It is familiarly called the Quebeckers' bas de laine - the woollen sock into which rural families used to hide their money, or so goes the legend - a nickname that could be loosely translated as Quebeckers' piggy bank because it holds their pensions funds. It is arguably the fanciest and most expensive piggy bank in the world.
Located in the plush "international quarter" of Old Montreal, the Caisse de dépôt et placement du Québec, Canada's biggest fund manager, inhabits a $362-million glass palace that spreads over a city block. Its huge windows are made of imported glass panels. This postmodern cathedral even has a trophy restaurant on its ground floor - chef Normand Laprise's world-class Toqué.
From the street, one can see the Caisse's low-level employees at work in their cubicles and meeting rooms. The top managers and the investors, though, are invisible. The operations of the Caisse are as secretive as its building is transparent. But there always comes a time when the Caisse must face its stockholders - the citizens of Quebec. And this year, they are furious.
In 2008, the Caisse lost $40-billion - 25 per cent of its value. A loss wouldn't have come as a surprise, considering the global financial crisis. The problem is, the Caisse's performance is by far the worst in Canada. The average loss of other Canadian pension funds was 18 per cent - 14.4 per cent in the case of the fund that manages the Canada Pension Plan. The difference is due to two factors: The Caisse bought more asset-backed commercial paper than all the other Canadian pension funds combined, and it bears the cost of owning a great deal of real estate outside Canada, in places such as New York and London.

Financial analysts point out that these losses are "on paper" and that, between 2003 and 2007, the Caisse got higher returns than the other Canadian pension fund managers. Still, the Caisse's losses will have direct repercussions throughout Quebec: Instead of having only one customer like other pension fund managers, the Caisse acts as the sole investor for as many as 25 public organizations, including the government employees' pension fund, the Automobile Insurance Board and the Workers' Compensation Board (whose premiums will probably be raised).
The Caisse's losses are turning into a tough political fight, with the Parti Québécois accusing Premier Jean Charest of having prematurely called last fall's election before the Caisse's annual report - something that might have seriously hurt his chances of being re-elected. Critics say Mr. Charest certainly knew there were troubles ahead at the Caisse, even though he denied it throughout the election campaign. They say the Caisse took too many risks because of the Charest government's insistence that the search for optimal profits should take priority over the Caisse's other mission as a promoter of economic development.
Ordinary people can't count in billions - such huge amounts of money become an abstraction. How many BMWs or sailboats or houses can you buy with $40-billion? But people can determine what a six-figure number means. And the nasty detail that stoked public opinion was that former CEO Henri-Paul Rousseau, who presided over the Caisse's investment strategies since 2002, jumped ship last May, months before the end of his mandate, to take a lucrative job at Power Corp., pocketing a $379,000 severance package on top of his extravagant bonuses.
It's not clear whether Mr. Rousseau could have foreseen the disaster that was looming, but he will have some explaining to do about his investment strategies and risk management practices - and about his bonuses, too - when he appears today as guest speaker at the Montreal Board of Trade luncheon.