Out­side ex­perts to re­view AIMCO’S in­vest­ments as well as $2.1-bil­lion loss

Calgary Herald - - CITY+REGION - LISA JOHNSON li­john­son@postmedia.com

ED­MON­TON Al­berta’s govern­ment-owned in­vest­ment man­ager is en­list­ing out­side ex­perts to in­ves­ti­gate its re­cent $2.1-bil­lion loss dur­ing the eco­nomic down­turn trig­gered by COVID-19.

The board of di­rec­tors of the Al­berta In­vest­ment Man­age­ment Corp., or AIMCO, stated Thurs­day that ac­count­ing firm KPMG will con­duct an in­de­pen­dent re­view “to iden­tify lessons learned and cor­re­spond­ing en­hance­ments to AIMCO’S in­vest­ment and risk-man­age­ment pro­cesses.”

Bar­bara Zvan, for­mer chief risk and strat­egy of­fi­cer of the On­tario Teach­ers’ Pen­sion Plan, will ad­vise the board through­out this pro­cess.

“We deeply re­gret this re­sult and are determined that the lessons from this ex­pe­ri­ence will im­prove the cor­po­ra­tion’s man­age­ment pro­cesses and pre­vent any sim­i­lar oc­cur­rences,” the state­ment said.

A re­port is ex­pected by mid-june and will be shared with AIMCO’S clients and the govern­ment.

The state­ment comes after re­ports that the Ed­mon­ton-based fund man­ager lost up to $4 bil­lion dur­ing the re­cent global eco­nomic col­lapse by bet­ting on con­tracts that pay off only if stocks re­main sta­ble.

In an April state­ment, AIMCO CEO Kevin Ue­belein con­firmed that the losses to date were $2.1 bil­lion, but said ac­tual losses won’t be fi­nal­ized un­til the vo­latile trad­ing strat­egy is com­pletely “wound down,” ex­pected by mid-june.

The board, led by chair and for­mer En­bridge Inc. chief fi­nan­cial of­fi­cer Richard Bird, said in Thurs­day’s state­ment that “no other in­vest­ment strategies could gen­er­ate sub­stan­tial losses in very un­usual cir­cum­stances.”

The loss amounts to roughly two per cent of AIMCO’S $119-bil­lion port­fo­lio. The fund man­ager con­trols in­vest­ments for 375,000 mem­bers of pro­vin­cial pub­lic re­tire­ment pro­grams, in­clud­ing the $18-bil­lion Her­itage Sav­ings Trust Fund and $50 bil­lion for the Lo­cal Au­thor­i­ties Pen­sion Plan (LAPP), with 275,000 mem­bers, in­clud­ing health-care, city and school em­ploy­ees and re­tirees.

We ... are determined that the lessons from this ex­pe­ri­ence will im­prove the cor­po­ra­tion’s man­age­ment pro­cesses.

In his April state­ment, Ue­belein said AIMCO takes full re­spon­si­bil­ity for the in­vest­ment strat­egy that led to the blow and com­mit­ted to “mak­ing any and all changes to en­sure AIMCO is stronger and that we avoid a re­peat of this out­come, re­gard­less of mar­ket tur­moil.”

The in­de­pen­dent Crown cor­po­ra­tion is set to take over the in­vest­ment man­age­ment of roughly $18 bil­lion in as­sets un­der the Al­berta Teach­ers’ Re­tire­ment Fund (ATRF) in 2021 after the UCP govern­ment passed a bill in Novem­ber.

On Tues­day, Al­berta Teach­ers’ As­so­ci­a­tion pres­i­dent Ja­son Schilling re­newed his call for the govern­ment to keep teach­ers’ pen­sions out of AIMCO’S man­age­ment.

“Time to lis­ten to teach­ers’ con­cerns and re­peal this de­cree,” he wrote on Twit­ter.

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