SAC one of largest investments under new program

SAC Mfg, the defunct natural gas company, received one of the largest provincial government investments under its commercialization program, according to a report by Rob Antle in Saturday's Telegram.

SAC received $500,000 - the maximum possible - from the program in December 2006 but ceased operations in September 2007 after relocating to Alberta. Since 2006, the provincial government has spent $2.6 million in investments of varying sizes in local ventures.

SAC is the only company of the 10 to fail. The others are going concerns, some with highly successful products and services being marketed globally.

SAC is also the only investment from this program in which the provincial government took shares. Similar investments, i.e. equity stakes, in three other operations - Blue Line, Consilient and Orphan Industries - occurred in 2005.

Of the other investments, only NewLab Clinical Research also received the maximum. NewLab recently announced the company's merger with Newfound Genomics, another local company doing similar or compatible research.

VMT - Virtual Marine Technology - received $450,000. The company provides training simulators for lifeboat operators. Data Sentinel, which markets a USB-based computer data backup storage system, received $400,000.

Northern Radar of St. John's received $374,900 from the provincial government in February 2007. It manufactures a locally-developed high frequency surface wave radar system marketed by Raytheon. The company has one sale in Sri Lanka with others confirmed or pending, according to media reports earlier this year.

A development and acquisition program with the Department of National Defence was cancelled in 2006. A research program is pending but the Government of Canada is planning an open tender call which would see the radar developer compete with other companies to continue work on its own project. Two test and demonstration sites in Newfoundland operated for the Canadian navy have ceased operation since the project cancellation.

Superior Waterproof Coatings, of Gander, received $153,600 from the province for its exterior rubber sealant coating for residential and commercial buildings.

St. John's-based Jackman Brand Marketing received $125,000. No details of any of the investments were reported in the Telegram. [Corrected:] Mediclink received $57,900. The company develops and markets practice management software for optometrists and optic stores.

Dockside Appetizers received $31,000 and [corrected] a car safety apparatus for pets called Koby Seat received $2,132.

Only three of the 10 projects were announced publicly. Two other announcements are pending, according to the Telegram.

-srbp-

PUB job competition: what happened to it?

Last summer, the Public Service Commission (PSC) held a competition for the position of chief executive officer of the public utilities board.

They also held a competition apparently for the vacant commissioner positions at the same time.

Bond Papers e-mailed the PSC on Friday and asked for confirmation the competitions had been held, and whether they had been completed or cancelled.

The reply confirmed that a competition was held for "CEO, Public Utilities Board" and that "the resumes of the candidates who applied for the opportunity were assessed" by one of the PSC commissioners and a representative of the Clerk of the Executive Council.

That's it.

A second e-mail asked - for the third time, all told - if the competition was actually completed.

You see, saying that someone assessed the resumes doesn't say anything at all. That would be one step in a full selection process that included interviews, some kind of written test and then a final set of recommendations. Then again, if the resumes were deemed lacking qualification after they were assessed, the whole process might have come to a screeching halt.

The second e-mail has gone unanswered. The one from last Friday likewise has gone unanswered.

This aspect of the current public utilities board controversy is really quite interesting.

Recall that in the offshore board matter, the provincial government twice agreed to a process to select a person for the chair/chief executive job based on merit criteria. Andy Wells wasn't even in the first competition. That was halted when the Premier injected Wells into the whole thing.

In the second go-round, based on a statutory process, Wells didn't get the job then either.

Now this whole Public Service Commission angle pops up and the whole thing takes on another aspect.

First, the vagueness - let alone incompleteness - of the PSC reply is suggestive there is more to the story.

Second, there have been no appointments made since the competition to fill two vacant commissioner jobs at the board.

Third, the news release announcing Andy Wells would collect a second big salary for a second big job contained not a single reference to Wells having been selected by a competitive hiring process based on merit. you see, while senior appointments don't normally refer to the selection process, in this case the successful conclusion of a process would be a really good thing. These sorts of appointments haven't been handled that way and establishing competition based on merit goes a long way to giving cabinet appointments more credibility than they have.

Of course, the news release omitted a description of the public utilities boards full set of statutory responsibilities - like municipal water and sewer rates - so maybe there's nothing to it. That's like saying there was a competition for CEO of the PUB when the position was merged with that of board chair in 2006.

