Evidence of meeting #21 for Finance in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was investment.
A recording is available from Parliament.
Conservative
Executive Vice President, Chief Operating Officer and Chief Financial Officer, Public Sector Pension Investment Board
Well, if we take equity market returns that have been negative, the U.S. equities and Canadian equities have lost—
Executive Vice President, Chief Operating Officer and Chief Financial Officer, Public Sector Pension Investment Board
—30% or 40%. The answer would be yes. I mean, the number would be in the billions, for sure.
NDP
Thomas Mulcair NDP Outremont, QC
Thank you.
Now, you have this wonderful way with words. You have a way of talking about des compensations relatives au rendement. I have a very simple question for you: are any people at your investment group, the PSP Investment Board, thinking of paying themselves a bonus this year? I've had it explained to me that you're actually thinking of trying to analyze your rendement over a four-year period and of trying to find a way to rationalize giving yourselves bonuses. I hope that's not true, but I'd like to give you a chance to say whether it's true or not.
Executive Vice President, Chief Operating Officer and Chief Financial Officer, Public Sector Pension Investment Board
Pages 31 to 35 of our annual report are quite explicit and provide details about how our compensation policies work. Frankly, it is the board of directors that decides whether management gets paid bonuses or not. It is not management.
NDP
Thomas Mulcair NDP Outremont, QC
Well, let me just put it to you this way, Mr. Valentini, now that I have you and Mr. Malo here and while this is being televised and you can send messages back to your board of directors, as I'm doing right now. Any people in this country running something called an investment board, which lost billions of dollars last year, who think—even think—about paying themselves bonuses need their heads read. I'd like you to give that message to your board of directors on behalf of my party. We would find it properly scandalous, in light of what happened last year, if in addition to your considerable salaries you decided to vote yourselves bonuses. Would you be kind enough to pass that along for us?
Executive Vice President, Chief Operating Officer and Chief Financial Officer, Public Sector Pension Investment Board
I'll pass the message.
NDP
Thomas Mulcair NDP Outremont, QC
Thank you very much.
Mrs. Urquhart, with regard to the presentation that was made—and I had the great fortune to hear the presentation you made with Officer Logan--you make reference to the fact that IMET is insufficient. I'd like you to elaborate on that for us, if you wouldn't mind.
Independent Analyst, As an Individual
First of all, IMET spends $40 million a year on securities crime policing, and according to the feedback we've had from the Toronto Police Services fraud squad and other fraud squads of Canada, as of 2003, the RCMP has taken effective exclusive jurisdiction. The RCMP, in the white-collar securities crime area, notwithstanding having spent in excess of $30 million per year since 2003, has been successful in only two prosecutions, and individuals were found to have been guilty of securities fraud and were placed in Canadian prison. This is an abysmal performance relative to the amount of money that has been spent and relative to the number of prosecutions that have been taking place in the United States.
We are not of the view that there is no securities fraud in Canada; we are of the view that the RCMP has not competently produced its investigations and prosecutions. Recently we have determined that one of the reasons why this is the case is that they seek to have their investigations approved by the investment industry.
NDP
Thomas Mulcair NDP Outremont, QC
While I agree with almost everything you've said and with the analysis that you and Mr. Logan make, there's one part on which, quite clearly, we don't agree.
I don't see how the creation of a new structure, a new institution that would be a national regulator.... For example, in Quebec, the Autorité des marchés financiers has done an excellent job of prosecuting. People like Vincent Lacroix are in jail for ten years on securities fraud, because there's a good prosecution team. You've correctly said that there's not a problem with resources. But how does changing structures answer the problem?
Independent Analyst, As an Individual
First of all, I want to make it clear that we're not talking about a national securities commission. We believe that the Autorité is a securities commission and that its best skills and its jurisdictional territory are in the administration of the Quebec Securities Act. What we're proposing is a passport model, a federal and provincial securities crime unit that comprises police experts who are going to allocate investigations to Quebec—
Independent Analyst, As an Individual
—where Quebec has proper jurisdiction. So I think we agree.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
Thank you, Mr. Chair.
Thank you, witnesses.
I want to reinforce Mr. Mulcair's comments, Mr. Valentini. Frankly, it would be inappropriate for your organization to be awarding itself significant bonuses in light of not only your performance in the market but of market conditions. Canadians have taken a pretty major haircut in the market in the last while, and it seems to me that even if you have outperformed the market, even if you've done better than the market, it would be inappropriate for people who are controlling these vast sums of money to be awarding themselves significant compensation above and beyond normal, because we do not live in normal times.
I did want to ask Ms. Miazga a question with respect to PIAC's proposal 1(c), “permitting plan sponsors to establish special purpose accounts”. Whose accounts are they? Are they the sponsors' accounts or are they the plan's account?
Secretary-Treasurer, Pension Investment Association of Canada
The account would be held separately from the sponsor's assets and separately from the pension plan trust assets.
Secretary-Treasurer, Pension Investment Association of Canada
I think the rules for ownership would be complex and would depend on the situation; however, they would provide the ability for the plan's sponsor to access those assets in times when the plan is in a fully funded position.
Secretary-Treasurer, Pension Investment Association of Canada
I think in a situation of a bankruptcy you wouldn't see a situation where a plan sponsor would be able to set up such an account.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
You're setting this account up when you have more money than you need. That's the point, isn't it?
Secretary-Treasurer, Pension Investment Association of Canada
A bankruptcy situation would probably not lend itself to having the ability to set that up.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
I understand that, but what I'm saying is that you'd never set that up when you're going into bankruptcy; you'd set it up when you have more money than you need. The economic cycle goes up, the economic cycle goes down. Who gets the dough when you go down?
