The door to Henri-Paul Rousseau's office swings open and the unsmiling chairman and CEO of the Caisse de depot et placement du Quebec steps forward. His beefy 6-foot-4 figure fills the door frame. The Oliver Hardy looks-down to the mustache-are in character. Rousseau can be a bit of a grouch, even to friends. "Honestly, I don't see myself as a grump," he protests. "But if I don't like something, it's probably easy to read.

Since he took over at Quebec's massive pension fund manager in September, Rousseau has seen little there that is to his liking. From senior management to corporate strategy, he has thrown out much of the old. Even the caisse's unofficial double-barrelled mandate-to seek returns and pump up Quebec's entrepreneurial class-is passe. Past caisse CEOs always insisted, evidence to the contrary, that they never sacrificed returns to build Quebec Inc. Rousseau, a former university professor and Laurentian Bank of Canada CEO, wants to silence the skeptics by entrenching the returns-first obligation in law. Should he succeed, it will mark the end of almost four decades that the caisse has been used as a tool of economic nationalism. Now that would be a quiet revolution.

If ever there was a moment to reconsider the caisse's mission, this is it. The $130-billion pension fund manager, by far Canada's biggest, is reeling from two disastrous years: It posted a -4.9% result in 2001 and a -9.6% return last year, putting it far back of its peers. Ontario Teachers' Pension Plan Board lost only 2% of its value last year; the median return for the Canadian industry was -4.6%. Much of the difference between the caisse and the rest is the result of the caisse's overindulgence in one sector, communications and technology. The caisse's boldest move ever-the $2.9 billion it invested to help Quebecor Inc. outbid Toronto-based Rogers Communications Inc. for cable operator Videotron-has created an albatross. Rousseau has written down the caisse's 45% stake in Quebecor Media to a bone-tingling $435 million. The unit that includes Videotron has lost 85% of its value in two years

Former caisse CEO Jean-Claude Scraire and his deputy, Michel Nadeau, lost their jobs over this. But they were sacrificial lambs. The telephone lines between the caisse and the Quebec Ministry of Finance are rarely quiet; few believe the caisse backstopped Quebecor without a nod, or prod, from the Parti Quebecois government. "The caisse cannot act like a lamb when it moves in a forest full of wolves," then-Finance Minister Bernard Landry said during the Videotron battle. Liberal regimes likewise have used the caisse politically (remember the move to block Loblaw from swallowing Steinberg?). If Rousseau is serious about change, he will have to persuade his political masters-of whatever stripe-to release their grip on the institution founded in 1965, in large part to wrest control of Quebec's economy from the ruling anglophone business class.

Rousseau, at first, seems an odd midwife to oversee this rebirth. His nationalist credentials are irrefutable-head of Economistes pour le OUI in 1980, responsible for a pivotal 1991 study that low-balled an independent Quebec's share of the federal debt, confidant to Lucien Bouchard. Yet, it may just be his devotion to la cause that makes Rousseau an ideal candidate to reform the caisse. No one can accuse him of being a traitor. Meanwhile, his credibility in business circles and his reputation for willfulness make it clear he didn't take the caisse job-at a reported $500,000, or fraction of his former bank-CEO salary-to implement orders from Quebec City. "No, no, no. Not Henri-Paul. He's big in all senses-not just physical stature," says Roy Firth, a senior vice-president at Manulife Financial who worked under Rousseau at Laurentian in the 1990s. Adds Henri Masse, president of the Quebec Federation of Labour and a caisse board member: "Henri-Paul is direct. I much prefer a grouch to someone who beats around the bush. I'm a bit of a grouch myself."

" Henri-Paul has this aura of strength. When he comes into the room, it's electric." The speaker is Lucien Bouchard. Rousseau and he have been intimates since they met in 1990. Since then, the former PQ premier has been a frequent visitor to Rousseau's farm in Quebec's Eastern Townships and can attest to the quality (Canada No. 1, very clear) of the maple syrup it produces. "He's very proud of that," Bouchard chuckles. "But you must know, his operation is completely run by computers. So his performance as a maple syrup producer may be due more to the computers than Henri-Paul's artisanal flair."

