In Focus

August 1, 2005

280 million in questionable investments is the subject of recent pension news, demands for a police investigation and trustee resignations.

The Canadian Commercial Workers Industry Pension Plan (the largest private-sector plan in Canada covering companies such as Food Basics, Zehrs, Loeb and Safeway grocery stores) has about $1.2 billion in assets. A blistering 82-page report by the Financial Services Commission of Ontario questions whether the plan has breached its fiduciary duties.

The report finds that in recent years pension plan records do not show who actually received millions of dollars and what was done with the money. Recent investments have included $170 million in Caribbean hotels, resorts and land. Another $110 million was invested in loans, mortgages and equities in other risky ventures, such as hotels in Ontario, a shrimp factory in Newfoundland, a potato processing plant in Idaho, a Las Vegas-based magic-theme restaurant chain and a former Internet provider in California. Most of these businesses collapsed.

Adding a sense of intrigue is the fact that many of these companies involved deals with a former priest who had been defrocked (and convicted) for indecent assault on five boys in 1979.

Amid demands for a police investigation and trustee resignations, the pension plan has countered that the report has errors, that workers are not at risk, and that the plan stopped doing business with the ex-priest years ago. One union steward calls that response "disgusting", especially given the trustees' refusal to admit that they did something wrong.

Stay tuned to see how this Canadian drama unfolds!

— James J. Eccleston
FinancialCounsel.com