OMERS Investments Come Under Scrutiny

July 8, 2004 ( - The Financial Services Commission of Ontario has asked the Ontario Municipal Employees Retirement Board (OMERS) to hand over documents related to the fund's investment in Toronto-based Borealis Capital Corp.

The Canadian pension and insurance regulatory body is looking into complaints about potential related-party transactions and conflicts of interest surrounding the Borealis Capital holding, the Toronto Globe and Mail is reporting, citing sources close to the situation.   OMERS said it is cooperating fully and sees the review as a chance to clear up any confusion surrounding the deal.  

Borealis was spun off from OMERS in 2001 to make investments and manage its holdings in real estate and infrastructure projects. As of February 2004, the private company oversaw C$9 billion in assets, most of which were owned by OMERS. Yet the fund controlled just 31% of the company.

Additional questions were raised following a Report on Business investigation.   The examination into OMERS’ dealings found an outsourcing arrangement between OMERS and Borealis that cost the fund roughly C$100 million in the past 12 months.

Also in February, the investigation found OMERS paid C$49.9 million to buy out other Borealis shareholders and bring the operations of the company back under the pension plan’s control.   OMERS chief executive officer Paul Haggis said the deal was part of an overall restructuring of assets and that Borealis served its purpose for the fund.

OMERS hasapproximately C$33 billion in assets.   The pension fund covers 342,000 current and retired municipal workers.