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  • authored by Members for Democracy
  • published Fri, Nov 1, 2002

MFD's Pension Trustees' Outreach Project

What we don't know about pensions could fill a warehouse and we make no bones about it. We're no different than the millions of workers who are members of pension plans of one kind of another. But we're making it our mission to be better informed and encouraging working people to do the same. After all, it's your money that's sloshing around in these enormous retirement savings funds. You have a right to be fully informed about what's being done with it, who's got their hands on it and what they're doing with it. We go so far as to suggest that you have a right to take part in those decisions.

In our efforts to get better informed about pension funds, earlier this week we invited the trustees of the Canadian Commercial Workers Industry Pension Plan (CCWIPP - pronounced "quip") to MFD forum to discuss their financial statement for 2001. We obtained a copy of the statement - possibly to their horror - last week. We posted it on our web site - possibly to their even greater horror - on Friday and invited them to join us on-line to discuss the statement and engage in a little Q & A.

We haven't heard back from the CCWIPP trustees yet. We assuming that they're considering our good faith offer. The CCWIPP has been the source of considerable interest on this web site for quite some time. A number of articles have explored some of investments CCWIPP trustees have made, one of the business guys on the receiving end of millions of dollars from the pension fund and we've asked a lot of what we think are legitimate questions in an effort to better understand how this plan operates. To date, have been left to figure it out on our own. What an opportunity, therefore, for the CCWIPP trustees to educate and inform their members and other working people about how a massive multi-employer plan with over a billion dollars in assets, works and how members benefit from its investments.

So come on CCWIPP guys, this doesn't have to be scary. MFD is the place to be. You'll get lots of exposure and have a better-informed membership - all at no cost whatsoever to your plan. It's the same as going on TV or the radio - only better. You get to read the questions, take your time before you answer them, everything is in writing so there's no misunderstanding and you can't be misquoted. What could be better? For your benefit, and to help you get prepared, we've even put together some questions that have already come up from our community.

Why we're so darned interested in you and your pension plan:

Pensions are important to working people. On that we're sure that even we and the mainstream labour leaders whose asses we boot around a lot of the time could agree. Life's tough after you're too old to sell your labour. Government income sources like Canada Pension Plan and Old Age Security don't pay much. The cost of living is rising. Retiring boomers will place additional strain on government retirement benefits. We've all heard the dire warnings and there's plenty of cause for concern. In the retail industry, good pensions are that much more important. Workers don't earn big bucks in retail. Few have amassed their own nest eggs for retirement. Many have broken workplace service. Many are members of groups that have historically been disadvantaged in the workplace (women, people of colour, First Nations people). They've been behind the 8 ball at work and shouldn't be forced to eek out a miserable existence after retirement. So good pension plans, prudently managed are really, really, really important as is worker education about pensions and other retirement savings vehicles.

We've talked about the CCWIPP plan off and on for well over a year. It's investment strategy has been one of considerable interest to a whole lot of people since the early 1990's when the Canadian UFCW decided to use money from the pension fund to put up financing for real estate ventures. Millions found their way into the hotel industry. Some appear to have received financing in exchange for voluntary recognition of the UFCW as bargaining agent for their workers. This guy seems to have launched a real estate empire thanks to CCWIPP.

Back in those early days, UFCW Canada Director Tom Kukovica was very enthusiastic about the strategy. He said it was all about creating jobs - good union jobs.

Besides putting money directly back into the pockets of the membership, the joint trusteeship of pension plans between the UFCW and its various employers has permitted the union to control the investment destiny of millions of dollars. "With the pension funds we've been mainly concentrating in real estate, such as affordable housing projects," says Kukovica. This month the UFCW, with an equity stake of over 50 per cent, helped to re-open the Triumph Hotel in suburban Toronto, "It was in receivership. Now the hotel will be unionized, so we've created (union) jobs at the same time.
(Our Times, December 1993)

But organizing and investing in the same barn proved to be controversial. Other unions, including this stalwart biz-union found it hard to hold their noses.

The Toronto Star
July 3, 1993
Workers' pension fund backs hotel chain employer

OTTAWA (CP) - Most unions find new members by signing up a company's employees.

