Carney takes heat over play for federal funds
Only days after former Bank of Canada governor Mark Carney was appointed as a special adviser to Prime Minister Justin Trudeau, it has emerged that Carney’s company is soliciting billions in federal dollars for a new investment fund.
This week, it was reported that Brookfield Asset Management — of which Carney is the sitting chair — is pitching Ottawa on a $50-billion asset fund that would be seeded by as much as $10 billion in federal dollars.
This means that Carney is taking on a new job at the right hand of the prime minister at the precise moment that he oversees a company seeking to secure one of the largest contributions of federal cash in the country’s history.
“The brazenness of this move is stunning, even if measured by the low bar of Mr. Trudeau’s wobbly ethical standards,” read a critique by Conservative MP Michelle Rempel Garner published in the Western Standard.
Conservative Deputy Leader Melissa Lantsman also raised the issue in question period on Wednesday, calling Carney an “unelected finance minister.”
“It’s never been better to be a well-connected Liberal,” she said.
Details of the fund were first disclosed in a Tuesday exposé by The Logic, and then confirmed by both Financial Post and The Globe and Mail.
Sources close to the talks told Financial Post that Brookfield has been shopping around the idea of managing a $50 billion pooled pension fund that would be directed toward Canadian assets.
According to the report in The Logic, $36 billion of that would come from existing pension funds, with another $10 billion contributed by the federal government.
On Sept. 9, Carney was appointed as a senior economic adviser to the prime minister, and put in charge of a task force on economic growth. However, Carney will be employed by the Liberal Party of Canada rather than a public body like the Prime Minister’s Office.
This will have the effect of insulating Carney from the usual ethical disclosures and conflict-of-interest rules that would follow a senior government staffer on the public payroll.
Just after Carney’s appointment, Conservative ethics critic Michael Barrett pointed this out in a lengthy letter to the prime minister. “Mr. Carney could voluntarily disclose all his corporate interests, although we suspect his appointment to the Liberal Party as opposed to the Government was done deliberately to help him avoid such scrutiny,” he wrote.
Brookfield’s idea of heading up a $50-billion, Canada-only asset fund seems to stem from an April declaration by Finance Minister Chrystia Freeland that Canadian pension funds should be encouraged to purchase more Canadian assets. That was the same month that Freeland asked another former Bank of Canada governor, Stephen Poloz, to lead a “working group” enticing pension fund managers to include more Canadian assets in their portfolios.
It was in the midst of Poloz’s new mission that Brookfield apparently pitched the idea of a giant, Canada-specific fund that it would manage. “I would describe it more as an ongoing conversation with the government, with my side fuelled by a very rich set of consultations from a very diverse range of individuals and associations,” was how Poloz explained the Brookfield fund to The Logic in an email.
Pension funds are something that Canada actually does quite well, which is part of why the Trudeau government has suddenly fixated on them as a potential saviour of the country’s crumbling economic situation.
Canada is home to the third-largest share of pension wealth in the world, behind only Switzerland and the Netherlands. What’s more, Canadian pension funds routinely outperform their foreign equivalents, both in terms of return and overhead. Canada’s pension plan model “is the envy of the world,” declared a 2020 analysis out of Mcgill University.
It’s largely for this reason that pension managers have been hesitant to screw up the formula with a bunch of federally mandated “buy local” rules. Both Poloz’s “working group” and the Brookfield pitch have reportedly been meeting cool receptions among Canadian pension managers.
“The success of the Canadian pension funds is largely due to their independence from government,” Jim Keohane, a director with the Alberta Investment Management Corp., told the Financial Post this week,
The Brookfield fund is only the second time in the last week that Carney has been personally connected with a project involving billions of federal dollars transferred to a private company.
Carney also has personal ties with Telesat, an Ottawa-based firm that last week became the recipient of a $2.14 billion federal loan to expand its network of broadband internet satellites.
Carney and Telesat CEO Dan Goldberg have often been described as “good friends,” including in a 2019 profile by the Ottawa Business Journal. As recently as June, a photographer for the Ottawa Citizen snapped a photo of Carney embracing Goldberg and sharing a laugh at a conservation gala.