Everything old is new again

According to a great story in today's Telegram, veteran political scribe Rob Antle reports that the House of Assembly has put in place what are described as new rules governing the accounting and administration of expense claims by members of the provincial legislature.

Don't bother checking thetelegram.com; the "news story" in the online edition is a puff piece about the SmartCar.

Go figure.

Anyway...

The new rules are simple: every claim must have receipts and any questions are to be directed to the chief financial officer.

They replace the old rules in which all expense claims had to be supported by receipts and questions were directed to the chief financial officer.

This is no joke.

The new rules are exactly the same as the old rules.

And it took a memorandum from no less than three people and a meeting of political staff in the House of Assembly to ensure everyone understood the new rules...

which were, of course, exactly the same as the old rules.

The only actual change is that from July 10 2006 onward, the entire claim must go to the Comptroller General before a cheque will be cut. This is a step forward, but evidently a determined program could frustrate the Comptroller General's last line of checks in the system.

Heck, even in the system that used to exist, the Comptroller General apparently never noticed that $1.0 million in cheques were cut to four individuals beyond the publicly available limits set by the Internal Economy Commission.

That said, this Telegram story demonstrates that when the province's finance minister, the Speaker and the Auditor General assured everyone in the province that changes already made in 2004 would prevent financial problems, these three august individuals were not telling factual and accurate information.

Nope.

If changes had been made in April 2004, the House of Assembly would not need to introduce changes in mid-July in the wake of a spending scandal.

One of the things that hasn't changed is the ability of members of the House to make donations of any kind and amount they deem fit out of money allocated for the operation of constituency offices and for discharging their duties as parliamentarians.

Apparently, there is also no requirement that the claims for donations or any other spending will be made available to the public as occurs in the provincial government through the Access to Information and Protection of Privacy Act.

In other words, the system remains as fundamentally unaccountable and opaque to the voting public as it has ever been.

Change evidently means more of the same.

Lono's odd sense of humour and interesting insights

Check out Offal news.

You'll find two things.

First is this picture, under the title "After the next election...".

Second is a series of articles on the Hebron negotiations. You can also find the complete thing in the latest issue of Atlantic Business Magazine.

Due diligence, Kathy? Try unduly indifferent.

Kathy Dunderdale, currently collecting a paycheque as the minister of natural resources, likes the phrase "due dilligence".

In her former cabinet post, as the almost completely ineffectual minister of innovation, trade and rural development, she used the phrase all the time. A little over a year ago, Dunderdale was desperately trying to explain how her department had signed agreements with an American call-centre company and yet the department seemed completely unaware of a series of serious law suits involving the company.

Dunderdale's excuse at the time was that the department's "due diligence piece" had been completed before the law suits had been filed. Unfortunately a simple use of google would have turned up numerous suits that were filed before the deal was inked and the "due diligence piece" was completed. Former NDP leader Jack Harris called google "due diligence for dummies". All this was covered at the Bond Papers before.

That little episode followed on the heels of at least one other major failure of Dunderdale's department to handle its "due diligence piece" on a Chinese company under embargo from the United States for shipping sensitive weapons technology related to weapons of mass destruction.

All this is just to refresh our memories as we listen to Dunderdale tackle an interview with CBC television's Debbie Cooper on why the provincial government has run to Ottawa to ensure INCO lives up to its contractual commitments to build a smelter/refinery in the province.

The interview is amazing given that Dunderdale never really explains what is going on; but she does manage to say "due diligence" and "due diligence piece" twice in the space of about 30 seconds at the start of the interview.

Simply put, there is no logical reason for the pleadings sent off to prime Minister Stephen Harper. The provincial government has a development agreement with INCO that apparently binds the company to build a conventional smelter/refinery if the hydromet facility originally proposed for Argentia fails. If anyone is going to hold INCO's feet to the fire, to use another horrid cliche, then that would be Premier Danny Williams. Harper's probably scratching his head in bewilderment over the letter.

So are the rest of us... even after duly diligently piecing together whatever it was that Dunderdale said.

For some months now, the provincial government and INCO have been engaged in some sort of dance with INCO wanting to build its hydromet test facility at Long Harbour while the provincial government insisting on having it built at Argentia as originally planned.

INCO has given no indication it won't build a hydromet smelter, although if you read the government news release, you will find just such an implication - "[Premier Williams has] written the Prime Minister to seek his assurance that as the Government of Canada proceeds with its due diligence of takeover and merger arrangements involving Inco, it will ensure the company commits to the use of hydromet technology in Newfoundland and Labrador for its Voisey's Bay project."

The issue seems to be about where the smelter will go.

That's about all we know in the public.

The reason is because while the provincial government likes the phrase "due diligence", no one on The Hill seems to have a clue what it actually means. What Dunderdale appears to mean by saying "due diligence" is that government is looking to achieve a certain result that will be beneficial to the province.

Due diligence is a term popular in business and means simply that a project is thoroughly researched and assessed before it is pursued. It can also mean that all reasonable means are used to secure a good result.

Due diligence carries with it another expectation, namely that shareholders will be thoroughly and properly briefed on a project. This is especially true when the project is risky or when the sharehodlers may take a financial loss if the project fails.

In that respect, "due diligence" is like "accountability" and "transparency". It is also like one of the basic definitions of public relations: we communicate to gain and maintain informed support. That can't exist if there is no information.

It can't exist if there is no action. Due diligence, like transparency and accountability are more than words to be tossed at random during interviews.

Instead of due diligence, it appears that what what we have from Dunderdale and her colleagues is yet another example of government being unduly indifferent to the requirement that they be fully and properly accountable to the public.

Getting off the road to hell

In the spending scandal at the House of Assembly, the frame placed on the issue by the members of the House of Assembly - and by cabinet - has focused on overspending, breaches of the public tendering process and possible criminal activity.

Certainly those issues can be addressed, to some degree, by changes to the House's administrative processes and by the police investigations currently underway.

But comments by deputy premier Tom Rideout and Speaker Harvey Hodder this past week expose an even more significant issue in how the members of the House of Assembly spend public money intended to pay for their office operations. As noted here at the start of this scandal, the frame which elected officials want us to accept simply does not cover all of the problems the scandal entails.

Specifically, both Rideout and Hodder acknowledged that they and other members of the House of Assembly routinely make donations to groups in the community from public funds. We are not speaking of purchasing the odd ticket to a dinner for a church group. Rather we are talking, in some instances of single donations of thousands of dollars or the purchase of advertising "compliments of" this or that member of the legislature.

There are several problems with this.

Firstly, on the face of it, the money for operation of a parliamentary office should not be spent on any purpose other than that intended. It doesn't matter that members of the legislature granted themselves an exemption from the ordinary and accepted practices of government spending and thereby followed the rules.

The rules that allowed such spending were wrong.

Some of the donations apparently took the form of advertising. But the advertising we are speaking of here is not related to parliamentary business. What was intended in 1989, when these operations budgets were created, was the kind of advertising that tells constituents how to contact their member in the legislature. What members have apparently been purchasing as advertising is nothing more than personal promotion for the individual member and that is an entirely inappropriate use of public funds.

We went through this sort of waste in the free-spending years of the Peckford and Rideout administrations in the 1980s. At that time it was only cabinet ministers who had the budgets to allow for that type of waste. What occurred in 1996 was a return to the waste of the past, but in the new form all 48 members of the legislature were given the ability to waste public money on personal promotion.

In the example used by Harvey Hodder, he could easily have purchased a ticket to the school play in his district. That sort of spending is already covered in one way or another as the type of expense a public official will incur as part of his or her official responsibilities. It would also be far less costly than the personal advertising he has purchased untold times out of public money.

It is also useful to look at the alternatives Hodder used. Rather than spend money on a constituency newsletter, Hodder feels it is better to buy advertising for himself.

Note how many members of the legislature maintain constituency websites, for example.¹ These days such a simple device is an inexpensive means of keeping in touch with constituents and informing them of a member's activities as their elected representative. It is exactly what constituency allowances would cover yet one wonders how many legislators opted to fund a little personal promotion - as Speaker Hodder would approve - instead of informing constituents on important issues.

Secondly, spending by members of the legislature under their district budgets is largely secret. While receipts are supposedly collected and kept on file, the only detail disclosed by the Internal Economy Commission (IEC) is the total. Voters - the people to who legislators are responsible have no idea how money is being spent and who is receiving the public cash.

This is the antithesis of accountability and transparency, despite the number of times those words have been tossed about over the past three weeks or in 2000 to justify changes to the IEC Act. We simply do not know what groups are being favoured, as at one observer has described the activity, nor do we know if the individuals involved are or have been political supporters of the individual legislator involved.

