MONTREAL — A fashion subsidiary financed by Quebec’s pension fund has closed and is being investigated for mismanagement.

Montreal Mode was set up in 1999 with a $20 million investment from the Caisse de Depot et Placement du Quebec as a kind of super agency to market Quebec fashion at home and abroad. It was designed to collect bills, buy fabric and take care of manufacturing and marketing to free up time for designers to create product.

But the agency has been closed by the new chairman of the Caisse after losing most of its initial investment. Montreal Mode is also being investigated by the province’s auditor-general for bad management and charges could be laid if there is evidence of criminal activity.

"Montreal Mode is something the industry really needs right now. It’s unfortunate this had to happen," said Lynda Brault, who recently resigned as director of the Montreal Fashion Network, which puts on Montreal Fashion Week twice a year. The two organizations are not related.

Some of Montreal’s most prominent designers joined Montreal Mode, including Jean-Claude Poitras, Lino Catalano and Marcel Denomme. Each had a different deal but retained a partnership in their business. All three have since left Montreal Mode.

One designer who decided not to join, Marie Saint Pierre, said the agency lost its vision very early on. "They said they’d be there for the designers and they were not."

Although approached, Philippe Dubuc said he didn’t sign on as he was already getting financial aid from the Caisse. But support dried up after Montreal Mode was created.

Many designers criticized the decision to appoint a designer with her own company, Chantel Levesque of Shan, as president of Montreal Mode. There were also accusations of nepotism after her husband was appointed vice president and several family members were given jobs at the agency.

Some industry insiders claim the only business being promoted was Shan, a successful swimwear company that Levesque originally sold to the Caisse for $3 million and bought back recently for considerably less.

Levesque held a press conference last Friday and said it was the former head of the Caisse de Depot et Placement du Quebec who ran the show. Further, she said she had nothing to do with the disappearance of the funds. She also denied using funds to promote her own business and to benefit members of her family."No project and no activity could proceed without the authorization," of thesix-member board of directors, said Levesque, who recently resigned from Montreal Mode.

In addition, she wouldn’t reveal how much she paid the Caisse to get back control of her company, citing a confidentiality agreement she signed with the pension fund.

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