But one big union is taking a radically different approach - its pension fund is helping a new hotel company buy bankrupt property.

And management appears to be encouraging employees to sign union cards.

Kelloryn Hotels has bought four Ontario hotels, including the Howard Johnson Hotel in downtown Ottawa, from creditors of bankrupt Orangeroofs Inc.

Some mortgage funding is coming from the $400-million Canadian =Commercial Workers pension fund. It manages pension investment for about 100,000 members of the United Food and Commercial Workers Union.

The unusual approach has a rival union yelling foul.

"The whole situation is a farce and a disgrace to the labor movement," said John Kearney, an organizer with the Hospitality and Service Trades Union.

"How can an employee expect to get fair representation if the union directly or indirectly owns the place?"

But Cliff Evans, retired Canadian director of the United Food and Commercial Workers and a director of the pension fund, said there is no conflict of interest.

He said the union pension fund has only put mortgage financing into Kelloryn Hotel in Toronto. "We have no investment in any hotel in Ottawa."

The union is successfully organizing hotel workers because it has a solid reputation, Evans said.

He said the pension fund is run by an independent board of directors with representatives from union and management. Professional managers make investment decisions.

Union membership of hotel employees is not a condition of financing, he added.

But one employee, who asked not to be identified, said managersdistributed union cards to employees at the Ottawa Howard Johnson Hotel the same day the Kelloryn purchase was announced.

"It seems if we didn't sign, we would be out of a job," said the worker. "It's a closed shop."

But it wasn't just other unions that had difficulty with the strategy. Within a couple of years, the Ontario Labour Relations Board would find that the UFCW's business relationship with Ron Kelly's company was enough to disqualify it's bid for certification at one of Kelly's hotels.

The Toronto Star
June 9, 1994
Food union acted unfairly, labor board rules
By Tony Van Alphen

The United Food and Commercial Workers invested heavily in a North York hotel and then improperly tried to squeeze out another union so it could represent employees, a labor board has ruled.

The Ontario Labor Relations Board rejected an application recently to decertify the Hotel Employees Restaurant Employees Union at the Howard Johnson Plaza Hotel after hearing evidence the food union - which had an investment relationship with management - urged workers to change their bargaining representation.

The hotel, formerly known as the Triumph, closed in July, 1991, because of financial difficulties. But in December, 1992, it reopened under the ownership of Kelloryn Hotels Inc.

Evidence at a board hearing revealed two investment companies had pumped $15 million in loans into Kelloryn for the hotel. The cash in the investment companies came from a food union fund, the Canadian Commercial Workers Industry Pension Plan, evidence showed.

Before the closing, the hotel and restaurant union's Local 75 represented workers. But in November, 1992, when Kelloryn hired workers before the reopening, employees received membership cards from the food union's Local 206. Furthermore, management advised them the union had some financial interest in the hotel.

The food union and Kelloryn soon negotiated a contract. But the hotel and restaurant union filed an application for successor rights at the hotel and won its bargaining rights back. Employees then petitioned the board to decertify the hotel and restaurant union.

Talk of job creation has long since dried up but the CCWIPP's investments in the accommodation industry have rolled right along. CCWIPP is now a major shareholder in AFM Hospitality Corporation, a hotel management and franchising firm which ended up buying at least some of the hotels that Ron Kelly's businesses purchased with CCWIPP dollars. CCWIPP has also bought up shopping malls and floated start-up capital to a variety of other businesses.

Its investments are made through intermediary companies called I.F. Propco. The Directors of the more than 50 Propco's registered in Ontario alone. Their Directors are Cliff Evans (a CCWIPP trustee and Chairman of CCWIPP's Investment Committee), Eugene Fraser (a member of the CCWIPP Investment Committee) and Howard Preston (a CCWIPP trustee representing small employers).

Apart from controlling the investment corporations Fraser and Evans are also directors of some of the businesses in which CCWIPP invests. Here's one.

CCWIPP's involvement with Ron Kelly and his accommodation industry ventures continues to this day and includes a Bahamian hotel and resort in which we understand over $100 million have been invested through various Propco's.

