Stephen Poloz, the former Bank of Canada governor, might have waited a few days before enlisting with Enbridge Inc., North America’s biggest pipeline company.
You know, for appearances, just in case the more cynical among us conclude he was looking out for No. 1 instead of fixating on the COVID-19 crisis.
Instead, Poloz, who turns 65 in October, joined the board of directors of Calgary-based Enbridge on June 4, the second day of his retirement from public service. The appointment pays US$285,000 per year, although it comes with a requirement to own US$855,000 worth of Enbridge shares within five years of taking a board seat, according to the company’s latest management information circular.
“Bank of Canada Governor joins Enbridge board like 20 seconds after his last day as governor. Banana republic,” tweeted Scott Terrio, a Toronto-based credit counsellor and occasional pundit. “The optics are terrible,” he said in a second tweet.
Poloz is apparently unconcerned about the optics, because on June 9 he joined CGI Inc.’s board, a position that comes with an annual retainer of $225,000, according to the Montreal-based information technology company’s latest compensation disclosures.
In less than a week, Poloz rounded up a pay package that exceeds his compensation as a central bank governor, which was between $463,100 and $544,800, according to the Bank of Canada. At this week’s exchange rate, Poloz would collect roughly $607,000 from Enbridge and CGI over the next year, assuming no changes or added responsibilities.
“Stephen Poloz’s deep knowledge of financial markets, the global economy and international trade will be an invaluable asset to CGI as we continue to help worldwide organizations grow their businesses,” Serge Godin, CGI founder and executive chairman, said in a press release. And Greg Ebel, chair of Enbridge’s board, said: “He has extensive business and financial experience, as well as expertise in global economics and public policy.”
In some ways, there’s nothing to see here. I followed Poloz pretty closely for the seven years he was governor and am comfortable stating that there’s nothing untoward about the appointments, which were cleared by the Ethics Commissioner.
If two of the country’s more important companies are getting advice from a director of Poloz’s quality, you might argue that we will all benefit because Enbridge and CGI will be making smarter decisions. At a minimum, their employees and shareholders should be feeling better about their prospects.
Still, the optics, as Terrio said, are terrible.
A year ago, we were still talking about the political scandal involving SNC Lavalin Group Inc., an episode that has absolutely nothing to do with Poloz’s decision to join a couple of corporate boards, other than it generated a new level of public resentment over the tendency of Canada’s business and political elite to do favours for each other.
The sight of a Bank of Canada governor walking out of his Wellington Street office for the last time and almost straight onto the board of a company that generated adjusted revenue of more than $5 billion in 2019 by transporting oil can only contribute to that feeling of distrust. But in case those of you who have taken up residence in this camp are open to more prosaic explanations for why Poloz took up with Corporate Canada so quickly, I asked Enbridge and CGI why they made their announcements when they did.
Sébastien Barangé, a CGI spokesperson, said the company wanted all its directors in place in time for an annual meeting of its vice-presidents to discuss strategy. “The insights of our directors are highly valuable and they take an active part in these discussions,” he said.
Tracie Kenyon, an Enbridge spokesperson, said Poloz’s departure date was known for months and that the company made sure there would be no ethical entanglements before recruiting him.
We carefully considered any potential conflicts with his role as governor and determined there were none
“Director recruitment occurs over a long period of time, often more than a year,” Kenyon said in an email. “We carefully considered any potential conflicts with his role as governor and determined there were none. We confirmed there was no cooling off period, as is the case with a financial institution, and his appointment to the Enbridge board was cleared by the Federal Ethics Commissioner.”
A public distracted by COVID-19 might well decide it has better things to get angry about than a former central bank governor’s retirement. If it doesn’t, Poloz’s decisions could complicate life for his successor, Tiff Macklem, who had to quit the Bank of Nova Scotia’s board of directors before transitioning to his new job.
The central bank’s battle against the COVID-19 recession forced it to wade into a conflict-of-interest quagmire. It paid $750,000 to BlackRock Financial Management, the advisory arm of BlackRock Inc., the New York-based financial behemoth that has become infamous for its political connections, for advice on setting up various bond-buying programs, according to the central bank’s quarterly disclosure of contracts.
TD Asset Management, which won the bid to manage the portfolio of corporate bonds that the Bank of Canada intends to purchase to keep downward pressure on interest rates, received a payment of $4 million. That was before the central bank started buying corporate bonds of a set list of companies in the secondary market. Policy-makers insist they are neutral, but they will struggle to convince everyone of that.
“It risks politicizing the bank,” said Angelo Melino, a University of Toronto economist who worked at the central bank as an adviser in 2008 and 2009. “I’m not comfortable with the bank having moved into that space.”
To the Bank of Canada’s credit, it has been transparent about how it plans to go about buying corporate debt. Most will give the institution the benefit of the doubt, but not all. That’s a reflection of the times in which we live, something Poloz might have considered more carefully when planning his retirement.