Ontario teachers' pension plan in deep over ties to Chilean private water sector

Friday, February 5, 2010
By Mike De Souza, Canwest News Service

OTTAWA — The Ontario Teachers' Federation is being urged to stop its pension plan managers from investing in Chile's private water sector.

In a letter sent by the Council of Canadians, a social democratic advocacy group, Maude Barlow wrote that it was "distressing" and of "great concern" to see money from the pension plan being used to fuel a shift toward privatization of a public service.

"I understand that the (pension plan) is supposed to be run at arm's length but I deeply believe that if ordinary teachers in this province knew and understood that their hard-earned pension funds , public pension funds, were being used to undermine public services in other countries, they would be outraged," wrote Barlow, the council's national chair.

"I do not doubt they will join us at the Council of Canadians in condemning these investments in demanding that the OTPP withdraw investments in Chile's private water sector and examine similar practices around the world."

On its website, the Ontario Teachers' Pension Plan says it had $87.4 billion in net assets at the end of 2008, and is the largest single-profession pension plan in Canada with billions of dollars in benefits and contributions paid out or collected every year.

Barlow said in an interview that the ethics issue has previously been raised over controversial investments by the fund in areas such as tobacco and the oil and gas industry. But she said she hoped that both the Ontario government and the teachers' federation, which each nominate the board members of the fund, would address the situation.

"I think it's a real contradiction to the values that the public teachers hold," said Barlow.

She said she received a special request from utility workers and social justice and human rights groups to raise this issue during a recent trip to Chile. The record of privatization projects have in the past resulted in rate hikes, reduced environmental controls and layoffs from the companies which want to drive up profits, the letter said.

But in a letter to Barlow, Jim Leech, president and chief executive officer of the pension plan, said her allegations were inaccurate. He said government decisions in Chile were responsible for the public policy and not the pension plan's investments. He also noted that the plan had invested in companies that were improving water treatment facilities that helped reduce water pollution and incidents of water-borne illnesses in the country.

The rates were also regulated by the government, and the companies had actually increased employment rates, he added.

But the federation's president, Reno Melatti, said he plans to meet with Barlow to discuss the concerns.

He added that the pension plan's mandate was extensively reviewed in 2004 and it adopted three out of 12 recommendations from a report about addressing social responsibility in its investments.

"To some extent, some of those concerns were addressed, although that doesn't necessarily mean that new issues don't come up," Melatti said in a telephone interview.

Leech wrote that the plan would continue to seek investments that provide long-term stable returns, but that members could change its mandate by convincing the provincial government to modify existing legislation that prevents a fund manager from selecting or excluding specific investments on the sole basis of social, environmental, political or any other non-financial criteria.

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