Then again, given that the whole appointment looks suspiciously familiar, maybe there was a failed or interrupted public service competition in this case as well.

Andy Wells and the conflicts of interest

Surely no one who has been following the strange case of St. John's Mayor Andy "Two Jobs" Wells was surprised at the revelations this past week that both Wells and Premier Danny Williams had discussed Wells serving as head of the public utilities board and staying on as mayor.

Note however, that they discussed it, as it appears, not after the issue was raised publicly, but before Wells was appointed to the public utilities board in the first place. An army of lawyers scoured the books to make sure there were no obvious impediments, like, say wording to the effect that the chairman can't hold down two jobs.

There is no conflict of interest, we are assured.

The lawyers from the city, the province and utilities board - presumably the ones who scoured originally - were dutifully trotted out to attest that there was no conflict in Wells serving as the mayor of a city which operates a public utility governed by the act - i.e. water and sewer services - and sitting as the head of the body that regulates the utility.

Well, sort of.

The board's in-house counsel, Dwanda Newman, wasn't quite as sure of the thing as some people seem to suggest, at least if you take a look at her comments in the Transcontinental story:

"The board has certainly — not to my knowledge — treated the City of St. John's as a public utility," said Newman. "That's certainly not the intention (of the PUB Act) to capture a large municipality that's incorporated by its own legislation. That's what I'd guess. I'm sure the intention was to capture a private company that's offering the service. But that's just a guess. I've only been here six years. I'm not aware of any history whereby the city was ever regulated by us."

Look at that last part again:

"...But that's just a guess. I've only been here six years. I'm not aware of any history whereby the city was ever regulated by us."

My lawyer guesses, I get the shakes.

Like my accountant telling me to go ahead and claim it and let's see what happens.

Or my doctor saying "geez, never saw that before."

Ms. Newman's cautions seems to derive from the clear intention of the public utilities act itself , in section 81, for example, to bring municipalities under the act for the purpose of fixing rates for providing certain public utilities. That section of the act dates from 1989.

It is by no means clear what the other lawyers are arguing given the plain English meaning of the statute's wording. Maybe they were referring not so much to the law as to the fact that the city of St. John's doesn't use the board to set water rates for its residents.

For his part, Wells is quoted by Transcontinental as saying:

"I was on the PUB 18 years ago and that definition was there [That the City of St. John's wasn't covered by the PUB]. And I was a member of council. The bottom line is that the city is not a utility within the meaning of that definition. So there is no conflict of interest there."

What Wells ignores - perhaps due to a faulty memory - is that in 1989 the utilities board was reorganized, with a changed role. Section 81, for example, applied after Wells left the board. Whatever definitions were used before 1989 may not count since the whole thing changed. Incidentally, there is some useful information in the decision rendered by the Supreme Court of Canada in Wells' subsequent law suit for compensation for the portion of his original term cut short by the re-organization.

There are other aspects of the conflict of interest inherent in Wells serving as mayor of the city and as the chief commissioner of a public regulatory body which oversees, among other things, municipalities providing certain services. These aspects of the conflict of interest has been ignored to date.

A mayor is the elected chief representative of the people of the city of St. John's. He or she is responsible for defending their interests in dealings with the provincial government. While undoubtedly the role of mayor is defined under various provincial statutes, a mayor will inevitably be required to advocate for citizens collectively and sometimes find himself in conflict with the provincial government.

Wells is no stranger to conflict and it is his forthright advocacy on behalf of his constituents collectively which Wells often cites as one of his strengths.

However, as the Supreme Court consistently noted, Wells occupied - and now occupies again - a public service position at a senior level in a quasi-judicial body. He will be paid handsomely for that job, in fact almost double his municipal salary and mayor and chief executive of the city.

His position at the PUB is tenured for at least 10 years and he serves in the appointment during good behaviour. However, it is a cabinet appointment and, given the situation, government may elect to re-organize the PUB as it did in 1989 or take some other action which will relieve Wells of his sinecure. As the Supreme Court noted, the legislature may do that, as long as they provide compensation as they would for any other employee.

