bcIMC

Disvalue for money

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In its last fiscal year, BC Investment Management Corporation (bcIMC) paid its top five executives $7.25 million. In its last fiscal year, Washington State Investment Board (WSIB) paid its top five executives $1.76 million. In Victoria, CEO Gordon Fyfe is paid almost five times the amount paid Gary Bruebaker, WSIB’s  Chief Investment Officer.

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In 2013, bcIMC employed 55 people who earned more than $200,000. That includes nearly one in three full-time employees. WSIB paid seven people more than $200,000.

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At bcIMC, none of the five highest paid and four of the 20 highest paid employees are female. At WSIB, two of the five highest paid and nine of the 20 highest paid employees are female.

After an earlier In-Sights report, a bcIMC associate contacted me and said the two organizations were not comparable. I agree, while they share the same objectives, manage reasonably similar investment sums and invest in the same marketplace, they are not comparable.

One conducts business with restraint and relative frugality, aiming  to minimize overhead costs and maximize value to investment fund beneficiaries. The other does not.

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To have appropriate housing for its many high paid executives, bcIMC moved in 2015 to waterfront offices developed by the BC Liberal’s favourite Victoria developer: Jawl Properties.  The pension fund manager itself holds ownership of many office and commercial properties but perhaps sometimes, it makes sense to be a renter and let another operation earn the profits.

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ADDENDUM

July 21, Finance Minister De Jong released information on executive compensation and announced the end of a”four-year wage freeze for public sector managers and executives.” Too often, corporate media believes its role is to echo government press releases without testing truthfulness so they repeated De Jong’s PR handout, even though it was not close to being accurate.

An example at CKNW: B.C.’s highest paid public sector employees

cknw

In the year before the freeze, the five top executives of bcIMC earned $4.7 million. As noted above, they earned $7.2 million. Not a very effective freeze Mike! Not a very accurate report CKNW!

According to the Daily Mail, only ten public servants in the UK earned more than £300k ($500k CAN) in 2015. In British Columbia, our pension fund manager had as many.


Once a year, bcIMC issues an inventory of investments. It is six months old when posted and is not updated for another year, which means the listing is from six to 18 months out of date. In addition, bcIMC publishes the inventory in a form that is protected by a password so that information cannot be sorted or extracted in whole or in part.

Protecting a 170 page listing that contains  thousands of lines of data is intended to inconvenience researchers who need to categorize investments to make meaningful comments and reports. It demonstrates bcIMC distaste for an informed public. This shows the restrictions applied to the inventory of investments.

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Categories: bcIMC

22 replies »

  1. Save that chart, Norm. It looks like you could use it for amount paid to IPPs for their power (blue bars), versus the amount BC Hydro sold the power for (green bars.)

    I’m a retired teacher and I was contacted by the BCIMC over a year ago, to answer a survey on their services. Under the “anything else?” category, I mentioned this blogsite and the amount of money being syphoned off by the investment staff.

    I see they haven’t made changes yet…

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  2. Ian Young wrote a story in the South China Morning Post about the Canada Revenue Agency’s failure to investigate warnings by their own auditors going back as far as 20 years that massive foreign investment was distorting the luxury BC real estate market and there was significant associated under-reporting of global income. Based on current audit volume, there is little doubt the under-reporting continues. Via Twitter, Global’s Chris Gailus was asked by a viewer if Global would be airing anything.

    His response?

    “Msg. received. Not likely. We don’t have the docs and it’s not a tv-friendly story. But Ian did a great job!”

    That is one of the most revealing statements Mr. Gailus has ever made. One doesn’t have to consider it for very long to realize what kind of journalist would make it, how hard he chases news in the public interest, and how unsophisticated he views his ever-diminishing audience.

    Don’t look for Norm’s work here to be covered by Global BC. They can’t make it appear to be mouthed by a cute puppy and since it would be too complicated for Keith Baldrey to do, viewers will be treated to video of car accidents, day-old drive-by shooting scenes, and unchallenged government news releases instead.

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    • Forgive my ignorance but these people get paid to make and supervise public investments, right? Do they get paid like some lawyers on a contigency basis? Win you get paid, lose you don’t? Or like stovkbrokers, you get paid no matter what? The money they invest essentially belongs to beneficiaries like public servants, teachers? Do I gather that thir groups decide, on their own, who are the “Brokers?” How os the decision made and do the rank and file have a real say?

      Who decides that Mr Fyfe’s position is worth $2.5 per year? That he’s the man for the job? Who fires him?

      Surely there must be some government involvement. Who? What authority does he/she hVe?

      Just as a comment, out of 3×5 executices shown, there are no women.

      As to all these questions and many others, are we just to trust our “betters”? Leave it safely with that “Hidden Hand” the Fraser Institute and the Liberals have such deep faith in?

      Just thiught I’d ask.

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  3. I notice the Washington State pension fund manager has a much more open style. They publish comprehensive quarterly reports that provide details of investments made and the returns gained. The BC operation has little by comparison. The most recent listing of investments is 17 months old.

