Tobacco stocks stay, despite lawsuit, Alward says
New Brunswick Premier David Alward says he won't order the sale of the province's holdings in several tobacco companies, despite a government lawsuit that accuses the companies of intentionally harming provincial residents, preying on children and engaging in "unconscionable acts."
"That is not something I am in a position to question or direct," Alward said of tobacco investments made by the Crown-owned New Brunswick Investment Management Corporation (NBIMC), which invests government employee pension funds.
“The New Brunswick Investment Management Corporation is an independent body. They have a mandate to seek to build the best returns,” he said.
CBC News reported this week that provincial pension managers at NBIMC have been buying up stock in several tobacco companies that the provincial government is suing in court.
The province currently holds more than 878,000 shares — worth about $44 million — in British American Tobacco, Philip Morris and its parent company Altria Group, Imperial Tobacco and R.J. Reynolds.
The investments come despite the fact that the province accuses each of the companies of "deceit and misrepresentation" in their business practices over the years and is seeking millions in compensation for health care costs caused by smoking.
"The defendants engaged in unconscionable acts or practices and exploited the vulnerabilities of children and adolescents and persons addicted to nicotine," the government says in its statement of claim.
"Knowing that cigarettes were addictive and would cause and contribute to disease, the defendants intentionally inflicted harm on persons in New Brunswick, by manufacturing, promoting and selling cigarettes, for profit and in disregard for public health."
The Canadian Cancer Society has called on the province to sell its tobacco holdings, but on Wednesday, NBIMC president John Sinclair said pension managers were bound by instructions issued by the provincial government to maximize returns and not investing in tobacco would violate their duty to the pension funds.
However, Alberta pension managers sold off tobacco holdings in that province last year due to a similar lawsuit there.
The New Brunswick government filed the lawsuit against several tobacco companies in March 2008 in a bid to recover the costs of treating smoking-related disease in the years the companies refused to reveal the health risks of smoking.
Earlier this week, four of the companies being sued filed statements of defence, arguing the province collected more on cigarette taxes than it paid providing medical services to smokers.
British American Tobacco P.L.C., B.A.T. Industries P.L.C, British American Tobacco (Investments) Ltd., and Carreras Rothmans contend the lawsuit should be thrown out.
