The demise of Sears Canada was an unnecessary happening and I would argue had little to do with Amazon but everything to do with mismanagement and greed.
There was a very big winner in the demise of Sears Canada and that was American billionaire and hedge fund manager, Ed Lambert.
If any company should have succeeded eking out a niche in on-line sales, it would have been Sears who, with its catalogue, was truly the forerunner to e-commerce.
Sears over the years had a number of ‘stay-the-course’ American CEO’s which put the retail giant behind the eight ball. But in 2011, successful Loblaws’ senior executive, Calvin McDonald, a Canadian, was hired with a new, progressive vision for Sears.
Soon after his arrival, sales began to tick upwards. But innovation takes investment and he soon learned that his Board had little interest in innovation or investment.
He left in 2014 after overseeing the sale of many valuable assets and yet seeing little re-investment.
In reality the final nail in the coffin for Sears came in 2005 when hedge fund manager, Ed Lambert, became the controlling owner.
Allowing hedge fund managers to become majority owners in an on-going business is akin to putting the fox in charge of the hen house. In economic terms, hedge fund managers are “rent seekers” not “value creators”.
In the same way the fox is going to watch the chickens closely until they are all eaten, hedge fund managers watch over stripping everything “cashable” out of a going-concern company.
The fox has eaten the chickens and the farmer ends up with nothing but feathers.
The American hedge fund manager has eaten away Sears’ on-going viability leaving behind employees with nothing and debtors with little.
Mr. Lambert, in 10 years, stripped $2.7 billion out of Sears Canada into two funds that he controlled. He and his board of directors, I would argue, knowingly caused 12,000 hardworking Canadians to lose their jobs.
In their greed, they didn’t even have the decency to leave enough behind to provide severance pay.
Most tragic, those long-term employees who have been paying into a pension plan have nothing for their retirement years.
It’s just wrong!
What story is going to convince those on the political right about the need for government to play a larger role in this complicated international marketplace?
Surely the Sears’ case highlights a problem of “rent seeking” entities hiding behind limited liability and foreign ownership to screw the middle class out of their livelihood and retirement.
The private sector, specifically the corporate elite and foreign owners, have no interest in the public good.
Why do we continue to trust these corporations more than our elected government?
It’s just wrong.
In Canada we still have a law that holds directors of corporations personally liable for all statutory deductions (taxes, CPP and EI).Bankruptcy does not free them of this obligation.
It is long overdue for a similar provision to be enacted where directors and principal owners are held personally liable for pensions, unpaid wages and severance pay.
If it’s fair to protect the government from shysters, surely it is equally fair to protect hardworking employees from billionaire bankruptcy-promoting, “rent seeking” shysters!
by B.P. Schimke
