Alberta butts out of tobacco stocks in preparation for lawsuit against industry

Posted on Thu, Oct 20, 2011, 2:03 pm by John Cotter

EDMONTON — Alberta is being lauded by anti-smoking and social investment groups for being the first province to dump its investments in the tobacco industry.

The Alberta Investment Management Corp. has sold $17.5 million in directly managed stock held by public sector pension funds and the Alberta Heritage Savings Trust Fund.

Leo de Bever, CEO of the Crown corporation, says the province is making the move as it prepares to file a lawsuit against big tobacco to recover health-care costs for smoking-related illnesses.

Holding such shares while fighting the case would look bad, he says.

“We have divested all of the actively managed tobacco stocks. This was across the spectrum and it is because the government is suing the tobacco companies over health care,” de Bever says. “We could be seen as directly holding tobacco stocks.”

Groups such as the Social Investment Organization and Physicians for a Smoke-Free Canada say Alberta’s move to divest itself of the tobacco shares is a first for a Canadian government.

Cynthia Callard, executive director of Physicians for a Smoke-Free Canada, says most provinces have tobacco industry investments, but only a few release detailed information about them.

She says the British Columbia Investment Corp. had $346 million in tobacco industry investments as of March 31, 2010. Quebec’s Caisse de Depot et Placement also has multimillion-dollar tobacco holdings.

The Canada Pension Plan Investment Board had $218 million worth of stock in multinational tobacco companies during the same period. Efforts to have the board divest itself of those investments have not been successful.

Callard says Alberta’s tobacco holdings were more modest, but hopes other governments will follow the province’s example.

“They are the first to do it. This is a very significant step forward,” she said from Ottawa.

“They have set a policy that will help ensure that people do not involuntarily find themselves part of a commerce that doesn’t sit well with most Albertans’ values or Canadians’ values.”

Les Hagen of the group Action on Smoking and Health also praises the Crown corporation’s decision to sell off tobacco industry holdings.

Hagen says it would be completely contradictory for the Alberta government to sue tobacco companies while investing in tobacco stocks.

“This is a momentous decision that will have a ripple effect on other pension-fund managers and institutional investors across the country.”

Alberta passed a bill in 2009 to pave the way for its tobacco lawsuit, but the legislation has not yet been proclaimed and a statement of claim has not been filed.

Last October, then justice minister Alison Redford said Alberta’s lawsuit against big tobacco would be filed within one year.

Redford, who is now premier, told the legislature last year that the tobacco industry must share the burden of paying to treat costly smoking-related illnesses such as cancer and heart disease.

Justice Department spokesman David Dear would not comment on the tobacco share divestiture, what is delaying proclamation of the lawsuit legislation or when the statement of claim will be filed.

He would only say the lawsuit is complex, timing is important and Alberta wants to see how similar cases unfold in other provinces.

Ontario, New Brunswick, British Columbia and Newfoundland have already filed lawsuits against the tobacco industry.

Earlier this month, the Supreme Court of Canada said it would not hear an appeal filed by four foreign tobacco companies that New Brunswick has no jurisdiction to sue them. The companies are British American Tobacco, British American Tobacco (Investments), B.A.T. Industries and Carreras Rothmans. New Brunswick filed its lawsuit in 2008.

This past summer, tobacco corporations moved to thwart Ontario’s $50-billion lawsuit by arguing they fall outside of provincial jurisdiction because they are foreign-owned. The companies include Imperial Tobacco Canada, JTI-Macdonald and Rothmans, Benson & Hedges.

The Ontario Superior Court has not yet ruled on the motion. Ontario filed its tobacco lawsuit in 2009.

All other provinces and territories except the Yukon and Prince Edward Island have passed legislation that would enable them to file lawsuits against the tobacco industry.

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