Rousseau is no amateur acericulteur. Last year, his farm yielded 3,600 litres of the quintessential Canadian delicacy, an output worthy of a full-time maple farmer. "It's something that can occupy your brain substantially, because there's a lot of nitty-gritty to it," Rousseau says. "Some people golf, some read. I do this." The grouch in him bristles, though, when pressed for financial disclosure. "This is too private a question. Let's just say my wife is convinced I'll never make money at it. But I think otherwise."

Where some see an impossible task at the caisse-remaking an institution that's deeply rooted in the collective psyche-Rousseau sees the chance of a lifetime. "It has happened a couple of times in my professional life," he says, "that I have felt that I am in the right place at the right time. This is one of them. This is a fantastic organization; there is so much brainpower. To arrive at a time we are facing such a complex situation, it's just a great, great opportunity. I do sense, internally and externally, that people want change to happen. So when you combine all this, a man should be happy."

In March, Rousseau unveiled far-reaching proposals to assert the caisse's independence from the government, starting with a restructuring of the board. Currently, most board members are political appointees or unofficial representatives of their constituencies, such as Quebec's labour federations or the pension and insurance plans whose money is managed by the caisse. The chairman and CEO is all-powerful, answerable, it seems, only to Quebec City. Rousseau wants a mostly independent board with a non-executive chairman. Instead of the government naming the CEO, Rousseau thinks the board alone should have the power to hire-and fire-the chief executive.

The changes, he says, are essential to rebuilding the caisse's credibility. Perceptions of political interference can never be dispelled unless an independent board becomes the sole arbiter of caisse affairs. And, as the biggest player on Canada's stock markets, the caisse must lead by example. "It would be difficult for us to push for more transparency and better governance at the companies we invest in if we don't practise a minimum of what we preach," Rousseau says.

But the most revolutionary item on his agenda is the redefinition of the caisse's very mission. As articulated by the apparatchiks who ushered in the Quiet Revolution in the 1960s (future PQ premier Jacques Parizeau at the head of the pack), the caisse's mandate was a happy confluence of two objectives-earning better returns than the feds by repatriating Quebeckers' pension contributions from Ottawa (through the creation of the Quebec Pension Plan) and using the domestic savings to lever growth in the province. But the objectives are not always complementary, and the law governing the caisse is silent on which should take precedence. The informal mandate is an extrapolation of Quiet Revolution speeches by Liberal premier Jean Lesage.

Rousseau wants to modernize the mission. The legislation will say that the caisse can contribute to the development of the Quebec economy only by pursuing the best returns for its depositors-if Rousseau gets his way. But he's acting as if he already had. "Job number one here is to manage the money of depositors. Anything else comes after that. If ever there is a tradeoff between managing money-which is protecting the capital and looking for the best return given the risk we're ready to take-and anything else, I'll be selecting the first objective."

Twice a week, Rousseau gets together with his 20-something sons-6 foot 6 and 6 foot 3-to shoot some hoops with a bunch of the boys' friends. As a centre at the University of Sherbrooke, Rousseau was a star on a provincial championship team in 1967. If Michael Jordan's pending retirement has left him in a funk, at least Rousseau's own on-court career has been rejuvenated by his sons' invitation to play. "They're all younger and faster-and most of them taller-than me. So, it's a thrill."

Such an ungrouchy sentiment is testimony to the importance Rousseau accords family. He has been married for 32 years to Monique Gregoire, one of Quebec's most seasoned television business reporters. The couple are parents to the two boys, an aeronautics engineer, 27, an economics major, 25; and a 23-year-old daughter, who is a classical harpist. Her husband's appointment may have put a crimp in Gregoire's career-to avoid conflicts, she can't cover caisse-related stories at the Quebecor Media-owned TVA-but not, apparently, their social calendar. The couple are frequent hosts at their 19th-century farmhouse near Dunham, where friends join in an obligatory sing-along. A more traditional modern family would be hard to find.

