Friday, April 3, 2009

Ontario Teachers' chucks corporate governance as a thing of the past?


Today we learn that Ontario Teachers’ Pension Plan is going to start downplaying their role as corporate governance guru to the stars.

Any claims that Teachers’ could have laid claim to on matters of superior corporate governance were completely blown out of the water by their conduct on the failed BCE deal. Good lord, they didn’t even abide by their own proxy voting guidelines in that deal, which would have required that the superior Catalyst proposal (www.canadiansolution.ca) have been disclosed to all BCE shareholders in the BCE bid circular, which it was not.

Unlike the bid from grossly conflicted Teachers’, the Catalyst proposal was superior in every respect and for every stakeholder, including that it would have actually been consummated and closed, which Teachers’ bid infamously did not. To make matters even more egregious and down right dishonest, we then had lawyers for Teachers’ before the Supreme Court of Canada providing false testimony that “all the deals on the table involved a credit downgrade to junk bond status”, the very outcome that the bondholders were suing over.

That was a great argument to make before the Supreme Court of Canada. Too bad it wasn’t true. In fact it was a blatant lie and misrepresentation of the true facts, that were obscured by BCE’s non-disclosure to shareholders of the Catalyst Proposal, an essential and explicit element of which was to preserve the investment grade credit of BCE’s existing bonds, which it clearly would have achieved, as confirmed by those that would know, the rating agencies.

No, Teachers’ announced abandonment of corporate governance principles in today’s paper has nothing to do changes in their portfolio holdings, as this Globe article attempts to construe, but rather with changes in the people who run Teachers’, who for reasons of convenience have decided that corporate governance is “oh, so yesterday”, as the rest of the world is awakening to the essential importance in having strict corporate governance rules in order to achieve markets with integrity, as opposed to markets with two sets of rules, namely those in print versus those in practice. Something which the OSC and their counterparts in Quebec have proven themselves to be completely oblivious to.

What’s the point of having regulations if they aren’t enforced by the regulators, which they clearly were not in the case of Teachers’ attempted BCE deal/utter failure? Rather than Teachers’ assuming the mantle of “cop” when it suits their purposes, where are the real cops?


Are Teachers' days as governance cop numbered?

The pension plan, long a leading voice on boardroom issues, has sharply cut its Canadian holdings - and its say over reform
JANET MCFARLAND

From Friday's Globe and Mail

April 3, 2009 at 3:44 AM EDT

The 800-pound gorilla in Canada's boardrooms is losing some of its muscle.

The Ontario Teachers' Pension Plan, long one of the country's most forceful voices for improved boardroom practices, sold off a large portion of its Canadian public company equity portfolio last year.

The pension fund decided to reduce its weightings in Canadian stocks, Teachers' chief investment officer Neil Petroff said yesterday, selling more than half of its shares in Canadian private and public companies. Some of those holdings were replaced with indirect ownership in index funds and derivative instruments.

Teachers felt it was overweight in Canadian holdings, given the relatively small size of the market on a global scale, Mr. Petroff said. "It's a lot less expensive for us to get exposure to these names through derivatives," he said.

4 comments:

Kephalos said...

An official inquiry a la Oliphant is needed to investigate the failed takeover of BCE.

The failure is connected to $20 billion of OTPP losses that will have to be paid for by Ontario taxpayers (about $4,000 per taxpayer).

For all Canadians, there is the issue of the independence and objectivity of the federal and ON provincial finance ministers. Clearly the federal finance minister was deeply involved in making sure that competing offers for BCE were forced out.

At one time, the OSC used the expression "the integrity of the market". But what's a girl to do when she's been tricked into dope and slapped around by some heavyweight pimp.

Anonymous said...

Yeah, between the mess of my trust units combined with my stupidity of purchasing Bell shares years ago, hanging onto them, then naively thinking that stupid deal would go through ... also an Ontario resident - yeah I think Kephalos statement of

"What's a girl to do when she's been tricked into dope and slapped around by some heavyweight pimps?"

is very applicable.

Anonymous said...

When you say that the Catalyst deal was better for all stakeholders you actually (and unfortunately) miss the only one that truly mattered, in their minds, the Board and senior management.

Your deal wouldn't have triggered the vesting of their options, so from their point of view it couldn't possibly have been good.

The other 2,000,000 stakeholders didn't even matter.

Neville

CAITI said...

Neville:

Yes, I had a great full page ad in the Hill Times that graphically made that point in advance of the CRTC hearings. Two columns, one is Catalyst deal and the other is Teachers’ deal. About ten different rows with bases for comparison, Check marks beside Catalyst deal all the way down to the bottom until you get to the row that reads “Triggers $250 million windfall profits to BCE insiders/affiliates” Didn’t get that check mark. Damn it, as it seems to have mattered a great deal in the end....namely everything.

Brent