So when it gets down to it, there are several problems inherent in appointing the full-time mayor of a city as the full-time chair/chief executive of the province's public utilities board:

1. There is a conflict in a fellow doing what are clearly two full-time jobs running two full-time organizations. It's not like having a day job and moonlighting at a fast food outlet or doing some other kind of job in your off hours. These are jobs that were clearly intended - both evident from legislation and from Wells' own words - to be held by someone without outside distractions. Full-time mayor used to mean working more than eight hours, according to Wells. Now he seems to believe he can fit the job in when needed or fit the PUB into the city.

Something's gotta give in the demands of two full-time jobs and the giving shouldn't be the obligations of either job. There are other people who could be mayor. or there are other people who could run the PUB.

2. There is a potential conflict in the mayor of the capital city running a board to which other municipalities in the area may be subject. Regional co-operation has been hard enough to achieve in the past. Wells' views on amalgamation and on how other cities and towns are run are well known. Imagine the idea of say Conception Bay South or Mount Pearl looking to have rates set by the PUB with the mayor of St. John's running the show. Sure he could remove himself from a hearing itself, but take a look at the Act: the chairman and chief executive officer is responsible for work assignments and scheduling.

3. There is a potential conflict of employers. Does Andy work for the citizens of St. John's or the provincial government? He can't realistically do both jobs cleanly since at some point the interests will collide. How that collision is reconciled will tell much.

And before anyone brings up public servants serving on town and city councils, let's just say that this is a conflict of interest which has gone unaddressed for some time. Just because no one has dealt with it doesn't mean it isn't an issue or that it doesn't exist.

4. There is a potential conflict of future public interest. With a single person as mayor and chair - take Andy personally out of the equation - the provincial government may have to face policy choices it shouldn't have to face.

Take municipal services. Currently, the PUB looks at water and sewerage. It wouldn't be unreasonable to consider a future point in which solid waste disposal - garbage to you and me - would be brought under the PUB to ensure that both public and private operators provide a proper service at suitable rates to the consumer.

Rather than all providers - public and private - heading off to an impartial adjudicator, they'd be staring at a stacked deck. The private company may wonder if the rates set truly are reasonable and fair if the municipality has some interest in continuing to control services within its own municipality or regionally.

When it gets right down to it, there simply is no legitimate, defensible reason to let Andy Wells - or any other full-time mayor - hold down the full-time job of chairman and chief executive officer of the public utilities board. The only reason this situation exists is because Andy and the cabinet created it.

Why they did so is not much of a mystery; Wells himself has talked about paying off his legal bills. That's a reason to pass the hat among your friends or just knuckle down and pay the bills out of your own pocket, over time. Heck, take the higher paying job and get the debt off the books faster.

None of what has been offered up by the Premier, the Mayor or the legion of lawyers can get against the inherent conflicts of interest in the arrangement the Mayor and the Premier have put together.

Then again it's not the first time we've seen this administration embrace conflict of interest as its favourite policy option.

-srbp-

Fed agency suing SAC for loan

Transcontinental's Rob Antle reported today that the federal Business Development Bank of Canada (BDC) is suing SAC Manufacturing over a $150,000 loan the defunct natural gas company received from BDC in February 2006.

The provincial government is also reportedly moving to secure $675,000 it invested in the failed venture. The province loaned the company $175,000 in early 2006 and a further $500,000 in December 2006. The directors of the company moved to Alberta four or five months later and notified the province in September 2007 the company lacked funding to continue operations. BDC alleges SAC defaulted on over $134,000 remaining on its loan in November 2007.

As Antle reported:

The province says it has moved to take action to recover its $675,000. Officials said they have security for the province’s investment, in the form of assets, personal guarantees and an equity stake.

The company directors had personal guarantees for the BDC loan as well. There are no assets of the company left in Newfoundland and Labrador, at least in terms of real property, and the equity stake - in the form of Class B shares - is really only worth anything if there are company assets to cover them.

-srbp-

Doing nothing to save the national emblem

A woodland caribou population in serious trouble. The overall drop is from over 90,000 animals to just under 40,000 in a little over a decade. Some herds are at a tiny fraction of their numbers a few years ago.

The fairly obvious reason: an increase in predation - especially from invading coyotes which are not native to the island - and other pressures from things like human development. Those reasons , especially the predation one, are acknowledged in the news releases describing government's response:

$15.3 million.

Five years.