Rousseau, 54, grew up in a very different kind of household. His father died when Henri-Paul, the youngest of eight children, was five years old. Yvette Rousseau, a schoolteacher, moved the family from tiny St-Eleuthere-de-Kamouraska, on the lower St. Lawrence River, to Coaticook to find work in the booming textile mills that then dotted the Eastern Townships. "Teaching didn't pay enough to support a family of eight kids, so she had to switch to the factory," Rousseau recalls. As a machine operator at Penman's Co. Ltd., Yvette Rousseau was exposed to the primitive working conditions that were one of the scandals of the Duplessis era. She found her calling as a labour activist and was eventually elected vice-president of the Confederation des syndicats nationaux (CSN), Quebec's second-biggest labour federation. She went on to found the Quebec Council on the Status of Women, a role that caught the attention of Pierre Trudeau, who tapped her to help set up and eventually chair the Canadian Advisory Council on the Status of Women. In 1979, Trudeau appointed her to the Senate, where she served until her death in 1988.

" She was a fantastic woman, indeed," Rousseau says of his mother, who instilled in him the ambition that won the then-unilingual francophone several scholarships to complete an economics doctorate at the University of Western Ontario. His thesis-an econometric model on the way people behave when economic forecasts don't come true, which might prove useful in his current job-was recognized as the best in his class. Several summers working at the Bank of Canada left Rousseau ready to embark on a career there. But he had a change of heart and headed for academe-first at Universite du Quebec a Montreal, and then, for a decade starting in 1975, at Universite Laval.

It was during his stint at Laval that Rousseau headed Economistes pour le OUI, a fringe group that made the economic case for sovereignty during the 1980 referendum campaign. His sovereigntist ardour was not bred in the bone: His mother, by then a Liberal senator, was a strident campaigner for the NON side. Today, Rousseau won't discuss politics-period.

He made a smooth transition to the corporate world in 1986, joining National Bank of Canada as chief economist. CEO Michel Belanger became his mentor, and before long promoted him to senior vice-president, treasury and financial markets. Many thought Belanger was grooming a successor. But then, History happened.

In June, 1990. Canada was plunged into crisis by the collapse of the Meech Lake Accord promising Quebec "distinct society" status. Hundreds of thousands of Quebeckers marched to show their indignation. Polls put support for sovereignty at more than 60%. The PQ clamoured for an immediate referendum. To buy time, Liberal Premier Robert Bourassa tapped Belanger, a known federalist, and Jean Campeau, a former caisse CEO and future PQ finance minister, to co-chair a commission to examine, among other things, the feasibility of sovereignty.

Belanger turned to Rousseau to become commission secretary, essentially ringmaster of the body's proceedings and voluminous research. The commission produced an infamous study pegging an independent Quebec's share of the federal debt at only 18.5%, well below the province's 24% share of the Canadian population. The study was ridiculed by economists outside Quebec, but Rousseau was more concerned with the job of keeping federalist and sovereigntist commission members from each other's throats. "A friend has often said to me that if I didn't have an MBA before Belanger-Campeau, I sure got one there," Rousseau recalls. Adds Bouchard, who was a commission member and emerging leader of the Bloc Quebecois at the time: "We were walking on a tightrope; the risk of the commission rupturing was constant. Henri-Paul worked day and night. I remember him waking me up in the middle of the night with proposals." Many credit Rousseau with the brilliant idea that ultimately rallied a majority of commission members: Hold a referendum on sovereignty in 1992 unless the rest of Canada (ROC) comes back with a better constitutional offer first.