This leads to the third issue, namely that this money has been or could be used as a form of vote buying or other political corruption. This does not mean that members have actually been up to no good; rather there is an apprehension - a reasonable suspicion - that such behaviour could be taking place.

The image of the self-interested and corrupt politician is corrosive in our political system. Yet while Speaker Hodder and some other members of the lesiglature seem worried - lately - that their reputations are being tarnished, they have done nothing at all to dispell the concerns. Rather, Speaker Hodder is encouraging members to withhold details of the spending, claiming legal advice that these records may become part of the current police investigations.

In this instance, there is no meaningful way in which the disclosure of what we are assured are legitimate expenditures could compromise a police investigation into wrongdoing. What Hodder and others have been doing may be inappropriate, but it isn't likely to land them in jail. Instead, disclosure of members' spending details - even at this late stage - would help to persuade sceptical voters that Mr. Hodder and his colleagues are indeed spending publicly money appropriately. One wonders why such an obvious point can be so easily over-ruled by a lawyer's standard advice.

The fourth problem with this spending comes from the explanations being offered by Speaker Hodder, among others. Put bluntly, it doesn't matter at all that, in the instances we know of, recipients of the money are doing good work in the community.

Good works do not preclude the possibility that the gifts from Mr. Hodder and others carry with them or may be perceived as carrying with them some conditions that are less than desireable. No matter what the intention, Mr. Hodder and others have created a climate in which voters are compromised by receiving public money inappropriately.

If these programs are worthy of public financial support, then there ought to be specific votes in the government's own budget through the appropriate department. In this way, all such groups in the province would have equal and fair opportunity to receive public financial support. Any public spending ought to be done in as open, fair and equitable a way as possible. It must be devoid of even the appearance of impropriety. Sadly this not what has been occuring.

What has opened up in recent weeks is clear evidence that the rhetoric favoured by our province's politicians is a far cry from their actions. Rather than being genuinely accountable, open and transparent in spending of public money, members of the legislature have been secretive.

Only such information as members wish to disclose is actually made public and even that - as in the IEC reports such little information as to be all but meaningless. That is, they would be meaningless even if, as the Auditor General recently alleged, the House accounts were falsified in at least four cases. Our politicians give us only the information they want us to have. Genuine accountability would give us the information we deserve.

Money has allegedly been misappropriated, but as more information comes forward, we find that misspending goes beyond just overpayments to individual members. We have found that members are spending scarce public money on personal promotion. By their own admission, members are handing out donations to community groups using money that was never intended to be spent on anything other than the operations of parliamentary offices.

If there was ever a doubt about the need for a far-reaching public inquiry, then both Harvey Hodder and deputy premier Tom Rideout have given us fine and ample reasons to probe further into how members of the legislature have been handling public money.

A public inquiry is the only way we can get off the road to hell that has been paved, if Hodder and others are to be believed, with the good intention of helping fill children's bellies before starting school each day.

---------------------------------

¹ An alert reader tells me there are three.

Provincial legislature salaries and benefits

It will be interesting to see if The Independent can actually piece together and describe accurately the salaries, allowances and other benefits for members of the House of Assembly in the edition this weekend.

The House of Assembly scandal is a story a newspaper like The Independent was designed to tackle. Much of the interesting detail takes digging and leg-work such that it doesn't matter if the competition is a daily outlet. There's plenty for everyone.

Remember the comment made here about the Indy being a guilty sin? Well, this is the scandal for the purpose. As much as people like Harvey Hodder can bitch about the story, the Indy could be the paper everyone turns to on the weekend to find more detail on a huge public issue.

Whether that happens past this weekend depends on two things:

First, the Indy has to get this week's story dead-accurate factually. Linking the current allowance system with the one that existed before 1996, for example, would be a fundamental cock-up that may fit some people's perceptions. It just isn't accurate. Anyone who mentions the Morgan Commission report from 1989 will have to tell us what that was meant to accomplish and how the system worked before 1989. Understanding the back-story helps understand how the current mess came to be.

Second, the Indy has to do the basic research that leads it to the other facets of this story beyond what is convenient and easy. For example, it isn't good enough to tell us what the local indemnity and allowances are by themselves and in comparison to other jurisdictions.

Nope.

The Indy has to get into issues like what allowances can be spent on here and everywhere else. They will likely run into some roadblocks from people who will be uncomfortable having their spending habits held up to scrutiny, but hey: that's accountability.

So while you wait for the Indy to appear on Saturday evening, take a look at the summaries compiled by the Saskatchewan legislature as part of its review of members' salaries. They call it the indemnity - meaning salaries.

District budgets are something else and there isn't any online information on those amounts for each province. One Alberta member of the legislative assembly reported her constituency expenditure at around $87, 000. Note that it includes salaries of employees - something not included in House of Assembly district budgets.

One line item not listed is donations to charitable or non-charitable groups in her riding. In fact, there doesn't seem to be any place in Canada where elected officials can spend public money in such a fashion.

Yes but what about responsible?

Harvey Hodder carried on his act as the Scarlet Pumpernickel crusading in defence of members of the House of Assembly on Thursday.

He did an interview with the CBC Radio St. John's Morning Show about the brewing controversy between the Scarlet Pumpernickel and his nemesis Ryan Cleary of the Indy over the Indy's publication last week of accurate information inaccurately presented. Harvey took offense because it appeared - according to some - that most members of the House were overspending their allowances.

Anyway, in the course of said interview with Jeff Gilhooley, Hodder blathered and flopped around trying to explain the allowances members get.

Gilhooley asked him a simple question: is it right that members use public money to make donations to charitable or non-charitable groups?

Harvey clearly had not been briefed or skipped that part of the Official Briefing Note from the Ministry of Truth - otherwise known as The Tenth. He flopped even more than on the stuff he thought he knew. His answer was something to the effect that the rules said it was okay and besides I give my donations to educational and youth groups.

At no point did he explain why it would be okay for Harvey Hodder - Speaker, not Pumpernickel - to give public money to a group and collect a personal tax receipt for it, for example. He never tried to justify the rules he just said he followed them. The rules were apparently handed down on tablets from a mountain somewhere or otherwise appeared magically from some authority that cannot be identified or questioned.

(By the way, you'll notice a few things in the answers MHAs past and present have been giving on this scandal:

1. I wasn't responsible; it was someone else. I don't recall who it was exactly but I do know it was someone else. The Sullivan variation is: I merely represented the will of caucus.

2. I don't recall. Perhaps the most common answer, especially offered by members of the group responsible for overseeing House operations. This is usually followed quickly by, but I do remember I was not there for that meeting. If the records show I was there, I don't recall that coming up for a vote and I voted against it. This was Tom Rideout's answer to reporters one day; other's have uttered similar lines.

3. I only followed the rules. This one is a favourite since it never explains what the rules were, who set them - the MHAs themselves - or attempts to justify them. It's the local equivalent of "I vuss only folloving ooorders".)

I digress.

At least Hodder finished with a flourish that was vaguely reminiscent of the Ming's Bight amateur dramatic society production of A Few Good Men featuring the late Don Knotts in the role of Colonel Nathan Jessep.

"We are not afraid of the truth" sputtered Hodder.

Uh huh.

But if I want to review allowance claims of members to see how public money is being spent, will Harvey show them to me as he promised he would during the interview?

Don't hold your breath. Under the Access to Information Act, the House is exempt from any disclosure. Now of course, the MHAs can decide what records to release - if they want to. Something tells me though, that we'll be hearing a lot of one of the stock House answers when the request gets turned down:

"I am only following the rules."

And then MHAs will sputter on about how unfair it is that people distrust politicians and that politicians are getting smeared. They need only look in the mirror to understand why the public is so intensely cynical of people who make the rules and talk about accountability and then deny anything and everything all the time, as convenient.

Accountability is not without responsibility and that's the word our elected members seem to forget.

Williams boosts size of cabinet in wake of scandal

Updated: 15:30 hrs 05 Jul 06

Danny Williams increased the size of his cabinet today in the wake of a growing scandal over spending within the House of Assembly.

Kevin O'Brien, a pharmacist from Gander, takes over the Department of Business. Known at Bond papers as the Department of Danny this was supposed to be the centre of major new policy initiatives to develop the economy. Instead it turned out to be a backwater. Reputedly, the deputy minister of the department had great difficulty getting in to see the minister in a timely way. until this morning, Danny was the Minister of Business.

Kathy Dunderdale replaces Ed Byrne as Minister of Natural Resources. Byrne is under investigation for alleged overpayments on his House allowances. Dunderdale's appointment increases the Premier's control over the direction of oil and gas policy in the province.

Replacing Dunderdale at Innovation, Trade and Rural Development will be Trevor Taylor.

