In Sabia We Trust?

Bill Curry of The Globe and Mail reports that Prime Minister Trudeau just named Michael Sabia as the next deputy minister of Finance Canada:

Prime Minister Justin Trudeau announced Monday that Michael Sabia, the former Quebec pension fund CEO and current chair of the Canada Infrastructure Bank, will be the next deputy minister of Finance Canada.

Mr. Sabia will replace Paul Rochon, who announced last week he was leaving the department.Mr. Rochon's announcement came a day after Finance Minister Chrystia Freeland released a fall fiscal and economic update that said Ottawa will be working on a post-pandemic recovery plan that could cost as much as $100-billion over three years.

The deputy minister is a senior public servant in a department. The job involves providing non-partisan policy advice to the minister, overseeing the management of the department and working on government-wide policy issues with other deputy ministers.

Mr. Sabia will start his new position on Dec. 14.

"The Prime Minister took the opportunity to thank Paul Rochon for his dedication and service to Canadians after having served the past six years as Deputy Minister of Finance," the Prime Minister's Office said in a statement.

Monday's announcement said Mr. Rochon will move to the Privy Council Office as a senior official.

Just eight weeks ago the government named Mr. Sabia as chair of the Canada Infrastructure Bank, a Crown corporation with a $35 billion budget that is mandated to attract private capital investments for large domestic infrastructure projects.

In October, Mr. Sabia appeared alongside the Prime Minister to announce a $10-billion plan for the bank that would see it focused on environmentally-themed projects and contribute to a post-pandemic economic recovery.

Mr. Sabia has long been a voice of influence with the Trudeau government. While he was still CEO of the Caisse de dépôt et placement du Québec, the provincial pension plan, he was part of an economic advisory panel that provided recommendations to Ottawa. That panel recommended the creation of the infrastructure bank as well as significant increases to Canada's immigration targets, which the government later supported.

Prior to leading Quebec's pension fund, Mr. Sabia was CEO of Bell Canada and Chief Financial Officer for the Canadian National Railway. He has also worked in the federal public civil service, including the Finance Department and the Privy Council Office.

Infrastructure Minister Catherine McKenna told The Globe and Mail earlier this year that since he joined the infrastructure bank, Mr. Sabia has been a trusted source of advice as the cabinet considers options for a post-pandemic stimulus package.

Ms. Freeland's recent update said the size of this year's projected deficit rose from $343.2-billion estimated in July to $381.6-billion. The update also said the deficit could be closer to $400-billion if the pandemic worsens over the final months of the fiscal year. 

Erik Hertzberg and Kait Bolongaro of Bloomberg News also report that Trudeau names Michael Sabia as deputy finance minister:

Prime Minister Justin Trudeau named Michael Sabia, former chief executive officer at Caisse de Depot et Placement du Quebec, as the top bureaucrat at Canada’s finance department.

The appointment is effective Dec. 14, according to a statement Monday from the prime minister’s office. Sabia’s predecessor in the role announced his decision to retire last week after Trudeau’s government detailed a budget deficit this fiscal year of $381.6 billion (US$298 billion), or 17.5 per cent of gross domestic product.

The deputy finance minister is the country’s third-highest ranking policy maker on economic matters, after the finance minister and Bank of Canada governor. Maclean’s magazine first reported news of the appointment Sunday night.

Sabia will be tasked with helping put together a post-pandemic stimulus package worth as much as $100 billion. The funding was promised by Finance Minister Chrystia Freeland in her first fiscal update since taking the reins from Bill Morneau, who resigned in August after a public rift with Trudeau.

Sabia stepped down as head of the Caisse — Canada’s second-largest institutional investor, with $333 billion in assets under management as of June 30 — earlier this year, before taking over as chairman of the state-run Canada Infrastructure Bank in April.

He has been an aide on economic policy issues for Trudeau’s government since the Covid-19 pandemic began, and was chief executive officer at BCE Inc., the nation’s biggest telecommunications company, from 2002 until 2008.

Paul Rochon, the outgoing deputy minister, will become a senior official at the Privy Council Office, Trudeau’s office said.

Alright, before I get to Michael Sabia's nomination, hot off the press, the Caisse de dépôt et placement du Québec (CDPQ) just announced that Macky Tall has resigned from his positions at CDPQ and its subsidiaries:

Mr. Tall has accepted a position with a U.S. private investment firm, which he will start in Spring 2021 following a cooling-off period. 

