The former CEO of the Ontario government’s employee pension fund has filed a wrongful dismissal lawsuit, alleging he was terminated after trying to rein in “lavish spending” at the fund’s autonomous and high-flying private equity investment group.
Stephen Griggs filed the lawsuit following his dismissal in April as chief executive officer of the OPSEU Pension Plan Fund (OPTrust), the pension plan managing $13-billion of assets for members of the Ontario Public Service Employees Union (OPSEU). His lawsuit seeks $2.1-million in severance and a further $100,000 in punitive damages.
The lawsuit – and the fund’s responding statement of defence – paint a picture of turmoil at one of Canada’s largest pension funds. Court filings by both sides refer to internal disarray and cite a number of studies and reviews by outside consultants who had been hired to study issues at OPTrust over the past two years.
Mr. Griggs said Thursday he could not comment on the legal dispute.
OPTrust chairman Maurice Gabay, who also works at OPSEU as the union’s accountant, said in an interview it is “unfortunate” the dispute with Mr. Griggs couldn’t be resolved and has become a legal matter.
He said the pension plan is “well governed” and is in a surplus position. Spending by staff is “not lavish” and OPSEU members have no reason to be concerned, Mr. Gabay said.
Mr. Griggs’ lawsuit alleges he was fired after members of the fund’s private markets division lobbied for his dismissal because they were angered by his attempts to review their operations and curtail the division’s “lavish spending.” He alleges he was trying to bring the private markets team under more centralized control because it was operating with little oversight.
The private markets group was created in 2006 to search the globe for investment opportunities in assets such as toll roads, power plants and utilities. It has its own offices in Toronto and London.
Mr. Griggs was hired in June last year at an annual salary of $415,000. He was OPTrust’s first CEO – the pension fund had previously been run by its board of trustees and had not had a chief executive officer.
Mr. Griggs’ lawsuit alleges that when he joined OPTrust, “he immediately encountered a toxic and dysfunctional culture.” The board was “highly suspicious” of management and management conversely viewed the board as “highly dysfunctional and ineffective.”
OPTrust lacked a strategic or operating plan, had no functioning budget process and had no effective mechanism in place to monitor expenses, the lawsuit alleges.
The lawsuit says the fund’s private management group or PMG had little oversight and could make any size of investment without board approval. It has its own offices, separate computer and data systems, and “in effect operated as an autonomous entity.”
“Mr. Griggs’ employment was terminated by OPTrust because he advocated for the reform of the excessive spending and compensation of the PMG, which was and is far in excess of PMG’s Canadian peer group and reasonable market standards,” court filings state.
A statement of defence filed by OPTrust alleges instead that Mr. Griggs was fired because his leadership of the pension organization was incompetent, he failed to develop an appropriate strategic plan after almost a year as CEO, and had “personal vendettas” against the private equity team.
“The plaintiff’s complete lack of experience with pension plans was also seriously hindering his ability to hold a leading role with OPTrust,” the pension fund said.
Before joining OPTrust, Mr. Griggs was executive director of the Canadian Coalition for Good Governance and previously was CEO of mutual fund company Legg Mason Canada Inc.
The pension fund alleged it hired an independent consultant to review Mr. Griggs’ leadership, and the consulting report “exposed numerous inadequacies” with his work, including “obsession and negative focus” with the private equity group.
Mr. Griggs alleges the consultant who did the report was not independent and was a friend of an OPTrust board trustee.