Board Profile - Canada Development Investment Corporation

Canada Development Investment Corporation

Mandate of CDEV

Canada Development Investment Corporation (CDEV), a federal Crown corporation, was incorporated in 1982 to provide a commercial vehicle for Government equity investment and to manage commercial holdings of the Government. The Articles of Incorporation give CDEV a broad mandate. CDEV’s primary objective is to carry out its activities in the best interests of Canada, operating in a commercial manner.

In November 2007, the Minister of Finance indicated by letter to the Chairman that the future operations of CDEV “should reflect a future focused on the ongoing management of its current holdings in a commercial manner, providing assistance to the Government in new policy directions suited to CDEV’s capabilities, while maintaining the capacity to divest CDEV’s existing holdings, and any other government interests assigned to it for divestiture, upon the direction of the Minister of Finance.”

CDEV’s vision and mission, as approved by its Board of Directors, are as follows:

CDEV'S VISION: To be the Government of Canada’s primary resource for the evaluation, management and divestiture of its commercial assets.

CDEV'S MISSION: Acting in the best interests of Canada, on behalf of the Minister of Finance, we bring excellent business judgement and commercial practices to the evaluation, management and divestiture of assets of the Government of Canada.

In addition to certain activities of its own, CDEV has three wholly-owned subsidiaries: Canada Hibernia Holding Corporation (CHHC), Canada Eldor Inc. (CEI), and Canada GEN Investment Corporation (GEN). CHHC owns and manages a working interest in the existing Hibernia offshore oil development project. CEI has no operations, but has responsibility for servicing liabilities, chiefly arising from the 1988 agreement of purchase and sale with Cameco Inc. GEN was incorporated in 2009 and held interests in General Motors Company (GM) that it acquired pursuant to a directive issued by the Cabinet and which have now been sold.

Since CDEV’s inception in 1982, it has been effective in the management and divestiture of corporate interests of the Crown. The assets sold on behalf of the Crown by CDEV through 2014 include Canadair Limited, de Havilland Aircraft of Canada Limited, Teleglobe Canada, Fishery Products International Limited, Canada Development Corporation, Nordion International Inc., Telesat Canada, shares of Cameco Corporation, common shares and preferred shares of General Motors, and interests in Chrysler. In 2009, the Minister of Finance requested that CDEV participate in the Government’s on-going review of corporate asset holdings, referred to herein as the Corporate Asset Management Review. In this role, CDEV retains advisors to provide financial, legal or technical analysis of those corporate holdings of Canada as requested by the Minister. CDEV monitors the advisors and reviews their reports prior to their being submitted to Canada. In some cases, CDEV is assigned responsibility to assist the Crown in divesting the corporate holdings reviewed (e.g. Ridley Terminals Inc. and Dominion Coal Blocks).

CDEV has a management team based in Toronto headed by the Executive Vice-President, whose role is to work closely with external consultants, contractor specialists and the Board to ensure the effective functioning of CDEV and its subsidiaries. CHHC has a separate management team based in Calgary that is experienced in the oil industry. This CHHC team, headed by its President and CEO, provides expertise in technical, marketing, transportation and financial areas of operation.

Role and Responsibilities

The CDEV has adopted a Board Charter which explicitly describes its responsibility for the stewardship of CDEV. Outlined below is a sampling of some of the roles CDEV’s board fulfills in order to assist director candidates with understanding the business issues that CDEV’s board regularly deals with:

  1. To supervise and oversee the conduct of the business and affairs of CDEV. This entails supervising management.
  2. To ensure that CDEV’s assets and liabilities are managed in a cost effective manner until such time they are divested or transferred to the government.
  3. To provide advice to the Minister about appropriate commercial strategies for the divestiture of assets.
    • Monitoring market opportunities
    • Providing commercial advice to the Minister about timing and procedures for divestitures
    • Engaging appropriate advisors
    • Negotiating transactions
  4. To manage the divestiture of assets (either essentially as principal or as agent) in accordance with the Government’s objectives which will often include maximizing the net return to the Government.
    • Engaging financial advisors to conduct or provide advice about sales
    • Evaluating the advice of advisors
    • Managing and monitoring the divestiture process
  5. To supervise the process in which CDEV provides services to assist the Minister of Finance with the Government’s Corporate Asset Management Review program.
  6. To supervise the management of other issues which may arise and to ensure CDEV remains prepared to assume management and divestiture of any other government interests assigned to it for divesture, in a commercial manner (unless directed otherwise).

