Péladeau’s Quebecor links in the spotlight

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Quebecor Inc. chairman Brian Mulroney says Pierre Karl Péladeau, the controlling shareholder who is poised to take over the separatist political movement in Quebec, has divorced himself from operations but still has a role to play in major decisions the company might make.

"But he hasn't interfered at all," Mr. Mulroney said Thursday after the company's annual meeting. "And he's not looking for it,either."

With Parti Québécois members set to hold a leadership election next week and Mr. Péladeau running far ahead of his rivals, the company and the candidate have come under increasing scrutiny for his role in Quebec's media and telecom giant, and his angry and intimidating behaviour.

The company maintained from Day 1 of Mr. Péladeau's political career 14 months ago that he would stay out of operations. However, The Globe and Mail reported Thursday that Mr. Péladeau angrily shoved aside initial attempts to keep him out of the company e-mail and executive suites.

Within weeks of the initial attempt to build a firewall between Mr. Péladeau and the company his father founded, chief executive Robert Dépatie resigned, citing health reasons. The departure was a preventive health measure linked to the stress of constant clashes with Mr. Péladeau, sources say. Board chair Françoise Bertrand followed him out the door a few months later.

Late last year, Mr. Dépatie took over as CEO of the St-Hubert restaurant chain.

The company also said early on that Mr. Péladeau would put his Quebecor Inc. shares in a blind trust if elected. He won a seat in the Quebec National Assembly in April, 2014, and has since said he would put his shares in trust with orders not to sell if he becomes PQ leader – a step the National Assembly's lawyer has described as insufficient.

The question of conflict was raised during Thursday's annual meeting. Both Mr. Mulroney and current CEO Pierre Dion said the year has been challenging but that Mr. Péladeau stepped aside.

"Pierre Karl has no longer been in the company's business for months and months. He has very little contact, and he's no longer a part of decision-making, in current business," Mr. Dion said. "I don't remember the last time I saw Pierre Karl."

Mr. Mulroney added that he and Mr. Dion are "equipped to deal with [the situation] because we were selected to run the company and we run it."

Quebec's National Assembly will examine the potential conflict between Mr. Péladeau's media holdings and political career during legislative hearings at the end of the month, promising to add a fresh partisan slant to the ethical debate. The committee could eventually lead to a tightening of rules regarding conflicts between corporate and political interests that might force a sale of Mr. Péladeau's shares, or could force him out of politics. The PQ opposition decried the hearings as a political witch hunt designed to attack Mr. Péladeau.

Premier Philippe Couillard said the hearings aren't aimed specifically at the media boss, "but it's not a trivial situation when someone who aspires to be leader of a party, leader of the Opposition and eventually to become premier of Quebec, controls 40 per cent of the media in Quebec. It's not a trivial issue. It's a very serious issue for our democracy."

Mr. Mulroney said as long as Mr. Péladeau is controlling shareholder he has to be involved in major decisions such as the theoretical sale of a major asset. It hasn't happened, Mr. Mulroney hastened to add, despite six major transactions that took place for the company in 2014, while Mr. Péladeau was in politics.

"There is still some contact. There has to be, he's the controlling shareholder. Let's say the board decided to sell TVA, or to do some other dramatic gesture, it would be appropriate he be consulted," Mr. Mulroney said .

Still, Mr. Mulroney and Mr. Dion maintained contact was disconnected by the time Sun News Network was closed and the deal was struck late last year to sell the Sun newspapers. "The discussion about Sun [TV and papers] began long before Pierre Karl went into politics, so obviously he had something to do with it," Mr. Mulroney told reporters. "Between the time we initiated discussion of it and the end, he went into politics. The day he went into politics that was the end of it."

During the meeting, company executives touted a year that saw it complete six transactions and shed assets outside its home province. Consolidated revenue in the company's first quarter ended March 31 was up 5.7 per cent to $949-million, driven in large part by a $38.4-million boost from the telecom division. But profit fell in the quarter to $29.4-million or 33 cents a share, which the company attributed to amortization charges. Quebecor also increased its quarterly dividend by 40 per cent to 3.5 cents a share.

Revenue at its Videotron Ltd. division was up more than 5 per cent in the period and it added 29,300 subscribers to its still-young wireless business, bringing the total after slightly more than five years to almost 633,000.

"At this point, we can say that our move into the mobile market has been a resounding success," Mr. Dion said.

Yet, almost a year after telling an industry conference in Toronto Quebecor was "ready, willing and able" to expand that business to the rest of Canada – if the right conditions were in place – Mr. Dion said the firm is still taking its time to evaluate all options.

One of the key elements he has pointed to are the roaming rates Quebecor has to pay to the large national carriers to roam on their networks. The Canadian Radio-television and Telecommunications Commission ruled on Tuesday that it will set limits on those rates but the final prices won't be determined until the commission conducts a costing exercise starting in November.