To develop a strategy - that can be implemented after the situation is five years further developed - to figure out.

Not we have a strategy or that it will take us a few weeks or months since we have already been studying this, but rather we will now study the problem to confirm there is a problem and then tell you what we will do.

Five years from now.

And that's in addition to two years and $3.7 million to study the decline already.

If the same rate of decline obtains, there will be something like 20,000 or fewer caribou left by the time they finish the study.

At that point the Do Nothings will probably announce a study to determine if the study that was just concluded actually had any impact or if things just kept getting worse on their own.

And according to the news release continuing to study rather than studying and then acting is part of their "strategy".

Strategy for what?

Doing Nothing, evidently.

And it's not like that should be a surprise.

Just remember the throne speech from a few years ago telling us what the Do Nothing philosophy was all about: and there shall be plans and plans for plans and plans to integrate the planning for plans.

The tale of the tape

Cash register tape, as well as the stuff pouring out of adding machines in both the Clinton and Obama campaigns for the Democratic nomination.

American political campaigns are expensive affairs with paid staffers and heavy expenses across the continent.

Hilary Clinton and Barack Obama each raised US$100 million in 2007 and, as Associated Press reports, Obama has raised another $7.6 million since Super Tuesday. He raised $32 million in January 2008 alone.

Meanwhile, Hilary loaned her campaign $5.0 million from her own personal funds to keep the fight going in the run up to Super Tuesday.

At a more mundane level, consider that pretty well every major political campaign these days has some form of campaign store. It started out in the 2004 presidential campaign with Howard Dean and online fundraising, most notably through cafepress.com. Sir Robert just opened his own tchochke emporium. cough. cough.

Since Dean paved the way, democraticstuff.com has taken on the market for merchandise geared specifically for candidates for just one party. That's how big the political market for geegaws and online fundraising has become in four short years. Go to any Democratic candidate's website and odds are the "store" link will lead you back to a d-stuff.

-srbp-

As innovative as a 55 gallon oil drum

Since we first introduced you to SAC Manufacturing - here and here - the Telegram has taken up the story and added interesting new details (see below).

VOCM makes it sound like the provincial government is looking for the cash rather than trying to avoid noting that the cash is missing in the first place but hey, that's a whole other story.

Anyway, the Telly confirmed that the company went under, a fact the provincial government knew in September 2007 yet for some bizarre reason, apparently failed to disclose to the Auditor General while he was doing the Public Accounts.

AG John Noseworthy included mention of Hebron and some other changes long after the close of the fiscal year he was auditing that looked rosy for the books, but this little story somehow escaped attention.

However, since the company shares could be worthless, the AG really should have listed that fact in the notes to his audited financial statements.

Somewhere.

And he might well have done so.

If he knew.

But in order for him to know, the people who did have the information would have to pass it along.

And apparently they didn't.

Just like they never issued a news release on the $500,000 equity position the provincial taxpayers took in a little company no one heard of. Not like say, Consilient or Blue Line both of whom received a similar equity injection. Or Orphan Industries and it's nearly $1.0 million of provincial cash.

Oh and don't forget that like those other equity stakes, this $500,000 equity position was decided and approved by cabinet.

And for another example, the Telly discovered that the province's $500,000 was in addition to a $175,000 loan dropped into the mysterious company the year before.

And for another example, the Telly quotes the province's innovation minister admitting his department was aware the company had "cash flow issues" and that there were other problems with the company yet dropped the cash in anyway.

Interesting his explanation that somehow SAC Mfg had an innovative product and therefore the cabinet invested in it.

That's interesting because some further digging in the oil patch turned up some people who were familiar with the SAC idea. While they didn't know all the details, these experienced industry players, referred to the concept as a pressure vessel for natural gas, in other words a form of compressor like the industry already uses in several forms.

Or like an oil drum?

Exactly.

Or as one of them put it: as innovative as a 55 gallon oil drum.

If that's the case, the market basically gets its 55 gallon drums from the people who can produce them at high speed at the lowest price. Not much time consuming analysis needed on that one. Also no surprise since, as Trevor Taylor admitted, SAC is now a floater in the East River of failed Newfoundland government business ventures, due to competition from the American market. Innovative ideas don't have much competition.