What's all this meant for the members? Well, we don't know but we're going to find out. CCWIPP is a massive pension plan. It receives contributions from over 400 employers and has assets of over $1 billion. It also provides benefits to a membership that is transient. Workers in retail come and go. Many never stay with an employer long enough to vest their pensions. According so some insiders, CCWIPP should be flush with cash but it isn't. The plan currently has an unfunded liability of $97 million.

Like it or not, CCWIPP had solvency problems under the Alberta pension rules. That should never in a thousand years have happened. CCWIPP's problem should be what to do with the "breakage," not how to fund up to become solvent under pension rules. They should be over funded, not under funded.

Breakage is a term used for monies paid into a pension plan on behalf of members who permanently leave the plan before becoming "vested," or eligible for retirement benefits. CCWIPP has truckloads of money pumped in for the tens of thousands of part timers who will quit before vesting.
(HJ Finnamore in MFD Weekend: Figures don't lie but...)

But solvency has been a concern - on the part of members and of regulators it seems. This member, a worker from eastern Canada, decided he was going to get some answers.

"About 6 years ago some of our members noticed that the rate of return for the amount of money that we were putting into the plan was getting smaller, so we went to the (Union) Business Agent and asked him. We were told we were troublemakers and if we didn't like the plan we should get out of it. So we decided to do our own research.

We sent a letter to Cliff Evans, a director and chief investment officer (of the CCWIPP). He replied that the Alberta Pension Commission was looking into the solvency of CCWIPP. I then wrote the Alberta Pension Commission and they stated that CCWIPP was having some funding problems and hopefully could work out these problems in a few months. We then received notice from CCWIPP stating that if you were not eligible to retire in 1997 or were not 50 years old in 1997 there would be a reduction in your pension if you retired at 60 of one-half % a month or 30% from age 60 to 65. When we got into CCWIPP we could retire at 60 with a full pension. CCWIPP also stated that for those who were not eligible to retire in 1997 there would be a supplement called the Supplementary Income Benefit (SIB) WHICH WOULD BE PAID TO PEOPLE WHO RETIRE AT 60 SO THEY WOULD NOT TAKE A 30% REDUCTION. It also stated that the supplement would be reviewed from year to year, available finances permitting.

We then received our 2000 statement from CCWIPP .The statement said that if you were not eligible to retire in 1997 you would take a reduction of 30% at age 60, 60% at age 55 and 90% at age 50. There was no mention of the SIB. Prior to receiving my statement I wrote (UFCW Canadian Director) Mike Fraser about the pension reductions. He called me and guaranteed that I would get my full pension at 60. When I received the statement I then wrote the Board of Directors asking them to guarantee me in writing that I would get my full pension at 60. Their reply was Alberta have now decided not to approve the payment of the SIB in the form which it has been currently structured. Therefore, the payment of the SIB has been suspended. Why were the members not told that the supplement had been suspended? Why was the Vice President of the local who works at our plant telling people that there would be no reduction in pension at age 60 when it simply was not true? The supplement was removed.

I received an email from the Alberta Pension Commission about the supplement. They said that CCWIPP currently has some funding problems. These were caused by a number of things, most notably some inaccurate information from one of their advisers (who I've been told has been fired).

The members then received a memorandum and a letter from the BA and CCWIPP stating that the SIB has been reinstated. NO ONE WAS TOLD IT HAD BEEN SUSPENDED. We were told the pension funds had been transferred from Alberta to Ontario where solvency requirements are less severe. A payment of 55 cents per hour would give you a pension of $40 per year now we need 65 cents per hour to get the same benefit.

I have written the Board of Directors asking these questions: Who was the person that was fired, what bad investment advice did he give the Trustees of CCWIPP? I asked for a full disclosure of investments that have contributed to the funding problems of CCWIPP, who recommended and approved those investments decisions and did any money from the fund go to businesses in which CCWIPP trustees have an interest. I asked for a list of companies and investments that CCWIPP is investing in. I also wanted a guarantee that I will get a full pension at 60. I sent a copy of the letter to (the Financial Services Commission of Ontario).

