March 05, 2008
CPPIB Model Separates it from Sovereign Wealth Funds
WASHINGTON (March 5, 2008): Appearing before two Congressional Subcommittees in Washington, D.C. today, David Denison, President and CEO of the Canada Pension Plan Investment Board (CPPIB) invited U.S. policy makers to examine the structural characteristics and maximum-strength governance model that distinguish the CPPIB from Sovereign Wealth Funds. In his remarks to the House Financial Services Subcommittee on Capital Markets, Insurance and Government Sponsored Enterprises and the Subcommittee on Domestic and International Monetary Policy, Trade and Technology, Mr. Denison said, “At the heart of the Sovereign Funds issue is the question of political control and the potential that Sovereign Funds may be used in support of national or political – rather than economic – goals. The governance model of the CPPIB is instructive in this regard because it was specifically designed to protect against political interference, while maintaining a high degree of accountability.” As policy makers around the world wrestle with the broader implications of Sovereign Wealth Fund investments, there have been calls for new protectionist legislation which could have negative consequences for the free flow of capital. As a global investor, the CPPIB believes free flow of capital across international borders is vital to achieving its investment mission. “We believe policy makers can make better policy decisions by looking beyond the labels to examine the underlying characteristics of these large pools of capital such as their governance frameworks, transparency and whether objectives are politicized or purely investment driven,” Mr. Denison said. “We believe that elements of Canada’s blueprint could help address some of the concerns raised about Sovereign Wealth Funds today,” said Mr. Denison. He also told Congressional policy makers that the CPPIB is not a Sovereign Wealth Fund for a number of significant reasons including: that it does not manage government assets; that is it not controlled by any government and assets are segregated from government funds. The CPPIB also has high standards of disclosure and a transparency model similar to international public companies. “However, because it has “Canada” in its name, some observers have inaccurately labeled the CPPIB as a Sovereign Wealth Fund when, in fact, it operates purely as a fiduciary, making commercially driven investment decisions at arm’s length from governments, ” Mr. Denison said. For a full text of the speech visit our website at www.cppib.ca.
About the CPP Investment Board The CPP Investment Board invests the funds not needed by the Canada Pension Plan to pay current benefits on behalf of 17 million Canadian contributors and beneficiaries. In order to build a diversified portfolio of CPP assets, the CPP Investment Board is investing in publicly-traded stocks, private equities, real estate, inflation-linked bonds, infrastructure and fixed income. Based in Toronto, the CPP Investment Board is governed and managed independently of the Canada Pension Plan and at arm’s length from governments. At December 31, 2007 the CPP Fund totaled $119.4 billion. For more information about the CPP Investment Board, visit our website at www.cppib.ca.
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