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Pension Trustees Wake Up With Fleas

Written by Wanda Pasz Saturday, 01 July 2006

For the management trustees of the Canadian Commercial Workers Industry Pension Plan it must be really awful. Oh the embarrassment, the humiliation, the shame of it all. To be busted. To be up on charges - 15 charges no less.

While their union counterparts can take comfort in the arrogant bravado that is common among guys who are too stupid to realize the depth of the shit they're in, the savvy business execs who made up the other half of the sinking CCWIPP-ship's Board of Trustees are, we can be reasonably sure, painfully aware of their predicament and its potential fallout.

Corporate life is cruel. For those who manage to climb the long ladder to VP-dom, enemies outnumber friends. Ruthless CEO's aren't known for forgiving or forgetting. Lapses in judgment, bad decisions, even seemingly inconsequential faux pas have been known to get the high and mighty fired out of cannons. Really bad decisions - ones that bring bad publicity, legal hassles and other high-profile unpleasantness - are, as they say 'round the water cooler, career-limiting moves. The six-digit earning crowd is supposed to minimize the potential (as they say in the boardroom) for high profile shit, not create it. "Beating the rap" is not an item that should be on any HR Vice President's list of strategic priorities.

With an unforgiving boss above them and dozens of scheming underlings below, life in the Vice Presidential suite is precarious on a good day. The pay is good but the occupational hazards are formidable. The bigger they are, the harder they fall. The employment market for the six-figure crowd is small. For those with "baggage", it's even smaller.

Smart Veep's know the name of the game is to avoid falling. Decisions are carefully considered, risks painstakingly analyzed, expert advice is sought, things that can go "boom" are avoided, due diligence is a way of life. And that's what makes the Financial Services Commission of Ontario's 15-count indictment of Lucy, Gordy, Tommy, Howie and Al so astonishing. How did this high-powered executive braintrust get themselves into such a mess? Better yet, how did they allow the pension plan they're responsible for overseeing get into the mess it's in? Did they think "oversight" was a synonym for "overlook"?

From the time that the FSCO's damning 2005 report about the pension plan was released, enquiring minds have wanted to know how these big shots - particularly the one who is a Vice President of Pension and Benefits - missed what the regulator found: The absence of due diligence, the sloppy (if not non-existent) record-keeping, the unpaid loans, the millions and millions of dollars of good money thrown after bad into the failed enterprises of a convicted sex offender. The bankrupt potato plant, the bankrupt shrimp factory, the bankrupt magic-themed restaurant, the bankrupt hotel management company - maybe they should have invested in a receiver-in-bankruptcy. How is it that they let Cliff Evans and his nephew run the pension plan? How could they? Why did they? These guys are supposed to be smarter than this.

The UFCW's employer-friendliness at the bargaining table may have had a certain sedative effect on them but didn't they worry that one day the lid might just blow off and the shit start hitting the fan? Obviously not. Why?

The only answer that makes any sense is (here comes the unkindest cut of all): They had faith in Cliff Evans. Yes, Cliff Evans - the swollen-headed, great UFCW-god. They believed this self-serving legend-in-his-own-mind had everything under control, even when it was beginning to look like he really didn't. Cliff Evans would get those nosey members to back off. Cliff Evans would shut down that former UFCW rep who they thought (wrongly) was behind the whole CCWIPP-flap and that radical web site that had been exposing all those unpleasant truths. Yeah, Cliff Evans was gonna shut 'em up and shut 'em down.

Betting on the wrong horse is dangerous when you're betting your ass. Putting their faith in the Evans clan was a high-risk proposition for the business execs on the CCWIPP Board. It's puzzling that the normally cautious movers and shakers (who are accustomed to sizing up reputations and credibility of potential business bedmates) missed this but, outside the UFCW it's hard to find anyone with much good to say about the the Cliff-god. Leaders of other unions have been holding their noses and rolling their eyes at the mention of his name for years. Yet somehow, Lucy and Tommy and Gordy and Al believed him - maybe even believed in him. Maybe it was his god-like presence that blinded them to the increasingly worsening condition of the pension plan. Maybe they were persuaded by his reasoning that the solvency deficit was only a problem because of a pesky law that required pension plans to stay solvent. Maybe some of the cultish reverence of the union trustees for him rubbed off on them at CCWIPP board meetings. Something must have lulled them to sleep and kept them that way for years.

By 1995 CCWIPP's sorry state became part of the public record when the UFCW tabled a proposal at an interest arbitration hearing to replace a fully-funded employer-sponsored pension plan with its sorry CCWIPP at an Ontario nursing home:

CCWIPP has had an experience deficiency every year-end for the last four actuarial valuations.

- at December 31, 1991, there was an experience deficiency which, by December 31, 1993, amounted to $8,179,900 and this deficinecy is now being amortized by taking 1.2 cents per hour from all contributions until December 2006.

- at December 31, 1992, there was an experience deficiency of $12,679,744 which was eliminated by making a special charge to the investment reserve.

- at December 31, 1993, there was an experience deficiency of $4,635,712, which is now being amortized by taking 0.7 cents per hour from all contributions until December 2008.

- at December 31, 1994, there was a further experience deficiency of $31,956,996, which is being amortized by taking 4.4 cents per hour from all contributions until December 2009.

The solvency report for December 31, 1994, discloses a serious solvency deficiency which will require some very significant remedial measure(s). Without remedial measure(s), the legislated sovlency teset discloses a deficiency of $113,000,000 - that is, the Total Liabilities are greater than the Total Assets by $113,000,000, which represents over 20% of the Total Asset.

The arbitrator went on to state that "the latest Solvency Report discloses a serious solvency deficiency that will require very significant remedial measures".

UFCW Local 175 v. Homewood Health Centre

But the hot-shot management trustees snoozed their way past that one and through another decade of harebrained investing by Cliff Evans, his nephews and his adoring local presidents. Now it sucks to be them. Now their names are up in lights - in Canada's largest circulation daily newspaper and on national TV.

I'm sure that back at the office they've assured their bosses that the crisis is under control. The regulator went way too far. It's all political. They're making an example of us. The charges will be dismissed. Legal counsel is confident. Cliff Evans says it's all good.

But in the elevators, at the watercoolers and in the hallways eyes are rolling and knowing looks are being exhanged. Snickering is heard about the lame media release issued by the trustees the day the charges came down. Its message is sort of reminiscent of Richard Nixon's I am not a crook public relations gaffe.For more information, call our lawyers whose firm "extensive experience defending allegations of white-collar crime". Sucks to be you Lucy, Gordie, Howie, Tommy and Al.

In UFCW watering holes across Canada, union trustees are huffing and puffing. The whole thing is bullshit. It's been blown out of proportion. It's all political. An anti-union plot. Maybe Wal-Mart's behind it. The charges will be dropped - this we know, because Cliff Evans tells us so. And even if they're not, it's the members who are going to pay the tab - isn't it? Who gives a f**k. Nobody's going to jail no matter what happens.

Sleep with dogs, wake up with fleas. The management trustees must be feeling awfully itchy along about now. But the greatest humiliation is yet to come. The story of how the whole stinking mess was uncovered and exposed by a handful of Internet shitdisturbers.

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