This pension reduction at age 60 and no guarantee of the supplement represents a direct financial threat to thousands of CCWIPP members in our age range who were planning to retire at 60 with some dignity. The pension statement says the Trustees have agreed to finance an additional monthly payment provided that the annual actuarial review confirms that funds are available. (That says it all).

According to my pension statement, if I were to retire at age 60 there is a 30 % reduction in my pension. I calculated my pension at 60 assuming the current rate of $40 per year to be $800 per month minus 30% or $240, which gives me $560 a month, less taxes. I cannot figure in the supplement because it is not guaranteed from one year to the next. This huge pension is my reward for working 30 years in a meat plant. THANKS UFCW FOR THE FINANCIAL SECURITY."

In May of this year, this worker (an MFD contributor who goes by the handle Downeaster) wrote to former UFCW Canadian Director, Clifford Evans, CCWIPP Trustee and Chairman of its Investment Committee. He asked Evans to identify the adviser that was fired, the bad investment advice he gave to the Trustees of CCWIPP and for a full disclosure of investments that have contributed to the funding problems of CCWIPP. He asked who recommended and approved those investments decisions and did any money from the fund go to businesses in which CCWIPP trustees have an interest. Downeaster sent a copy of his letter to the Ontario Financial Services Commission (CCWIPP in the interim moved the registration of the pension from Alberta to Ontario).

A month later, Downeaster got a response from Evans along with a brief "financial statement".

"There is no funding problem in respect to CCWIPP on an going concern basis, which is how the pension plan is funded day-to-day" Evans assured him, although increased contributions of twenty cents per hour were being negotiated to cover any potential shortfall due to solvency legislation. Evans didn't confirm or deny the dismissal of an adviser but stated that "an in-house actuarial division was established in 1998 to perform day-to-day financial functions and an independent actuary appointed because of the deteriorating health of an actuary who had served the CCWIPP for 20 years".

Downeaster again wrote to Evans asking for answers to his questions and again copied in the FSCO. He asked for a copy of CCWIPP's financial statement and asked the FSCO to look into his concerns. The FSCO has told him that it's looking into his concerns. Last month, the regulatory agency provided him with the financial statement and told him that CCWIPP's lawyer would be responding to his questions. He's still waiting for that reply - and so are we. It's surprising that Evans, the grand old man of CCWIPP can't respond personally. Why a lawyer is needed at this point is, well, beyond us.

The financial statement is quite extensive - 30 pages or so - a far cry from the half page that Downeaster was sent by Evans in June. Here are some questions for the CCWIPP trustees:

Why is the financial statement not signed?
On the bottom of page 3 - Statement of Net Assets Available for Benefits - there are two signature lines for Trustees. Both are blank. Why have the Trustees not put their signatures to this document? This is an official financial statement that must be filed with the regulatory agency. Someone's going to have to put his or her name to it. Who will it be?

Who are the Trustees of the Plan?
The CCWIPP web site has been down for renovations for several weeks now. This is a list of the Trustees as of October 2001 from our trusty web archive:

UNION REPRESENTATIVES

Bernard Christophe, President, UFCW Local 832

Clifford Evans, Chairman of the Investment Committee

Tony Filato, Secretary-Treasurer, UFCW Local 500R

Michael Fraser, Canadian Director, UFCW International Union

Wayne Hanley, President, UFCW Local 175

EMPLOYER REPRESENTATIVES

Howard G. Preston, Representing Smaller Participating Employers

Robert A. Wuest, V.P. Labour Relations, Sobey's Inc.

Tom Zakrzewski, Senior V.P. Labour Relations, The Great Atlantic & Pacific Company of Canada Limited

Gordy Cannady, V.P. Human Resources, Canada Safeway Ltd.

Are these the current Trustees? How are they selected? Why are there five union trustees and only 4 employer trustees? What are their responsibilities?

What is the Investment Committee?

