Government Had No Influence on TimberWest Deal, Says Pension Fund

The British Columbia Investment Management Corporation made its decision to invest public sector pension funds in TimberWest independently of the government and cabinet, according to a statement from the agency.

“No government minister, department or organization may direct BCI to make or divest any investment,” the statement said. “The decision to invest in TimberWest was made by BCI’s Infrastructure team following extensive commercial due diligence.”

The Tyee recently reported that documents filed in court suggest former forests minister Rich Coleman was actively involved in the process that led to the sale of TimberWest to BCI, formerly known as bcIMC, and the Public Sector Pension Investment Board.

BCI manages $135.5 billion for some 569,000 current and former public sector employees in B.C., according to its website. The PSPIB manages pension funds for federal public employees including those working for the RCMP and Canadian Forces.

In a May 8, 2008, email that Coleman wrote to then-TimberWest CEO Paul McElligott, he said, “Have a green light. Need to meet on implementation. Made the sale, not sure they understand what they bought but they did. The roll out will be critical. Also have a reluctant partner in the east. They will play when pushed.”

Within a couple months there was an offer from BCI to buy the company at $15.25 per share, an offer the board rejected.

But later that year the board agreed to a $100-million loan from BCI that could be converted into an ownership stake in the company. And less than three years later BCI and the PSPIB bought the rest of TimberWest through a jointly owned numbered company at the greatly reduced price of $6.48 a share.

“BCI’s decision to invest was made in the best financial interests of BCI clients and not for any other purpose,” the statement from BCI said.

“Although the Minister of Finance owns BCI’s only share and has the right to appoint three directors to the BCI board (the Chair and two appointees from among BCI’s largest clients), the Board is statutorily prohibited from making investment decisions and was not involved in the decision to acquire TimberWest Forest Corporation.”

Coleman’s email and other documents related to the sale of TimberWest are part of a civil lawsuit first filed in 2013 between plaintiffs Ted and Rebecca LeRoy and defendants TimberWest Forest Corp., two associated companies and three senior TimberWest officials, including former CEO McElligott.

The lawsuit alleges that the defendants deliberately drove Ted LeRoy Trucking Ltd., a major contractor for the company, into bankruptcy as part of a plan to reduce costs and raise the value of TimberWest. None of the allegations have been tested or proven in court.

Lawyers acting for the LeRoys are seeking to have Coleman examined under oath, an application that government lawyers are opposing. A hearing is scheduled for June 22 in Vancouver.