Taking over Taylor's old job at Works and Transportation is Lake Melville MHA John Hickey.

St. John's South MHA Shawn Skinner is as parliamentary secretary to the Premier while Charlene Johnson holds the job of parliamentary assistant to the Minister of Natural Resources.

That brings to 20 the number of government caucus members holding cabinet or parliamentary secretary/assistant portfolios. Of that number 15 are in cabinet, including Williams.

Roger Grimes' last cabinet numbered 19 including the Premier.

Who's little friend are you?

Paul Oram, first elected to the legislature in 2003, has one of the gold rings everyone is wondering about.

Paul called one of the local call-in shows today to explain how he came to have one of the golden circles.

Turns out that he received the ring about a year ago from "a friend". Paul wouldn't reveal who the friend was, although he was quick to deny that he received the ring from the legislature's former financial operations director.

According to Oram, once he found out there was a problem with the rings, he returned it to the Speaker's Office.

Hmmm. This is the same Speaker's Office (right next to the Clerk's Office) where the Auditor General couldn't find rings, pins and fridge magnets.

The story gets curiouser and curiouser.

Any bets that one of his "friends" calls Paul and suggests he stay off the Open line shows?

The process isn't fine, Mr. Noseworthy

Auditor General John Noseworthy said on Tuesday that the process he followed in auditing the House of Assembly was fine and didn't need any changes.

Here are just a few of the problems with the supposedly fine process:

1. An interpretation of what constitutes working papers of the Auditor General that prevents those being investigated from seeing the very documents they are being asked to explain. It's a basic principle of justice that an accused individual can confront the individuals and evidence being used against him. Self-serving interpretations don't make for a bullet-proof audit. The fact that this can even be raised as an issue potentially compromises any subsequent investigation.

2. Reports that provide incomplete or inaccurate information. Forget the quirky way of reporting the fiscal year. AG Noseworthy's reports do not provide sufficient information on the process followed or the information collected to support conclusions of anything beyond overspending. Part of the confusion dogging anyone trying to pick sense of the whole mess - The Independent included - is that no one has provided a simple explanation of what was supposed to happen and what actually happened. The AG hasn't told us what led to the audit in the first place, how far back in time he and his team went. heck we don't even know if he was asked to look at specific issues by the Internal Economy Commission or just conducted a routine audit and uncovered problems.

Take away the mandatory blather in the Ag reports and you wind up with four reports on members of the House of Assembly that in total wouldn't cover a single 8.5 X 11 sheet. There is a great deal of background detail missing from the reports. For example, one of the nice things to know would be how much each member was entitled to claim - in total - and what the discrepancy was between that number and the amounts actually paid. Part of the problem with the Indy's reporting this past weekend was confusion about the most basic of information - stuff the AG should have already explained to everyone in plain English.

As for AG Noseworthy's claim he has evidence of misspending dating back to 1989, we are all waiting to see any evidence to back that one.

3. Pull the other one. According to the Auditor General, Wally Anderson and Randy Collins made no claims for travel for three of the four years he reviewed. When they did submit claims it was for a tiny fraction of travel spending by St. John's-area MHA Ed Byrne.

If AG Noseworthy, is right then there are much bigger problems at the House of Assembly than mere misappropriation of funds by some members.

Something tells me the AG's work is incomplete; however since he didn't described for us the work he did complete in reaching his conclusions, we just don't know. Taken together with all the other issues in this audit, AG Noseworthy's word just isn't good enough.

4. "Do I look like Gil Grissom?" After standing on his hind legs and insisting that having claim forms with a signature was evidence that the individual under review actually signed the forms, AG Noseworthy admitted on Tuesday that police investigation will have to determine if documents he attributed to four members of the House were forged.

If the AG process was adequate, he would have already ruled out forgery as a possibility before alerting police to a problem. AG Noseworthy would have described the process of submitting claims, who had opportunity to forge claims and how he eliminated the possibility of fraud before accusing anyone of criminal activity.

As it stands, we now have claims made by the Auditor General that don't even meet the sniff test of thoroughness.

5. I can't tell you if the items were even delivered. Does that mean you looked and couldn't find them or never looked in the first place? Given that rings and other items mentioned in the $2.8 million questionable spending report started turning up less than an hour after the report was made public, it sure looks like the audit team didn't do their job very well.

6. All is well... sort of. When the story broke three weeks ago, AG Noseworthy was everywhere insisting that changes made at the House of Assembly in 2004 "fixed" the problems. The Byrne report appeared to confirm that since the alleged overspending stopped at the end of Fiscal Year 2003.

Two weeks later, AG Noseworthy details alleged overspending that carried on two years after the changes.

Those changes included not only hiring two more financial staff in the House of Assembly but, apparently, requiring that claims had to be submitted to the Comptroller General with all supporting documents in order for payment to be made.

$200,000 later, it turns out the controls were less than adequate and that all that was well two weeks ago is apparently not so well after all.

7. Maybe I should end this here. Perhaps the finest proof that AG Noseworthy's approach to this matter was inadequate is the unseemly haste with which he ended Tuesday's news conference once reporters started asking tough questions.

Much of what they sought was the same information Noseworthy had volunteered freely two weeks ago. However, at some point over the weekend, someone advised Noseworthy to do the smart thing and restrict his comments to the facts he was making public.

As it is, his free-wheeling accusations have tarnished reputations of all current and former members of the House of Assembly, possibly opened up legal defenses for those he accused and generally created an environment in which factual information is in short supply and rumour and innuendo are running rampant.

If this is a perfectly fine process, we should all hate to see one that was shagged up.

The Lard of the Rings

For those still seeking a good name for the House of Assembly scandal, consider this one:

The Lard of the Rings.

The $69, 000-worth of gold rings seem to symbolize the $4.0 million in alleged misappropriations and inappropriate spending and that spending, in and of itself appears to be lard or fat.

We can shorten it to Ring-gate from those who like their scandals to be named derivatively.

The inscription on the One Ring from Tolkien even seems oddly appropriate:

One Ring to rule them all.
One Ring to find them.
One Ring to bring them all,
and in the darkness bind them.

The Scarlet Pumpernickel

The seek him here.

They seek him there.

But Harvey Hodder - otherwise known as the Speaker of the House of Assembly - only seems to turn up at the oddest of moments during the scandal in his precincts over alleged misappropriation of over $4.0 million of public money.

Hodder stayed silent when the story broke and did absolutely nothing in response to alleged misappropriations that occured right under his nose. Instead, Hodder surrendered his authority as Speaker of the legislature to the Premier and cabinet.

Hodder popped up briefly last week to criticize some of his fellow politicians for their taste in jewelry.

"I don't know why anybody would want to wear these gaudy looking rings, but that's their business," Hodder said.

He brandished one of the rings, supposedly turned in by a House staff member.

Then the lawyer for the former financial director of the legislature told reporters that Hodder had been visiting the fellow in hospital attempting to elicit a confession. Mr. Speaker was acting oddly if not downright suspiciously, especially given that in another interview with CBC, Mr. Speaker Hodder fingered his own former employee as the guy at the centre of the scandal. Hodder conveniently forgot to point out that he had responsibility for supervising the House and its operations.

Surprisingly, Hodder stopped doing interviews after those two self-inflicted wounds.

That is, he stopped speaking to news media until Tuesday, two days after a story appeared in The Independent that inaccurately conveyed some information about members of the legislature and their allowances and spending. Indignant Mr. Speaker demanded unsold copies be withdrawn and a new front page be printed with a full retraction.

Tough talk from a weak Speaker who has demonstrated repeatedly these past two years he is nothing short of incompetent in discharging the considerable responsibilities he holds. Too bad Hodder didn't discover his backbone a few weeks ago when this mess first appeared.

As if that feeble display were not enough, Mr. Speaker's condescending tone about rings - at a time when only Liberals had fessed up to owning them - was shown to be ill-timed if not downright disingenuous.

It seems that seven of his colleagues from the Progressive Conservative caucus have gold rings. That means Harvey likely knew all about the rings some time ago; the House is just too small a place to hide such "gaudy" adornments from notice. But here's the bit that makes the story even more lame for the Speaker: one of the confessed ring-holders is none other than Roger Fitzgerald, deputy speaker of the House and a member of the House's Internal Economy Commission.

Harvey Hodder might just want to resign now and save us all the further waste of time and himself from further embarrassment. His little effort to right wrongs at The Independent couldn't have been more inappropriate or misplaced than if it was done by Daffy himself in the classic 1950s Looney Tunes adventure.