We know that Cliff Evans is the Chair of the CCWIPP Investment Committee and that Eugene Fraser, who is a director of the various Propco's, is a member of the Investment Committee also. Who else is on this Committee? Why does it exist? What are the responsibilities of its members? What decisions do they make? What is the relationship between the Investment Committee and the Trustees? Eugene Fraser is a Director of Dynamic Venture Opportunities Fund, a Labour Sponsored Investment Fund, in which the UFCW is a shareholder. In Dynamic's 2002 prospectus, Fraser is described as:

Eugene K. Fraser, prior to becoming Executive Vice-President of Propco 100 Ltd., was a senior executive with Fisher Scientific Limited from January 1993 until December 1996. Mr. Fraser is also a Director on the Investment Committee of the Canadian Commercial Workers Industry Pension Plan and a director of several private and public corporations.What is Fraser, a Director in a business in which the UFCW has significant investments, doing sitting on the CCWIPP investment committee? Is this a conflict of interest here? What's Fraser's involvement in CCWIPP anyway? (Just asking.) He's not a representative of the employers or the union. He's involved in companies that get money from CCWIPP (like Dynamic) and arrange for money from CCWIPP (like Propco 100).

How are investment decisions made?

Who decides where CCWIPP funds are to be invested? What is the criteria used to determine who gets what and on what terms? Who decides the investment policy? What is the investment policy? Why, for instance, are funds invested in AFM and not other accommodation industry companies including those with significantly higher rates of return on investment? What kind of due diligence is conducted? Are investments subject to regular review? If so, who conducts these reviews and what criteria are used? Who are the actuaries, lawyers, consultants and other advisers referenced in various CCWIPP communications and what role do they play in investment decisions?

What's with the unfunded liability?

CCWIPP currently has an unfunded liability of over $97 million. While it's not unheard-of for pension plans to have an unfunded liability, what has contributed to CCWIPP's? The Alberta Pension Commission told our friend from the east coast that this was due, at least in part, to some "bad investment advice". What was that all about? Who gave the bad investment advice and what are CCWIPP trustees doing about it? Are there other factors that have contributed to the unfunded liability? What are those? What steps are being taken to reduce the unfunded liability? Will this impact on members' benefits? Our insider friend (above) tells us that CCWIPP ought to be flush with cash. It isn't. Why?

Which investments are in default?

On page 7 of the financial statement there is a notation that: "The Fund has approximately $72 million of investments that are in default of their principal and/or interest payments. These investments are secured and the Fund is carrying out whatever procedures it considers appropriate to realize on its security and recover its investment In such instances, the investments' fair values have been reported at their estimated recovery amount and interest is no longer accrued."

Who is in default and by how much? Compared to the $1 billion total in net assets, $72 million may sound like a drop in the bucket but it's still an awful lot of money. It's money that is no longer earning a return of any kind. What was the degree of risk involved in these investments?

Capitalized interest - a benefit to members or entrepreneurs?

Also on page 7 there is a notation to the effect that:"Several of the Fund's loans and mortgage held by the investment corporations contain provisions whereby interest is deferred until a specific date in the future and is capitalized as part of the loan until that date. The amount of capitalized interest included in the above is approximately $29,000,000."

"Capitalized interest" is interest that is not paid until some pre-determined point in the future. It accumulates and is added to the principal amount borrowed. For this reason, capitalized interest increases the cost of repayment because the principal sum is bigger. But what if the borrower defaults? With our limited knowledge of these matters, we assume that the fund may not see any of the interest owing on the investment. Assuming that the loan is secured, it may get back the principal amount. Which investments have these deferred interest provisions and why? What is secured - the principal sum or the principal sum and the interest that will be payable in the future? Overall all, who is getting the better end of this deal? CCWIPP members or the business that's borrowing their money?

What kinds of assumptions are made?

At pages 5 - 6, Summary of Significant Accounting Policies, there is a statement about the assumptions that are used to calculate the "fair value" of investments.

The determination of the estimated fair values is dependent upon many assumptions. The calculation of estimated fair value is based on market conditions at a specific point in time and in the respective geographic locations and may not be reflective of future fair values. This is particularly true for private companies where the outcome of their development can be difficult to determine. The associated fair values and investment returns will therefore be subject to a variety of risk factors, both specific to the individual investments and arising from general economic conditions. The actual amounts ultimately realized could differ from the amounts reported in these financial statements. The Fund's primary exposure is to a decline in the long-term real rate of return below that which the Plan's actuary has used.

