N.B.'s auditor general is wrong to claim authority over Vestcor, pension body claims

The head of the body in charge of billions of dollars in New Brunswick government employee pension funds appeared before a committee of MLAs Friday and directly rejected criticisms by the office of the auditor-general it has been wrongly refusing access to its records.

"We felt a little bit exposed when that original AG (auditor general) report came out and we didn't have the opportunity to respond," John Sinclair, the president of Vestcor, said during a two hour hearing in front of the Legislature's Public Accounts Committee

"Having a report like that tabled does create quite a bit of angst."

Vestcor is the Fredericton-based organization set up to manage nearly $20 billion in New Brunswick government pensions and other funds.

It's jointly owned by the province's two largest public pension plans serving civil servants and teachers, but also oversees the retirement plans of hospital workers, nurses, Crown corporation employees, provincial court judges, MLAs and other groups.

Vestcor also manages other investment accounts, including University of New Brunswick endowment funds, retirement accounts for the city of Fredericton and nuclear waste and decommissioning funds for NB Power.

It used to be a Crown agency but was reconfigured, renamed and given its independence in 2016.

In a bitter showdown last year, it refused demands by then New Brunswick auditor general Kim Adair-MacPherson to turn over internal financial information she said she needed to complete her audit of the province's finances because of the way pension liabilities can affect its bottom line

In February in a scathing report about that dispute and other matters, Adair-MacPherson asserted her office's right to investigate Vestcor's operations and called on MLAs to help her make that happen.

"In our view, the Auditor General Act, as it stands, grants the Auditor General authority to audit Vestcor," said Adair-MacPherson in her report.

"To prevent future disagreements over access, however, we propose a regulation be added to the Auditor General Act to explicitly list Vestcor as an auditable entity."

"Decision makers have to agree that they want this entity subject to audit."

Adair-MacPherson has since left to become the auditor general in Nova Scotia, but MLAs responded to her call for help by voting unanimously to summon Vestcor to answer questions.

That resulted in Friday's hearing.

In a lengthy opening statement, Sinclair repeated Vestcor's central claim that it is independent of the provincial government and the office of the auditor general has no authority to oversee its operations.

He especially disputed a detailed section of the auditor general's report that argued MLAs had been promised during Vestcor's creation that it would be subject to ongoing oversight by the auditor general's office

In a section of the 48 page report entitled "Legislators were told the Auditor General would still have access to Vestcor" Sinclair and Vestcor lawyers were quoted as assuring MLAs in 2016 that oversight would continue.

On Friday, Sinclair said those were misrepresentations of the full explanations given at the time which made it clear Vestcor would be completely independent.

"That was some very unfortunate choices of analysis If you look at those references," said Sinclair.

"I find it very hard to believe that there was anybody in that committee that didn't understand that there would no longer be access to the AG in that Act."

New Brunswick's Auditor General Act grants broad powers to look at any "auditable entity," which can include "a service provider" to government or "a funding recipient."

The province pays Vestcor more than $300 million a year as its share of employee pension contributions and during his questioning of Sinclair, Liberal MLA Robert McKee said he supports the position put forward by the auditor general that those contributions trigger a right to audit Vestcor.

"The auditor general stated that she believed in the Auditor General Act that Vestcor was and is an auditable entity and we agree with that, at least I do." said McKee. "The business of Vestcor is public in nature."

Progressive Conservative MLA Bill Hogan said, as a retired teacher with a pension managed by Vestcor, he had concerns about the auditor general poking around inside the organization

"This whole notion somehow that the auditor general should have access to my private information, through you, is a little disturbing," said Hogan.

"I find it to be an overreach on the part of the auditor general."

New Brunswick's acting Auditor General Janice Leahy had no comment Friday on Vestcor's appearance but her office said she will have something to say in the months ahead.

"The auditor general will be commenting on Vestcor in the next financial audit volume," said spokesperson Jolyne Roy in an email.