Canadian Pension Funds Invested in Chinese Companies Indirectly Linked to Human Rights Abuses, House Committee Hears

The website of the Canada Pension Plan in a file photo. Sean Kilpatrick/The Canadian Press

Some Canadian pension funds have invested in Chinese companies complicit in human rights abuses, the CEO of a geopolitical intelligence consulting firm told a House committee, echoing concerns from rights advocacy groups.

“What we’ve noticed is that ... America has a list of countries that are sanctioned, that can no longer act in the disclosure rules that are much more binding, and as far as we’re concerned, Canadian authorities should play a much more significant role in the setting up of this system of management of risk,” Alex Payette told MPs on the House committee on the Canada–People’s Republic of China Relationship (CACN) on April 24.

Payette, CEO of Cercius, a Montreal-based geopolitical intelligence and strategy consulting firm, declined to publicly name any Chinese companies that are complicit in human rights abuses and are invested in by Canadian pension funds, but he agreed to provide the information to the House committee in private.

“So it’s fair to say that there are pension funds in Canada, public ones, that have invested in companies that are in the PRC that are directly linked to human rights abuses. That’s a fair statement?” asked Conservative MP Raquel Dancho.

“The fairer statement will be to say more indirectly, not directly,” Payette answered.

“That’s still very significant,” Dancho said.

Reports

The subject of Canadian pension funds’ investments was raised by Conservative MP Michael Chong, who cited a report by the NGO Hong Kong Watch, alleging that at least three federal and six provincial pension funds have invested in a dozen Chinese companies involved in forced labour and internment programs for Uyghurs in Xinjiang.

In an earlier report, Hong Kong Watch called out the Canadian Pension Plan Investment Board (CPPIB) for its “considerable holdings” in behemoths like Alibaba and Tencent, in which the ruling Chinese Communist Party (CCP) holds about 1 percent of the shares—enough to give it the power to appoint board directors and influence management decisions.

Tencent owns WeChat, a widely-used social media platform in China, has been used to monitor Uyghur Muslims in China’s Xinjiang Province, Margaret McCuaig-Johnston, a senior fellow at the University of Ottawa, told another House committee  last December.

Another advocacy group, the Centre Ice Canadians, has urged the Canadian Pension Plan to pull out of two of its equity indices allegedly linked with Uyghur internment camps in China.

Payette said public pension funds in Canada that seek to invest in China should be required to “produce due diligence reports that are much more comprehensive,” so that the government can oversee their local operations, suppliers, and clients.

He said that there are some companies in China that Canadian pension funds could invest in without directly or indirectly lending support to the CCP’s human rights violations, though it may require having “due diligence studies carried out that are more in-depth than a simple assessment from annual reports of certain companies.”

“So as far as we’re concerned, it’s important to mobilize much more specialized firms that are not affiliated with Chinese companies and institutions in order to avoid these types of risks and before any investment in China,” Payette said.

Tara MacIsaac contributed to this report.