AG reports leave serious unanswered questions

Auditor General John Noseworthy finished his work on the House of Assembly scandal by filing three reports on two current and one former member of the House who allegedly received overpayments on constituency accounts amounting to more than $766, 000 for Fiscal Years 2002, 2003, 2004 and 2005.¹

However, the the reports on Wally Anderson, Ed Byrne, Randy Collins and Jim Walsh raise more questions than they answer.

For example, constituency allowances are supposed to include a travel component. This is the explanation for members from remote districts - such as Torngat Mountains - having an allowance of approximately $84,000 per year while members from urban districts have much lower allowances.

The Auditor General reports that Ed Byrne, who represents a constituency in metropolitan St. John's billed five times as much for travel as did Randy Collins, representing western Labrador and Wally Anderson, representing northern Labrador, combined over the whole reported period.

In fact, AG Noseworthy reports Byrne's travel claim for one year - at about $5, 000 - totals as much or more than Anderson's and Collins' combined claims for one year. For three of the four years, the Auditor General reports no House of Assembly travel portion for either Collins or Anderson.

Looking more closely, Byrne's claim for FY 2004 includes a travel allowance of $16,000, while Anderson reportedly claimed no more than 25% of that amount in FY 2005. AG Noseworthy reports no travel for Anderson in FY 2004.

On the face of it, this is extremely unusual. Either Anderson and Collins took minimal travel to their districts in the four fiscal years under review or AG Noseworthy's audit contains serious flaws that might ultimately undermine the credibility of the audits themselves.

Further, the Auditor General has indicated to news media that the requirement to submit original claims with supporting documentation was reinstated by the Internal Economy Commission in April 2004 (the start of FY 2004). However, the reports released Tuesday on Collins and Anderson show these two members were allegedly able to bill over $200,000 more than their report allowance limits in the years after the administrative changes the Auditor general and others claim corrected the problems.

Simply put, the supposed changes to the administrative rules should have prevented $200,000 in alleged overpayments from having occured in the first place. in Collins'' and Anderson's cases, these amounts are almost half the total they are alleged to have received in overpayments.

The Auditor General's latest reports bring the total alleged overpayments to four current and former members to more than $1.0 million. Overpayments for Wally Anderson and Randy Collins are alleged to have been made for the period FY 2002 to FY 2005. Overpayments for Ed Byrne and Jim Walsh are alleged to have occured in FY 2002 and FY 2003. According to the Auditor General, almost 25% of the total overpayments took place after the problems were supposedly fixed. In one of his first comments on the scandal - when Bryne's report was released - AG Noseworthy said on several occasions that changes made by the IEC to House administrative practices in 2004 would prevent overpayments from occurring again.

According to some media reports, the Auditor General shied away from making the bold statements he did earlier on the likelihood of collusion - a criminal offense - as being at the heart of the overpayments.

Criticism of the Auditor General has been mounting since he filed his first report three weeks ago. Some critics have focused on the accusations leveled by the Auditor General - such as collusion - which have not been supported by the skimpy reports made public.

Given the contradictions in the Auditor General's four reports, his work may be done but he has left more unanswered questions in his wake both about the alleged offenses and about the operation of the Auditor General's office.


_____________________________

¹ The Auditor general consistently reports fiscal years in a way that is at odds with the way the provincial government notes its fiscal years. For example, for the Fiscal year that begins in April 2002 and ends in March 2003, the provincial government refers to this as Fiscal Year 2002. The Auditor General refers to this as FY 2003.

For the sake of consistency, Bond Papers will use the more common Fiscal Year references.

World of the Psychic Auditor General

Consider this situation.

You are meeting with a provincial Auditor General who is interviewing you about some expense claims from three years ago. The AG has already stated publicly he considers the claims are dodgy, although to this point he hasn't named you publicly.

"Explain these, please," pronounces the AG, holding several forms in from of him.

"May I have a look at them?" you ask. "It's been a few years and I'd like to refresh my memory."

"Hooooo no," says AG. "I am not permitted to show you any documents." He clutches them tightly to his chest.

"That's the law. Now I think you fiddled these claims so please explain this one for example." He holds up a sheet plucked from the middle of the pile. It is indistinguishable from a gajillion other such forms.

"Is this an audit or a test of my freakin' psychic ability?"

"Come, come now. Your attitude isn't helping."
______________________

Sounds asinine but it isn't much beyond what several members of the House of Assembly have apparently faced in the audits related to the House financial fiasco.

According to Auditor General John Noseworthy, he is not permitted to show people being interviewed any papers related to his investigation. He hasn't referred publicly to any specific section of the Auditor General Act, but based on his comments to the Sunday Telegram we can guess it is section 21.

That provides the AG and his staff must hold their work confidential.

Makes sense. God knows you wouldn't want the Auditor General in front of the news media waving around forms and making all sorts of accusations before he has finished his work.

Oh.

Yeah.

Right.

But here's what s. 21 says:

The auditor general and each person employed in the office or appointed or engaged to assist the auditor general for a limited period of time or in respect of a particular matter under section 28 shall keep confidential all matters that come to his or her knowledge in the course of his or her employment or duties under this Act and shall not communicate those matters to another person, except as may be required in connection with the discharge of his or her responsibilities under this Act or under the Criminal Code. [s. 28 allows for the hiring of temporary staff support.]

Now Auditor General John Noseworthy has some clever lawyers and Noseworthy himself has conducted his fair share of audits. Presumably both the AG and the lawyers can read plain English. This section of the AG Act makes it pretty obvious that an AG is permitted to disclose certain documents as required during the conduct of an audit or investigation. It's a fundamental element of our system that people should have a right to confront any individuals or other evidence being used to accuse them.

Even if there was no suggestion of anyone doing anything wrong, it would simply make common sense to allow an individual being interviewed to have a chance to review certain documents in order to refresh his or her memory. After all, it is an audit, intended to get at the facts of what occured.

It certainly appears AG Noseworthy has either applied a particularly stupid or a particularly self-serving interpretation of his legal powers in this case. Perhaps he should turn to the shrine in his office every once in a while and ask "What would Sheila do?"

She'd probably hand the guy being audited the bloody form, if for no other reason than to ensure the whole thing doesn't get tossed because of questionable audit practices and funky interpretations of plain English.

AG Noseworthy gives us yet another reason for a public inquiry.

A counterpoint to trash talk

Check out the Imperial War Museum site dedicated to the Somme.

This is a stunning site with solid introductory information and a balanced, well-informed perspective.

It stands in stark contrast to some of the nonsense spouted by our man in Ottawa, for example, on a documentary aired last week by CBC Radio.

Question of the week?

vocm.com has left its public inquiry question up now for about three days.

That's long enough for some people who didn't vote to climb on board and lower the percentages from 75/18 in favour an inquiry - after the end of Day 1 - to now when all three categories, yes, no and not sure are about even.

Since when is Question of the Day supposed to be "Question-of-As-Long- as-it- takes"?

The pressure mounts

Public support is growing for a public inquiry into the operations of the House of Assembly.

At vocm.com the Question of the Day results show 75% of respondents favouring a public inquiry with only 18% opposed. It isn't scientific but it does indicate there is a public mood in favour of a more far-reaching inquiry than the Williams administration has suggested lately.

As The Current magazine online points out, Simon Lono has started an online petition.

Deputy Premier Tom Rideout says the time is not right yet to decide on an inquiry. The time has been right, Tom, since Day One. let's see what the Premier does hwne he gets back from France and receives publicly the report for Auditor General John Noseworthy that he has had privately for over a week.

Commemoration Day, 2006

Some time ago, I planted Forget-me-nots on my front lawn. Each June, they sprout and spread wildly. They get cut when the lawn is mowed but they always come back.

The pretty blue flowers are small but they never fail to catch the eye across the deep green of the lawn. In a little ravine just a few hundred metres from my house, the little flowers grow wild along a small stretch of river that flows, ultimately past Bowering Park and on to St. John's Harbour.

It's easy to understand why Forget-me-nots were chosen as the flower for Commemoration Day. Aside from their name, they are everywhere by July 1st, the anniversary of the opening day of the Somme offensive in 1916 when the Newfoundland Regiment was all but wiped out in their assault on German trenches near Beaumont Hamel.

On July 1st, 1916, the Somme valley was not the muddy pile of trenches so familiar as an image of the Great War. Rather, the lush farmland was largely untouched by heavy shelling even after the massive preparatory bombardment that lasted the entire week before the infantry assault on the fateful Saturday morning. Green grass was everywhere.

This year marks the 90th anniversary of the tragedy in which the 1st Battalion, the Newfoundland Regiment suffered the highest casualties of any battalion in the British Army at the time. Virtually every man who stepped over the parapet and advanced toward the German lines was killed or wounded that morning. Only the 10% cadre left out of battle and the battalion headquarters escaped the slaughter.

