By: Geoff Kirbyson
The RCMP were unable to find a smoking gun during their three-year investigation of the Crocus Investment Fund.

But the Mounties did discover plenty of evidence of poor governance, a weak investment management process, lack of internal controls, policies and procedures and poor expense management practices. None of that, however, warranted charges of any kind, said RCMP Sgt. Line Karpish.

“They may have been contributing factors leading to the fund’s demise but they don’t necessarily add up to criminal behaviour.”

Crocus critics were quick to say they weren’t disappointed by the RCMP’s findings as they didn’t expect it to dig up a mountain of evidence leading to numerous arrests.

Bernie Bellan, the disgruntled investor behind a $200-million class action lawsuit, said the results of the RCMP investigation shouldn’t impact any of the fund’s 34,000 unitholders.

“The only thing we should be concerned with is when are we going to see some money,” he said.

Gerald Hawranik, the Tory critic for Crocus, said the party always thought the RCMP investigation was a red herring. He said his party continues to believe there was “negligence and wilful neglect” on the government’s behalf and reiterated its call for a public inquiry.

“If you had no part to play in it, why would you settle for $3 million? It’s clear the role of the government needs to be examined to get at the whole story,” he said.

Hawranik said he has no illusions that the Doer government will open itself up such an exercise.

“That will require a change in government. We are committed to an independent inquiry to examine the province’s role and why it failed to act and protect taxpayers,” he said.

On Tuesday, Crocus’s receiver, Deloitte, said now that the last of the defendants in the class action has settled — tentative agreements are in place for more than $12 million — cheques could arrive in unitholders’ mailboxes by the fall.

Karpish said the RCMP investigation took “thousands of hours” and involved pouring over 60,000 documents and interviews with nearly 100 people. Among the concerns the Mounties found was a discovery that while expenses were required to be approved by the fund’s CEO, not all of them were. She declined to provide names or dollar figures but said an unspecified amount was subsequently reimbursed to the fund.

Bellan said Crocus directors and officers aren’t out of the woods yet and he’s looking forward to Manitoba Securities Commission hearings, which could take place as early as this fall.

“The securities commission is red-faced for what they’ve had to answer for with their lack of proper oversight of the fund. Part of their way of making amends will be to come down hard on the principals in Crocus,” he said.

Bellan noted he has taken down a number of inflammatory statements from his website dedicated to the cause (crocusfundalert.com) in the aftermath of the RCMP announcement. He said the site was dedicated to putting pressure on defendants in the class action and convincing them to settle. Now that it has served its purpose, he said he’s considering winding up the site.

“I’m not getting paid a cent for this. I’m tired of getting phone calls from shareholders asking me when they’re going to get their money back,” he said.

Robert Tapper, the lawyer representing James Umlah, the fund’s long-time chief investment officer who left three months before its shares were frozen in December 2004, said his client felt “relief and vindication” at the RCMP findings.