Vaughn Palmer: Pension fund, under pressure, says it is selling Russian investments

Opinion: Attribute it to a combination of pressure from politicians and unions representing workers with money in the pension fund

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VICTORIA — When news broke that millions of dollars in provincial pension funds had been invested in Russia, Premier John Horgan initially said it was not up to him how the funds were invested.

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“These are not government-run,” Horgan told the BC Liberals during Question Period Monday.

Technically correct. Public sector pension funds are invested and managed by the BC Investment Management Corporation.

It is protected from political interference by legislation passed under the NDP government of the 1990s.

Horgan also acknowledged that a technical explanation would not satisfy public outrage over the Russian invasion of Ukraine.

Russian investments “would not be choices I would make,” the prime minister said. “Certainly not today.”

The Liberals kept pushing, so Horgan offered them a briefing on how the investment management company works.

Judging by his early comments, he could have benefited from a briefing himself.

He has repeatedly called on union pension fund administrators to take action. “They have people elected to those positions who can make those calls and I hope they will.”

The union trustees of the pension plans appoint four of the seven directors to the board of directors of the investment management company. The other three are appointed by Finance Minister Selina Robinson.

But the law prohibits members of the board of directors from participating in the company’s investment or disinvestment decisions.

The board of directors appoints a chief executive officer of the company, monitors and reviews performance, approves policies, a business plan and a budget.

Once the managing director, who is also the chief investment officer, is in place—currently it’s Gordon Fyfe—he and his team of professionals make the investment call.

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What they get paid well for: Fyfe earned $3.6 million in compensation last year. His four executive vice presidents split an additional $7 million between them.

Back to the Prime Minister.

“We have already looked at the BCIMC issue and have come to the conclusion that, as things stand, directors and investment managers are the ones who decide when to invest or divest.”

This still left room for MPs “to stand with one voice and say, ‘We should divest’.”

“We did that today, I think, quite emphatically,” the Prime Minister continued, noting that Liberal and Green support also has its own camp.

Instead of sticking with it – with the legislature speaking with one voice – Horgan announced that the government would also take the message into its own hands.

“We will definitely follow up,” Horgan assured at home.

“But I want to caution that I don’t think we should arbitrarily say in response to a Question Period question that we’re going to throw away the arm’s length relationship that currently exists.”

Later Monday, BC Liberal Leader Kevin Falcon suggested Horgan try moral suasion as well.

“We cannot directly, nor should we directly, try to tell the British Columbia Investment Management Corporation what it should and should not hold,” Falcon said in an interview with Jas Johal on CKNW.

“But I think the moral suasion here requires the prime minister and the finance minister to reach out and say, look, given what’s going on in the world right now, it’s just untenable that we have in government pension holding companies that are benefiting, probably Putin, in part, but certainly the oligarchs around him, and it is our responsibility to eliminate them as soon as we responsibly can.

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When the Legislative Assembly convened for Question Period on Tuesday, the Liberals pointed out that the Alberta equivalent of the BC investment management company had already announced it would divest of its Russian holdings. .

Did the Prime Minister call the BC Pension Corporation as promised?

In Horgan’s absence, Finance Minister Robinson handled the response and got to work.

“We heard from the investment management company that they were taking action,” she told the house.

“I’m prohibited by law from being involved in investment decisions, for good reason,” Robinson continued, pointing out that those were the responsibility of the CEO/CIO.

She added that she hoped it would be quick.

With this setup from the minister, BCI, as the company calls itself, confirmed that some kind of decision is in the works.

Late Tuesday, the news broke.

“In response to the Russian invasion of Ukraine, BCI is actively working to sell remaining Russian securities from our clients’ portfolios,” the statement read in part.

“BCI recognizes that holding Russian securities in our portfolio is not in line with our values ​​as an organization or those of our clients and our hearts go out to the people of Ukraine.”

CEO Gordon Fyfe said the company began to shed its Russian holdings before the invasion. As a result, he had managed to reduce his holdings, reported at $450 million last year, to $107 million.

It will be more difficult to unload the last part because the exchanges are at a standstill. Nevertheless, the effort will continue.

Fyfe also said the BCI is also working to “remove Russian from all global and emerging market indices.”

It is rare for the investment management company to comment on anything, let alone its investment decisions.

So attribute it to a combination of pressure from politicians and unions whose members were appalled to learn where their pensions were invested in the first place.

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Dolores W. Simon