The Telegram also notes that the company got the $500,000 cash in December 2006 and, as Bond Papers can now note, the directors of the company listed their house for sale the following April. The two year old home was sold within two months.

And if all that wasn't odd for you, try comparing innovation minister Trevor Taylor's comments about SAC to what he said last week about local companies and the investments the Ag criticised in his report.

Last week, Taylor was talking about the need to keep companies here through government investment rather than see them up-stakes and head to where the capital is that might just buy into this or that product.

Ok.

Except in this case, the product was aimed - as Taylor admits - at the Alberta natural gas acreage.

Alberta.

The place with lots of capital, private especially, looking for innovative ideas. As Bond has already noted, the product in this case really isn't useful locally - unlike Blue Lines energy monitor, for argument's sake - and is pretty much aimed at a niche market. Whatever SAC might have gotten around to building, it also wouldn't be a product that needed to be built here, as opposed to Alberta or Saskatchewan.

So why the heck would the provincial government drop cash into it?

That is as much a mystery as the company itself.

And as for government's explanations so far?

Well, those are about as innovative as a 55 gallon drum.

They ring about as hollow too as a brand new empty one rolling down Barter's Hill.

-srbp-

The story below was also carried in The Western Star (Corner Brook). Note that some information at the back end of the piece was chopped. Note especially, though, that the headline conveys a bit of a different twist on the story than what the story itself suggests.

The Telegram

February 5, 2008, p. A1

Business

Company shut down after $675-K handout
Closure came months after infusion of tax cash

Rob Antle

A local oil industry firm ceased operations last year, just months after quietly receiving a $500,000 equity investment from the provincial government.

The province had previously provided a $175,000 loan to SAC Mfg. Inc. of Paradise. Taxpayers are now out a total of $675,000.

But Innovation Minister Trevor Taylor insisted that officials did due diligence on the company, which was working to develop a natural gas compressor for use in the Alberta oil industry.

"We knew it was a high-risk investment," Taylor told The Telegram. "We knew that the company, there were cash-flow issues ... that this was as far as we could go, and that they were going to need to change the way they were conducting their business, or get further private investment or whatever in order to be able to carry forward.

"The reason we invested in it is because it was an innovative product. It was something that was explained to us - as we understood it, based on the analysis that was done - (that) this was an unconventional piece of equipment, that if it took off, would have had a good placement in the oil industry."

There are no news releases in provincial government archives announcing or even referencing any investments in SAC Mfg. Inc. Details of the equity infusion are buried in a schedule attached to the recently-released 2006-07 public accounts.

Taylor said he didn't know why there was no news release trumpeting the SAC cash, even though his department routinely does so for other infusions of government money. "I really couldn't tell you, to be honest with you ... I don't know." But Taylor noted there was no direction from him to keep it quiet.

In early 2006, the province loaned SAC $175,000. Later that year, in mid-December, the government made a $500,000 equity investment in the
company through its new commercialization program.

But soon after SAC received the money, the company's sole two directors - Dana Clancy and Sandy Clancy - sold their Paradise home, according to records filed at the provincial Registry of Deeds. That address doubled as the contact point for the company, according to documents filed at the Registry of Companies.

The house sale went through in June 2007, less than six months after the $500,000 government investment in SAC. There is no record of the Clancys subsequently buying another house in Newfoundland and Labrador. Taylor said one of the firm's principals moved back to Alberta.

The government said it was informed in September 2007 that SAC lacked sufficient capital to continue operations, citing competition from the U.S. and downturns in selected markets.

Government officials are now examining their options to recoup the cash. Taylor acknowledged he is concerned that the company's directors left so soon after the equity investment, but defended the actions of his department.

"We don't have a crystal ball around here that we can gaze into and say, 'Oh yeah, I just saw this person selling a house six months after we gave them money.'"

The province knew SAC Mfg. Inc. was a "high-risk" venture, and decided it was "worth a shot," Taylor said, insisting that the people of Newfoundland and Labrador want the government to take such risks.

"They've asked us - as a department, and as a government - to invest in research and development, and to put our money on the line and to do our due diligence, and understand what the risks are, and understand what the benefits might be if a technology is developed."

SAC officials were not reachable for comment. Sandy Clancy's e-mail address returned messages as undeliverable. All local phone numbers associated with the firm are out of service. And SAC's website has disappeared from the Internet. In fact, its domain is not currently registered by anyone.

