The Canadian Union of Public Employees, Toronto, plans to sue the C$34 billion (US$27 billion) Ontario Municipal Employees Retirement System, Toronto, in about three weeks, after the Financial Services Commission of Ontario finishes an investigation, according to Pat Daley, union spokeswoman. The suit claims that payments of more than C$100 million in annual and termination fees made over a 19-month period to Borealis Capital were excessive and a misuse of the fund's assets.
In June 2002, OMERS sold the asset management business of OMERS Realty Corp. to Borealis for $11 million, and in conjunction with the sale, OMERS contracted with Borealis to manage $7.5 billion in real estate investments for the fund. Borealis charged OMERS $16 million in fees for the six months ended Dec. 31, 2002, and $46 million in 2003 In February 2004, OMERS terminated its contract with Borealis and paid an additional fee reported to be $49.9 million, according to Ms. Daley.
Deborah Oakley, senior vice president of corporate affairs at OMERS, said the pension fund is cooperating with the Financial Services Commission's investigation into transactions involving OMERS and Borealis, and is "confident that it will resolve the matter." She said the fact that the lawsuit is being held up until the commission issues its report shows that CUPE is "willing to wait until they finish their work."