While one branch of the New Brunswick government has been suing large tobacco companies, another branch has $21 million invested in them, investment records show.

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.

"The optics of that aren't great," said Ellen Snider, a spokeswoman for the New Brunswick branch of the Canadian Cancer Society.

"I don't think the government has any choice but to take a close look at this and to consider the possibility that absolutely those [investments] have to be pulled."

The government pension funds have also invested in other tobacco companies, but those are not part of the lawsuit.

Tobacco companies have called the lawsuit hypocritical since the province allowed the sale of cigarettes and profited from heavy taxes on the product.

Kenneth Maybee, the president of the New Brunswick Lung Association, said the province's pension fund managers must stop investing in tobacco companies.

"I think it's disconcerting. I think it's an eye-opener," Maybee said.

"And 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."

Organizations question pensions' tobacco stakes

The Canadian Cancer Society is joined by the Canadian Medical Association, and Physicians for a Smoke Free Canada in questioning the appropriateness of public pension investments in tobacco interests.

Snider said it is especially dubious in New Brunswick because of the lawsuit.

"As an organization, we support the lawsuit wholeheartedly but have some very serious questions around the investment in tobacco companies," Snider said.

Neither Health Minister Michael Murphy nor Attorney General T.J. Burke would comment on the tobacco investments. A spokesman for the two said it would be inappropriate to comment while the lawsuit is before the courts.

The New Brunswick Investment Management Corp. also declined to comment, but John Sinclair, the agency's president, directed CBC News to the organization's responsible investment guidelines, which are posted on its website.

Those guidelines emphasize the responsibilities of pension fund managers to make as much money as possible through investments with the minimum of risk, with no weight to be given to "non-financial investment considerations."

"In most cases we believe that the laws and regulatory agencies of the specific countries in which we invest are the best served to opine on social issues," the guidelines say.

Pension plans took a hit last year

The government agency also announced last week that the province's pension plans suffered an 18.3 per cent loss last year due to the dramatic decline in global equity markets.

The value of net assets under management shrank by $1.6 billion in fiscal 2008-09, finishing the year with $7 billion.

The public service pension fund lost 18.43 per cent, the teachers' plan lost 18.24 per cent and the judges' plan fell by 18.46 per cent.