A copy of the Board Charter can be made available to director candidates if desired.

Challenges and Issues

CDEV’s portfolio presents significant challenges:

  • Given the large number of historically-related issues that the Corporation faces and the limited staff, continuity in board membership and strong skills, particularly in the financial area, are important. Because a significant amount of the work is conducted by consultants, CDEV must be able to identify innovative consultants and negotiate appropriate contracts.
  • The Canada Eldor issues require sensitivity to environmental remediation concerns and the public policies and legislation applicable to them.
  • The government’s interest in Hibernia is a very valuable asset but one that will present unique challenges when divested.
  • CDEV’s mandate is very broad and largely undefined in terms of specific responsibilities other than commercial divestiture.  Directors should be competent to deal with businesses in a wide range of activities.

Stakeholders and Other Interested Parties

CDEV reports to the Minister of Finance but both CHHC and Canada Eldor are of interest to other Ministers and departments, notably the Ministers of Natural Resources and Environment. The asset review assignments and recent agency divestiture assignments also involve other Ministers and departments from time to time.

CDEV does not currently need to communicate or deal with the public to a significant extent however the need to do so could arise at the time of divestitures or because of mandate changes. The Corporation is aware that as a Crown corporation it is desirable to provide general information to the public about its business. A website for the Corporation is accessible by the public and the Corporation holds annual stakeholder meetings.

Core Attributes, Competencies and Experience

Every director of CDEV is expected to have the following competencies and experience:

  • Financially literate:  an ability to read, understand, and analyze financial statements
  • Informed judgement:  ability to provide wise counsel and consider strategic impact and relevant stakeholder perspectives
  • Mature policy and financial judgment:  experience in making major decisions or providing recommendations regarding major decisions which have large financial and public policy implications
  • Integrity and accountability:  a record of responsibility and taking accountability, dedication and loyalty
  • Receptivity and impact:  ability to work in a collegial fashion, respecting the sometimes differing views of others and the ability to appropriately influence others in order to have a specific impact or effect
  • Commitment:  commitment to the Canadian public interest and to self-improvement and growth as a director

Specific Skills and Competencies

One or more directors on the CDEV Board should have the following skills, experience or competence:

  • Financial expertise; professional accounting or finance accreditation and experience, particularly business valuation techniques
  • Experience in dealing with investment bankers, the financial community and public markets
  • Experience in senior positions related to commercial and market operations
  • Experience as director in other medium or large corporations including, in particular, service on audit committees
  • Experience in dealing with central government ministries
  • Accreditation and experience in corporate law
  • Experience in privatization transactions (asset and share deals) including structuring and negotiating sales to third parties through private sales, auction processes or public offerings
  • Experience in business operations
  • Experience in human resources matters
  • Experience in risk assessment and management

Representation

In addition to representation in terms of experience (as outlined in the preceding section), the membership of CDEV’s Board should continue to reflect gender diversity and to represent the geographical regions of Canada.

Working Conditions

  • There are typically five full Board meetings a year and occasional conference call Board meetings (to deal with approval of quarterly financial statements periodically and to deal with other matters as they arise).  The Board also annually holds a one day retreat.
  • Full Board meetings normally require two days and additional travel and preparation time.
  • Most Board members serve on one or more board committees, as well as boards and committees of CDEV subsidiaries.
  • As a Governor in Council appointee, CDEV directors are subject to any restrictions generally applicable to such appointees, including the Conflict of Interest Act.  CDEV directors are also subject to the conflict of interest provisions in the Financial Administration Act and the Canada Business Corporations Act, as well as those in CDEV’s by-laws.  CDEV’s Board is also subject to a CDEV-specific Code of Conduct, including conflict of interest guidelines.  These statutes and the CDEV guidelines will not necessarily prevent a person with a conflicting interest from becoming a Board member but will limit the ability of that individual to participate in a decision of the Board on certain matters in which that director had a conflicting interest.
  • CDEV directors are remunerated in accordance with Governor in Council approved rates and, currently, also in accordance with the Remuneration Guidelines for Part-time Governor in Council Appointees in Crown Corporations. Directors (unless they decline) are paid annual retainers and per diem fees (including for traveling to and preparing for and attending Board and committee meetings) at approved rates and receive reimbursement of their reasonable expenses incurred in connection with their CDEV responsibilities in accordance with travel and expense guidelines and policies adopted by the CDEV Board from time to time.