REAL ESTATE – Elements of a suit first brought two years ago against the Ontario Municipal Employees Retirement System (OMERS) over the 2002 transfer of its real estate fund management business to infrastructure subsidiary Borealis have been allowed by a Canadian appellate court judge.
The judge agreed with the Canadian Union of Public Employees (CUPE) Ontario, which brought the suit, that fund members had a right to transparency over how their contributions were invested. CUPE makes up 40% of OMERS’ membership.
In an open letter published in the Toronto Star, CUPE Ontario president Sid Ryan said that it was “shining the light of accountability” over OMERS’ investments, notably the alleged paying out of CA$100m (€71m) in annual and termination fees over a 19-month period. CUPE Ontario also cited the OMERS board’s 2002 sale of OMERS Realty Corporation’s asset management business to Borealis for CA$11m.
A spokeswoman for CUPE Ontario told IPE Real Estate: “There’s a lot of money that needs to be accounted for…and it’s our members’ money. Has there been wrongdoing or hasn’t there?”
The union plans to appeal against the court’s dismissal of allegations brought against two individual defendants and Borealis. However, it allowed a suit against a third individual, R Michael Latimer, who left OMERS to join Borealis.
Although unwilling to comment in detail on a sub judice case, OMERS spokeswoman Debbie Oakley said the claims made by CUPE Ontario were “unfounded” and “driven by other agendas”.
Those agendas apparently include political opposition to public—private partnerships. “It’s a public policy issue that affects people. People have views about it,” she said.
Oakley said the judge had “recognised that many of the claims were not valid. “The court has not decided in favour of the plaintiff,” she said, adding: “We’ll be very active in defending ourselves.”
The CUPE spokeswoman claimed the suit had prompted a change in the law that will transfer governance of the fund from the government to a 14-person board representing all the province’s municipalities and 45 trades unions. “As a result, what happened could never happen now,” she said.
OMERS’ Oakley said the pension fund was “very confident” that the new model would work, citing the Ontario Teachers Plan, which has been self-governing since the early 1990s. “I have great confidence in the board,” she said.