The casualties included:

- 14 officers and 219 other ranks killed or died of wounds;
- 12 officers and 374 other ranks wounded; and,
- 91 other ranks missing

Miraculously, some men did manage to escape unscathed. Lieutenant Owen Steele, serving as officer commanding D Company recorded after the battle that 16 men of the company returned to the Newfoundland trenches unwounded. Steele, whose brother was wounded in the assault, was injured by German shelling on 7 July 1916 and died of his wounds.

The last survivors of the battle died more than a decade ago. Abe Mullett, the last of the original recruits, known as the First 500 or the Blue Puttees for the navy coloured material of their original leggings, died in 1993. The last known survivor of the battle, Walter Tobin, passed away in 1995. Ron Dunn, died in 1993 as well, having survived the battle in 1916. He was wounded in the stomach and staunched the flow of blood with the field dressings from his pack and clumps of grass torn from the French soil.

Newfoundland's participation in the Great War produced profound changes in the small Dominion. The regiment marked the first national effort that was not divided or organized along sectarian lines. Efforts at home to assure the appointment of officers based on sectarian lines was firmly resisted by serving officers on the grounds that ones religious beliefs were irrelevant in wartime. One was only concerned that an officer or soldier was capable to doing his job.

Commemoration Day was established by an act of the House of Assembly in 1916 to be held on the Sunday nearest July 1st each year. It was one of the first Great War remembrance days established in the Commonwealth. Although the statute remains in effect, common practice has been to hold a remembrance parade and wreath-laying on the morning of July 1st each year with the remainder of the day devoted to Canada Day.

In the 1920s, memorials were erected by the Newfoundland government at five sites in France and Belgium. Each marks a significant moment in the regiment's history during the Great War. At each stands a life-size bronze caribou looking toward the German position. The main Newfoundland national memorial is fittingly located at Beaumont Hamel. A sixth caribou (right) stands in Bowring Park, in the west end of St. John's facing across the ocean toward northwest France and Flanders.

The National War Memorial was erected on Water Street in St. John's in 1924.

Most significantly though, survivors of the war and their fellow Newfoundlanders and Labradorians chose to establish as a permanent memorial to the fallen a new non-sectarian college that later became Memorial University.

The Somme offensive and the British Army's performance in the Great War continue to be a source of controversy. More recent scholarship has taken very different view than the one commonplace in the anti-war climate of the 1960s. The Newfoundland Regiment's experience in the Great War has largely escaped examination by Canadian historians. Comparing the experience of the Newfoundlanders and Canadians might serve to temper some of the interpretations that have been applied t Canada's war effort at the time.

Historians from Newfoundland and Labrador have given the history of the Dominion's war effort some attention, but by no means to the depth it deserves. Popular attention continues to focus on Beaumont Hamel.

Some continue to abuse the events of 1916 for their own purposes and ascribe to the war an effect on Newfoundland and Labrador it did not have. The people of Newfoundland and Labrador did not pay for their sacrifice with a loss of democracy. This is merely a dolled up version of a convenient townie myth that has existed largely unchallenged since the 1920s.

Such an interpretation, which sadly will be broadcast across Canada this weekend as if it were credible, makes a mockery of what did occur.

Regardless, the Forget-me-nots will bloom again next year at this time, as they have for decades. It is hard to forget what occurred almost a century ago, even if some find it inconvenient to remember.

J'accuse?

Not surprisingly a lawyer representing one of the five people named thus far in the House of Assembly spending scandal has taken issue with the way Auditor General John Noseworthy has been conducting his business. Vernon French is the lawyer representing Jim Walsh, a former Liberal member of the House and a former cabinet minister.

French and Walsh met Noseworthy on Tuesday, although French said Noseworthy would not allow him to examine records that he has collected.

"The AG refused to provide copies of the requested information and, in fact, refused to permit me to look at any of the documentation in his possession," French said.

One of the most obvious ways to mount a defence here is to attack the credibility of the accuser.

Frankly, Noseworthy has given plenty of ammunition with his claims and statements. Bear in mind that nothing has been presented publicly thus far other than evidence that something occurred. One possible explanation of what that something is - criminal activity, for example - has been largely implied by Noseworthy in the absence of corroborating evidence.

Take for example his comment that he couldn't find any evidence that the pins, fridge magnets and rings had been purchased. Amazingly rings started popping up within seconds of the news story hitting the radio and television. The next evening, television news could show coasters and other items covered by the expenditures.

Mr. Noseworthy's comment suggested fraud.

By the next day, any such implication had been severely damaged. It looked like - and may well be that - Mr. Noseworthy and his team simply did not ask for or go looking for the items in question.

In the same way, Noseworthy has called on police to investigate constituency allowances from 1989 to the present. He says that he has indications of misspending before his audit period but gives absolutely no indication of what indications he has.

The year 1989 is a long way from his constituency accounts audit that went back nor further than 2000. On another day, Noseworthy acknowledged that one of the key checks in a good system of checks and balances existed prior to 2000. That system has not been replaced to this day, apparently, despite claims by the current administration that everything at the House of Assembly is now fine. So on what basis is AG Noseworthy basing his claims? Hunches? Apparently so.

Let's be clear though: Noseworthy has uncovered something. It could be criminal activity. It could also be overspending on an expense account, which is not a criminal matter. It could be violation of conflict of interest rules and the Public Tender Act. It is serious but by no means as serious as accusing people of acting in collusion for a criminal purpose.

Let's also be clear that being involved in a matter such as this is heady stuff. It isn't every day that someone has such praise-filled coverage in which one is described as smart and meticulous and is given credit for "bringing down" this one or that one in a manner reminiscent of Eliot Ness. Gaggles of reporters hang on Noseworthy's every word. It would turn any but the most strong head.

However, the conduct of a proper investigation sometimes must take place with very little being said publicly save that an investigation is underway. There are many reasons for doing so, not the least of which is ensuring that any court proceedings cannot be compromised by inappropriate publicity.

It is heady stuff to run about shouting "J'accuse". But if the police investigation does not support the initial claims or if a lawyer can point to an investigation starting from a false premise, we might find ourselves left with a scandal of tremendous proportions and no one held accountable for anything because of someone going bald-headed at it.

Perhaps it would be best if the Auditor General exercised considerably greater restraint in his public comments from here forward. There will be plenty of time for accusations backed by evidence from people whose expertise is the Criminal Code of Canada.
______________________________

The case for Mr. Hodder's resignation

Speaker Harvey Hodder claims he was shocked by revelations of the Auditor General.

At this point, the only people who should be genuinely shocked are the people of Newfoundland and Labrador.

They should be shocked by information about the House of Assembly - for which Mr. Hodder is responsible - and about Mr. Hodder's own apparent actions and those of the Internal Economy Commission (IEC) which he chairs.

By Mr. Hodder's admission he had some misgivings about the financial operations of the Assembly when he took the Speaker's Chair in 2004. Apparently, there was sufficient awareness that Bill Murray, the former financial operations director was in a conflict of interest in that his own private company had been doing business with the Assembly.

The Auditor General noted in his most recent report:

Furthermore, the Clerk of the House of Assembly indicated that, after writing all staff including the former Director in February 2004 advising that they had a responsibility to disclose any conflict of interest activity, he received written notification from the former Director that business activity between Unique Keepsakes and the House of Assembly would cease. However, I found that the former Director appeared to circumvent this commitment by having Unique Keepsakes' transactions go from direct payments recorded in Government's financial management system (FMS), to transactions directly with the various Members of the House of Assembly which were then claimed through their constituency allowance and therefore undetectable through FMS.

This last statement - "and therefore undetectable through FMS" - refers to the provincial government's financial management system. This is the computer-based administration system which is intended to verify claims are legitimate and appropriate and then to generate payment. In order for any other payment to be generated for any government department, completed claims, for example, with original supporting documents must be sent to the Comptroller General. It is the responsibility of the Comptroller General to assess the claim and provide the final sign-off. Without original documentation, indeed without information apparently beyond the name of the payee and the amount to be disbursed, there would be precious little the Comptroller General could do to verify the authenticity of payment demands.

For the outset, the key decision that apparently facilitated the entire fiasco has gone unnoticed. At some point around 2000, the IEC allowed the House financial officer to hold the complete control of financial transactions and determined that he did not have to supply documents to the Comptroller General. At no point after 2000, and apparently not until the past few weeks, successive Speakers of the House of Assembly and the IEC did not alter that requirement.

It is the simplest of simple checks. It is the most obvious of the simple checks that would likely have made the entire spending fiasco from occurring in the first place. Yet it was not done. So much for Mr. Hodder's misgivings.

