CANADA - The Financial Services Commission of Ontario (FSCO) is reviewing whether to take action against the C$1.2bn (US$987m) Canadian Commercial Workers Industry Pension Plan (CCWIPP), following a two-year probe which found the fund has poured more than C$166m into questionable real estate investments.
The Ontario-based multi-employer union pension plan, which has more than 240,000 members, represents workers in the food industry, two thirds of whom are active members of the United Food and Commercial Workers union.
FSCO’s damning 86-page report found the multi-employer union pension plan had breached numerous parts of Ontario’s Pension Benefits Act. It criticised the plan’s “significant lack of processes” dealing with due diligence and reporting, poor monitoring and an absence of procedures for identifying and addressing conflicts of interests between 1997 and 2003.
Also at issue were 45% of the plan’s assets, managed at the time by the board of trustees, before some of the responsibility was shifted to professional investment managers a few years ago.
The commission paid particular attention to the plan’s investments in its wholly owned corporations known as “Propcos”, which in turn lent C$166.9m in funds to RHK Capital Inc., which then used the loaned money to purchase hotels and land in Jamaica and the Bahamas.
“The total assets of the plan as at December 31, 2003, at book value, were C$1.06bn,” the report stated.
Under the Ontario Pensions Benefits Act 1990, the plan could face charges and a maximum fine of C$100,000 on each of the counts.
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