The Daily Twigg: BCIMC's costly burn in Sino-Forest stock crash shows pension funds better kept close to home

 
[Editor's Note: The QC Sentinel is pleased to announce that it will be carrying John Twigg's new column, "The Daily Twigg". John has been an active analyst of B.C.'s political landscape for some time now. The QC Sentinel has put out notice since its inception for local writers and columnists to join its publication and contribute local content but to date the invitation has proven to be rather sparse. That offer still stands.]
 
BCIMC's costly burn in Sino-Forest stock crash shows pension funds better kept close to home

By John Twigg  

Dec. 18, 2011
 
 
I was shocked to see the story in Saturday's Globe and Mail (Dec. 17) to the gist that the British Columbia Investment Management Corporation (BCIMC) was the largest shareholder among more than a few who got burned for multi millions or even billions of dollars when ostensibly some evil rival short-sellers allegedly in June used false information to drive the Sino-Forest share value down to about zero from a mkt cap max of $5 billion - BCIMC had owned 6.5 million shares (price and value unknown) but is now down to "only" about 1.5 million shares and has a class-action lawsuit pending while the OSC froze the stock and the RCMP are investigating possible fraud. The story mentions that BCIMC withheld its votes at AGMs in 2007, 2008 and 2010 reportedly to protest the poor attendance of some Sino-Forest directors.
 
 
But my question is this: what the heck was BCIMC thinking in the first place when it made such a huge placement? And exactly what did they pay and why and now how much is their estimated loss? It could be hundreds of millions. They held roughly 2.5 per cent of the issued shares, which in a short period this year fell from $24 to $2 per share - so $20 times 6 million shares is around $100 million lost - though the loss could be less than that depending on when they unloaded and what for. The shares went from $24 to $18 over a few weeks then suddenly plunged to $2, recovered to $5 then got frozen by the OSC.
 
Wiki says Sino-Forest is a privately-owned integrated trader in wood fibres mainly from plantations inside China but also from someplantations around the southern hemisphere held through subsidiaries. So why was the money of B.C. public-sector pension plan members invested in job creation in China? And why didn't their "due diligence" reveal that the business might be a scam??  Or was BCIMC talked into the placement by some third party, like maybe the Royal Bank subsidiary that now manages B.C.'s pension plan assets?
 
This by the way is also a great argument or example of one good way in which any B.C. government could increase jobs in the province - by investing more of B.C.'s pension funds in viable B.C.-based assets! Let's keep our investments at home and in good use, invested right here where we can watch them grow and help keep them healthy and honest and prosperous.  We CAN create jobs and add new programs without only raising taxes or adding to debt or cutting services.

There ARE MANY WAYS THAT AN ECONOMY CAN BE MADE TO GROW without adding to debt to taxes and lots of them are in a category that could be called "Eliminating False Economies Left By The Campbell Liberals" - of which their stupid investment in Sino-Forest is a prime example.
 
The B.C. economy could be greatly improved if BCIMC was directed to invest more of its fund in safe and secure activities here in B.C. andless in dubious gambits in far-flung locales.  In fact they ARE doing some of that, such as snapping up asset-rich Timber West Forest when its share prices fell so low, but a lot more could be done. Think, for example, how many mills could be running now if BCIMC had kept its investment at home instead of offshore!

Enough is enough! Let's keep B.C. pension funds here at home where they can be safer and more productive and useful.

 
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John Twigg is an independent B.C. journalist who lives in West Vancouver, B.C. The Daily Twigg, is an emailed news service featuring columns, comments and other material by John Twigg on B.C. politics, economics, business and other cultural and environmental matters including some sports and entertainment items. 
John can be reached via email at: john@johntwigg.com