The Department of Innovation was slow to respond to inquiries about SAC.

The Telegram first asked about the investment on Jan. 30, following a posting on the company by Internet blogger Ed Hollett.

rantle@thetelegram.com

Fail to plan...

Plan to fail.

It's an old military axiom.

That's why it was surprising when CanWest called last week to discuss a story they were working on in which the Department of National Defence said he didn't have any casualty estimates or projections for the mission in Afghanistan.

Runs contrary to everything your humble e-scribbler knows about armies anywhere, let alone the Canadian version of the beast. Even on a road trip to training ranges at Mackinsons, there'd be provisions for a road accident or for a cut or scrape. There'd be a casualty estimate - even if it was zero - and there'd be contingency plans to deal with what would occur if something went off the rails.

But no cas estimates at all?

Sheeet, in the work up for a possible deployment to the Persian Gulf in 1990, the Canadian army included a casualty estimate in Contingency Operations Plan Broadsword.

In a 1995 international exercise, casualty estimates were prepared as part of the normal planning routine. That situation was a bit special since the public affairs officers on the exercise - role-playing media - used their knowledge of the military world to ask questions most journalists would miss.

The media briefer - somewhat inexperienced with reporters - talked frankly about the whole thing, referring to a certain number of casualties as light. In his world, they were light. To the rest of us out here in the world, the numbers he used would be considered appalling. They actually weren't appalling, but civilian sensibilities have changed with 60-odd years of peace.

Anyway, said senior officer learned the value of picking words carefully and understanding how his audiences out beyond the tent flaps might respond.

But he had casualty estimates.

His successor apparently goes to morning prayers with his boss and smiles like Dr. Flox, er, an idiot: "No sir, no casualties. None. Nada. And we know because we didn't prepare a casualty estimate."

Sounds like every anal ops officer or J7 plans guy you'd ever meet.

The inevitable headline

First this.

Watch next for Jack Harris to announce he'll run for the Dippers, which will make the next headline, followed by the next one: Harris wins in landslide.

Ironically, Jack Harris was first elected as a member of parliament in a Jurassic Park battle where he was the furry, agile little mammal as the alternative to two dinosaurs.

Now, Harris will likely be one of the dinosaurs, but with no alternative, voters will have an extremely limited choice.

The thing about inevitable headlines is that they aren't all inevitable; the other thing about them is that if the first one turns out to be inevitable, the rest will just fall in line.

-srbp-

Possible privacy breach at MUN

As many as 150 Memorial University students are being contacted concerning a possible leak of their personal information resulting from the theft of a professor's personal laptop, MUN's official online news service reported on January 31.

The theft occurred while the professor was out of the country. He returned home to find his home had been burgled. Among the items stolen was a laptop computer on which the professor had kept class lists, student grades and their Memorial University student identification numbers. The affected students were enrolled in two sections of Business 1000 from fall 2006 and a section of Business 7302 from fall 2007.

“We are obviously very concerned about the possibility of such privacy breaches,” said Rosemary Smith, the university’s information access and privacy protection co-ordinator. “Our first priority has been to advise our students of what’s happened. We remain confident that the information that may have been exposed by this theft was minimal and cannot lead to further problems for the students affected,” she said. “Still, we are reminding all faculty and staff at the university, and anyone who teaches at the university and who may handle private information, to use password protection and/or data encryption on all laptops and removable media devices.”

-srbp-

The Do Nothing Department in a Do Nothing Administration

in American politics, there used to be the Know Nothings.

They were a group of native-born Americans who had a problem with immigrants yet whenever anyone asked a member of the group about it, he'd claim that he "knew nothing" at all.

In Newfoundland and Labrador, we should call the current administration a Do Nothing government.

You see, in 2004 a provincial government task force laid out a plan to deal with the problem of hospital-related infections. That's when you go to hospital and get sick from a bug you picked up in the place where you went to get better in the first place.

Anyway, it is now 2008.

Four, maybe five years later depending on how you count it.

The Auditor General released a report this week noting that not only does the province have no freakin' idea how many infections are caused by hospital infections or nor how many deaths come from those infections, but also that there are a raft of problems with hospital sterilization techniques and cleaning procedures.

