Alberta Finance Minister Nate Horner wants us to believe he sacked the CEO and entire board of the Alberta Investment Management Corp. last Thursday because, as his news release put it, “the corporation has seen significant increases in operating costs, management fees and staffing without a corresponding increase to return on investment.”
After reciting a couple of out-of-context statistics about increases in fees and the number of employees, the release proclaimed, “Alberta’s government has decided to reset the investment corporation’s focus. … All board appointments have been rescinded and a new board will be established after a permanent chair is named.”
According to a report of The Canadian Press that day, Mr. Horner suggested he’d been keeping a careful eye on the pension fund management Crown corporation and had “determined changes weren’t going to happen without a ‘major reset’.”
This intentionally leaves the impression Mr. Horner had concluded the board’s members were a bunch of inattentive jerks who had to be fired without so much as a thank-you-for-your-service. But a glance at the resumes of the members of the former board strongly suggests this is not the case.
Some are exemplary. Some not quite so much. But the board was big enough to encompass a range of experience, and the experience of several former members is impressive.
Collectively, the 10 board members were clearly capable of carrying out their legal mandate to “act honestly and in good faith with a view to the best interests of the Corporation and … exercise due care, diligence and skill, and manage risk appropriately in their oversight of AIMCo.”
Indeed, if circumstances were as serious as those Mr. Horner wants us to believe, one would have thought they might have fired the CEO Evan Siddall themselves.
The governance page of the AIMCo website notes that all directors of the Crown corporation are appointed by the Lieutenant Governor in Council, that is, the provincial cabinet. To be appointed, they “must have experience in investment management, finance, accounting or law, or have served as an executive or director with a large, publicly traded company. Individuals should also have, to the extent practicable, experience in executive management of a substantial corporation. All directors are fully independent of management.”
So, let’s consider the qualifications of the 10 fired directors:
Kenneth Kroner, the board’s vice-chair and acting chair at the time of the purge, holds a PhD in economics from the University of California San Diego, where he is also a member of the university’s board of trustees. He has served as a board member, vice chair and chief executive officer of U.S.-based corporations, worked as an economics professor at the University of Arizona, and was for close to 22 years a senior managing director of BlackRock Inc., the world’s largest asset manager.
Phyllis Clark is the former vice-president and chief financial officer of the University of Alberta. She chairs the Royal Canadian Mint and the Edmonton Symphony and Concert Hall Foundation, and sits on the board of Inuvialuit Investment Committee. In the past, she has been a member of the boards of the Bank of Canada; the AMA Insurance Services Board; chair of the Universities of Alberta Academic Pension Plan and its Investment Committee and a board member of the Canadian University Reciprocal Insurance Exchange. She is a former Chief Economist of Ontario, assistant deputy minister to the Management Board of Ontario’s cabinet and of its finance ministry.
Bob Dhillon is the founder, president and CEO of Calgary-based rental apartment manager Mainstreet Equity Corp., a board member of the Canada Mortgage and Housing Corp., Invest Alberta, and Strathcona Resources Ltd. He was the key donor, to the tune of $10 million, to the Dhillon School of Business at the University of Lethbridge. He is a member of the Order of Canada.
Jon Horsman is CEO of Horsman Enterprises Ltd. Before that, he was 14 years in senior management positions with ATB Financial, as Crown-owned Alberta Treasury Branches is now known, and chair and CEO of AltaCorp. Capital Inc.
Joel Hunter recently joined Calgary-based TransAlta Corp., the electricity generating and marketing corporation, as executive vice-president and chief financial officer. From 2021 to this year, he was executive VP of TC Energy, the former TransCanada Corp., also based in Calgary. He is a Chartered Financial Analyst and holds bachelor’s degrees in commerce and economics from the universities of Calgary and Regina. He was appointed to the AIMCo Board by the Premier Danielle Smith’s cabinet in March.
Jim Keohane is the former president and CEO of the Healthcare of Ontario Pension Plan. That’s all his LinkedIn resume says, but that would seem to be enough.
Lorraine Mitchelmore is a member of the Suncor and BMO Financial Group boards. She was previously president and CEO of Enlighten Innovations Inc. and president and country chair of Shell Canada Ltd. She has served in the past on the boards of Shell Canada and Trans Mountain Corp. She was named the recipient of the 2024 Calgary Influential Women in Business Lifetime Achievement Award.
