Quebec finance minister to testify Friday about Caisse losses

Quebec Finance Minister Monique Jrme-Forget will testify Friday morningbefore a committee of the national assembly about what went wrong at the Caisse de dpt et placement du Qubec.

After weeks of refusing totestifyabout last year's $39.8 billion loss at the province's pension fund manager, the minister took the national assembly by surprise on Thursday and reversed her position.

"I will answer your questions," said Jrme-Forget, speaking across the floor to members of the Opposition.

She will do so at 9:30 a.m. ET Friday before the standing committee on finance at the national assembly.

The government had originally planned to call a special legislative commission to investigate the Caisse's historic losses last year.

However, Opposition and government officials agreed late Thursday afternoon to leave the investigation up to thestanding committee on finance.

Jrme-Forget will be the first witness. She will also return at the end of theprocess after the committee has heard from past and present managers of the Caisse.

Calls fortestimonygrow

Calls had been intensifying for seniors members of the Liberal government to answer questions about what they knew about risks some managers of the pension fund were taking.

Parti Qubcois members had also accusedthe Liberalgovernmentof concealing knowledge about the Caisse's weakening position during last fall's election campaign.

PQ leader Pauline Marois said she was happy that Jrme-Forget was willing to respond publicly about the Caisse's performance.

Marois asked that the minister bring with her the fund's annual report, which is not expected to be made public until next month.

Caisse remains on credit watch

In late February, the Caisse reported a $39.8-billion loss for 2008, a loss of one-quarter of the total assets which ended the year at $120.1 billion.

Caisse executives have attribute the 2008 financial losses to a number of factors, among them a decision to invest heavily in asset-backed commercial paper that was almost obliterated by the U.S. subprime housing crisis.

With the market for the short-term debt frozen, ABCP accounted for $4 billion of the Caisse's total losses for the year.

The influential bond rating agency Standard and Poor's has put the Caisse on credit watch.