The compromise placated the sovereigntists, including Bouchard, because it seemed to guarantee a vote on separation, now that the post-Meech ROC appeared to have lost its appetite for courting Quebec. But it also pleased the federalists because it bought Bourassa more time. In the end, Bourassa's calculation proved more astute. The Charlottetown Accord of 1992 went down in flames in a Canada-wide referendum. But the fact that Quebeckers voted on Charlottetown, and not outright sovereignty, may have saved the country, which just might make Rousseau a Canadian hero, in spite of himself.

After Belanger-Campeau, Rousseau returned to National, but having been passed over for the CEO's job there, he jumped to the Laurentian Group in 1992 to run the Quebec financial conglomerate's general insurance division. When Laurentian Bank CEO Dominic D'Alessandro left to take the top job at Manulife Financial Corp., Rousseau took over. In more than eight years as the bank's CEO, Rousseau held his own in a market dominated, on the one hand, by the Toronto-based behemoths, and on the other, by National and Mouvement Desjardins. During his tenure, Laurentian's assets grew to $18 billion from $10 billion; the share price to $30 from $18. The feat is all the more laudable considering Desjardins was, for most of Rousseau's term, both Laurentian's controlling shareholder and a primary competitor. Laurentian also faced a militant unionized workforce. "I know the challenges he faced and I don't think anyone could have done better than he did," says Firth, who describes his ex-boss as a dynamo. "Every day he'd come in with new ideas. He didn't micromanage. But he stayed hands-on with the important stuff."

More significant, perhaps, than Rousseau's corporate duties at Laurentian were his behind-the-scenes political ones. Rousseau was part of by then-Premier Bouchard's inner circle, a tiny group that included Landry and Louis Bernard, a former principal secretary to PQ Premiers Rene Levesque and Jacques Parizeau who was in senior management at Laurentian in the 1990s. The group was widely seen as having more sway over Bouchard than his own cabinet. "Henri-Paul was extremely important to us," Bouchard concedes. "When there were economic decisions to be made, I often turned to him for advice." In 1996, Bouchard approached Rousseau about the top job at Hydro-Quebec. Rousseau passed, instead intent on managing Laurentian's transition from Desjardins subsidiary to stand-alone bank. Rousseau, however, remained ever close to the Premier. He was considered instrumental in Bouchard's decision to toe a moderate line on sovereignty and embrace a zero-deficit policy. In return, Rousseau defended some of Bouchard's more unpopular policies in the business community, accompanying the premier on trade missions and denouncing negative depictions of Quebec's language laws in the U.S.

In late 2001, word began to circulate that the Caisse de depot-collectively known as le bas de laine des Quebecois, or Quebeckers' nest egg-would be forced to take a massive writedown on its Quebecor Media investment. It was not an isolated case. As the tech bubble burst, one caisse deal after another went bad. Far too many of them involved private placements-investments in companies that don't trade on the stock market. While its counterparts like Teachers' had plowed up to 75% of their assets into stocks, the caisse until 1998 had been limited by provincial law to holding a maximum of 40% of its assets in equities. Then, with share prices reaching astronomical heights, the caisse was forced to buy high to get into the game and often invested in private companies outside Canada. And the caisse, under CEO Jean-Claude Scraire, desperately wanted to play.

Scraire envisioned the caisse as a Top 10 contender among pension funds worldwide. Foreign investments doubled to constitute 42% of the caisse's portfolio during Scraire's seven years at the helm. He opened branch offices in such far-flung places as Bangkok and Budapest; he actively sought mandates to manage assets on behalf of other pension funds. It was all aimed at building the critical mass Scraire believed was needed to attract and keep top people at public-sector salaries, while at the same time enhancing Montreal's status as a financial centre. Accordingly, the caisse had $133 billion in assets under its belt in 2001, compared with $45 billion in 1995, the year Scraire took over. He sought to establish in-house the expertise that most other global pension funds outsource. That in-house talent helped the caisse post a stellar 16.5% return in 1999, and earned it Reuters's designation as the best fund management group in Canada the following year. But with the growth came bureaucracy. The global network was costly and complicated. A booming market made it easy to mask expenses; but by late 2001, as tech-related losses mounted, there was no allowance for waste.

