The Canadian Connection to BlackRock
In March 2020, the Bank of Canada announced that
BlackRock, the world's largest asset manager, is
to be a key
advisor and consultant regarding the federal
Liberal government's
COVID-19 corporate bailout program. This is just
the latest development
in the growing influence and deep entanglement of
the U.S.-based
super-cartel in the economy and politics of
Canada, which goes back a
number of years.
For example, there is BlackRock's involvement in
the federal government's Infrastructure Bank. In
the 2015 election,
Trudeau proposed the formation of a federal
infrastructure bank "to
provide low-cost financing for new infrastructure
projects" that would
"use its strong credit rating and lending
authority to help
municipalities reduce their cost of borrowing."[1] But in January
2016, Prime Minister Trudeau met with BlackRock
CEO Larry Fink at the
World Economic Forum in Davos at a time when Fink
was also calling for
increased infrastructure investments by
governments and private
interests. Trudeau met with Fink again in March
2016 in New York. Later
that spring, the Liberal government announced
the formation of
an Advisory Council of Economic Growth which, in
the fall of 2016,
called for the creation of a Canadian
Infrastructure Development Bank.
By that time, the original concept of the
infrastructure bank -- to
provide low-cost financing for infrastructure
projects -- was replaced
with the new aim of allowing the private sector,
including BlackRock
and its clients, to put up much of the financing
at a higher cost to
municipalities and other bodies.[2]
Prior to the meeting in fall 2016, Trudeau
government officials worked cheek-to-cheek for
several months with
BlackRock executives in crafting presentations to
inform potential
investors about investing in the Infrastructure
Bank. BlackRock
personnel organized the investor meeting for
November 14 and, in the
course of a number of bi-weekly sessions leading
up to it, even went so
far as to help put together the PowerPoint
presentation that Amarjeet
Sohi, the federal Infrastructure Minister,
delivered at the meeting.
Jean Boivin, currently a BlackRock managing
director and previously an
Associate Deputy Minister with the federal
government, also
participated in those sessions.
One of the big
attractions of public infrastructure projects for
a private interest
like BlackRock is the higher return on its
investments, which can be as
much as seven to nine per cent per year. Of
course, that extra return
ends up coming out of the public purse and, over
time, can end up
doubling the cost of projects.[3]
However, a think tank formed by Larry Fink and
other financiers argued
that private investment in public infrastructure
represents "a rich
opportunity ... with predictable income streams
and time spans measured
in decades."[4]
As the BlackRock Transparency Project and various
news reports have revealed, other government
bodies, such as the Canada
Pension Plan Investment Board (CPPIB), have had
their own involvements
with BlackRock.[5]
Mark Wiseman was a CEO of the $278 billion pension
plan board from 2012
to 2016 which manages the CPP pensions of 20
million Canadians. While
at the helm, Wiseman "significantly outsourced
management of the
pension plan's assets to BlackRock," including
investing in BlackRock's
"distressed mortgage funds" and other global
investments. As CEO of the
CPPIB, Wiseman was eventually appointed to the
government's Advisory
Council of Economic Growth. However, just three
days after its first
meeting, "Wiseman abruptly announced his intention
to resign from the
[Council and the CPPIB] to join BlackRock as its
global head of
equities." Despite this clear conflict of
interest, the federal
government allowed Wiseman to remain on the
Council, as well as to stay
on as a senior advisor to the CPPIB. And so it is
that the federal
government allows BlackRock officials to be key
advisors while at the
same time lobbying for federal funding.
Besides Wiseman and Jean Boivin, both of whom
jumped to BlackRock from top positions in the
public sector, there are
a number of other examples of the "revolving door"
of high level
personnel between BlackRock and the federal
government. For example, in
2018, BlackRock took on another CPPIB official,
Andre Bourbonnais who
had been the CEO of PSP Investments, which is the
$139 billion
retirement fund that manages investments for the
Public Service, the
Canadian Armed Forces and the Royal Canadian
Mounted Police. All told,
there are more than two-dozen additional officials
"who have worked or
interned at both the CPPIB and BlackRock."
According to the BlackRock
Transparency Project, BlackRock has had "a
significant hand not only in
the [infrastructure] bank's creation, but in
personnel decisions as
well" including determining who should fill key
positions.[6]
Thus the state
and the super-cartel become one.
For his part, Prime Minister Trudeau continued to
meet with BlackRock executives, including
attending a private dinner
with BlackRock executives on March 8, 2017 and a
meeting in 2018 in New
York with BlackRock investors. Today, with
BlackRock appointed as key
advisor in the COVID-19 bailout program, even the
Bank of Canada has
been "thrust into BlackRock Inc.'s increasingly
crowded orbit."[7]
One of the oldest economic think tanks in Canada,
the C.D. Howe Institute, has also been brought
under BlackRock's
influence. In 2017, the Institute, which
previously had published a
study critical of the idea of an Infrastructure
Bank, received funding
from BlackRock and appointed a top official from
the super-cartel to
its board of directors. Since then the Institute
has issued various
publications praising the Infrastructure Bank.