With that in mind, the accusation that Mr. Hodder recently visited the former financial director in hospital should raise further alarms. His likely excuse - that it occured because of a sincere human concern for Mr. Murray's welfare - does not pass the sniff test of credibility. He may well be concerned about Mr. Murray's health; who wouldn't be. In the context of the alleged misappropriations, there simply is no reason why Mr. Hodder ought to be visiting the individual identified as being at the heart of the alleged misappropriations and misspending.

If the full accusation is true - that is, if Mr. Hodder spoke with Mr. Murray about events in the House and either attempted to or was perceived as having tried to elicit a confession from Mr. Murray - then we have cause to be suspicious of Mr. Hodder's actions and his motives. Mr. Hodder may well be innocent of anything at all. He may well be innocent of anything but being asleep at the switch, but his actions in visiting the hospital are grossly inappropriate.

Even if all this were not true, there are other questions about Mr. Hodder's behaviour in recent days. Mr. Hodder held responsibility to receive the Auditor General's report. Together with the IEC, he had the authority and the responsibility to take the actions of calling in the police, instituting any other inquires, and, of course, advising the public fully of what was taking place.

He has done nothing of the sort. Instead, Mr. Hodder has surrendered the legislature to cabinet and his own office to the first minister.

All he has done in this whole fiasco is appear with several news media a week after the story broke and express his shock and amazement at events. Mr. Hodder has taken no responsibility to clean up the mess and instead points his elbows toward the external auditors for failing to find anything wrong in the first place.

All this points to two straightforward things which must occur.

First, Mr. Hodder must step aside, even if only until the investigations are complete.

Second, and most important, the cabinet must appoint a public inquiry without further delay. This is the only way the public can be assured that all relevant information will be disclosed, those responsible identified and held accountable and the innocent exonerated.

At this juncture, nothing less will do.

Nervous much, Harvey?

According to CBC television's Here & Now supper-hour news show, Bill Murray - the former financial operations director at the House of Assembly - has local lawyer Averrill (A.J.) Baker representing him.

So far, everyone who has been to see the Auditor General has lawyered-up with the best and/or best-known criminal barristers in town. By my count, there are only a couple left so people better hope they fall under John Noseworthy's scrutiny soon. Otherwise it is gonna be hard to find anyone other than a slip and fall specialist to help deal with the criminal probe that grows by the day.

So finding that Murray had a lawyer wasn't a surprise. It was what Baker said: Speaker of the House of Assembly Harvey Hodder - Murray's boss and the guy responsible for the House's administrative procedures - paid Murray a visit in the hospital where Murray is apparently undergoing treatment.

Baker claims Hodder tried to elicit a confession from Murray. As Baker noted, anything Murray may have said wouldn't be admissible in court.

That's not really the point.

Hodder shouldn't be anywhere within a hundred miles of Murray. If Baker's accusation is false, the little visit just looks odd.

But if Baker is correct, then Harvey looks like a really nervous guy and the visit could be called suspicious. It's the kind of thing the fellows down at Fort Townshend will be looking for as they bring the whole sordid mess at the House under their scrutiny.

Just remember, Harvey and everyone else. The Constab these days are not the guys who used to get a chuckle rousting teenagers making out in the backseat of Dad's Chev.

Nope, these days the men and women at Fort Townsend are among the best cops around. And if that wasn't good enough they can always bring in Mounties or whoever else they need to find.

And even if you didn't do anything wrong, Harvey, you might wind up looking for a barrister of your own... just because you acted very suspiciously.

Hodder fits the Premier's frame

Speaker of the House of Assembly Harvey Hodder commented today for the first time on the scandal in his office.

Hodder chairs the Internal Economy Commission.

He says he had concerns about some issues when he took over in 2004. Hodder added he felt the big mistake was barring the Auditor General from the House of Assembly in 2000.

Oddly, Hodder gave no indication of the changes he implemented in 2004. Evidently, whatever changes he implemented weren't enough. Of course, Hodder is now claiming credit for something that last week the Premier claimed credit for doing.

But that really won't get him out of the glare of scrutiny since Hodder is, after all, responsible for overseeing the operations of the House of Assembly.

But I digress.

Overall, though Hodder is sticking to the Premier's line and the focus on the Auditor General.

Hodder apparently made no mention to the key decision in 2000 and the real root of the issue. In 2000, IEC gave the former director of financial operations the power to have cheques cut by the Department of Finance without submitting supporting documents. This decision wasn't reversed in 2002 or even in 2004. It may have changed within the past few days, given the Auditor General's findings

The Auditor General notes that this is one of the decisions that facilitated the $2.8 million in questionable spending that continued almost two full years into Hodder's tenure as Speaker. It is also totally at odds with administrative practices in every department of government.

According to Hodder's version of events, it takes the Auditor General to point out that having one person responsible for all financial transactions is a recipe for disaster. That's another point noted in AG John Noseworthy's latest report. No one has indicated yet if the former Auditor General, who sat on IEC in 2004, brought this issue to Hodder's attention either. Maybe all this happened but that there was a concerted effort to hide facts from the people responsible for overseeing administration of the House of Assembly.

Of course, if the AG doesn't get around to auditing your books for over two years, Harvey, a few bucks might go astray in the meantime.

The pernicious frame

Auditor General John Noseworthy has stated he would like to see an audit of constituency claims going back to 1989. That's the year when the constituency allowance was first introduced.

"Go mad" would be the likely response. "Fill your boots if that will get to the bottom of the problem."

Part of the problem with auditing that far back starts from the assumption that the same system exists today that existed in 1989.

Demonstrably it isn't, even on the basis of the limited information on the current House of Assembly spending scandal that is in the public domain. Here's why.

When constituency allowances were first established, they were limited amounts of money intended to cover the necessary expenses of representing the people of the province. The rules stated clearly that a member of the House of Assembly was entitled to claim expenses for pins, a mail-out, Christmas cards for constituents and similar items. The amounts didn't vary from district to district or if they did vary it wouldn't have been by much. On the face of it, a mail-out to residents of a Labrador district with 2, 000 members would cost less than a district in St. John's with over 10, 000.

Members of the House of Assembly appear to have several other allowances to claim against, most of it referred to in the budget as "allowances and assistance". There was a constituency amount - for the pins, flags, and public meetings, but there was also a travel budget and that's the bit that would have varied and been obviously varied widely. It costs a heck of a lot more to get around Torngat Mountains or on the south coast of the island than it would to represent a St. John's constituency on a bus route. There is likely also an entertainment budget and for some members of the House, such as the leader of the opposition, those particular allowances might be higher than those available to an ordinary member.

Based on several conversations over the past week and on the information the Auditor general has made public, Bond Papers has come to the conclusion that what changed was not how the amounts were presented but how the Internal Economy Commission looked at members' spending. Sometime around 1998, the view took hold that members' allowances were to be looked on as a global amount to be allocated as an individual member saw fit. Fewer restrictions were applied and, consistent with the approach taken in Ottawa, the Auditor General was kept out. If a member didn't overspend the total budget - or at least didn't overspend by much - then everything was viewed as being just fine.

That date - 1998¹ - matches up with the date for the $2.8 million in questionable spending described by the Auditor General on Tuesday. It also predates, but only by a year or so, the changes to the Internal Economy Commission Act in 2000 and subsequent decisions by the IEC that have already been identified has possibly having contributed to the scandalous events.

Another part of the problem auditing back to 1989 - at this point - comes from something mentioned by AG Noseworthy when talking about questionable payments to four companies.

For one thing, AG Noseworthy told the public on Tuesday that the former finance director of the House had the bizarre practice of over-writing his spreadsheets for each year. We have no idea how long this has been going on. As a result, AG Noseworthy and his officials have had to reconstruct the accounting system.

The size of that task would be daunting: hundreds of accounts and tens of thousands of transactions for one hundred or more individuals over the past sixteen years. Rebuilding those records would take years, and this is allowing that complete records of claims and cheques exist back to 1989.

Even at this stage AG Noseworthy could reasonable have only re-built a relatively small portion of the total picture. There may be enough to indicate there is a wider problem but there certainly isn't a clear picture of what the rules were, what monies were claimed and paid and where those monies went. He may have only been able to reconstruct a general outline so far and therefore cannot see the detail in which the various demons will surely be lurking.

The most obvious approach to take from here onward remains the same as it has been since the outset. Given the scope of the problem and the number of people potentially associated with the problem - many of them still sitting in the House - the House of Assembly or cabinet must appoint a public inquiry.

It can run simultaneously with the police investigation with both being supported by the best forensic auditors available.

If there is a need to investigate back to 1989 or even before that, then by all means let's do it.

But let's start with the period in front of our faces.

Let the investigation be conducted, in part, by a commission of inquiry.

