Ontario Teachers’ Finance Trust Issues First Green Bond

The C$204.7 billion ($156.7 billion) Ontario Teachers’ Finance Trust (OTFT) has issued its first green bond, a €750 million ($890 million) 10-year bond guaranteed by the Ontario Teachers’ Pension Plan Board (OTTPB).

An amount equal to the net proceeds from the issuance will be allocated to assets that are deemed environmentally and socially responsible. Assets qualify if they achieve one or more of the following goals: replace direct fossil-fuel use; facilitate low-carbon solutions; significantly reduce emissions; remove/store carbon; help adapt to climate change impacts; and help preserve or conserve scarce natural resources.

“We believe a transition to a net zero economy is underway,” Ontario Teachers’ CIO Ziad Hindo said in a statement. “OTFT’s green bond issuance allows us to access capital to support the much-needed investments to transition towards a sustainable future.”

The bond has been issued under the Ontario Teachers’ Green Bond Framework, which was created to align with the pension plan’s green investment principles. The framework will guide any green bonds issued by the trust and was prepared in accordance with the four main components of the International Capital Markets Association’s green bond principles: use of proceeds; process for asset evaluation and selection; management of proceeds; and reporting.

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Eligible green assets include existing investments made up to three years before the issuance date of any green bond, and new investments made after issuance.

Investment teams will identify and propose eligible green assets, which will be subject to review for consistency with Ontario Teachers’ Green Investment Principles and existing environmental, social, and governance (ESG) expectations. They will also take into consideration the EU Taxonomy, United Nations Global Compact Principles and the OECD Guidelines for Multinational Enterprises.

As the fund plans to do with any additional green bonds, it will publish an annual green bond report on the Ontario Teachers’ website, which will include disclosures on allocation and impact.

The pension fund said the framework was reviewed by CICERO Shades of Green, which evaluates green bond investment frameworks, and it received a “dark green” shading, which indicates strong alignment with a low-carbon climate resilient future as well as a governance score of “excellent.”

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Tags: Canada, Climate Change, ESG, Green Bonds, Ontario Teachers’ Finance Trust, Ontario Teachers’ Pension Plan Board, Pension Funds, sustainable, Ziad Hindo

The former CEO and the former chief operating officer (COO) of biopharmaceutical company MiMedx Group have been convicted of crimes related to their roles in a scheme to fraudulently inflate the company’s revenue.

Former CEO Parker Petit was convicted of securities fraud, while former COO William Taylor was convicted of conspiracy to commit securities fraud, to make false statements in US Securities and Exchange Commission (SEC) filings, and to mislead the conduct of audits.

MiMedx sold regenerative biologic products, such as skin grafts and amniotic fluid, to public and private hospitals and to various stocking distributors, which resold the product to end users.

According to the allegations in the indictment, Petit and Taylor schemed to inflate revenue related to the shipment of MiMedx products to four stocking distributors to give the appearance that the company’s revenue fell within MiMedx’s publicly announced guidance, and to fraudulently convey consistent growth quarter after quarter.

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The company identified revenue as the principal metric of its growth, and claimed that quarter-over-quarter revenue growth met or exceeded guidance in 17 consecutive quarters, from 2011 through year-end 2015. However, according to the indictment, due to decreased demand from certain distributors and the increasingly aggressive revenue targets MiMedx had announced, by 2015 it became increasingly difficult for MiMedx to reach its revenue guidance and Petit and Taylor conspired to falsely inflate the revenue figures.

“As the jury found, Parker Petit and William Taylor employed secret agreements and corrupt financial inducements with four distributors to materially misstate the quarterly and annual sales revenue of MiMedx,” acting US Attorney Audrey Strauss said in a statement. “They deceived the SEC, auditors, and the investing public, repeatedly misrepresenting the financial condition of their publicly traded company.”

For example, in the second quarter of 2015, Petit and Taylor caused MiMedx to fraudulently recognize $1.4 million in revenue by making a $200,000 fake consulting payment to the owner of one of its distributors, which the Southern District of New York (SDNY) says was really a bribe to get the distributor to buy MiMedx products. Under the arrangement, MiMedx secretly agreed to send the distributor products it did not want and did not intend to sell, while promising that the distributor could return the product to MiMedx and swap it for different products in a subsequent quarter.

In the third quarter of 2015, Petit and Taylor caused MiMedx to fraudulently recognize $4.6 million in revenue by booking revenue from another distributor, despite knowing that the distributor would not make a timely payment for the product. To hide this from MiMedx’s auditors, Petit arranged for his adult children to use a shell company to loan money to the distributor with the understanding that the loan proceeds would be used for paying down the distributor’s debt to MiMedx. The money in the shell company came from a trust fund established by Petit for his children’s benefit. Petit did not disclose the loan to MiMedx’s outside auditors, and made false and misleading statements to the auditors about the distributor’s ability to pay MiMedx.

According to the charges against Petit and Taylor, their manipulation of MiMedx’s revenue caused the company to report materially inflated revenue in the second, third, and fourth quarters of 2015, as well as for the full-year 2015. In MiMedx’s 2015 annual report, revenue was fraudulently inflated by approximately $8.2 million. The Southern District said that without the inflation of revenue, MiMedx would have missed its revenue guidance for the third and fourth quarters of 2015 and annual revenue guidance for 2015.

The securities fraud count against Petit, 81, carries a maximum sentence of 20 years in prison, and the conspiracy count against Taylor, 52, carries a maximum sentence of five years in prison. Both men are scheduled to be sentenced in February.

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Tags: Audrey Strauss, biopharmaceutical company, MiMedx Group, Parker Petit, SEC, Southern District of New York, US Postal Inspection Service, William Taylor