Former prime minister Stephen Harper delivers the keynote address at a conference, on March 22, 2023, in Ottawa.Adrian Wyld/The Canadian Press
Alberta’s government appointed former prime minister Stephen Harper as chairman of the province’s $169-billion public-sector pension fund manager and added a senior government official to its board, signalling a shift in governance at Alberta Investment Management Corp. and raising questions about its independence.
Mr. Harper is taking the chairman’s role unpaid as part of a revamped board of directors after Alberta’s government dismissed AIMCo’s entire 10-member board and four senior leaders, including its chief executive officer, two weeks ago.
The province also added the deputy minister of Treasury Board and Finance – a high-ranking public servant – as a permanent member of the board, also without pay. That restores a board seat the deputy minister held at AIMCo’s inception in 2008, which was removed a year later
Three other former AIMCo directors, who were dismissed on Nov. 7 as part of the government’s sweeping leadership changes, are returning to the board: Former private-equity executive Jason Montemurro, real estate investor Bob Dhillon and former Healthcare of Ontario Pension Plan CEO Jim Keohane.
Alberta’s government said in an news release the changes are aimed at “restoring confidence” in AIMCo, controlling costs and improving performance. But the new leadership will have to show it can rebuild an experienced and capable executive team to stabilize AIMCo and repair a corporate culture shaken by the sudden dismissals, while maintaining trust with clients and investment partners.
The decision to put a senior government official on the board of the arm’s-length pension fund manager raises questions about AIMCo’s continued independence, and whether the move opens the door to the government to exert greater political influence or to steer the pension fund manager toward government priorities. Current deputy minister of finance Kate White was named to the role in October, 2022, the same month Ms. Smith became Premier.
Provincial Finance Minister Nate Horner said the decision to restore the deputy minister to the board was “more about having a clear line of communication” between AIMCo and the government, and that Mr. Harper agrees.
“There definitely won’t be any political pressure,” Mr. Horner said in an interview.
But opposition politicians raised concerns about whether the change makes AIMCo less arm’s-length.
“The appointment of Stephen Harper calls into question the political independence of AIMCo, and having a deputy minister of finance on the board reinforces that,” Court Ellingson, the opposition New Democratic Party finance critic, said in an interview. “We need to be able to instill confidence with those pensioners that their pensions are not going to be a political pawn in how the Premier wants to use AIMCo.”
Mr. Harper could not be reached for comment on Wednedsay. Ms. White referred a request to Mr. Horner’s office; Mr. Montemurro and Mr. Keohane did not respond to requests for comment. Mr. Dhillon expressed his “full support” for Mr. Harper in an e-mail.
AIMCo is Canada’s sixth-largest pension fund manager, investing money on behalf of 17 clients. The pension plans that account for the bulk of its assets have hundreds of thousands of members in Alberta including municipal and health workers, public servants, teachers, university professors, police officers and judges.
Its mandate says it operates “independently and at arm’s length” from Alberta’s government, though there is “broad cooperation” between them. That mandate includes “full discretion to make investment decisions” for funds entrusted by clients, “free from any influence or direction” by the government.
On Wednesday, Mr. Horner said there could be “minor tweaks” to AIMCo’s mandate document, but its major provisions – including those protecting independence – will remain intact.
Mr. Harper was widely expected to be Premier Danielle Smith’s choice for the chair’s job as the province searched for a permanent replacement for Mark Wiseman who stepped down late last year.
“I couldn’t think of a more well-known and trusted Albertan,” Mr. Horner said, citing the former prime minister’s experience steering Canada through the global financial crisis in 2008 and his more recent work in the investment sector.
Mr. Harper said in a news release that he agreed to be AIMCo’s chair “because I believe it is a meaningful act of public service to my adopted home province of the last 46 years.” He added, “I also feel uniquely positioned to help the organization improve its governance.”
The former prime minister is “a capable guy and will be a very good appointment,” said Ed Waitzer, a lawyer and a senior fellow at the C.D. Howe Institute who serves on a corporate board with Mr. Harper. And Keith Ambachtsheer, director emeritus of the International Centre for Pension Management, said in an e-mail the return of three board members provides “some continuity in the governance of the organization.”
