(Reuters) – A newly published book says the former chief of Canada’s top pension fund, Caisse de depot et placement du Quebec, devalued the fund’s assets in 2002 as he ushered in a bonus and banking culture at the storied institution.
“La Caisse dans tous ses etats”, or “The Caisse in all its Stages”, looks at the fund since its early days in 1965, and says its six years under the leadership of then-President and Chief Executive Henri-Paul Rousseau represented a cultural sea change.
The Caisse, an arm’s-length agency that manages investments for various public and private pension plans in the province of Quebec, managed C$120.1 billion ($103.9 billion) in assets at the end of last year.
Author Mario Pelletier says in his book, published last Friday, that Rousseau devalued certain assets in 2002, among them cable company Videotron (QBRb.TO), to improve results in subsequent years.
“He was being very conservative, of course, but it served his purpose to make him look better in the year after, the first complete year of his mandate in 2003,” Pelletier told Reuters in a telephone interview.
The Caisse denied the allegations on Tuesday and demanded Pelletier print a correction or retraction.
It pointed out that in February 2006, the Montreal daily newspaper La Presse published a retraction after making similar allegations.
“The Caisse has informed Quebec’s auditor general of allegations made in a forthcoming book entitled ‘La Caisse dans tous ses etats’, by Mario Pelletier,” it said in a statement.
“For the Caisse, the accuracy of financial statements is crucial and must not leave any room for ambiguity. Alleging that the Caisse’s financial statements can be manipulated is not only false but is also likely to cause serious damage to the institution’s integrity, its processes and its employees, and to the confidence of its partners and its counterparts on financial markets,” the Caisse said.
Pelletier said he will not print a correction, adding that his sources included high-level executives at the company.
He said that his book outlined the move to a bonus-focused banking culture that started after Rousseau took the helm.
Pelletier said Rousseau also devalued other assets, and points at generally higher risk-taking since 2002.
“La Caisse didn’t like these statements in my book. They tried to put an embargo on the book,” he said.
Pelletier says his publisher kept the books off store shelves over the weekend but decided to start sales on Tuesday. Some 2,000 copies were printed, his publisher said.
Rousseau left the Caisse in August last year.
The Caisse overhauled its management ranks last month in the wake of big investment losses in 2008.
In February, it reported it lost C$39.8 billion in 2008, a quarter of its overall holdings, and blamed the meltdown in global financial markets.
Critics said the Caisse made too many risky investments.
($1=$1.16 Canadian) (Reporting by Pav Jordan; editing by Peter Galloway)