News | SSMU invested in tar sands

Stock portfolio tied to natural resource exploration and military

SSMU VP Finance and Operations (FOPS) Jose Diaz announced Thursday evening in his report to SSMU Council that the Society has sold its shares in a company because of its ties to the Alberta tar sands. But according to a recent report of the Finance Committee, SSMU retains bonds worth $32,200 in Connacher Oil and Gas, which owns and refines 98,000 acres of tar sands in Fort McMurray.

When questioned about the investment, Diaz said he was unaware of Connacher’s mining projects and indicated he would address the investment.

“That is definitely going to be fixed on Monday,” he said, adding that he is currently investigating SSMU’s shares and bonds in Uranium One – a uranium holding company with investments in uranium mining and exploration in Kazakhstan, South Africa, China, and Canada.

However, SSMU still owns shares and bonds worth $172,666 in eight companies that undertake the exploration or production of natural resources – including crude oil, natural, gas, and coal – in addition to $226,394 in bonds of the Royal Bank of Canada, which is heavily invested in the tar sands projects. Its stock portfolio also includes an additional $31,910 of shares in two companies with links to the Department of National Defence (DND).

Diaz stated that SSMU has no policy on investment in mining exploration, or any policy on oil, natural minerals, and base metals.

“We’ve gotten rid of [investment in] the actual mining companies – companies whose activity is extracting the material to process. What you see in the portfolio is exploration, like looking for deposits,” Diaz explained.

He added that there is an additional grey area in SSMU’s tar sands policy.

“We have a policy in companies that are involved in tar sands development, but what about all the other companies that are related to tar sands?” Diaz said, pointing to SSMU’s investment of $21,258 in the Trans Canada Corporation, which owns a 59,000 pipeline through North America.

“All kinds of oil goes through the pipeline. They don’t discriminate based on deep-sea oil, or tar sands oil. There are many ways companies can be involved in tar sands without being directly related to them, and we have to decide at what level we are going to have the restriction,” he said.

Military connections
According to the same Finance Committee report, SSMU currently owns $14,410 in shares of Discovery Air, whose subsidiaries provide assistance in arctic mining exploration as well as airborne training for the Canadian military – which includes air controllers in Afghanistan, CF18 Hornet pilots on air sovereignty patrol missions, and warship airborne defense personnel.

SSMU also owns $17,500 in shares of Calian Technologies, a telecommunications company that specializes in satellites and outsourcing. In 2009, Calian signed two contracts worth $195 million and $70 million to provide simulation training and research for the DND and the Royal Military College, as well as a $65-million contract more recently to provide “instructional training, support, and administrative services” for the DND, according to its web site.

Diaz said that while SSMU does not invest in companies with apparent ties to the military, its policy toward military investment suffers from a similar lack of clarity as its tar sands and mining policies. There is currently no policy on what degree of separation SSMU’s investments must have from the military.

“Calian Technologies [for instance] provides technology services for the government, and for a bunch of ministries: for labour, financial industries, aerospace,” Diaz said. “What they’re doing is not really focused on the military or the defence sector. They provide this tech service that happens to be used by the several industrials, and one of them happens to be the military sector.”

Down to that dolla’ bill
SSMU’s nearly $2-million investment portfolio originates from a settlement made with McGill several years ago, when SSMU sold its shares in the McGill bookstore. The portfolio is managed by Penson Financial Services, and overseen by Diaz, the SSMU Comptroller, the Investment Advisory Committee, and the Investment Advisor Committee Coordinator.

SSMU does have a Financial Ethics Research Committee (FERC), but according to Diaz, it primarily reviews spending over $15,000. While it can set guidelines and ethical policies for SSMU, the committee only meets on an ad hoc basis.

“FERC has not met this year. Nobody’s called a meeting yet [because it is] contingent on someone introducing a motion to actively refer something to [the committee],” said FERC member, Daily columnist, and SSMU councillor Joël Pedneault.

Diaz said that if students wanted to engage more actively in the management of SSMU’s portfolio, he would be open to suggestions. “[Ideally,] we’d set up very restrictive guidelines in terms of what is allowed, what is not, and specified limits, [like] when other companies might provide a tertiary service to those industries, where do they fall,” he said. “The investment manager needs to have very specific restrictions.”

Pedneault and Diaz both said it was a possibility that SSMU could invest more heavily in “green” funds – though Diaz said it could be more financially beneficial for SSMU to explore additional green stocks that had not yet been included in an environmental stock index because they might have more potential for growth.

Pedneault, though, questioned whether the entirety of SSMU’s settlement should be placed in investments. “A question [to be] raised is what do we do with this money? It’s been sitting here in stocks. It’s money SSMU could be putting to better use for student needs.”