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Mark Machin has resigned from his post as CEO of Canada’s largest pension fund manager after The Wall Street Journal broke the news late Thursday that he had received a COVID-19 vaccine in Dubai. The board moved swiftly in appointing John Graham, CPP Investments’ former global head of credit investments, as Machin’s replacement, effective immediately. Here’s what you need to know about the executive shakeup.
The basics: Machin arrived in the United Arab Emirates (UAE) earlier this month, where he and his partner received their first dose of the Pfizer-BioNTech vaccine. Machin is reportedly still in the UAE, where he plans to receive the second vaccine dose within the next few weeks. Sources who spoke to the Journal said he used local connections to obtain the vaccines. A CPP Investments spokesperson told the paper, “Zero influence was applied or sought to be applied” for Machin’s vaccination.
Machin had been at CPP Investments since 2012, where he was the fund’s first president for Asia, based in Hong Kong, before leading its international investment activities. Michel Leduc, a senior managing director at the fund, told The Logic that Machin, a Brit, has been based in Canada for the past five years. “We understand he travelled to the UAE, but unaware if there might have been stopovers vs. direct,” said Leduc.
The reaction: Machin was immediately chastised both for violating Canada’s travel restrictions and for jumping the line ahead of millions of Canadians waiting for the vaccine in what has been one of the slowest rollouts in the Western world. Katherine Cuplinskas, press secretary for Finance Minister Chrystia Freeland, called Machin’s trip and vaccination in the UAE “very troubling.” (CPP Investments is a federal Crown corporation and operates independently, though the federal finance minister is responsible for appointing board directors.)
The context: While Canada hasn’t outlawed international travel, the government has issued guidance against non-essential travel outside the country. Machin is among a string of high-profile executives and public officials who have stepped down after facing blowback for violating those restrictions—many related to travel during the Christmas holiday season.
Why Dubai? The Canadian Press reported that Machin claimed in a memo there were “many reasons” for his trip to the UAE, “some of which are deeply personal.” He did not disclose what those reasons were, including whether he travelled specifically to get the vaccine, or received it while in Dubai for other matters. The UAE’s vaccination program is among the most successful in the world, second only to Israel’s, with about 59 doses administered per 100 people. The country also has flexible rules around who can get vaccinated, allowing all residents—a designation that includes foreigners who’ve invested, bought property or started a business in the region—to receive the vaccine. It has made exceptions, though, offering doses to a UAE-sponsored cycling team made up mainly of non-residents.
A swift transition: Machin tendered his resignation after discussions with the board Thursday evening, and the board unanimously agreed to Graham as his replacement. “[Graham] has been instrumental in helping to shape and execute CPP Investments strategy over the last decade as a longstanding employee and member of the senior management team with a successful track record of building and leading global investment businesses,” reads the board’s statement. The new CEO has been at CPP Investments since 2008; before that, he worked in research and strategy roles at Xerox Innovation Group. According to Leduc, the succession plan had long been in the making. “The board’s succession process is very rigorous,” he told The Logic. “The appointment was quick—the process leading up to it was many years.”
A turbulent week for pension funds: Machin’s resignation caps a rocky week for Canada’s largest pension funds, as the pandemic weighed on their results. On Thursday, OMERS posted a 2.7 per cent investment loss, its first time in the red since the 2008 financial crisis. Fred Hahn, president of the Canadian Union of Public Employees Ontario—OMERS’ largest customer—called for a review of the fund’s investment strategy following what he said was “an epic failure for workers.” And the Caisse de dépôt reported a 7.7 per cent return in 2020, below its 9.2 per cent benchmark. The controversy around Machin is a snag in CPP Investments’ otherwise smooth operations during the pandemic. Earlier this month, the fund reported $23 billion in net income for the third quarter of 2021, up from $14.6 billion for the same period the year before.