Over the last 16 years, Macky has helped shape our organization through his deep investment expertise and the implementation of CDPQ Infra’s innovative business model. He is recognized for his commitment to CDPQ, his accessibility and his integrity. A leader known for his ability to bring people together, Macky built strong and mobilized teams that are ready to step up,” said Charles Emond, President and Chief Executive Officer of CDPQ.

“Macky has contributed to CDPQ’s evolution in a unique way. With his teams, he built our infrastructure activities—from our investments in existing assets to designing and building new projects like the REM. As Head of Liquid Markets, and then of Real Assets, his vision of investing and ability to develop talent benefited CDPQ’s strategy and, ultimately, our depositors. On behalf of the Board of Directors, I would like to sincerely thank Macky for his tremendous contribution to CDPQ’s growth and success,” added Robert Tessier, Chairman of the Board of Directors. 

“I’m honoured to have served Quebecers for 16 years at CDPQ. It was a privilege to work with very talented teams on building investment strategies, solid, long-term transactions and unique and innovative projects like the REM. I would like to thank all my colleagues, people I am proud to have worked side-by-side with at this institution that plays such a unique role in Québec,” said Macky Tall.

To ensure a smooth transition, Mr. Tall will stay in his position until the end of 2020. 

Appointments in the Real Assets group 

CDPQ announces a change in the structure of its Real Assets group, which is based on the talent and expertise developed within CDPQ.

Accordingly, the following appointments will be effective on January 1, 2021:

  • Jean-Marc Arbaud, Managing Director, CDPQ Infra, since September 2018, is promoted to President and Chief Executive Officer of operating subsidiary, CDPQ Infra. He will report directly to the President and Chief Executive Officer of CDPQ. In this role, he will continue to be responsible for the team and for developing and managing projects piloted by CDPQ Infra, in particular the Réseau express métropolitain (REM).

    Jean-Marc Arbaud’s experience includes eight years at SNC-Lavalin and, from 2005 to 2011, he served as President and Chief Executive Officer of InTransitBC, concessionaire for the Canada Line, Vancouver’s electric, automated public transportation system. Before joining CDPQ Infra, he also held senior positions at Power Global and was president of Infra‑Diagnox.
  • Harout Chitilian, who served as Executive Director, Corporate Affairs and Development, CDPQ Infra, is appointed Vice-President, Corporate Affairs, Development and Strategy, CDPQ Infra. As such, he will directly support Jean-Marc Arbaud in executing and developing CDPQ Infra’s business strategy. 

    Before joining CDPQ Infra, Harout Chitilian was a consultant for various companies specialized in information technology and telecommunications. He was Chairman of the City Council before becoming the Vice-President of the Executive Committee of Montréal, where he was responsible for information technology and the smart and digital city project, until 2017.
  • Emmanuel Jaclot, Executive Vice-President and Head of Infrastructure and member of CDPQ’s Executive Committee, will report directly to the President and Chief Executive Officer. The Infrastructure portfolio he leads is expected to double in the next four years, reaching $60 billion by 2024.

    Emmanuel Jaclot has been Executive Vice-President and Head of Infrastructure since June 2018. In this role, he already holds responsibility for CDPQ’s global infrastructure strategy and investments. Before joining CDPQ, he was Senior Vice-President at Schneider Electric, a global leader in energy management, in London. From 2007 to 2015, he was Deputy CEO at EDF Énergies Nouvelles, a subsidiary of EDF specialized in renewable energy, in Paris. His past experience includes managing major international mergers and acquisitions, through which he developed a dual expertise in investing and asset management. 
  • Martin Laguerre, currently Managing Director, Capital Solutions at CDPQ, is appointed Executive Vice-President, Private Equity and Capital Solutions. In this role, he will report directly to the President and Chief Executive Officer of CDPQ and become a member of the Executive Committee. 

    Martin Laguerre has over 20 years of experience in private equity and finance. Prior to joining CDPQ in 2019, he was Senior Principal, Power and Renewables at Canada Pension Plan Investment Board (CPPIB, now CPP Investments) in New York. He previously held the position of Managing Director, Global Power and Water Division and Renewables at General Electric, as well as various positions in investment banking and investment management at global financial institutions.
  • Lastly, a new Chairman of the Board for Ivanhoé Cambridge will be appointed to replace Macky Tall at the beginning of 2021.

“This evolution of our structure demonstrates the depth of expertise our organization can count on and the work accomplished by these leaders in recent years. I would like to thank and congratulate everyone on their new positions at CDPQ. Their advancement is both a source of pride for me and a confirmation of the immense talent that we have built up over the years,” added Charles Emond.

