By Jim Rankin
Ontario's pension watchdog is investigating the finances and dealings of the Labourers' Pension Fund of Central and Eastern Canada, The Star has learned.
One of the areas being looked at is the fund's investment holdings and the roles played by trustees in overseeing the investments. In particular, provincial investigatiors have asked about $23.7 milliion land purchase by the fund in 1989. The land bought at the height of the 80's real estate boom, is now worth a fraction of that.
The pension fund declined to answer a number questions faxed by The Star to the trustees and fund administrator about the investigation.
It would be totally inappropriate for us to respond at this time to the several questions...." fund administrator Onorio D'Agostini said in written reply. He also wrote: "Pensions continue to be paid as required and the fund continues to grow in a satisfactory manner and is being properly administred and handled as always."
The probe into the fund was launched earlier this year, officials with the Financial Services Commision of Ontario confirmed this week. The Labourers' fund boasts assets of more than $650 million and supports about 10,000 retired construction trade workers.
Commission officials would not discuss details of the probe. "I think it would be fair to say that some issues were raised as far as the administration of the plan and the investment of the plan assets," said Nurez Jiwani, a commission official.
One of the issues surrounds the 1989 land deal that even the pension fund concedes went bad. "It's nobody's fault, it just didn't pan out," said lawyer Steven Kichler, who handles the funds legal work dealing with real estate investments.
The deal involves land in Stoney Creek bought by the fund with plans to build condominiums. The land is owned solely by a company controlled by the fund, documents show. Nothing has happened on the land. Pension fund books now list the land's cost at just under $28 million. A fund trustee told The Star last year that the fund would be lucky if it could sell the land for $5 million. The pension fund did not respond to a Star question about why the stated cost of the land has risen by over $4 million.
Kichler said commission investigators recently submitted a list of questions to the pension fund concerning the Stoney Creek lands, and a response was given.
"I doubt it will go any further than that, because we've given them answers to everything," said Kichler, who added the investigation seems to be centred on real estate investments only. "From my perspective ? (The fund is) clean as a whistle." He said other investments have done well.
Under the Pension Benefits Act and the Labourers' own in house rules, pension fund administrators and trustees are allowed to invest some fund money in real estate investments of their choosing. Documents obtained by The Star show that, as of 1996, the Labourers' pension fund had invested $84,888,629 in hand -picked real estate lands and mortgages, held in trust by eight corporations. By provincial law and the union's own in-house conflict of interest rules, fund assets cannot be invested in the securities of " a corporation wholly owned or controlled either directly or indirectly" by any trustee.
Kilcher said pension fund trustees are listed as officers and directors of four corporations formed to hold pension fund real estate investments in trust, but the fund members control each of them through shares. Because of the shareholder arrangement, there is no chance of conflict, said Kilcher. "It's the only way to do it."
The fund is run by five trustees: Arthur A. Coia, Enrico H. Mancinelli, Carmen Principato, Nello Scipioni and Antonio (Tony) Dionisio. All are senior managers within the Labourers' union; four are Canadian. Coia an American, chairs the Canadian fund and heads the U.S. based Laborers International Union of North America. He has been battling allegations, both from his own union investigatiors and the U.S. government, that he is associated with organized crime.
A draft complaint prepared by the U.S. Government, uses the words "La Costa Nostra" in reference to Coia's alleged connections and associates. Coia who lives in Rhode Island, has maintained the allegations are false. In an arrangement with the U.S. Government, the international union agreed to weed oout corruption within the union and the complaint was put on hold.
Coia, a top fundraiser for the Democrats and prominent supporter of President Bill Clinton, was then slapped with internal discipline charges.
An internal hearing into those charges, which also allege ties to the mafia, is still under way.