Good afternoon. I am here to talk about Nortel's workers who have a long-term disability. We are a group of people suffering from diseases like cancer, scleroderma, Crohn's disease, heart disease or mental illnesses. Several people from our group do not even know what is happening. We find ourselves in a horrible situation because Nortel sold us life insurance, accident insurance and disability insurance, for which we paid premiums. We thought we were insured under Sun Life and Clarica.
In 2005, we heard that Nortel was actually playing the role of insurance company and assuming the risk. This means that Nortel should have set aside the reserves necessary for benefits to be paid out in the future, based on an actuarial study. I am wondering where our insurance premiums went. Our life insurance, accident insurance and disability insurance will disappear on December 31. We are uninsurable for the rest of our lives, and there is no possible remedy. But Nortel did things right in the beginning. There is a trust administered by an independent trustee. Despite that, we were the victims of a breach of trust. In fact, over $100 million in revenue for people receiving a disability pension are missing.
After signing the agreement with Nortel, we learned that Nortel borrowed $37.1 million from the $100 million for needs other than those of the beneficiaries and that the company left an IOU note in the trust. Actually, Nortel stopped its contributions to the trust years before going under the protection of the Bankruptcy and Insolvency Act. So we are absorbing the bankruptcy, and it is depleting quickly. Yet, before stopping its contributions to the plan and stopping it, Nortel was obliged to notify the trustee. The trustee should have done an actuarial study to determine the future needs to be met by the trust. That was not done. Nortel has still sent no notice. I am wondering whether Nortel is trying to get away by sending the notice as late as possible to prevent any recourse and to make it impossible to recover the funds. In fact, the company will be bankrupt. The other problem is that the U.S. Securities and Exchange Commission discovered in 2005 that the trust, of which we are beneficiaries, was actually combined with Nortel's operating income. That suggests to me—to me and others—that Nortel might have used the funds to inflate its operating income, not to mention other ploys that come to mind.
Ordinary people like us do not stand a chance when companies go bankrupt in Canada because lawyers are paid by the company and they are not asked to produce results for the people they are representing. In addition, our law firm signed a confidentiality agreement with Nortel and Ernst and Young. We have been kept in the dark from the beginning. Even worse, we were controlled, gagged and shattered by our lawyer, who attacked the group and isolated those who were asking the real questions and were looking for solutions. Our case could have been solved from the beginning by blocking sales in order to force Nortel to negotiate and assume responsibility or even to restructure itself. Nortel was fine, but the executives were less so. Nothing was done. The more the company nosedives, the deeper it gets, the longer it takes and the more money the lawyers and controllers collect.
What really shocks me is to see that the bankruptcy industry in Canada is in fact a big happy family. In the case of Nortel, the judge came from Goodmans LLP, who represents Ernst and Young in bankruptcy. In addition, David Richardson, who is now the chairman of Nortel, comes from Ernst and Young. He was appointed at Nortel after the company declared bankruptcy. The day Mr. Zafirovski left, Mr. Richardson was promoted to chairman, with an increase in his salary of more than $100,000 offered by Ernst and Young, now running Nortel. The lawyers representing me are very vocal about their disgust with how we are being treated. But these very same lawyers represented Massey Combines Corporation and Eaton's, and no recommendation was previously made to the government to change things. In fact, that would be to their disadvantage. Bankruptcy is an industry that pays handsomely.
The superintendent and Nortel have not been honest from the beginning of the bankruptcy. Mr. Doolittle, who is now president, was offered double the salary, putting it over the $1.7 million mark for the next two years. In his affidavit, he claimed that Nortel would continue to pay the benefits, but he never mentioned that the trust had a deficit and that the contributions to our disability fund had stopped. In addition, Murray McDonald, the court monitor at Ernst and Young, mentioned in his first report that there was a surplus in the trust, although it was running at a deficit.
He kept saying that we contributed to the trust according to past practices. He should have waited for the settlement agreement to know that there would be a deficit, because Ernst & Young did not disclose anything before, even though it was in possession of an actuarial study done by Mercer in January 2009. While under bankruptcy protection, how could Nortel, a company that did not even do any restructuring and claimed not to have any money, have the audacity to grant more than $333 million in bonuses for key employees and more than $137 million in court-approved bonuses—the same court that rejected Nortel's agreement to satisfy junk bond holders? They are the ones who wanted to keep any amendment to the Bankruptcy and Insolvency Act from applying to our group. Junk bond holders will get a few extra cents for each bond at the expense of our lives, when they are already making an exorbitant profit buying default swaps at more than 60¢ for every $100 in bond denominations.
How could the court endorse an agreement that put us out in the street and took away our right to sue the trustees when we were the victims of a breach of trust and were denied the right to a settlement fairness hearing, which is absolutely necessary for invalids? If you compare our situation to that of pensioners, we expect to receive 17% of our income, whereas pensioners are guaranteed to receive 69% to 92% of their income if they live in Ontario, which half of them do. Furthermore, our payments stop in January 2011, while those of pensioners continue as usual and my pension ceases to exist.
Although an appeal has been filed, there is only one solution for us. The government must support Bill S-216 on humanitarian grounds. We are in a serious crisis that demands immediate action, or else even more lives will be lost. We have already lost two members, including one who lost her will to live because she was under too much stress. She was too worried that her medication would be cut. Her family said she truly lost her will to live.
I want to add that when the agreement came to light and we learned that there was a deficit and a loan to Nortel, we had only 10 days to find a lawyer to object to the agreement. Despite the fact that the firm of Rochon Genova was moved by our situation and stepped into the lions' den, the judge rejected all of the reasons for our opposition. The only reason the agreement was rejected and then re-signed was to benefit junk bond holders. That is outrageous. What a rotten thing to do to throw 400 people out in the street, some of whom are going to die. I am one of the people who will end up in the street. There is nothing else I can do because I will get only about $8,000 a year. I cannot survive on that when I have around $7,000 a year in medical expenses.
That is all. Thank you.