Media Releases


October 28, 2008

Crown Corporations Minister Ken Cheveldayoff today announced the province's Crown corporations are moving to a Saskatchewan First investment policy in light of the results of a KPMG study that showed many of the previous government's investments have lost money.

"We contracted KPMG to review Crown investments made outside Saskatchewan by previous governments," Cheveldayoff said. "Over time there has been almost a half-billion dollars invested with a target return of 22 per cent. Alarmingly, the actual overall rate of return on these investments to date was a negative 15 per cent."

Over the past 16 years, out-of-province investments were made by SaskTel, SaskPower, SaskEnergy and SGI. In total, 26 investments were reviewed by KMPG including 16 active investments and 10 exited investments. The Crowns invested $465 million in these 26 investments, and the capital remaining in the active investment portfolio is approximately $300 million.

"Investments were spread across Canada and distant parts of the world including Australia, Chile and Mexico," Cheveldayoff said. "The report shows that, in summary, the active investments have produced a negative return mainly due to the former government's investments through SaskTel. Of the four Crowns, SaskTel has made the most investments outside Saskatchewan."

Examples of some of the previous government's problem investments:

From 2001 to 2005, the former government, through SaskTel, invested $70 million in Navigata, then wrote down $15 million by 2005. The government moved Navigata inside SaskTel, so it wouldn't have to keep reporting on the ongoing losses. The assets previously owned by Navigata continue to lose money. From 1994 to 1996, the former government, through SaskTel, invested $16 million in NST Network Services Inc. to build fiber optics networks for cable TV companies in the US. By 1997 it had all been lost, at which time SaskTel had to shut down the company. In 2000 and 2001, the former government, through SaskTel, invested $10 million into Craig Wireless. The investment went bad almost instantly, running up losses equal to the money invested in only two years. It was written off as a total loss. From 1999 to 2000 the former government, through SaskEnergy, put $7 million into a natural gas distribution company in Chile called Gas Sur. In 2001, the government decided to double up on the investment for an additional $5 million. Almost ten years later, the money invested has only returned $1 million back to SaskEnergy so far. The same amount of money invested in a government bond for the same time period would have returned interest of $5 million by now. Between 2000 and 2004, the former government, through SaskTel, put $25 million into RETX, Inc., a software company in Atlanta, Georgia that designed software for the deregulating U.S. energy market. This was a business that had no relation to SaskTel's core operations. The company never got off the ground and the investment was a total loss. In 2001 and 2002, the former government, through SaskTel, put $8 million into a company called Ag Dealer. Actual sales by this company have been less than one tenth of what was originally expected when the investment was made, yet the government refused to get out of a bad investment, and owns the investment to this day. After reviewing the report the government has established a new policy framework:

  • The government supports a Saskatchewan First investment policy, which will focus the Crowns on investing within Saskatchewan;

  • The Crowns will not invest out-of-province;

  • Where feasible, existing out-of-province investments will be divested in a thoughtful manner with a goal to maximize returns; and

  • There may be limited circumstances where an exception to this policy will be permitted if the Government determines the investment supports in-province operations.

"The Crown Corporations are owned by the people of Saskatchewan," Cheveldayoff said. "Investing outside the province has not proven beneficial to the people of Saskatchewan and going forward with our new Saskatchewan First Investment policy will add more value to the province through job creation and capital spending.

"In Saskatchewan's growing economy there exists opportunities for Crown corporations within the province to grow and support the provincial economy. New investments made in Saskatchewan must benefit Saskatchewan people and preferably not compete with the private sector."




Leanne Persicke
Executive Council
Phone: (306) 787-1321

Mike Woods
Crown Investments Corporation
Phone: (306) 787-5889
Cell: (306) 539-9588

7439-External Investment Audit

CIC Summary Report-FINAL