CANADA - The Financial Services Commission of Ontario (FSCO) has formally requested information from the Canadian Union of Public Employees (CUPE) Ontario relating to the investment activity of the Ontario Municipal Employees Retirement System (OMERS) on the back of a lawsuit filed by the union in May.
The lawsuit against OMERS and three of its managers alleges the managers were unjustly enriched at the expense of pension plan members and seeks C$60m in damages from the three managers, to be returned to the pension fund.
Union president Sid Ryan said: “FSCO wrote basically asking for documentation to be released to them so we will comply and release that documentation.”
He would not comment on the nature of the documents, however he said the information would assist the commission in conducting a “more thorough” investigation.
“We hired forensic auditors to investigate and interview former employees of OMERS and the different corporations that were associated with OMERS when they acquired real estate,” he said. “We found out information... that the investigators should have their hands on.”
Ryan said he would be instructing the union’s lawyers to release any information FSCO asked for.
The lawsuit seeks a declaration that the pension fund and its board were in breach of their trust and fiduciary duties to members and acted negligently by entering into allegedly imprudent real estate transactions with Borealis Capital and Borealis Real Estate.
Over an 18-month period, CUPE claims OMERS outsourced management of its real estate to Borealis Capital, which it is alleged to have paid the pension fund an “undervalued C$11m” and hired OMERS employees to do the work. The claim alleges OMERS subsequently repatriated the management function, paying Borealis shareholders - including the three managers - C$50m for return of its own assets.
OMERS has publicly refuted the claim.
The claim also alleges that the three managers who had been employed at OMERS or its subsidiaries and then became managers at Borealis, failed to disclose to the pension fund board that the costs of the agreement with Borealis were well above market rates. The court date is expected to be set for some time in December.
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