Besides its inroads into the Canadian public
sector, BlackRock has a huge involvement in the
private sector.
Although the full extent is not known, BlackRock
either manages or owns
assets in most large North American companies and
financial
institutions, including those in Canada. As well,
iShares, its family
of exchange traded funds (ETFs) dominates the $200
billion ETF market
in Canada (as it also does in the huge U.S.
market).
In 2019, BlackRock formed a strategic alliance
with RBC Global Asset Management to deliver a new
brand of ETFs named
"RBC iShares" worth $60 billion. According to a
press release from RBC,
"this transformational alliance brings together
two market leaders: the
world's largest ETF manager and Canada's largest
asset manager."[8]
Not a few
pundits, journalists, academics, NGOs and unions
have raised concerns
about BlackRock's growing clout over the Canadian
economy as well as
its ethical violations.[9]
Critics have argued that BlackRock's role in the
creation of the
Infrastructure Bank "puts the priorities of
wealthy investors and
BlackRock clients ahead of Canadian taxpayers,
public pension
investors, and consumers." Others have pointed out
that the cozy
relationship between the company and government
"violated federal
conflict of interest rules and gave BlackRock
preferential treatment in
the selection and implementation of projects
financed by the new bank."
Matthew Dube, the NDP's parliamentary
infrastructure critic, says that
"Canadians will likely have to pay twice for their
infrastructure --
first through the federal treasury and then
through user fees that will
generate corporate profits."[10]
Besides the issue of the Infrastructure Bank,
there is the broader issue of a super-cartel like
BlackRock being in a
position to take actions and make decisions that
impact the public
interest of Canadians in fundamental ways. Indeed,
the corporation
threatens to enmesh much more of the Canadian
economy in its net,
especially now that it is a key advisor in the
government's COVID-19
bailout program, which will provide funding to
chosen corporations and
financial institutions. As one professor has
commented, it's likely
that BlackRock now "oversees at least a portion of
just about every
Canadian's retirement nest egg."[11]
The super-cartel currently has $27 trillion of
assets under management, while the Canadian
economy has only a GDP of
$1.9 trillion. Thus it has the capa:bility to
influence and distort the
entire direction of the economy as well as the
political affairs of the
country. But should a giant entity with such
narrow aims have such
influence over everything from public pensions to
the economy as a
whole? After all, BlackRock's aims are all about
its own private
interest and that of its clients, not the broader
public interest.
The super-cartel aggressively pursued the
interests of its investors (and its own interests)
when it pushed to
de-regulate the financial sector in the U.S. in
the 1990s and promoted
the toxic mortgage-backed securities market, all
of which contributed
to the financial crisis of 2008, resulting in
countless bankruptcies,
housing foreclosures and job losses in the U.S.,
Canada and elsewhere
(while BlackRock benefited hugely from the very
crisis it helped
cause). Over the years, it has pursued cartel-type
policies that put
its interests first and which various observers
believe should be
prosecuted or made illegal. In addition, as an
example of its lack of
commitment to any sort of public interest, the
super-cartel has been
named in various international tax evasion
scandals, including those
revealed in the Paradise Papers and Panama Papers.[12]
All of this shows that we need a new direction
for
the economy in Canada. Decision-making power must
be in the hands of
the Canadian people, not in those of a
super-cartel or a financial
oligarchy with a hammerlock on the state.
Notes
1.
"Private-sector role in Canada Infrastructure Bank
raises conflict
issues." by Bill Curry, Globe and Mail,
May 5, 2017.
2. "Creating
a
Canadian infrastructure bank in the public
interest." by
Toby Sanger, Canadian Centre for Policy
Alternatives, March 20, 2017.
3. Ibid.
4. "New
evidence
shows BlackRock's role in Canada Infrastructure
Bank may have
also included advising on key personnel," by
Black Rock
Transparency Project: Campaign for Accountability,
August 27, 2018.
5. Ibid.
6. "Why
the Bank of Canada needs BlackRock's help while
fighting the
coronavirus downturn," by Kevin Carmichael, Financial
Post,
April, 1, 2020.
7. Ibid.
8."RBC
Global Asset Management and BlackRock Canada
announce strategic
alliance to transform Canadian ETF market," RBC
Global Asset
Management, January 8, 2019.
9. "Democracy
Watch
files complaint with Ethics Commissioner raising
questions about
violations of federal ethics law by BlackRock
and the federal cabinet."
by Bradford, Democracy Watch, May 24, 2017.
10. "What
is
BlackRock, and why does it matter now in
Ottawa?" by Andy
Blatchford, Maclean's, May 11, 2017.
11. Ibid.
12. "Canada
Infrastructure
Bank promoter involved in tax havens."
National Union of Public and General Employees,
accessed May 2, 2020.
This article was published in
![](http://cpcml.ca/Tmlw2019/Articles/Logo-TMLWeeklyIP-Small.jpg)
Volume 50 Number 21 - June 13, 2020
Article Link:
The Canadian Connection to BlackRock
Website: www.cpcml.ca
Email: editor@cpcml.ca
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