Kinder-Morgan Fiasco: The Cat Is Out of the Bag at the CPPIB
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- Published on Sunday, 29 November -0001 16:00
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A Socialist Project e-bulletin ... No. 1613 ... May 30, 2018
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Kinder-Morgan Fiasco: The Cat Is Out of the Bag at the CPPIB
Bob Farkas
In the weeks and months ahead, there will be many political casualties of the Liberal government’s crisis surrounding the Kinder Morgan Trans Mountain Pipeline expansion. The first of these, however, was the carefully-crafted illusion that the Canada Pension Plan Investment Board’s (CPPIB) investment decisions are free from political influence. Over two decades, the Board had painstakingly constructed the pretence that Board decisions stood above retail politics.
Despite occasional whispers of politically-inspired Board investments and industrial policy by stealth, the public position of the Board has been a steadfast insistence on autonomy and independence. For two decades, a parade of faith groups, trade unionists, environmentalists, and mining justice activists beat a... path to 1 Queen Street East in Toronto, only to be solemnly informed that shunning tobacco, divesting from fossil fuels, and rejecting labour and human rights violators were incompatible with the CPPIB’s exclusive remit to make profits.
The Board needed only to point to its founding statute. The CPPIB Act carefully specifies that the Board is not an agent of the Crown, and that it stands at arm’s length from the Government of Canada. The Board is mandated to invest its assets with a view to achieving a maximum rate of return, without undue risk of loss, and the Board is expressly prohibited from conducting any business in a manner that is contrary to this principle.
In practice, of course, these strictures proved extremely malleable, and the Board continued to invest in a diverse group of assets offering a wide range of risk-adjusted returns. Nevertheless, the Board stuck to its narrative that the political needs of governments of the day never entered into the equation.
