Finance minister appointed interim director after AIMCo board turfed

By Al Beeber - Lethbridge Herald on November 8, 2024.

LETHBRIDGE HERALDabeeber@lethbridgeherald.com

The provincial government on Thursday has appointed Minister of Finance and Treasury Board President Nate Horner to right the flailing ship of AIMCo, Alberta’s investment agency.

Horner will serve as interim sole director and chair of AIMCo effectively immediately. All AIMCo board appointments have been rescinded and a new board will be established after a permanent chair is established. That board chair will be appointed within the next 30 days.

The province said Thursday that AIMCo has for years consistently failed to meet its mandated benchmark returns and changes are being made to restore confidence in the agency.

AIMCo has experienced significant increases in operating costs, management fees and staffing without a corresponding return on investment, says the province.

There has been an increase of 96 per cent in AIMCo’s third party management fees from 2019 to 2023, a time period in which the number of employees also rose by 29 per cent and salary and benefit costs increased by 71 per cent.

The government says these increases occurred while AIMCo managed a smaller percentage of funds internally.

“AIMCo’s work has direct consequences for Albertans. While they have achieved returns for their clients, we are acting to bring a renewed focus on the best possible returns and low operating costs,” said Horner in a release.

Horner won’t be making any investment decisions or be compensated in his roles with AIMCo which the province says from 2019 to 2023 had an average 7.62 per cent annual total fund return.

In 2023, AIMCo’s operating costs were $222.3 million, up 71.38 per cent from 2019 when those costs were $129.7 million.

Last year, there were 600 employees, up from 465 in 2019 while per cent of funds managed internally dropped to 67 per cent last year from 82 per cent in 2019.

In a late-afternoon press release, NDP Finance Shadow Minister Court Ellingson responded to the government’s move to fire the AIMCo board.

“Today, they could have put in place a new interim board and CEO, rather than this drastic, earth-shaking move. They chose not to. This is supposed to be a non-partisan, arms-length organization. Appointing a UCP politician the head of it sends entirely the wrong signal to Albertans and the investment community,” he said.

“The Premier herself appointed some of these AIMCo directors. The Finance Minister himself said this spring that AIMCo was doing a good job. To suggest this is about AIMCo salaries, when this government passed legislation to remove the caps on salaries for board members, is ludicrous,” said Ellingson.

“AIMCo’s poor returns are a clear reflection of the UCP’s incompetence. We have raised concerns about their poor returns for years, and we’ve noted AIMCo’s returns have been below that of the Canada Pension Plan. Until now, the UCP even proposed using AIMCo to manage the proposed Alberta Pension Plan. Any such APP scheme should now be completely off the table,” he said.

“This government must immediately pull the finance minister from governing AIMCo and put in place a non-partisan interim board and CEO. Anything less is reckless.”