The pernicious frame that has been applied to date and lately the unsubstantiated accusations by the Auditor General about events back to 1989 might lead us in the wrong direction.


___________________________________

¹ The Auditor General's report released to date follow the practice of referring to the fiscal year by the calendar year in which it ends. For example, the Auditor general would refer to the current fiscal year as FY2007 even though we are in calendar 2006 and the budget approved earlier in 2006 is set for Fiscal Year 2006.

By adjusting the dates given in the Tuesday report, the year identified as 1999 is actually FY 1998 by the way the budget would have been set.

The case for a public inquiry

With the latest revelations from the Auditor General of Newfoundland and Labrador, it is difficult to imagine that cabinet will not appoint a public inquiry to get to a complete picture of what happened in the administration of the House of Assembly.

The report from Auditor General John Noseworthy describes unusual circumstances surrounding payment of more than $2.6 million to three suppliers and a further $170, 000 paid to a company owned an operated by the former director of financial operations in the House of Assembly.

This brings the total of allegedly misappropriated and misspent public money to almost $4.0 million. In all likelihood, that number will go higher.

Unfortunately, the public has only a very limited amount of information. The Auditor General's reports, suggestive as they might be, are actually grossly inadequate as a guide to any further action or as an audit by a legislative auditor. Where there should be portraits in sharp focus, we sometimes find stick figures.

The epitome of this type of work is that conducted by Auditor General Sheila Fraser into spending at the Office of the Privacy Commissioner. It is thorough and well documented. AG Fraser's conclusions are, in every respect, supported by the information contained in the report itself.

By contrast, AG Noseworthy's report on Edward Byrne merely demonstrates that something unusual occured. There is no discussion of administrative practices within the legislature, nor does the report identify the nature of the claims allegedly submitted by Mr. Byrne. The report on payments to certain suppliers contains a number of comments that suggest a substantive problem within the legislature and potentially with relationships between the legislature and the Department of Finance. These are not to be addressed by AG Noseworthy, nor will they be dealt with by the police investigation currently under way.

AG Noseworthy has also made claims that are not yet supported by any evidence. He has suggested collusion - a criminal term - yet he has provided insufficient detailed information to support the contention.

Likewise, AG Noseworthy has advocated an audit of member's spending dating to 1989. He does this despite fairly clear evidence in what he has provided to the public that this
circumstance dates from about 1998 and continued and indeed may well have been facilitated by certain decisions taken by the legislature and by the Internal Economy Commission in Fiscal Year 2000 and afterward. Investigators can certainly go back to 1989 or even before that if they wish, however, there is a prima facie case for focusing attention a little more recently.

At his news conference today, AG Noseworthy was asked a sensible question by one reporter: "how did this happen?" His answer provided general and largely superficial comments. His report does give some clues to the issues that AG Noseworthy's work will leave unaddressed and which the police are simply not empowered to deal with.

Internal controls relating to purchases were basically non-existent:
- no segregation of duties - the former Director of Financial Operations ordered goods, indicated receipt of goods and approved company invoices for payment;

These internal controls were not solely the responsibility of the former director to implement. There were others within the House who had clear authority to provide direction on these matters. That such a situation continued for years is inexplicable unless further inquiry is made. A simple question on the signing and approval authorities within the House, asked for example the by IEC established in April 2004, answered truthfully, could have revealed the depths of the problem. We need to know if it was asked and if not, why not. We need to know also if it was answered truthfully.

- and although payment authorization was made on the Government's financial management system, it was most often performed by an official without seeing the original documentation.

This comment, almost cryptic in the Auditor's report, refers to a decision apparently taken by the IEC in 2000 and confirmed by subsequent IECs that the former director of financial operations need not provide any supporting documentation to the Comptroller General in order to generate payments. At the same time, however, we might wonder how it could be that some individuals apparently received overpayments on the order of 10 times the entitlement - something apparent even without documentation - yet no one detected this at all or apparently raised questions about it.

Much of the latest report seems to lay responsibility for the mess solely at the feet of the former financial operations director. However, the fact remains that the former director was accountable to the Clerk of the House who was in turn responsible to the Speaker and the Internal Economy Commission who were in turn answerable to the legislature as a whole. Perhaps the most remarkable aspect of the most recent Auditor's report is that questionable practices not only continued after April 2004 but accelerated from previous rates over the subsequent 21 months. Yet this is an aspect of the current scandal - in some respects the very heart of the entire matter - that AG Noseworthy will not be addressing at all.

If all that were not enough, somehow we must establish how the private sector auditors employed by the legislature after FY 2000 either were negligent or were duped.

Apparently the Auditor General will only be doing enough audit work to establish something odd occured. It will fall to the police - by AG Noseworthy's own comments - to look into any criminal activity. However the broader issues of administration, management and accountability will be handled some other way or ignored altogether. Those who had legal and moral responsibility appear to be escaping notice. They may have done nothing wrong; they may have been deficient in their actions. As it stands right now, they will escape any public scrutiny.

If we are left with these thin Auditor General reports and the widening police investigation, significant aspects of the House of Assembly scandal will not be addressed. Clouds will hang over more than ought to be overshadowed. This is unacceptable if our goal is genuine accountability. It is an unconscionable circumstance if our goal is to find the problems, fix them and restore the integrity of the legislature.

The only way the public can be assured of full and proper accounting is with a public inquiry. It need not be a long or complex inquiry, but it is - simply put - the only way of getting answers to all the questions raised by this complex and troubling episode. As argued here several days ago, in addition to a police investigation, itself supported by the finest forensic auditors available and experienced legal counsel, a public inquiry should be appointed.

The commission of inquiry would comprise ideally three individuals who, "by virtue of their considerable political and other experience, unimpeachable personal integrity, and commitment to parliamentary democracy can recommend all the measures needed to put the House in a proper state and begin the process of restoring public confidence in the most important of our public institutions."

Three individuals that come to mind are the current chief justices of the Supreme Court Appeals and Trial Divisions. A third individual is John Crosbie: member of the Privy Council, former minister of finance of Newfoundland and of Canada and former minister of justice for Canada. Others, such as Lynn Verge or retired Justice Bill Marshall have the requisite qualifications.

Make no mistake: AG Noseworthy's inquiries and the police investigation will not root out the answers to all the questions raised by this scandal which itself is without precedent in the province for over 80 years.

The case for a public inquiry has been made repeatedly in the past week. It now remains for the cabinet to make full and proper use of the Iron Fist which the legislature has provided in the form of a public inquiry. Anything else would be pulling punches.

The frame and the iron fist of cabinet

Less than a week after cautioning residents of Newfoundland and Labrador not to make hasty judgments about the financial scandal affecting the House of Assembly, Premier Danny Williams announced today measures that he claims will address the matter. The actions he is taking are guided, as much as anything else, by the frame he has placed around the issue.

That frame focuses on the Office of Auditor General and on moving forward from here with the Premier being seen as acting decisively to correct a problem.

Take a look at the release. It fits the frame perfectly. In a news release, the most important information for the reader is contained in the first sentence - sometimes called the lede - and in the opening paragraph. Here's the lede for the latest news release:

In light of recent findings of the Auditor General into the finances of the House of Assembly, Premier Danny Williams today announced that his government will build upon the successful reforms already implemented since forming government. The Williams Administration [sic] committed to transparency and accountability, and has demonstrated this commitment with several initiatives including passing the new Transparency and Accountability Act, Lobbyist Act and Access to Information legislation.¹

The second paragraph then builds off the first, confirming that the Premier is satisfied he was right all along and is doing all that needs to be done to handle the problems that have been made public. The actions announced on Monday include changes to the Internal Economy Commission Act that will clearly state the Auditor General can audit the House accounts, the appointment of Chief Justice Derek Greene of the Supreme Court Trials division to review member’s' salaries and allowances on a "“go-forward basis"” and implementation of other changes needed to correct the House of Assembly's internal controls and compliance.

Overall, one must know what occured and why before one can take corrective action on any problem. In this instance, the Premier is acting without knowing very much of anything save that something has occured. The Auditor General is still furiously reviewing the House accounts and producing tiny reports with the ink still wet. His copious media interviews contain claims but his one report thus far says little of substance beyond demonstrating that something wrong occured.

As well, the police investigation is only now underway and the larger issue of how the Internal Economy Commission operated will simply not be examined (see below).

Let's take the Premier's initiatives in order.

As far as the Auditor General is concerned, while this has been a key element of the Premier'’s frame for the House of Assembly misappropriation issue, it is not really the most important one in understanding what happened and why. The Auditor General can only detect problems after they have occurred. Since the Auditor General was allowed back to review the House books, the Premier'’s change to the IEC Act proposed on Monday is largely a cosmetic one.