Nor was there much goodwill toward Scraire. A former PQ operative, Scraire had been appointed by Jacques Parizeau; he was hardly a favourite of the new guard in the party who ascended under Bouchard and Landry. What's more, Scraire had alienated many caisse board members. Countless decisions, including the fateful move to backstop Quebecor, were made in last-minute conference calls. Directors resented it. They also were turned off by Scraire's grandeur-his hobnobbing with Hollywood honchos and fashion mavens, and overspending by $100 million on a new headquarters for the caisse. When Scraire mused about taking over National Bank in a bid to protect the head office of the only Quebec-based member of the Big Six, the board figured he had gone too far. "The caisse is not there to take control of every institution in Quebec," Masse of the QFL remembers telling Scraire. "It is there to fructify Quebeckers' nest egg."

There was never much doubt about who would replace Scraire. Abilities aside, Rousseau's political connections are impeccable: Louis Bernard, the PQ's Mr. Fix-It, is a friend and ex-colleague; Jean Saint-Gelais, the Landry government's principal secretary, is a former Rousseau student and protege. Then there is Bouchard, whose influence remains ever-present in all things Pequiste.

Rousseau, appointed for a seven-year term, had no sooner taken over in September than copies of Good to Great began showing up on the desks of caisse employees. The 2001 book, by U.S. management guru Jim Collins, is a panegyric to the CEOs who propelled middle-of-the-road companies like Gillette and Philip Morris to the top of their class. It has become Rousseau's bible. "It is a book I pass on to many people," he admits. Collins lauds CEOs who are driven not by personal ambition but devotion to their organization, who push managers hard, and who focus on core strengths and missions. It did not take long before Rousseau began implementing the recipe at the caisse.

Last December, barely two months into the job, Rousseau brought down the axe. The positions of 19 executives were eliminated. Eight of 11 foreign bureaus were closed; 138 of the caisse's 958 non-real-estate jobs were cut. Among the casualties was Claude Seguin, who had presided over the caisse's private equity business. Seguin, a former deputy finance minister, was ultraconnected in Quebec City. His departure alone signalled that Rousseau would not be a toady to political friends.

More important than the management purge was the massive reorganization that wiped out much of the structure that had been built up under Scraire. The private equity and telecom divisions essentially were downgraded to work-outs. Subsidiaries to develop Quebec's fashion industry and its overall exports were shut down. For an opening act, it was cathartic.

The scaled-down caisse will be less ambitious. Forget about managing money for outsiders. Rousseau's caisse has its hands full with its own portfolio. And even then it will increasingly turn to outside managers to invest a greater share of it. "We cannot be good at all aspects of the job," Rousseau says. Scraire would never have made such a concession.

Yet, changing the caisse's investment tack seems easy compared to overhauling its very mission. Rousseau's proposals were supposed to be discussed at parliamentary hearings in March. The provincial election delayed the debate. But debate there will be. It's far from certain any future Quebec government, Liberal or Pequiste, will agree to give up its prerogative to appoint the caisse's CEO or relinquish its ultimate right to guide the institution's affairs. There is still a strong constituency in Quebec that believes the caisse should be a tool of economic nationalism. Maitres chez nous, no matter how dated it sounds, is still the collective mantra. Should Rousseau fail in his mission, he may simply become the latest in a long line of CEOs who never could really master the caisse. Plus ca change

Mid-March, and the sap still isn't running at Rousseau's farm. A brutal winter in Eastern Canada has delayed the onset of the maple syrup season. It's beyond even Rousseau's control. "Spring is late. Let's hope it lasts a long time, otherwise," he sighs. In the end, Rousseau philosophizes, the lives of the acericulteur and the money manager converge. "Syrup production is a lot like the stock market-a lot of uncertainty."

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