This gets into the issue of risk. What is the rate of return that has been established by the Plan's actuary? What kinds of assumptions are being made and who is making them? Investing in start-up businesses carries a higher degree of risk than investment in an established business. Why does CCWIPP invest in start-ups? What degree of risk is involved in these investments? Is CCWIPP's investment strategy low, moderate or high risk? Who decides and on what basis?

Unrealized adjustment of investments to fair value?

This appears to refer to money that was invested but didn't generate the return that was expected. On page 4, there is a reference to "Unrealized adjustment of investments to fair value". This appears be a $37,407,611.00 loss in 2001. Sounds like a lot of bleeding. What are these unrealized investments? Who recommended them? What steps are being taken to avoid similar dogs?

Investment fees - who's paying who and for what?

Why was over $4 million paid last year for benefits administration to a company (Prudent Benefit Administration Services) of which CCWIPP owns 30%? Benefits administration, while important, is not rocket science. Is CCWIPP's arrangement with PBAS a cost effective way of administering its benefits? Have other benefit administration companies been canvassed for the best available price? One of our contributors suggests that you could simply hire a couple of people to do it for a fraction of the cost.

PBAS has a subsidiary company called Benchmark Decisions. Benchmark provides consulting services to the Fund. Since 2000, CCWIPP has paid our about $1.5 million to Benchmark for its consulting services. Benchmark's web site has us just a little confused about just what it is that they do:

BENCHMARK DECISIONS LTD.
Good benefit consulting, like resourceful cooking, transforms assorted ingredients into unique concoctions that are both appealing, to the consumer, and affordable, for payer. Remove either result, and the service is questionable. Remove both, and it fails.

Exceptional benefit consulting is harder to find than a fine restaurant. The Micheline (sic) Guide doesn't extend that far. But, there are other indicators, such as talent mixed with meaningful experience, and integrity driven by purpose, that should attract plan sponsors.

By way of illustration, most of our consultants -- themselves a bend (sic) of talents -- have been mixing clients' needs and resources in successful recipes for years longer than our firm has existed. With backgrounds in insurance underwriting, retirement planning, actuarial science, industrial relations, program design and documentation, and benefit communication, their work is governed by strictly applied (sic) doctrine:

  • Patterns of service are dictated by client interests.
  • Connected resources are exploited to the client's advantage.
  • Consulting fees are defined by the quality of service, and they are offset by all sources of remuneration.

What kind of consulting advice is being dispensed? Who is dispensing it? Is this a cost effective way of doing business? Are these guys running a business consulting firm or a bakery?

The monies paid out to PBAS and Benchmark are in addition to over $1 million paid in "investment fees", $947,000 for consulting fees, $386,180 for legal fees. CCWIPP Trustees were paid $135,000 for meetings. Of interest also is the $82,939 in investment fees that was paid to Propco 100 Ltd.? If Propco is a wholly owned by CCWIPP to invest money, why does it charge an investment fee? Where is all this dough going, who's on the receiving end and why? Who selects these investment firms and what are the criteria for selection?

Are the Propco's necessary? Is investing through these intermediary corporations a good strategy?

Significant investments of money from the CCWIPP are made through intermediary companies called I.F. Propco. We can't quite understand what the need for this arrangement is. Why couldn't CCWIPP invest directly or through one of the fund management companies that it employs? If there is a benefit (to CCWIPP members) of this arrangement, then we're all ears. But as things sit right now, it seems a lot of additional expense to incorporate, administer and operate these companies (or which there are over 50). More importantly, are the Propco investments a good thing for plan members? At the bottom of page 11, there is a reference to "Income (loss) from investment corporations". The figure for 2001 appears to a loss of $3 million. Other investments, such as bonds and other securities, gained. The Propco's came up $3 mil in the hole. Is this investment strategy beneficial? Who decides?

Whatever became of all those hotels CCWIPP financed for Ron Kelly? Some were eventually sold to AFM Hospitality and then sold off to other buyers. How did CCWIPP members do out of all that?

