Laurie in Question Period
Alberta Treasury Branches
Ms Blakeman: Thank you, Mr. Speaker. While the rest of the world is uncertain and fearful about their finances, the government owned bank, ATB, decides to reward its executives with huge bonuses, even though it took unnecessary risks that led to millions of dollars in lost profits. When mistakes are made, there should be consequences. My questions are to the minister of finance. Why did the minister not act when the ATB board overrode its own policy and rewarded executives with $26 million in bonuses, even though the actions taken put the taxpayers’ dollars at risk?
Ms Evans: Mr. Speaker, I support the board in the decision the board made. The board understood that the variable pay was for performance. This was a market failure, not a performance failure, and for literally thousands of employees their salaries were not increased by a significant amount but by a recognition of their performance. In terms of the executives that were given considerably more in bonuses, again that was a board decision that accounted for what they believed had been sufficient due diligence on the job.
The Speaker: The hon. member.
Ms Blakeman: Wow. Thank you very much, Mr. Speaker. To the same minister: does the minister agree that it is not sound business practice to reward poor decision-making and that eliminating the fear of losing a hefty bonus also removes any incentive to act prudently?
Ms Evans: You know, Mr. Speaker, there are going to be a lot of people judging the asset-backed commercial paper from the rearview mirror, assuming then that with that clarity of vision they would have done something differently. Eighteen hundred individuals in Canada made that investment. Many of those people made investments through other institutions. I’m very satisfied that the due diligence that they did in exploring that was sound. They did their very best to determine whether it was a sound judgment. They followed through with that judgment. The fact that it failed – everybody understands that there are security risks. They unfortunately had them.
Ms Blakeman: Except that we all had to pay for that. Back to the same minister: what oversight or direction was provided to ATB by the department or the minister regarding its exposure to asset-backed commercial paper before and after the market disruption?
Ms Evans: Mr. Speaker, just stepping back from that supervision that is being suggested by the hon. member and looking at the decision-making process of the board, the board, in fact, is entitled to make the decisions and support the executive in those decisions in the manner they did. But let’s not believe that because they made a decision in a market that collapsed, that was the wrong decision to make. In fact, along with the write-down there’s an assumption that those dollars will accrue back to ATB within the next five to seven years.
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