Boudreau defends pension plans' $21M investment in big tobacco
Last Updated: Wednesday, June 17, 2009 | 9:10 AM AT
CBC News
Finance Minister Victor Boudreau said tobacco companies that are being sued by the province have proven to be strong investments for the New Brunswick Investment Management Corp.
'The New Brunswick Investment Management Corporation has a mandate of getting a maximum return on their investments so that our pension funds can continue to grow.'— Finance Minister Victor Boudreau
When the Liberal government launched the lawsuit against tobacco companies in 2006, two cabinet ministers said it was about holding them accountable for the soaring health-care costs attributed to those who used their products.
But Boudreau said on Tuesday when it comes to making money on the province's pension plans, it's important for investment managers to earn revenue any way they can.
"The New Brunswick Investment Management Corporation has a mandate of getting a maximum return on their investments so that our pension funds can continue to grow," he said.
The pension funds lost almost $2 billion in the markets last year, including on its tobacco stocks. But the finance minister said over the years the tobacco industry has proved to be a strong money maker.
The records released last week by the New Brunswick Investment Management Corp. show heavy investments in Imperial Tobacco, Rothmans, British American Tobacco, Philip Morris, its parent company Altria Group and R.J. Reynolds.
The provincial government agency that manages the pension funds of public servants, teachers and judges had holdings in those companies worth about $21.2 million on March 31, 2008.
Those same companies are all targets in a lawsuit launched in December 2006 by the province. New Brunswick alleges the companies failed to warn consumers of the dangers of smoking, marketed light cigarettes as safe and targeted children in their advertising campaigns. It argues those actions all led to widespread health problems and public medical costs for those who began smoking.
N.B. union wants tobacco companies snuffed out of pensions
The New Brunswick Union of Public and Private Employees, one of the largest contributors to the province's pension funds, is joining the Canadian Cancer Society and New Brunswick Lung Association in calling for the province to dump its investments in tobacco companies.
Tom Mann, the union's executive director, said his 5,800 members don't like it being invested with cigarette manufacturers.
And he said because of the amount the union contributes to the pensions that it should have some sway in where that money is parked by the pension plan.
"Certainly the people who own that money should have a say in how it's invested," Mann said.
Kenneth Maybee, the president of the New Brunswick Lung Association, said on Tuesday that the province's pension fund managers must stop investing in tobacco companies, calling the revelation an "eye-opener" that was "disconcerting."
"It's perhaps one of these cases where one arm [of the government] doesn't know where the other arm is. But I think the message will be very clear … that it's not the right thing to do," Maybee said.