Other things that caught our contributors' attention:

PBAS shows up as an employer/contributor. PBAS employees are UFCW members represented across Canada by UFCW Local 1977. That in itself is odd because Local 1977 is not considered a union outside of Ontario. (Is it cool to do business with the contributing employers? We don't know. Does it create a conflict of interest? We're hoping the Trustees will shed some light.)

If you look closely, you'll see all sorts of links between companies.

World Heart Corporation is linked to the Terrace Corporation. You'd shake and shudder if you knew what World Heart is worth today. CCWIPP apparently had almost $12,000,000 sunk into World Heart Corporation in 2000; however, it was worth only $7,000,000. I've heard that that stock went from around $20 a share to about a buck a share today.

Rod Bryden is also CEO of Terrace Corporation, the principal owner of the Ottawa Senators Hockey Club. I understand that CCWIPP has close to $17,000,000 invested with Terrace Corporation.

CCWIPP reports that it owns 30% of Sea King Fisheries for an investment of just under $5 million. However, a 1998 media release by Brian Tobin reports, "RHK Capital Inc. will invest $1.5 million to initiate the renovations for the shellfish operation in exchange for a 50 per cent interest in Sea King Fisheries. Did RHK get a substantial chunk for much less than CCWIPP?

Dynamic Venture Opportunities Fund Ltd. is registered as a labour sponsored investment fund corporation under the Ontario Small Business Investment Funds Act (Ontario).

The United Food and Commercial Workers International Union, Canadian Region, is one of the sponsors of the fund.

UFCW Canadian Director Mike Fraser's uncle Clifford Evans is Chairman of the fund, and Clifford is also the Investment Committee Chair for CCWIPP.

CCWIPP invested close to $58 million with Goodman & Company Investment counsel. Both Dundee Mutual Funds and Goodman & Company, Investment Counsel are divisions of Dundee Investment Management & Research Ltd., a wholly-owned subsidiary of Dundee Bancorp Inc., an investment management firm. They are the same people who run Dynamic Mutual Funds of which Cliff Evans is the Chairman. If the money went to Dynamic, would that be a conflict of interest for Evans or the CCWIPP Investment Committee?

PRK (Propco Ron Kelly) Holdings Ltd. has over $130 million of CCWIPP money in some Bahamas properties and perhaps a Haliburton golf course. Even though CCWIPP has some direct control over the owners, all the companies involved report neither a loss nor a gain on the loan amounts. The auditors claim that because some entries deal with private companies, that accurate valuations are not possible to get. In an instance where Propco's are in so deep, that is odd. In one instance what started out as a $10 million loan ballooned into a $70 million loan.

What about the UFCW represented MGI Meat Packers Inc. The CCWIPP financials show the loan value at $5 million even though MGI went bankrupt in 2001 with only about $600 thousand in assets.

I've noticed that CCWIPP has reported the Bahamas hotel and golf course accounts rather cryptically. They don't use RHK Capital, they report the activity under PRK Holdings Ltd (we understand that "PRK" stands for "Propco Ron Kelly").

They also report costs and fair value at identical amounts. For example:
I.F. Propco Holdings (Ontario) 34 Fair value = $70,223,000 Cost = $70,223,000
I.F. Propco Holdings (Ontario) 39 Fair value = $33,477,000 Cost = $33,477,000
I.F. Propco Holdings (Ontario) 44 Fair value = $18,738,000 Cost = $18,738,000
1328434 Ontario Limited Fair value = $6,026,000 Cost = $6,026,000
PRK Holdings Fair value = $404,000 Cost = $404,000
What gives? Why are the cost and the fair value identical in each instance?

Do the trusty Trustees know whether the golf course at the South Ocean Golf and Resort has been reclaimed by the leasor? If it has, wouldn't that drastically affect the worth of that property?

With respect to all of these investments, what due diligence has been performed? Have the Trustees conducted feasibility studies, market analyses, economic models, studied financing arrangements or other information so that they can make informed decisions?

This forum regular is confident: "I'm sure that... each of the Trustees will be able to give detailed accounts of what was invested and under what terms".

So CCWIPP Trustees come on over. We're baking a cake.

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