Chief Justice Greene'’s task is one of the most curious aspects of a very curious approach to handling a scandal of this magnitude. Firstly, the Premier'’s news release makes it clear that while Chief Justice Greene will review salaries and allowances of members, the Chief Justice will not be acting with powers under the Public Inquires Act.

Under section 13 of the Internal Economy Commission Act, the House may appoint a committee of no more than three persons to review salaries, indemnities and other benefits with the powers of a public inquiry. The review is to be completed within 90 days and handed to the Internal Economies Commission for action. This confirms that the House is master of its own destiny and that members of the House are collectively responsible for appointing an independent commission to review salaries and benefits.

The Premier's charge to Chief Justice Greene is significant since it specifically prevents the Chief Justice from reviewing any aspects of the current scandal which may have arisen from the way in which the IEC discharged its responsibilities and which may affect any recommendations he makes. Since the Chief Justice does not have the powers of a public inquiry he cannot compel evidence from a witness or cause the production of any records. His powers are being clearly limited; the purpose of the limit is far from clear.

In short, Chief Justice Greene has been given a task that appears to be similar to requirements under the House of Assembly Act for setting salaries and benefits however he is reporting in this instance to the Premier and the cabinet to determine salaries for the House of Assembly.

As for the administrative changes, the Premier'’s news release on Monday makes it clear that the House of Assembly practices that likely contributed to the current scandal did not change in 2004. Rather, the only thing changed was the access to the legislature accounts for the Auditor General.

This is a significant acknowledgement on the one hand, however, it raises at least two unanswered questions that have potential significant implications. The most obvious question is why the IEC in 2004 did not put in place the simple administrative checks and balances which were obvious as long ago as 2000 when the IEC Act was changed.

There is also no potential for determining if the nature and amount of allowances is appropriate but that the IEC acted inappropriately. This is something Chief Justice Greene cannot determine since his powers have been purposely limited.

Did abuse continue after 2004? AG misreports date of audits

More importantly though, the second question is what, if any, misappropriation took place after 2004. The Auditor General has stated he is reviewing spending by the House of Assembly for Fiscal Years 2003 and 2004. This would cover the period from April 2003 to March 2005, given the government'’s fiscal year system.

However, the attachment to the Auditor General'’s one page report on Ed Byrne misidentifies the time period for the audit. The headings are for FY 2003 and FY 2004. The dates, though, are for FY 2002 and FY 2003. Only two payments appear to have been made in FY 2004 however it would appear, on the face of it that these payments actually relate to FY 2003.

This is no small matter. The Auditor General may have reviewed spending since May 2004 but his reports thus far have not indicated if he actually reviewed FY 2004 and found nothing or if he has simply not audited the period at all.

If administrative practices had actually changed in March/April 2004, then there would be no need for the Premier to announce those changes in 2006.

In "Reframing the issue", the Bond Papers raised the concern that, in his sincere desire to address an obviously grave issue, the Premier has effectively usurped legal powers he does not have. Monday'’s release confirms that this practice is continuing, although the Premier is suddenly conscious of this aspect. His news release concludes:

The Premier noted that the IEC is an autonomous body with representation from the Progressive Conservative and Liberal parties. Any changes to the operations of the House of Assembly would require approval of the SpeakerÂ’s Office and the IEC, and Premier Williams said he will be instructing his caucus members to ensure appropriate measures are undertaken.

Having already taken responsibility for decisions that are actually not his to make, this last paragraph raises even more questions. The Premier'’s news release on Monday suggests that he will ensure that salaries and benefits for the House of Assembly will be set by cabinet and imposed by the power of the government caucus. Even with the acknowledgement that the Premier lacks the legal power to do what he has undertaken, his comments suggest he will do it anyway.

It would be interesting to know if former New Democratic Party leader Jack Harris still holds the view he held in 2004, when he told the House of Assembly that the legislature made "provision for the Internal Economy Commission so the House of Assembly was not subject to the iron fist of the cabinet in telling the House of Assembly what to do."”
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¹ The Access to Information and Protection of Privacy Act was passed by the legislature prior to the 2003 general Election but not proclaimed by the grimes administration.

The Commission of Internal Economy - background

Like all legislatures that follow the parliamentary tradition, the House of Assembly in Newfoundland and Labrador uses a committee of members to manage the operations of the legislature.

The Internal Economy Commission Act establishes the membership and powers of the commission. House of Assembly operations include television broadcast of the legislature, production of a record of debates known as Hansard and maintenance of a legislative library to support the Speaker and the members in their duties.

The Act also provides other powers, such as the mechanism for reviewing members' salaries, allowances and other benefits.

Prior to 2000, money for House operations was maintained in accounts run by the legislature itself. Budget allocations were made each year but the House of Assembly maintained its own accounts as it had done since 1855. The Auditor general had full access to the accounts and supporting documents for expenditures.

In 2000, the House of Assembly approved amendments to the IEC Act that provided, among other things:

- money for House operations would come from the Consolidated Revenue Fund, maintained by the finance department through the Comptroller General, thereby eliminating the requirement for the House to maintain its own accounts;
- power for the IEC to determine who would audit the House accounts; and,
- power for the IEC to determine what, if any, documentation/information would be provided to the Comptroller General to support requests for funds in order to make payments.

The amendments bill went through all three legislative stages in a single day - May 11, 2000 - without amendment. There were surprisingly few comments by members.

Beaton Tulk, then government House leader said this - and only this - on second reading:

Mr. Speaker, I don'’t intend to belabour the points in this bill much except to say that some of the language that we see in laws governing the Internal Economy Commission Act dates back to responsible government days. What this bill clearly does is set out the duties of the IEC and the kind of duties that the IEC should carry out. They are more clearly defined in this bill. I would ask my colleagues to quickly move on passing the bill.

His Opposition counterpart, Loyola Sullivan said merely the following:

I have just a few brief comments because it is pretty straightforward and pretty routine. It does include that the accounts here shall be audited annually. I think as members of the House we have no problems with being subject to an annual audit here, and as elected representatives I guess we should be accountable there. We certainly endorse that increased accountability of Members of the House of Assembly, and we support that.

The longest comment came from Jack Harris:

I think it is symbolic in a way that the funds of this House were looked after by this House, that whatever was voted for the House was looked after internally by the House of Assembly, and that was recognized by the provision that had the Clerk physically handle the funds of the House. That is obviously being changed to bring it into line with the Consolidated Revenue Fund and the normal handling of accounts by government, with provisions to ensure that the Internal Economy Commission and the House retains its autonomy.

Similarly, we have a new provision which requires an annual audit of the accounts of the House of Assembly which I think is appropriate; that there be accountability through an annual audit. We are satisfied to support this bill and that the Internal Economy Commission should ensure that this annual audit is done, and that the auditor be appointed by the Commission as is provided for in the legislation.

In the controversy over the Auditor General's access to the house accounts in 2002, Sullivan reportedly sided with his fellow members of the IEC and backed keeping Elizabeth Marshall from her investigations. He now denies this, although there does not appear to be any public record of his objections anywhere.

At no point has anyone asked the former members of the IEC why they decided no documents needed to be sent to the Comptroller General, a practice which apparently remained in place until 2004 or may have remained in place until very recently. Itt was this decision which frustrated the checks and balances built into standard government administrative practices. As much as anything else, this decision facilitated any misappropriation of funds that may have taken place.

Since a number of people have been curious, following is a list of members of the IEC in 2000, 2002 and 2004. This list was compiled based on the official record of the House of Assembly.

Internal Economy Commission, 2000

Chairman: Speaker of the House of Assembly Lloyd Snow

Members: Doug Oldford, Deputy Speaker
Beaton Tulk, Government House Leader
Paul Dicks, Minister of Finance and Justice
Kevin Aylward, Minister of Forestry and Agriculture
Loyola Sullivan, Opposition House Leader
Tom Rideout, Opposition member

Secretary: Clerk of the House John Noel

Internal Economy Commission, 2002

Chair: Lloyd Snow

Members:

Bob Mercer, Deputy Speaker
Tom Lush, Government House Leader
KevinAylwardd
Joan Marie Aylward, Minister of Finance
Ed Byrne, Opposition House Leader
Loyola Sullivan, Opposition member

Internal Economy Commission, 2004

Chairman: Speaker Harvey Hodder

Members:

Roger Fitzgerald, Deputy Speaker
Ed Byrne, Government House Leader
Loyola Sullivan, Minister of Finance
Elizabeth Marshall, Minister of Health and Community Services
(replaced Nov 04 by Tom Marshall, Minister of Justice)
Kelvin Parsons, Opposition House Leader
Percy Barrett, Opposition member