Giant public pension fund manager
calls emergency news conference to dispel rumours
RHÉAL SÉGUIN AND BERTRAND
MAROTTE
November 22, 2008
QUEBEC, MONTREAL
-- Directors of Quebec's most powerful economic institution held an
emergency news conference yesterday in the middle of the provincial
election campaign to dispel growing concerns that the giant public
pension fund manager was facing liquidity problems.
Rumours swirled yesterday after the Caisse
de dépôt et placement removed 10 equity portfolio managers from
their positions on Thursday amid an internal financial crisis.
The shuffle follows this week's announcement
that the Caisse's president and chief executive officer, Richard
Guay, was taking a four-week leave on the advice of his doctor
because of "fatigue" less than three months after being appointed.
The Caisse holds a special place in the
political debate because it is the keeper of many Quebeckers'
savings. The fund manages about $155-billion in net assets for
several provincial insurance and pension plans, including the Quebec
Pension Plan, government and public employees pension funds, the
workers' compensation fund and the province's automobile insurance
plan.
Any shortage of liquidity would mean higher
pension contributions or increases in automobile insurance and workers'
compensation rates. In the end, taxpayers would foot the bill, and the
political consequences of this could affect Liberal Leader Jean
Charest's bid to win a majority government in the Dec. 8 election.
Regulations prevent the pension fund from
revealing its financial position until its scheduled annual report in
February.
But the economic uncertainty forced Caisse
chairman Pierre Brunet to return from a business trip in Florida to call
a news conference in an attempt to quell the rumours. He acknowledged
that he speaks regularly with Finance Minister Monique Jérôme-Forget,
but insisted no one twisted his arm to go before the media to take
pressure off the Liberals.
"It is only normal that the boss representing
the government and the Ministry of Finance have conversations about what
is going on," Mr. Brunet said yesterday, adding that the Caisse is
independent from any political interference.
"We decided it was time for us to say
something."
Executive vice-president Fernand Perrault told
reporters at yesterday's hurriedly called news conference that the
minister is regularly informed of the Caisse's financial health and that
the situation is well under control.
"It's important to reassure everyone. ... The
Caisse currently maintains a liquidity level of about $20-billion, which
corresponds for all intents and purposes to its historic level," Mr.
Perrault said.
Despite the reassurances, unconfirmed rumours
that the Caisse may have lost as much as $30-billion because of dismal
market conditions and major losses in the asset-backed commercial paper
market has become a time bomb ticking at the heart of the Quebec
election campaign.
Both the Action démocratique du Québec party and
the Parti Québécois blame Mr. Charest partly for the Caisse's
performance.
They contend that when Mr. Charest changed the
pension fund's mission and demanded short-term higher returns on
investments, the Caisse was forced to take unnecessary risks with
Quebeckers' pension contributions.
"The Quebec government with Jean Charest at the
helm behaved like speculators with the Caisse de dépôt. It's important
to note this because the global financial crisis was created by
speculators," Mr. Dumont said yesterday.
ADQ finance critic Gilles Taillon said the worst
is yet to come and that the Liberals timed the election in an attempt to
dodge a backlash from voters.
"Mr. Charest called the election to camouflage
the situation ... he was determined to avoid the bad news everyone is
expecting in the coming months," Mr. Taillon said in a telephone
interview.
The PQ is demanding that the government release
all the information it has on Caisse's financial state, saying it has a
duty to tell voters before the election.
"We need to know how bad the losses have been.
It is the right of Quebeckers to be informed," PQ finance critic
François Legault said in a telephone interview yesterday.
Mr. Charest refused to ask the pension fund to
release an interim report on its financial situation.
"I have no doubt the Caisse will pull through
despite the global economic turbulence... But I will not meddle in the
affairs of the Caisse," Mr. Charest said while campaigning in Montreal
yesterday.
The ADQ and the PQ say voters are growing
increasingly concerned over how their savings are being managed and plan
to grill Mr. Charest about it during next week's televised leaders
debate.
