Is Regulator in the Sack with UFCW Pension Crew?
Many months have passed since the Financial Services Commission of Ontario released a report about the UFCW's Canadian Commercial Workers Industry Pension Fund. The report identified so many instances of non-compliance with pension legislation, that it became the subject of an extensive feature in the Toronto Star.
There would be more to follow, the FSCO stated, pending review of some new submissions provided by the CCWIPP trustees.
It is to be noted that FSCO's findings reflected the documentation and information available to the examiners at the time the review was undertaken. Subsequently, additional material has been made available which may impact on some of the findings of this report.
The Board has provided additional material to address all of the concerns raised by FSCO in this report. This information is under review by FSCO. It should be noted that the findings of this report, in part, reflect the historical record of activities related to the handling of certain of the investments of the pension fund. FSCO's examiners documented their findings and made their conclusions based on the Material available in the files at the time the examination was undertaken.
Next Steps: The new submissions are being reviewed by FSCO to determine if the matters identified in this report have been or are being addressed and whether all compliance issues have been resolved. Concurrently, FSCO will take steps to determine whether the activities surrounding the investment of certain of the real estate assets warrant further action under the Act. From the FSCO's Report on CCWIPP
Nearly six months later, the regulatory agency has said nothing about the "new submissions" or what "further action" it plans to take.
How long could it possibly take to review whatever "additional information" the CCWIPP boys claim to have provided at the last minute? Given the scale of their rule-breaking and the pension plan's hefty solvency deficit, shouldn't there be some sense of urgency about this?
Considering that under the Financial Services of Ontario Act, one of the purposes of the FSCO is:
To provide regulatory services that protect the public interest and enhance public confidence in the regulated sectors.
And that under the Pension Benefits Act of Ontario (Sections 106 - 115) the FSCO has broad powers of investigation (including the power to seize documents and records) and enforcement (fines of up to $200,000 per offence can be imposed on directors, officers, officials or agents of organizations that breach the Act) the FSCO's leisurely approach to its "next steps" is troubling. People whose faith in government agencies is anything but rock solid are beginning to wonder what's going on.
A lot of members are worried about the state of their pension plan. Some are considering their own "next steps". They need to know what the regulator is going to do or not do. As long as the FSCO's examination remains ongoing (and as long as documents are being reviewed, that's exactly its status), it's not over. As long as it's not over, any formal steps by members to hold their pension trustees accountable will be "pre-mature".
Just what the FSCO intends to do next and when it's going to do it is a mystery. Various enquiries have turned up different answers, all of them vague. FSCO officials have stated that some kind of "addendum" to the report is being prepared. The release of the addendum is either imminent or "months away" - depending on who's asking.
While the regulator drags its feet, the CCWIPP trustees issue one indignant statement after another. Their terse media releases have called the FSCO report "incomplete", "riddled with inaccuracies" and proclaimed the pension plan "sound" and "funded and administered in accordance with all regulatory requirements". More recently, a glossy UFCW magazine which was discussed at length in a recent MFD article called Beaver Tales put words in the FSCO's mouth that its examiners clearly never said:
In fact, pension plan regulators the Financial Services Commission of Ontario (FSCO), in conjunction with the Alberta and Québec regulators and the Canada Revenue Agency (CRA), have recently completed an exhaustive two-and-a-half year examination of the plan, reviewing virtually all of its investments made since inception. Conducted as a result of malicious, unsubstantiated allegations made by unnamed complainants, the examination involved CCWIPP's Board of Trustees working with FSCO in compiling and providing over 100,000 pages of documentation relating to the plan's investments. The FSCO report concluded that while some minor administrative procedures may require updating, absolutely no instances exist (or ever have existed) to cause concern to any UFCW Canada members with regard to the ongoing viability of CCWIPP.
We've looked high and low and just can't find anything that even comes close to that anywhere in the FSCO's report. But the FSCO doesn't seem to mind that almost two hundred thousand members have been sold a bill of goods about the outcome of its two year examination.
A cynical person might conclude that the regulator doesn't want to do anything and is content to keep pension plan members waiting while their trustees spin-doctor its report into oblivion.
Good thing that we have a lot of faith in government agencies like the FSCO. If we didn't, some documents that recently came our way from confidential sources would have us gasping for air.
These documents include a "to do list" prepared by a CCWIPP lawyer for an FSCO Officer following a meeting held in June 2002 between representatives of the FSCO and CCWIPP. Why would a pension administrator be giving a pension regulator a "to do list"? Shouldn't it be the other way around? We're going to to post the documents and ask the FSCO to join us online to explain.
What's Wrong With This Picture?
The "to do list" contains five pages of documents. A brief explanation of each one:
Page 1:
This is a fax dated June 12, 2002 from CCWIPP Administrator Joan Tanaka to some guys named Larry Martello, Tony Cooper and Mark Zigler. Martello is an FSCO Pension Officer assigned to the CCWIPP file. He is one of the examiners who conducted the FSCO's examination of CCWIPP and is a co-author of the FSCO's report about CCWIPP. Cooper is an actuary who does work for CCWIPP. Zigler is a lawyer with the firm Koskie and Minsky which also does work for CCWIPP. The fax refers to an agenda for a meeting that the group will be holding on June 14, 2002.
Page 2:
This is the agenda for the June 14, 2002 meeting. Included on the agenda were items called "Solvency Issues - Required Holdbacks", "Investments - Background" and "Administration - Regulatory Review".
Page 3:
This is a letter dated June 17, 2002 (3 days after the meeting) from CCWIPP lawyer Mark Zigler to CCWIPP Administrator Tanaka. It includes a proposed "to do list" which Zigler states Tanaka should send to the FSCO's Larry Martello.
"It may be a good idea to send it to Larry Martello as well so that we confirm what has to be done and the basis upon which it is being done."
Page 4:
This is the "to do list". Check out the first item on the list, "Re: Amendent No. 1 to Pension Plan" and the three points listed under that item. Check out also the section titled "Investment Issues" (near the bottom of the page).
Page 5:
This is a fax from CCWIPP Administrator Tanaka sending the "to do list" to Tony Cooper and some other CCWIPP advisors. The FSCO's Larry Martello is copied (at the bottom of the page).
Maybe it's standard operating procedure for FSCO officials to have pension plan trustees' lawyers write "to do" lists for them. Maybe they do this to humour trustees whose pension plans are under review - to make them feel like they're in control of something. Maybe it helps the public interest when FSCO staff say what they're going to write in response to letters that haven't yet been written. Maybe it helps enhance public confidence in regulated sectors when FSCO officials agree to run interference for pension trustees. And then again, maybe it doesn't.
Maybe the FSCO can tell us what it's doing about the mess it uncovered and what it has no intention of doing. Put that on your "to do" list.