But the various business roles Mr. Harper has taken on since he left government have raised questions about potential conflicts of interest.
He is chairman and CEO of Harper & Associates, his consulting and advisory business, and chairman and co-founder of Miami-based investment fund Vision One, as well as a “working equity partner” at private-equity firm Azimuth Capital, which invests in energy and the energy transition. In addition, he is a director on the boards of Alimentation Couche-Tard Inc. ATD-T – the Quebec-based convenience store giant currently seeking to acquire the Japanese parent company of 7-Eleven – as well as professional services company Colliers International Group Inc CIGI-T.
One of the returning board members, Mr. Montemurro, was previously a partner at Azimuth Capital and is an acquaintance of Mr. Harper’s.
Last year, Alberta’s then-ethics commissioner, Marguerite Trussler, was asked to review Mr. Harper as AIMCo’s potential board chair, and the opinion flagged potential conflicts, according to three sources with knowledge of the advice. And two sources said Mr. Harper attempted to pitch AIMCo on investing in a fund with which he was affiliated.
The Globe and Mail is not identifying the sources because they were not authorized to discuss the confidential process.
“I think that those conflicts need to be resolved,” the NDP’s Mr. Ellingson said.
Mr. Horner said it is “not my role” to manage Mr. Harper’s potential conflicts and that “there’s no special treatment” for the new chair, who he expects will meet the requirements.
One of the most important tasks facing Mr. Harper and the new board will be choosing a permanent CEO to lead AIMCo. On Nov. 8, Mr. Horner appointed the province’s most senior public servant, Ray Gilmour, as AIMCo’s interim CEO – another move that raised questions about how arm’s-length the pension fund manager will be from government.
AIMCo’s chief people, culture and engagement officer, chief legal officer and chief of staff were also dismissed on Nov. 7, and its chief investment officer left in September after less than two years in the role.
“The real challenge is going to be staffing up,” Mr. Waitzer said. “Who is CEO will affect not only their ability to recruit people of caliber, but their ability to engage in meaningful partnerships with other major pension plans and wealth funds. That’s a select group and AIMCo should want to remain part of that club.”
The CEO selection process “will be watched with great interest by both Albertans and by those of us outside its borders,” Mr. Ambachtsheer said.
AIMCo welcomed the appointment of Mr. Harper and the other directors, saying, “their proven expertise will provide important continuity for AIMCo,” in a written statement. “The reestablished board is an important step forward as we continue to work to restore stability to our organization.”
Mr. Horner said rising costs were the main reason the government opted for a reset of AIMCo’s leadership, and he will be “making that clear” to the new board. “There’s an expectation that they continue to be a low-cost provider.
Last week, AIMCo’s former interim board chair, Kenneth F. Kroner, pushed back in a letter to Mr. Horner, saying the government’s claims about costs and performance “are tarnishing AIMCo’s reputation.” He said that third-party data shows AIMCo’s costs “are in the lowest third of the industry,” while the fund manager mostly beat its internal benchmarks for investment performance in recent years.
Ms. Smith has floated the idea of a “hybrid investment approach” in recent media interviews that could allow for the province’s $23.4-billion Heritage Savings Trust Fund – money that AIMCo manages – to chase faster growth, aiming to reach at least $250-billion over the next 25 years. At the same time, she suggested pension plan savings would be invested conservatively.
Ms. Smith said that reaching that goal for the Heritage Fund “requires strong oversight, which [Mr. Harper] will provide.”
The board led by Mr. Harper could also play a key role in a continuing debate about whether the province should withdraw from the Canada Pension Plan and create an Alberta-run alternative. The government contended last year that it is entitled to more than half of CPP assets, and is awaiting an estimate from Ottawa’s Office of the Chief Actuary to estimate Alberta’s rightful share – a figure that some experts predict could be substantially lower than Alberta’s claim.
In 2001, when Mr. Harper was president of the National Citizens’ Coalition and had yet to step into federal politics, he was a co-author of a letter advocating to “build firewalls around Alberta” against encroachments from Ottawa on provincial jurisdiction. The letter proposed that Alberta withdraw from CPP and create “an Alberta Pension Plan offering the same benefits at lower cost while giving Alberta control over the investment fund.”
With a report from Carrie Tait.