    The lack of timely information from BCIMC is inexcusable. So is the absence of reporting in the mainstream media. Any public agency controlling over $120 billion ought to be carefully and comprehensively reviewed in public. Sunshine is the best disinfectant.

    This was published by the World Press Freedom Committee:

    “What happens when there is no free flow of information, when crucial events are kept under several layers of official protection from the public?

    “Easy. Secrecy and corruption flourish, and the public suffers the consequences of abuse of power…”

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  4. At the same time that these people were getting fat pay rises, the pensioners were getting less. The “newsletters” sent out to pensioners told them this was to “preserve the value of their pensions”. Retired public servants lost the payment of both their MSP and their Blue Cross “subsidy” previously paid by the government. Blue Cross also significantly reduced the coverage and increased the copayments required for services such as hearing aids or dentures. Pensioners were told that this was necessary as making these payments was “unsustainable”. No mention was made of the huge increase in payments to BCIMC.

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    • Stephen is correct although I would say it is not government that was paying for small portions of insurance coverage. It was the investment fund that was paying the costs. By the way, in the year ended Mar 2015, bcIMC boasted of a 14.2% return on investments. In 2015, they credited 1.3% interest on member’s contributions. Yet, despite that huge differential, the managers argued they needed to reduce benefits of current and future pension holders.

      I’ve seen material from the Municipal Pension Plan confirming reduction of various benefits. In addition, inflation is only partly adjusted for IF investment earning allow for it. With this highly remunerated group running bcIMC and getting substandard results, there will great difficulty providing pension improvements.

      What is interesting is that no matter how bad the investment outcomes, the PR bumpf from bcIMC announces they beat the benchmark performance standards. Even in the past fiscal year when they had a negative rate of return, that supposedly beat the benchmark. Obviously those are very flexible standards.

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  5. My wife receives a pension from the fund managed by this bunch. She received a notice of changes this summer that will cost us around $1,000 a year. Strangely, the notice did not include any fulsome explanation of why the changes might be necessary. With people like the CFO of Finning chairing the bcIMC Board that appointed Fyfe, and an executive vice-president and CFO of BC Hydro chairing the Board’s audit committee, one would think the talent should be there to be candid with the pensioners kneecapped in this manner.

    While we’re thinking of the unexplained, here’s a chin-scratcher for you. Gordon Fyfe came to the bcIMC straight from his gig as CEO of the Public Sector Investment Board in Ottawa. According to page 65 of the 2014 annual report of that organization, his compensation for the years 2014, 2013, and 2012 was $4,206,983, $5,307,541, and $3,404,746 respectively.

    http://publications.gc.ca/collections/collection_2014/investpsp/CC511-2014-eng.pdf

    Now, he was born in Victoria and according to his bio still has extended family there, which might make a return attractive. He does bear a striking resemblance to one Richard Fyfe, the author of the Basi/Virk payoff agreement we all know and love from the BC Rail trial. But is that and a nice waterfront office enough to take a $2,000,000 pay cut to leave Ottawa?

    Or is the raise he got in his second year here a sign of much bigger rewards ahead? Time will tell. But don’t look to the MSM for details. Come back to Norm’s for those.

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  6. And I suppose he/they can ‘top up’ that disgusting remuneration with ‘tips’ they have gleaned from publicly funded research they have performed in their line of duty.
    And I suppose they’re entitled to a pension at the end of their tour?
    Wonder what Fyfe got as severance when he left Ottawa, Lew?

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  7. Gordon Campbell brought in the “grifter government” on the foundation of NDP accomplishments of doing the same.

    Every deal Campbell did, in hindsight, was a land deal, enriching his cronies. The TFN agreement, was not about settling land claims, rather it was done to get land out of the ALR and leasing to Cambridge developments on the cheap for a massive mega mall. (The then Chief, Kim Baird) has been well rewarded for this deal by receiving the “Odor of BC” and being on various government boards etc.

    The Massively expensive Port Mann Bridge and SFPR was to reward Kliewit and the road builders Association, with a vastly gold plated bridge and highway project.

    The Canada Line was to award SNC with a lucrative operational and maintenance package (over $110 million annually)as the winning P-3 Concessionaire in the mock P-3 bidding process.

    BC Rail of course was virtually given away for a billion dollars to a Liberal Party crony.

    The list goes on and on, BC Ferries, Sea to Sky Hwy. and site C, etc., etc.

    The NDP have done little to expose this massive grift and our current sociopath premier, Photo-op is continuing this massive grift.

    The MSM, are in the pocket of the Liberals and write virtually nothing about it, unless the reek of political corruption is so great, that they have to report it or lose credibility altogether.

    This story is more of the same, rewarding party members and insiders with massive pay packets to keep them loyal, to continue the Goebbellesque propaganda machine in operations.

    We live in a nightmare of corruption and greed, where schools and hospitals are wanting, but not grossly over built vanity bridge, dam, transit and Hwy. projects.

    Liked by 1 person

  8. John, pensions are detailed on page 64 of the annual report. Mr. Fyfe will not have to worry much about the cost of living in Victoria.

    As for severance, that is covered on page 66. Mr. Fyfe would have been eligible for a severance payment of $6,491,625 had he been terminated, but no severance if he left on his own volition. It is safe to assume that since no amount showed in the 2015 annual report he left voluntarily, although not entirely penniless.