Jason Montemurro is tax lawyer who was appointed to the AIMCo board by the UCP cabinet on the same day as Mr. Hunter. His LinkedIn resume includes jobs as a principal of The Targeted Strategies Group, a partner in Azimuth Capital Management, a director of CIBC Capital Markets, and an audit manager of Deloitte Canada.
Roger Renaud is the former Global Chief Operating Officer and Canadian president of Manulife Asset Management and the former President of Standard Life Investments, both companies based in Montreal. He is a board member of Fonds de solidarité FTQ, which was created by the Quebec Government, and a member of numerous boards.
Theresa Whitmarsh is the executive director of the Washington State Investment Board. She is past chair of the Council of Institutional Investors and the Pacific Pension & Investment Institute and a past director of the International Centre for Pension Management. She is based in Seattle.
As these thumbnail bios suggest, all the AIMCo directors were arguably qualified to fill their positions. Messrs. Hunter and Montemurro were criticized last spring when they were appointed because they lacked pension experience. Some have connections to past and current Conservative governments in Alberta. But by and large this is not the sort of board that you would think would be at risk of a wholesale purge.
So what was the actual problem?
As noted, Mr. Horner says the board wasn’t acting fast enough to cut costs and improve the results achieved by Mr. Siddell and his management team.
Remember, AIMCo’s most serious recent problems took place in 2020 under President and CEO Kevin Uebelein, when it lost $2.1 billion in what was described at the time as an amateurish bad bet on market volatility.
Mr. Siddell, the former president and CEO of the Canada Mortgage and Housing Corp., was clearly hired to get AIMCo on track as a sober and thoughtful investor in which Albertans could have confidence, as befits a corporation managing $169 billion in workers’ retirement savings.
Is it possible the real problem was that the board was too cautious for the UCP’s taste, unwilling to take big risks on questionable investments motivated by politics, not prudent investment strategies?
The investment industry is already abuzz with just such speculation.
“Alberta’s Premier Danielle Smith has made it clear she wants the pension fund to put more capital to work in Alberta,” an investment newsletter said today. “Some stakeholders have already voiced concerns that this could mean more investment in fossil fuels.”
Top1000funds.com quoted “pension system luminary” Keith Ambachtsheer of the University of Toronto asking, “What makes the government think it can improve on the high quality of the board and executive team it just fired?”
Good question. But perhaps the UCP has something completely different in mind. “Danielle Smith I think looks at AIMCo as a bit of a cookie jar,” said a Globe and Mail business columnist.
Mr. Siddell has been temporarily replaced by Ray Gilmour, a veteran senior civil servant trusted by the UCP but who has little experience in pension management.
If the Government of Alberta really cares for AIMCo’s clients it would set them free! Forcing pension plans with significant assets (most notably LAPP and ATRF) to place these assets under AIMCo’s management is indefensible.
[Surely Albertans will see through Horner’s costs smokescreen – it’s returns net of costs that should be the focus, and independent fiduciary pension administrators need to be able to freely choose who is best placed to manage assets.]
[Surely Albertans will see through Horner’s costs smokescreen – it’s returns net of costs that should be the focus, and independent fiduciary pension administrators need to be able to freely choose who is best placed to manage assets.]
Narrator: No, they never did. And after the inevitable collapse, when 100s of thousands of Albertans were rendered destitute, and the hole in public finances exploded beyond any hope of repair, their hatred and resentment against the Prime Minister and Québec grew ever more intense and inconsolable, as inconceivable as such increase may seem to normal human beings.
Yes, the board fired by the UCP seems to have a considerable amount of experience in the relevant areas. And the investment performance, at least since the previous debacle when the last CEO was replaced, now seemed to be in line with other similar pension funds.
So I also really doubt the Minister’s story that this was management or performance related. And after this latest debacle, I suspect Alberta will have difficulty in getting competent people to take on this role.
But perhaps the UCP really doesn’t want competent people who might challenge what the government wants, but it just wants order takers.
It would be interesting to know about severance and payouts. There may be very large ones involved to keep the departing people from talking, in particular those whose reputations and future job prospects may be damaged by the Ministers smears. Or there may be upcoming legal action soon against the Alberta government.
