‘I wish it never happened.”
For the past 90 minutes, Denis Desautels has been reflecting amicably over lunch on a career that included a decade-long stint as Auditor-General of Canada and another decade as chairman of Laurentian Bank of Canada.
But the soft-spoken Mr. Desautels’s mood darkens as he speaks about his role in the largest corporate takeover in Canada, the 2007 sale of Alcan Inc. to Rio Tinto PLC, when he was chairman of the Alcan board’s audit committee.
“I wish Alcan was never sold for the atrocious price it sold at,” he says, a rare whiff of bitterness taking hold. “That transaction made the shareholders of the time rich, but so what? It’s basically dismembered what was a nice organization, with a solid management team, a head office in Canada, with all the benefits that go along with that. And it’s making the shareholders of Rio Tinto unhappy. So there are a lot of negatives about this.”
When I point out Mr. Desautels did well personally by Rio Tinto’s $101 (U.S.)-per-share bid, he spits back: “Yeah, but I don’t care. I’d go back. I’d reset.”
It says a lot about Mr. Desautels that the biggest regret of his career would, for others, serve as a crowning achievement: Presiding over a deal that enriched shareholders at a peak in the commodities cycle with an offer that was too stupid to refuse.
But it’s not the only thing troubling Mr. Desautels on this day in late May. After a career providing oversight to public and private institutions, the latest headlines have been all about abuses of government finances, including the Senate spending scandal and Quebec’s Charbonneau Commission. “I find what’s coming out is quite discouraging,” Mr. Desautels says.
While he believes the longer-term trend has seen generally improving accountability and controls in public institutions, “for someone who tends to look to the positive side, it sets me back a bit,” he says.
At 70, Mr. Desautels remains a much-sought-after and active overseer and voice of conscience by major organizations across Canada. He is chairman of the audit committees of both industrial giant Bombardier Inc. and Quebec pharmacy retailer Jean Coutu Group (PJC) Inc.
Meanwhile, the federal government has engaged his services to provide guidance and oversight on several files, including a rethink of the country’s controversial jet-fighter purchase plans.
“His only fault, which we tease him about, is that he doesn’t know how to say ‘No,’” says Sheila Fraser, his successor as auditor-general and former colleague at Ernst & Young.
For our lunch, Mr. Desautels has chosen Le Café, a long-favoured dining spot of official Ottawa alongside the Rideau Canal, now seemingly a bit sidelined after several quality restaurants opened in the past 15 years.
I’m surprised upon arriving shortly after noon on a bright spring day that less than one-quarter of the tables on the expansive, awning-covered patio are occupied.
Mr. Desautels arrives a few minutes late, dressed in a blue suit and yellow tie and apologetic. A practising Catholic and family man, he is a humble and extremely private individual, who nonetheless participates in weekly “Rideau Club Roundtable” lunch discussions with a coterie of retired senior bureaucrats and politicians.
He has barely sat down before a smiling elderly man drops by to warmly pay respect – Charles-Antoine St-Jean, the former comptroller-general of Canada.
Mr. Desautels hails from St-Bruno, east of Montreal. The fifth of seven children, he worked summers at the Mount Bruno Country Club, caddying for top Montreal executives. After growing up a unilingual francophone, his mother decided Mr. Desautels should attend high school in English in Montreal, an adjustment that took him two months to overcome. He became interested in accounting and studied commerce at McGill University, where he met his future wife. Upon graduating in 1964, he joined audit and accounting firm Clarkson Gordon, later part of Ernst & Young. His career path “unfolded quite well for me, quite fast,” he says and he was made partner at 29.
Mr. Desautels split his 27-year career at Ernst & Young working in Montreal, Ottawa and Quebec City. One client was engineering firm SNC, now part of SNC-Lavalin. Asked what he thinks of the firm’s recent scandals, Mr. Desautels says he’s “both surprised at the turn of events and very disappointed. I doubt the SNC that I knew would have gotten into this kind of trouble.”
After a couple of executive exchange terms in the Office of the Auditor-General of Canada, a task force of accountants suggested Mr. Desautels as a candidate to succeed Kenneth Dye, which he did in 1991.
“I had my own agenda coming in,” Mr. Desautels said. “I focused on what I thought were some of the real challenges of the day, namely the government’s financial situation. My first objective was to see what role I could play in generating some consensus around the need to do something about that. I didn’t want anybody to say, if Canada ran into difficulty, ‘Well, where was the auditor-general?’ So I sent plenty of warning signals about the path we were on.”