Wow! I can't say I'm surprised, after all, Macky Tall was hand-picked to succeed Michael Sabia at CDPQ and there was even white smoke pointing to an imminent announcement, but in the end the government of Quebec appointed Charles Emond to succeed Sabia for reasons I discussed here.

I'm not going to get into a long detailed discussion on Macky's resignation, suffice to say I think it has been in the works for some time and he will be sorely missed.

Importantly, Macky Tall was a powerhouse at CDPQ. He was literally in charge of the most important files at CDPQ while Michael Sabia was the CEO and even after Michael left, reporting to Charles Emond.

To say his departure represents a huge loss for the organization isn't an understatement. The man spent 16 years of his life at CDPQ, he wasn't selected to be CEO and he is rightly moving on to a US private investment firm where he will find his next challenge and be compensated appropriately (not that he wasn't compensated well at CDPQ but I suspect he will be compensated more and have more upside in his new role).

[Update: Macky Tall was named co-chairman of The Carlyle Group's infrastructure group. He will join Brooke B. Coburn, deputy chief investment officer of Carlyle's real assets business and currently sole chair of the infrastructure group, according to a news release Monday.]

As far as the moves CDPQ made, those were in the pipeline. Jean-Marc Arbaud is appointed President and Chief Executive Officer of operating subsidiary, CDPQ Infra, but he was already managing this subsidiary. 

From what I heard, "he's brilliant" and is "the reason why the REM is a success" but he's also made some mistakes along the way.

As far as Martin Laguerre being appointed Executive Vice-President, Private Equity and Capital Solutions, I don't know him but I trust Charles Emond's judgment and he knows and trusts Mr. Laguerre or else he wouldn't have appointed him to this critically important position. 

And Emmanuel Jaclot, Executive Vice-President and Head of Infrastructure since June 2018, will continue in his role being responsible for CDPQ’s global infrastructure strategy and investments, building out major platforms with global partners, except he now reports to Charles Emond (makes perfect sense since CDPQ doesn't have a CIO in charge of Public and Private Markets).


Back to Michael Sabia. Are you surprised? I'm not, I even predicted it on my blog months ago that he will one day return to his roots, the federal government, much richer, much wiser and with a ton more experience.

Prime Minister Justin Trudeau has made plenty of bonehead moves as the leader of Canada, appointing Michael Sabia to the most powerful role in the federal civil service isn’t one of them.

Why is this the most powerful role in the federal civil service? Well, I don't consider Tiff Macklem as part of the federal bureaucracy as he has independence at the Bank of Canada and Ms Freeland is the Finance Minister who will rely heavily on Sabia's advice.

I've said this before and I'll say this again, Ms. Freeland is a lightweight when it comes to economic policy, an economic journalist who didn't have the requisite experience for this important role (say what you want about Bill Morneau, he had the requisite experience but Trudeau threw him under the bus following the WE scandal and appointed Freeland to dole out goodies to everyone in need because of the pandemic, a classic Liberal response in every crisis to buy votes).

Also, notice how the outgoing deputy minister of Finance Canada Paul Rochon will move to the Privy Council Office as a senior official.

For those of you who don't know, PCO basically supports the Prime Minister's office, it's not by accident that Mr. Rochon will move there (keep your friends close and your enemies closer). 

And what about Michael Sabia's nomination to deputy minister of Finance Canada? That too, wasn't an accident. Carolyn Wilkins, senior deputy governor at the Bank of Canada, was rumored to replace Mr. Rochon and she would have been a formidable deputy minister of Finance Canada (in many ways, much better than Sabia except she lacks his private sector and infrastructure experience).

So why Michael Sabia? Well, as alluded in the articles above, Sabia has longstanding ties to the Liberal Party of Canada, he's very well connected with senior government officials including the PM, and he has ties to some of the most powerful families in Canada who also support the Liberals.

Michael Sabia is as solid as you can get to be the deputy minister at Finance Canada. He won't be taking marching orders from Ms. Freeland but he will be advising her every step of the way, and she needs solid advice.

Lately, Ms Freeland has been ruthlessly attacked by Conservative MP Pierre Poilievre who has been on a roll demolishing Liberal hypocrisy and criticizing their economic policies:

My advice to Ms. Freeland, please stop peddling wacky, nonsensical ideas, take the time to listen to Michael Sabia.

I also have advice for Michael Sabia. You couldn't win over Macky Tall to be the next CEO of the Canada Infrastructure Bank but you should reach out to Brian Romanchuk of the Bond Economics blog and former senior fixed income analyst at CDPQ.