The pension management world is small one in Canada and what has happened is a bit like a radioactive explosion. So I suspect competent people, who could otherwise be enticed, may be inclined to steer clear of this mess and a government that does not appear to respect the independence of its pension funds and interferes too much.
How much did Dani’s renewable energy moratorium affect AIMCo? Is she the reason they didn’t perform well?
And Minister Horner’s resume to manage AIMCO – 2 year ceritficate in agriculture .
Danielle Smith wants AIMCO to invest more in Alberta fossil fuels? You say that like it’s a bad thing. There’s at least one pension management firm that’s quite bullish on fossil fuels. None other than your friendly neighbourhood Canada Pension Plan Investment Board headquartered in downtown Toronto.
https://www.shiftaction.ca/news/2023/12/7/cppib-opens-cop28-by-celebrating-oil-and-gas-investments
In his address in Calgary the CPP CEO stated that CPP has $6B (of a $576B portfolio) invested in Alberta’s oil and gas industry) – a little over 1% of AuM at the time.
CPP is a sophisticated global investor, independent of government (!) and freely choosing where best to invest. AIMCo’s captured clients want to make their own choices (really, to choose their own investment managers).
The author has written at least 2 articles about the underperformance of AIMCO. The board was not cashiered because of their credentials but for their performance. Are we now disgruntled because they were held to account or because it was the UCP that passed judgement? Would we be reading an article extolling the AIMCO board if an incoming NDP government had done the same thing?
No one detests the current government more than I, but when they do the right thing, I don’t complain. Having said that, I don’t trust them and will be watching diligently to see it there is more to this story than simple performance management.
The article makes it fairly clear that they board was not cashiered for their performance, but for the performance of the previous CEO who was replaced I believe in 2020, or at least in consequence of a bone-headed move made in 2020.
I think folks are way too hard on Nate Horner!… I have full confidence in the UPC running pension funds!…. Oh, full disclosure: I just had a lobotomy!
If Marlaina gets her hands on this money, say goodbye to your pension. Instead, fossil fuel company executives can start shopping for new private jets.
When she first floated the idea of taking our CPP into her grubby little mitts, I saw her comment in an interview when being questioned about the CPP takeover, ‘just think what we can do with that money’. Alarm bells went off in that moment for me! My retirement, her slush fund. It was only later that I found out about the $2.1 billion loss of the Alberta Teachers pension fund and then shortly after that, I came across the information that AIMCO is not arms-length from the Alberta government (as our CPP is from any government whether Conservative or Liberal). You might be right about ‘shopping for new jets for the oil CEO’s.
Isn’t it terrifying that the UCP doesn’t feel obliged to adhere to the decisions on referendums! Pray that the federal government makes this such a painful and difficult thing that. by the time it potentially happens, the NDP have kicked this dead horse to the curb! Let’s pray that there is a God and he’s listening.
I believe that the AIMCo board didn’t want to make some questionable investments, even though the UCP wanted them to, so they were fired.
Truth be told, Anonymous, I do to. But it is a belief without evidence for the time being. DJC
David Climenhaga: I understand. We know for a fact that the UCP are less than honest. When something goes wrong, they need a scapegoat.
SO what about the Alberta Teachers Pension Funds. (The fund that had a better track record than AIMco.)
As I recall they were ‘stolen’ by the UPC and put into AIMco.
Then, I believe a judge ordered AIMco to keep the ‘stolen’ funds separate.
How is that going? Will it survive this latest shenanigan?
Thanks for writing this, David, and for digging out the articles you provided links for. I found the article with the link ‘an investment newsletter said today’ especially disconcerting. This whole fiasco has given me multiple thoughts.
First, I expect this whole thing will be of little concern for the UCP base, some of whom would be delighted to see a bunch of retired civil servants suddenly find themselves without a pension. I don’t know if the Government of Alberta is liable for these pensions, but if they are it would only be after a future government had to implement a sales tax to cover the pension shortfall that the UCP’s base would see that the whole issue does affect them after all.
This has to have an effect on Albertans who are undecided about the whole Alberta Pension Plan issue. I suspect that either the UCP has given up on the idea, or else they have given up on the idea of holding a referendum on the issue. Some UCP faithful have been pushing the premier to go ahead with the APP without a referendum.
These are scary times.