That's pretty much what your grandmother taught you about disease prevention: wash your hands. Oh yeah, and boil things to make them sterile.

And the hospitals aren't quite getting it yet. But anyway, someone gave them a plan.

In 2004.

So, in response, health minister Ross Wiseman promises that by 2009 - that is 12 months from now and definitely five years AFTER the plan was laid out - there will be "significant progress" made on a "comprehensive, provincewide infection control program."

Uh huh.

And we are supposed to believe this from a guy whose department is embroiled in controversies of one form or another.

Like the breast cancer one.

Or the one also revealed this week where the health boards created in 2004 that were supposed to save money are actually costing more money.

And we are supposed to believe a guy who just by pure coincidence scheduled his media availability to coincide with one being held by his colleague minister talking about the InfoSec breach.

Flying wingman for a guy who is himself trying to obscure the facts of a very serious political and legal problem for government is not a way to enhance your credibility.

But then again, speaking of Jerome, this is a government where things explode, fail, fall-apart or collapse based on government inaction over a long period of time and the standard government response is that a "plan is in the works", that this is "a priority of government" and that "all is well."

These cabinet ministers seem to spend too much time torquing and talking to actually accomplish anything real.

Around these parts, they used to be the serial government: one thing after another.

But all this talking and lack of action is actually part of a bigger problem: this is a Do Nothing Administration.

-srbp-

Related:

- Serial government and Labrador

- "and there shall be plans, and planning for plans, and plans to co-ordinate the plans of the planning for plans..."

Missing company has half million in provincial cash

The Government of Newfoundland and Labrador invested $500,000 in a natural gas-related company in 2006 which has apparently disappeared in the meantime.

The company is SAC Mfg Inc.

According to the recently released Public Accounts:

During the year, the Province acquired 500 Class “B”Common shares at a cost of $500,000. Commencing in June 2007, these shares are conditionally redeemable based on after tax earnings. All shares must be redeemed no later than 19 December 2016.

There is no SAC Manufacturing listed in the current Newfoundland and Labrador telephone directory and a number available through an Internet search is not in service.  The fax number with the same listing will ring but there is no fax machine at the other end, apparently.

Likewise, a check with the telephone company's directory assistance turned up no listing for SAC Mfg in Rochan Sands Alberta, another address for the company that shows in a listing for an Alberta oil and gas exposition last June.

The contact name for SAC at the exposition is the same name as a director of SAC in the company's entry in the Newfoundland and Labrador registry of companies. The corporate registration hasn't been renewed since 2006.

A local telephone number for the two corporate directors, showing a Paradise address also in the telephone directory as the couple's home address, is also no longer in service. [Update:]  The company web domain - www.sacmfg.ca - is unregistered.

There is no indication on the Internet of what the company did  except that it was related to natural gas manufacturing. SAC is not listed as a member of the province's oil and gas supplier association, NOIA.

The Public Accounts for the year ending March 31, 2007  - quoted above - gave no indication that there had been any change in the company's operating status. 

The Auditor General's annual report for the same period  - released on Thursday - makes no mention of the company whatsoever.  Instead, the AG report raises questions about provincial government small business support for 2005. 

The provincial government has issued no news releases about the investment in SAC Mfg. 

-srbp-

It's the software's fault

Apparently the latest provincial government InfoSec breach can be blamed on the software, specifically a file sharing program known as LimeWire.

A popular file-sharing program exposed the private details of more than 150 people over the internet [sic]earlier this month, the Newfoundland and Labrador government said Thursday.

That's an interesting take on the story, given that people operated the computer involved, loading the software without changing the default settings.

Apparently, no one at the Workplace health and safety commission had anything to do with it either, even though they handed over highly confidential information without ensuring the outside contractor was following appropriate security procedures.

No people were involved at all.

Well, that is, except, ummm, of course for the 153 people whose files were exposed, including 108 who had their medical histories and work histories, as well as names and birthdates openly accessible on the Internet for 24 or so days.

And that identity theft thingy that Attorney General Jerome Kennedy warned about in the news release on Thursday? Well, when he spoke to reporters, Kennedy had a slightly different tune to sing:

"The file sharing program allows for access of various information that's on an individual's computer. It doesn't mean it will be accessed," Kennedy told reporters.