I worked with Brian at BCA Research and CDPQ, he's not only super sharp -- he has a PhD in electrical engineering and he might as well have one in modern monetary theory (MMT) -- he's super nice and  really understands fiscal and monetary policy and can provide Finance Canada with incredible policy advice.

Let me put it in a way that both Sabia and Freeland can understand, if you're going to reshape Finance Canada into a powerhouse, you'd better hire the best talent in the country, and Brian Romanchuk is one of the best (he's also Ukrainian-Canadian like Freeland).

What else? What happens to the Canada Infrastructure Bank? It will go on under the new leadership of Ehren Cory but I simply can't see how Michael Sabia can remain its Chair of the Board.

Why? Simple. Sabia is now the country's top civil servant, a very political job, he cannot politicize things that are going on at the Canada Infrastructure Bank.

Good governance requires him to immediately step down from that role and if it's one thing Michael Sabia knows very well, it's good governance.

A friend of mine thinks Sabia wanted out of that role anyway. "It didn't take him long to realize the foundations of the Canada Infrastructure Bank (CIB) are all wrong and he wouldn't be able to change that."

According to my friend, the CIB was incorrectly trying to be a private equity firm and should have instead been modeled on the European Infrastructure Bank (EIB). "The EIB is the gold standard and the CIB lags far behind."

My friend did say "the CIB is starting to hire people with revenue risk transactions experience" but he lamented "there's no way it will fulfill its mandate to invest $35 billion in an infrastructure platform because there's no pipeline and no interest from private sector investors."

We both agree the federal government needs to sell off chunks of their airport stakes and that the Montreal airport is grossly mismanaged but there are powerful vested interests which are blocking many infrastructure deals in this country, which is another reason why there aren't enough brownfield projects for sale (if Canadians only knew the truth, they'd be disgusted).

Maybe with Michael Sabia now controlling Finance Canada, this will change as he will be negotiating and holding high level discussions with other deputy ministers from key departments.

Maybe but it won't be easy. Still, Sabia isn't the patient type, he will demand swift responses as he weighs the best post-pandemic recovery policies (he should talk to my friend who he knows).

Lastly, following my comment last week on how CDPQ's helmsman is navigating the storm, I received an email on how I was too critical and too tough on Daniel Fournier, the former CEO of Ivanhoé Cambridge.

It's always the same guy who sends me these emails stating he once worked with him and that Fournier did a lot to revamp the Caisse's massive real estate portfolio, shifting it more into logistics and internationally.

No doubt, Daniel Fournier did a lot, he was much better than his predecessor, but as I told this person, he could have done a lot more, and that's why I was critical.

Fournier and Sabia made millions during their tenure at CDPQ and they were both lucky they left before the pandemic hit.

But I'm not going to lie, the pandemic is a bit of a blessing for Nathalie Palladitcheff, the current CEO of Ivanhoé Cambridge, because they can aggressively write down non-performing retail assets and blame the pandemic (everyone is going to do the same thing).

I'm certain Fournier would have done the exact same thing if he was still at the helm of Ivanhoé Cambridge.

Come to think of it, maybe Charles Emond, not Michael Sabia, will turn out to be the luckiest CEO ever of CDPQ (doubt it but with central banks backstopping madness, you never know). 

Alright, that wraps it up for me, I wish both Macky Tall and Michael Sabia much success in their respective new roles, if they or anyone else need to reach me, just email me at

Below, an older clip featuring Michael Sabia's mentor. Paul Tellier, former President and CEO of CN Rail, hand-picked Sabia to help him launch CN Rail in what was then Canada's largest initial public offering. He discussed his track record in government, in Corporate Canada, and with the Caisse de Depot. 

Sabia did great things at the Caisse but he was far from perfect. I'm sure Charles Emond will take it to another level, continuing in the same direction on many fronts, but forging new directions too.

Update: Following this comment, a few people emailed me perplexed as to why Michael Sabia took on this job."for less pay than he was receiving as CEO of the Caisse and having to answer to politicians."

Let me make one thing clear, Sabia isn't taking this job for the pay or pension, he's a multimillionaire from his days at CN Rail, BCE in particular and the Caisse. And he won't be answering to any politician, he will be advising them, it's an important distinction.

Bottom line: the Government of Canada is lucky Sabia took on this job, something Jim Leech, the former CEO of OTPP expressed in a tweet on Tuesday morning:

Lastly, take the time to read this MacLean's article on Michael Sabia, the busy mandarin heading to the top post at Finance Canada. 

If it's one thing you can't question, it's that Michael Sabia has a tremendous sense of public service.