poor unfortunate bankers out, by buying up their dubious mortgages and their questionable assets. That’s right, us, we the taxpayers, who never get paid at that level, let alone get to share in those bonuses on top of our regular pay; we have invested up to $75 billion to take the bank’s shaky assets off their hands, so they could make a more secure profit.
A question: did the bankers earn their outrageous bonuses because they are financial wizards who were brilliant at their jobs and enriched the company, or did the bankers get those outrageous bonuses because the taxpayers bailed their sorry butts out of the mess they had gotten themselves into?
In the US, the companies that got massive bailouts from the government paid massive bonuses to their employees at the very same time. Citigroup, Merrill Lynch, and seven other banks paid a staggering $32.6 billion in bonuses to their top employees while receiving $175 billion in government aid, in 2008.
Citigroup alone lost $27.7 billion, but paid out bonuses (for good performance?) to the tune of $5.3 billion. Of course they had to keep the highly skilled senior staff responsible for that wonderful result.
In the public sector, perfectly incompetent performances will result in dismissal. In the for-profit sector, at least at the upper echelons, perfectly incompetent performances get you multi million dollar bonuses.
Because they were bailed out by the taxpayers, the banks in the US and Canada made big profits so far in 2009. How could they miss? In return for being clever enough to accept government bailouts, the senior staff on Wall Street is in line for a record amount in bonuses this year; $140 billion dollars, to be a bit more exact. That is a hundred and forty thousand million dollars. Between 2008 and 2009, the big companies are going to have paid out, in bonuses, on top of salaries, almost as much as they received in government bailouts in the first place.
US President Obama has decided that this greed complex has gone too far. He’s announced that the government is going to impose pay cuts of up to 50 per cent for top executives at the companies bailed out by the taxpayers. Cash salaries for the top 25 executives must be cut by 90 per cent, and total executive pay, encompassing bonuses and benefits, will fall by half. The German government has announced they will take action to limit executive compensation. Other governments have made noises in that direction.
One has to assume, of course, that the Harper government won’t be far behind. Doesn’t one? Maybe that’s what the government meant by its promise to get tough on white collar crime? Or does it cease to become theft when you help yourself to a big enough amount?
The economy crashed for a reason. The economy had been effectively hollowed out by persistent and appalling greed that collected far too much money in the hands of the few at the top and left everyone else struggling to get by. We won’t get a real recovery until we deal with that issue. Mr. Harper, Mr. Flaherty, we’re waiting.
NUPGE
The National Union of Public and General Employees (NUPGE) is one of Canada's largest labour organizations with over 340,000 members. Our mission is to improve the lives of working families and to build a stronger Canada by ensuring our common wealth is used for the common good. NUPGE
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