The federal government announced a requirement for a 35% reduction in emissions on November 4th, 2024. Three days later, on November 7th, 2024, the UCP announced that the AIMCO board was fired. DJC, is it possible that these events are somehow related?
GMG: It’s an excellent question. Perhaps they indicated an unwillingness to break the law by engaging in treasonous activities. DJC
Need to hear from the AIMCO board members fired and/or senior AIMCO staff.
It is telling that not one of them has spoken publicly about this.
Marc: I have no knowledge of this at this time, but my assumption is that some deals have been cut. Certainly the reputations of all the board members have been harmed by this. They would have needed to be compensated for that embarrassment, even if a pay-out was not legally required. I was shocked that no one from mainstream media – you know, the reporters who are actually paid for their work – appears to have bothered to try to figure out who the former board members are. (It was easy, thanks to the Wayback Machine and LinkedIn.) I will leave the time-consuming work of trying to track them down and ask them the obvious questions to the press corps. Or perhaps I should say the press corpse. Also, of course, there will have to be severance for the executives, including the CEO, who have been sacked. I imagine it will be quite expensive. That’s another question real reporters should ask. DJC
I’m sure that Rick Bell will be right on this.
CBC News website reports that potential Trump appointee Mike Waltz, who apparently hates Trudeau, is married to Julia Nesheiwat, a V-P at TC Energy. Well, that completes the equation.
YYC Lefty: If I were the UCP, I wouldn’t look at oil prices right now. That’s one thing. It would cause them to have a meltdown. Second, if Donald Trump fulfills his commitments, including with the tariffs, Danielle Smith will go berserk. She will not be able to blame Justin Trudeau for the severe ramifications this will cause, which will happen.
Oh ya. Humpty Dumpty Dani will have a great fall. Thus the panic trip to broker deals in UAE and afar. When are cons going to get it? Uber competitive ness has a point of diminishing returns and in exports, we about to reach it.
The US has opted for government by internet troll. Canada is very likely to do the same next year.
Probably all board members had to sign non-disclosure agreements, so likely they will be tight lipped.
John: Well, almost nobody has to sign an NDA. But sometimes the terms of the agreement make it pretty difficult to resist. I expect that is the case in this situation. DJC
Can’t you just imagine the lawsuits coming out of this for taxpayers to face? Anyone of them is a lot smarter than these Reformers combined.
1. You can count on senseless rag-dolling, with no accountability for the dogs chewing on the chew toys Du’jour.
2. If they were right in the first place? Why did they elevate a know nothing to ride herd over people who actually know something about the balance between risk and reward when it comes Alberta citizens pensions and the Heritage trust fund.
3. Well, they want to dangle 3-4 billion dollars of your pension money on a re-animated Keystone XL? Only to evaporate that investment like when Kenney fooled around and found out? Now we have no guard rails! Horner is a clueless puppet who should resign! A finance minister who has no clue about risk management is big risk!
This is only a rumour and I haven’t any proof but I heard the Board didn’t want to invest in Wolverine Pelts.
It’s to become Dictator Dani’s slush fund! Just like Trump she’ll hire loyalists who answer only to her! When are people going to wake up and see what this disaster of a premier is slyly doing to Alberta??
All passengers on the Bozo tour? The pilot says fasten your seat belts, return your tray tables to locked and wrap your hands around your head (which should be between your knees). Doomed you say? Not quite yet but whose quibbling!
Stephen Harper considered for the role? Say what?
https://www.bnnbloomberg.ca/business/politics/2024/11/12/former-canadian-prime-minister-harper-eyed-as-alberta-pension-chairman/
Hello DJC and fellow commenters,
Like your commenter Dave, I would hazard a guess that the Board was reluctant to make questionable investments that the government ?Danielle Smith? was demanding.
I also agree with Public Servant’s concerns about pensioners being unable to rely on the government and other pensions whose funds are being invested by AimCo.
I find it difficult to believe that the former CEO of AIMCo, Evan Siddall, who was CEO of CMHC and has previous experience as an investment banker has the faults attributed to him by Minister Horner. This debacle seems quite unlikely to line up with reality.
As I have written previously, it feels as if Danielle Smith believes that Alberta is her personal fiefdom and that she can run it exactly as she likes without regard to the well-being of those who live here.