NDP Heritage Fund hijinks

In October, Alberta’s NDP government instructed the Alberta Investment Management Corp. (AIMCo), the managers of the province’s Heritage Fund, to call up the Financial Post. That, after a column (written by me) revealed that the government had been letting its political priorities seep into what was supposed to be an arm’s-length relationship with AIMCo, which manages nearly $90 billion in provincial money.

The government was “unhappy” about the story, wrote an apparently frustrated Nathan Rotman, Premier Rachel Notley’s director of issue management, in an email to AIMCo’s CEO, Kevin Uebelein and Chief Corporate and Human Resources Officer Angela Fong. “I need AIMCO to call this reporter or the editor on the story,” Rotman said in an email obtained by the Financial Post.

The NDP urgently wanted to eliminate any question that AIMCo had been tainted by politics. So the NDP’s political staff directed AIMCo to call the press and — as additional emails obtained by the Financial Post show — later called on AIMCo to help massage the public messaging in press releases and talking points for the premier to ensure everyone knew the government wasn’t compromising AIMCo’s independence. Isn’t getting AIMCo to do all that pretty much the opposite of independence?

That original column, which had thrown NDP into damage-control mode, concerned an investment AIMCo made last June in Calfrac, a Calgary-based oil services company. AIMCo had provided financing to Calfrac to restructure its debt, which had become an investor concern, and had arranged very lucrative terms. One analyst complimented AIMCo on a “sweet deal.”

The trouble came when the NDP government re-announced the deal in September, portraying it as an investment in the government’s efforts to promote “renewable energy,” diversify the economy and “create jobs.” Calfrac was taken aback at the way politicians were suddenly, inaccurately framing the deal. It sent a note out to bankers and analysts explaining the government’s announcement “was not vetted by AIMCo or Calfrac” and said it didn’t think “either parties are particularly pleased with the confusion it has caused.” Calfrac’s note reiterated that AIMCo’s investment was being used “for working capital and general corporate purposes,” the same words it used when the deal was announced months earlier, and was not a subsidy for green energy schemes or job creation.

The cock-up with Calfrac came after the government had started directing AIMCo on where to invest its money, compromising its fund managers’ longstanding independence by requiring they allocate three per cent of the Heritage Fund to “directly invest in Alberta’s growth.”

Most recently, the NDP stripped out requirements that appointees to AIMCo’s board have relevant financial, legal or board experience, and permitted the government to appoint candidates outside its nominating committee’s list. Albertans might see all these as reasons to suspect their savings are at growing risk of being hijacked for the NDP’s political priorities.

The emails between the government and AIMCo obtained by the Financial Post won’t likely alleviate those concerns. They show that just before the NDP government made its misleading Calfrac announcement, AIMCo tried warning the office of Economic Development Minister Deron Bilous there could be trouble. “Legally, we have to get approval from Calfrac for any release that we are part of to include them, and it has been indicated to me that getting sign off may be difficult,” wrote AIMCo’s communications director in an email to the ministry. “I appreciate that this is not what you are wanting to hear, so we will work with you to do what we can to support the Minister’s messaging.”

Perhaps, he suggested, they could simply say AIMCo’s investments were good for job growth “instead of relying on one of our investee companies.” Bilous’s office insisted that top people very much wanted a quote from Calfrac, even suggesting that perhaps the firm would at least “concede” to reusing a quote from its president that could be cut and pasted out of an earlier press release, when Calfrac first signed the deal with AIMCo. But no quote from Calfrac would show up in the government press release. And Bilous made the announcement anyway, naming Calfrac as an investment meant to “support innovation and environmental stewardship.”

Clearly the government was eager to take some political credit for AIMCo’s deal, and AIMCo shortly realized the repercussions: When the Metro news outlet ran the first story on the announcement, AIMCo alerted Bilous’s office that the report “got the messaging wrong” because it “implies new money, rather than a recap of prior investments.” The press release had been fuzzy about that. It’s easy to see why reporters got confused when the government was so heavily spinning the messaging.

What Albertans should be concerned about is AIMCo getting sucked into the government’s spinning whirlwind. After the misrepresentations about the Calfrac deal were exposed here, emails show the NDP’s Rotman didn’t just ask AIMCo to start making phone calls to newsrooms to clean up the messaging mess. He told AIMCo to get him a “briefing note” on Calfrac “no later than first thing tomorrow morning as the Premier will be scrummed on this tomorrow.” He was involved in helping draft the press release that AIMCo released correcting the “unclear” wording in the government’s Calfrac announcement. In it, AIMCo takes the blame for providing flawed “guidance” to the government, while reaffirming its “investment decision making independence.”

Then, the emails show, Rotman had AIMCo work with him on responses the premier could give reporters in that scrum. In the script that went back and forth between the government and AIMCo, there were hypothetical questions that reporters might ask, followed by talking-point answers. For instance, this one: “There are those who suggest you are interfering into the mandate of … AIMCo. How do you respond?” The premier’s scripted, unconvincing answer: “That is simply not true.”