    If one were to be developing a recipe for excess in the area of compensation, it would include ingredients such as letting the Board and its appointees create their own rules and operate with no oversight. That appears to be the case with management of these large pension fund assets. The Human Resources and Governance Committee, a sub-committee formed from appointed bcIMC Board members, is responsible for among other things, “compensation philosophy”, and performance and associated payments under incentive plans. The three current members of that committee are all appointees to the Board made by the Boards of Trustees of individual pension plans.

    This whole operation needs some sunlight, and although the traditional media shares the bulk of the blame for not highlighting what’s going on here, the people most affected are the existing and future pensioners covered by the fund, and to that extent the college, municipal, public service, and teachers’ boards have some explaining to do. After all, they have a majority on the Board that governs the bcIMC.

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    • It is a carefully designed system. Participants must go along, to get along. “Oversight” provided by individuals at the local level is well contained and of little consequence. People who do not support the status quo are soon made unwelcome. So, if an individual wants to keep receiving the small financial rewards and the pretense of influence, they adapt. They learn to listen, not to talk.

      The oversight pyramid is steep and there are rather few at the top, where the rewards and influence are no longer insignificant. The atmosphere is collegial and any serious attack on the current state of affairs is unwelcome.

      Unfortunately, unless more than one large group of beneficiaries is willing to make fund management an issue, nothing will change.

      However, WSIB shows us a way to proceed. It is public accountability. There, senior managers hold regular meetings in public with time reserved for public inputs. WSIB publishes regular reports, including minutes of board meetings. They talk about what they do and they answer questions from the public.

      bcIMC does none of this. They won’t even make timely reports of their activities. Look at the bcIMC website and the last listing of investments is dated March 2015, almost 17 months ago. Even it is only available in PDF form that is secured by a password and copying, sorting and manipulation is prohibited. (That is to tie the hands of nosy researchers, like me.)

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    • I suppose that’s an indication of how much he has gleaned from the system. I think, if I could afford to walk away from a 6 1/2 million dollar severance I wouldn’t be too concerned about the cost of living in Victoria. Heck, I’d just buy Victoria! (Or has that already been done?)

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  9. Somewhat off-topic:

    Quote:
    BC Hydro is seeking approval for rate increases totalling 10.5% over the next three years (the maximum the government will allow under their ten-year rate plan), plus the deferral of some $800 million in costs—costs that will be charged to customers in the future—because the maximum rate increases allowed by the government are not keeping pace with BC Hydro’s rapidly increasing costs of service.

    And what is underlying those increasing costs? BC Hydro’s application makes very clear that the single most significant factor is increased purchases from independent power producers (IPPs) – purchases that BC Hydro was forced to make as a direct result of Campbell’s Clean Energy Plan.

    http://www.policynote.ca/how-the-so-called-clean-energy-plan-wreaks-havoc-on-bc-hydros-rates/

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  10. I’m wondering if Mr. Simon Little has since taken it upon himself to delve deeper and report with unbridled veracity?

    Laziness has become the chief characteristic of journalism, displacing incompetence – Kingsley Amis

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    • Shatteredmirror.ca

      Sorry I got the name wrong – I’ve never been good with cutesy-poo names. The website is above.

      The report is long with some 11 recommendations many of which I don’t yet understand especially their significance. Now someone had to listen and read and recommend but we are not told who. Hugh Winsor thinks it may have been Greenspon alone … now there’s an open minded person for you! I can find no list of the committee members and will keep looking.

      This is going to come at us in the form of a bill or government policy as an authoritative independent srudy and my sense of bullshit is very high.

      Rafe

      >

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  11. The bcIMC is a government agency, established under the Public Sector Pension Plans Act enacted by the NDP. The goal was to keep the government at arm’s length from the management of the public sector’s pension funds while enabling the trustees of the funds to manage the investment professionals required.

    We now have a situation where the professionals required are being compensated at rates that are questionable and the return on investments is such that established benefits are being taken away from pensioners. As Norm has outlined, right next door we have a comparable model that appears to be providing greater returns at much less cost.

    The questions must be asked. Is this what the NDP envisioned when enacting the legislation? If not, what do they propose to do about it if elected in 2017? Do the unions (BCGEU, CUPE, BCTF) involved have anything to say about how their pension funds are being managed and how benefits are being stripped away from their pensioners? What are they going to do to inform their trustees and through them the appointees on the bcIMC Board of their wishes?

    The unions and the NDP would do well to get out in front on this, because it’s going to hit the fan a few months before the election. And it’s their baby.

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  12. Reading this again: “According to the Daily Mail, only ten public servants in the UK earned more than £300k ($500k CAN) in 2015. In British Columbia, our pension fund manager had as many.”

    As a retired teacher, I got my 1.3% COLA increase this year… though it is always made clear that the COLA is not a guarantee: it will only be given if the fund stays healthy. With these robbers at work, they’ll be down to the bones, soon.

    Meanwhile my former colleagues are having to put a higher percentage of their wages into the pension plan. Hmm… I wonder why that would be?

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