Corporate Greed in the Time of COVID

"Think about what's happening: Taxpayers are indirectly subsidizing payments to shareholders."

"That is completely unacceptable. Even if the government didn't drop the ball, which they did, these noteworthy companies should lead by example."

"I expected more from Corporate Canada."

Dr.Richard Leblanc, professor, corporate governance adviser, York University 

A Financial Post analysis found that the 68 companies received at least $1.03 billion in CEWS and while doing so, paid out more than $5 billion in dividends. Photo by Getty Images

Some diligent, dogged research by journalists specializing in economics has revealed the extent of corporate greed, given the opportunity to seek out public financing gratis on the part of corporate giants, industry stalwarts, hugely successful businesses whose bottom line is perpetually in the black and whose shareholders are always gratified when their expectations are met and it comes time to dole out the profits in healthy dividend payments.

A month earlier the scandalous news was published that the Canadian government's emergency COVID-19 benefits had gone out to people who clearly had no need of it. The $2,000 monthly Canada Emergency Response Benefit (CERB) serviced 8.9 million Canadians from March until October for a total of $81.6 billion expended. Used for the most part by people whose earnings in 2019 did not exceed $47,630 according to Canada Revenue Agency. But these low-income earners who found their employment temporarily or permanently interrupted were not the only applicants to the aid program.

 

Additional data supplied courtesy of Canada Revenue Agency indicate that about 114,620 people earning between $100,000 and $200,000 the year before, also saw fit to apply for the CERB payments. The Trudeau government had instructed those civil servants receiving applications to do nothing to verify the applicants fit the category to be aided; payments were to be approved and expedited to all who applied. And so people who earned handsome incomes and had no need for government top-ups gained these benefits, and an additional 14,070 people who earned over $210,000 also applied successfully.

 

People line up at a Service Canada office in Montreal 2020. (Paul Chiasson/The Canadian Press)

 

From conscienceless individuals to equally blase corporations we now learn that at least 68 publicly=traded Canadian companies have paid out billions of dollars in dividends to their shareholders while at the same time applying for, and receiving government assistance under the Canada Emergency Wage Subsidy. This program was meant to help struggling companies meet their payrolls, so they could retain their staff and keep operating without having to lay people off. Analysis has revealed that at least $1.03 billion in CEWS payments went out to these 68 companies.

The federal government had been quite clear who would qualify for the CEWS; companies which had experienced significant drops in revenue, to cover payroll costs to avoid sending workers home to join the ranks of the unemployed and under-employed. Yet these 68 companies were on the receiving end of government assistance and they continued to pay out over $5 billion in dividends. The general taxpayer base, themselves suffering under the economic ravages of COVID were contributing to shareholder payouts.

Lobbying of the Federal government was up 60% in March compared to the same month in 2019. File photo of Bill Morneau by The Canadian Press / Adrian Wyld. File photo of Toronto financial buildings

 

Eleven of those companies either introduced a dividend or saw fit to increase existing dividends in the two quarters where they received CEWS. Of the total, 17 firms either introduced share repurchase programs or actively bought back millions of dollars in shares. Leon's Furniture, as an example along with Titanium Transportation Group Inc., Secure Energy Services Inc. and Yellow pages Ltd. both introduced a dividend and increased existing dividends. What else they have in common is that the companies claimed no correlation between the money received in CEWS and the money paid out in dividends.

Government experts point out that the analysis raises concerns relating to the decision-making process at some of the country's largest companies alongside the government's inaction in adequately rolling out subsidies in such a way that would ensure the funding would benefit the intended targets. BCE Inc., Telus Corp., Canadian Natural Resources Ltd., Constellation Software Inc. and Suncor Energy were all among the 355,900 unique applicants government data indicates applied for the emergency subsidy.

The government program paid out $50.35 billion to private and publicly-traded companies across eight claim periods. Half of the companies received $5 million or more; Imperial Oil Ltd. was the recipient dividend-payer receiving the largest CEWS at $120 million. Finning International Inc. received $95 million and paid out $68 million in dividends across two quarters, and Aecon Group Inc. which received $91.6 million paid out $19 million in the same time frame.

Easy money, found money, all on the taxpayer. Business was told 'come and get it' and they did.