CPPIB's new website fails to improve opaque disclosure

It has been almost three years since I started to raise questions about CPP Investment Board’s financial disclosure (see prior post “CPPIB should take a page from Oregon’s book” Sept. 12-10), and I am sorry to report that I continue to fail in my efforts to get our money manager to give us the same information that the good people of Oregon, Washington, California and Texas, for example, receive from their government-backed plans. The public feedback I’ve received has been excellent (see representative prior post “BNN interview regarding secrecy at CPP Investment Board” Dec. 21-12), but that and $4.15 gets you a Grande Latte, to borrow a cliche. Recognizing that blogs on the subject can be ignored, even television coverage on BNN Business News Network, I finally broke down and wrote to our stewards on the CPPIB Board of Directors early January. In the polite “Heisman” form of reply from Chair Robert Astley, on Jan. 28th., the Board advised that it:

“…believes disclosure practices should not be static. Indeed, we will continue to consider opportunities to further enhance how we inform stakeholders about our strategy, investment and other developments….”

One could have taken that many ways, of course, so I wrote back in the hopes of better understanding the inconsistent manner in which CPPIB discloses information about our investments. I provided them with a series of examples of how the CPPIB was not following its own disclosure policies, and how arbitrarily they approach when they choose to make certain information about our private equity or private debt investments public while, other times choosing to hide information when it shows certain major financial losses that we’ve experienced (see prior post “12 questions CPP Investment Board won’t be answering on BNN today” Jan. 17-13).

Hundreds of millions of dollars on EMI alone, for example.

The reply that followed in March 2013 was downgraded to a PR executive, who didn’t address any of my questions about the CPPIB’s erratic approach, even under its own opaque disclosure regime. He did say they’d keep me and you posted, however.

I would be foolish to take credit for the most recent development on this front, but the CPPIB has revamped its website. Sadly, we have access to nothing that we didn’t already have access to before. The site is far more pretty, but there is no more financial disclosure than, say, five years ago. CPPIB still supresses the key private equity financial return analysis that is available at similar large plans in Oregon, Washington, California and Texas…. Even though they’ve invested in many of the same mega buyout fund managers, which removes the excuse that confidentiality agreements prevent CPPIB from telling us how our $40 billion is really doing; although I’ve tried my best to parse it for you (see representative post “Solvency canary alert?: 59% of CPPIB PE $ commitments producing IRRs below 6%” Dec. 6-12).

In fact, the new CPPIB website now features a Webfocus business intelligence tool that makes it easier for Canadians to be misled about the success/failure of our $39.7 billion private equity fund program. How so? Because you can now sum the column “reported value + distributions”, but CPP Investment Board still won’t disclose our internal rates of return on these fund investments, online or otherwise — unlike the leading U.S. public funds.

It is now painless for you to find out that we committed US$475 million to Fund XYZ in 2006, and received, say, 27.8% more back in U.S. dollars than we originally invested. However, according to the disclosure from CalSTRS, this same XYZ private equity fund earned an internal rate of return of just 3.7%. Well below the CPPIB’s annual solvency target of 4% plus inflation.

For all the time, money and effort that CPPIB invested to make our site appear to be more transparent, the curtains are shut just as tight as ever. You’ve got to ask yourself: why?

MRM