Ontario Teachers’ Brussels Connection?

Leo Kolivakis is a blogger, trader and independent senior pension and investment analyst. This post was originally published at Pension Pulse.

Barbara Shecter of the National Post reports, Ontario Teachers’ Pension Plan owns 39% stake in terror-targeted Brussels Airport:

The terrorist attack in Brussels on Tuesday morning hit close to home for the Ontario Teachers’ Pension Plan.

The pension fund owns 39 per cent of the Brussels Airport, a stake acquired in 2011. Two bombs went off at the airport while another exploded at a busy metro station. The combined death toll reached at least 30, and more than 200 were injured.

“We are deeply saddened and shocked by the tragedy in Brussels and our thoughts are with all of those that have been affected,” said a statement posted on the Canadian pension fund’s website.

It added that Teachers’ is “in close contact with Brussels Airport and the Belgium Government,” and that the pension fund is “providing whatever support we can.”

Deborah Allan, a Teachers’ spokesperson, said there would be no further comment Tuesday.

Other shareholders in Brussels Airport include Macquarie European Infrastructure Funds and the Belgian State.

Teachers’ holds the airport stake in its infrastructure and natural resources portfolio, alongside stakes in Bristol Airport, Birmingham Airport, and Copenhagen Airports, the largest airport in Scandanavia.

The Canadian pension plan also has a stake in High Speed 1, the 109-kilometre high-speed railway connecting London to the Channel Tunnel.

Ontario Teachers’ has a large portfolio of infrastructure assets that includes many European airports. Most recently, along with AIMCo, OMERS, and Kuwait’s sovereign wealth fund, it bought London City Airport.

I questioned that deal, stating the premium they paid was outrageous but one senior Canadian pension fund manager who didn’t bid on this asset told me: “You can’t always look at infrastructure valuations as I’ve seen assets that look cheap and turn out to be terrible investments and others that look expensive and turn out to be great investments. It really all depends on their long-term strategic plan for this asset.”

This comment, however, isn’t about valuations or the Brusssels airport as an asset (I know it well and think it’s a great asset). It’s about another risk that comes along with infrastructure assets, namely, security risk associated with the scourge of terrorism.

If I was an owner of any any major infrastructure asset that terrorists can potentially strike, I would be sitting down with my infrastructure team to review security operations.

Admittedly, if you start thinking about airport security or security on a subway, bus or train, it can drive you mad because many of these are “soft” targets that terrorists can easily strike.

In the case of Brussels airport, we know the carnage happened outside the security perimeter where people were waiting in line to check in their bags.

Right now, there are many fingers being pointed at who is to blame for the Brussels attacks. Reuters reports one of the attackers in the Brussels suicide bombings was deported last year from Turkey, and Belgium subsequently ignored a warning that the man was a militant, Turkish President Tayyip Erdogan said on Wednesday.

The Haaretz reports that Belgian security services, as well as other Western intelligence agencies, had advance and precise intelligence warnings regarding the terrorist attacks in Belgium on Tuesday.

If this is the case, clearly security agencies need to accept their responsibility in this tragedy. Who else dropped the ball here? Some are pointing the finger at ICTS, a firm run by former Israeli intel operatives who run the security at Brussels airport:

ICTS was established in 1982 by former members of Shin Bet, Israel’s internal security agency and El Al airline security agents, and has a major presence around the world in airport security including operations in the Netherlands, Germany, Spain, Italy, Portugal, Japan and Russia. ICTS uses the security system employed in Israel, whereby passengers are profiled to assess the degree to which they pose a potential threat on the basis of a number of indicators, including age, name, origin and behavior during questioning.

Signs of the Times states this isn’t the first time that ICTS has come under scrutiny for possible security lapses. But when I read absurd nonsense like “it seems that the conditions are being created whereby the events of Nazi Germany may well repeat, only this time with Muslims in the position of the Jews,” I tune off and question the angle of this “investigative reporting” (only fools would state or believe such rubbish).

When it comes to airport security or any security, I would hire an Israeli firm run by former Shin Bet operatives in a second. Not that they can guarantee the security of passengers but these people are highly trained specialists who know what to look for when it comes to possible terrorist threats.

After Paris and Brussels, it’s easy to point fingers but the reality is security agencies across the world are stretched thin as governments cut back on their spending. This places more pressure on Ontario Teachers and others that own infrastructure assets to review their security measures to ensure the well-being of passengers as well as the security of all their infrastructure assets.

When thinking of infrastructure assets, experts often cite liquidity risk, currency risk, political and regulatory risks but rarely cite terrorism as a risk. Maybe they should start talking about this risk because terrorism isn’t going away, it’s only going to get worse.

Photo by Christian Junker via Flickr CC License