So why all the big fuss about government officials taking proper measures in the wake of the leak or of the giant lock-down being applied to every computer in government? Apparently it was nothing to worry about after all.

In other words, the giant news release Kennedy authorized for distribution was just a waste of energy.

Is it just an overactive imagination or did the province's attorney general sound less like a cabinet minister looking out for the public interest and more like the government's chief legal counsel representing a client staring at potential lawsuits?

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Remember the story yesterday and the Telegram's short version? The story on page three of the Friday edition didn't mention identity theft anywhere.

Gov Comm 101: How to manage crisis spin

1. Write a news release which deliberately buries the real news so far down the page that reporters are likely to miss it.

2. Omit key information from the news release, like the fact that the information in a security breach was exposed to the Internet from December 30 until at least January 22.

3. Hold a newser to discuss the security breach later on the same day when the Auditor General releases a scathing report into government operations. (Since you have the AG report months in advance in order to prepare replies and since you know in advance the day, time and place the thing will be released, then deliberately scheduling the newser you want to bury is very easy. Experience tells you that newsrooms will be so consumed with the AG report they won't have the resources - people or time - to dig through your presentation for the news you buried.)

4. Send the number two person in the Communications and Consultation branch to supervise the execution of the spin plan. (That's a clue as to how much concern there is in government about ensuring the story is highly torqued.)

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AG raises issues with public cash in three private ventures

in his annual report, the Auditor general examined the provincial government's investment programs for business, including three businesses which fell outside the programs already established.

The three companies are identified as High Technology Company A, High Technology Company B and High Technology R&D Company. They are, in order, Blue Line, Consilient and Trans Ocean, as revealed by comparing Volume II of the Public Accounts with the AG report.

The Auditor General's conclusions on the three were:

We are of the opinion that there is no explicit authority under the Financial Administration Act
for the Department to make direct investments in companies. During 2005-06, the Department made three such investments totalling $1,050,000 to three companies. Furthermore, there are no documented procedures for approving, disbursing and monitoring such unique investments and, as a result, these investments were not subject to the same due diligence required for investments under the SME Fund. As a result, there were deficiencies. For example:

- none of the three companies were required to repay the investment contingent on either income earned or a maximum seven year period;

- one company was not required to submit documentation to support specific expenditures;

- shareholders for one company (Knowledge-based IT Company A) who received $500,000 were not required to make new equity investments as part of their contribution to the project; instead,
previous investments were accepted;

- shareholders for one company (Knowledge-based IT Company B) who received $500,000 were not required to provide personal net worth statements; and

- Department officials were not entitled to attend any company meetings for one company (Knowledge-based IT Company B) even though the company was provided with funding totalling $500,000

The innovation department responded:

With respect to other investments outside our normal programs, we do not concur with your interpretation that there is no explicit authority under the Financial Administration Act for the Department to make direct investments in companies. We understand that there is a separate section
in the Report on the Financial Administration Act to which the Department of Finance has responded.

Government, as has always been the case, receives proposals from companies seeking financial assistance of various types and levels that do not fit our normal business programs. Government reviews each case based on its own merit, including full due diligence, and, when considered appropriate, has provided assistance to some of these companies. The process that is followed in these cases is the Cabinet process. Economic development and business growth, especially new growth sectors, are priorities. Access to capital is an important issue for these SMEs in this Province. These investments levered additional funding for these companies and involved young entrepreneurs, leading edge technology, the potential to increase export sales and to increase quality employment opportunities in new growth sectors for our post-secondary graduates.

As noted, these investments were approved, with the required analysis and due diligence outside the SME program and therefore were not subject to the same requirements for auditing purposes. At the time of the approval, the Department did not have a program to support commercial research and development, and/or invest in businesses at the pre-commercial stage of operation. Since then, the Department has established a Commercialization Program that accommodates projects of this nature.

Given that these transactions took place two fiscal years ago, perhaps the Auditor General will report on some more recent transactions similar to the ones cited above - which took place since then - when he issues his next report: January 2009.

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Atty Gen'l: identity theft potential exists for victims of gov't InfoSec breach

Attorney General Jerome Kennedy said today that 153 residents of the province, including 108 clients of the province's workers compensation agency, face the potential risk of identity theft as a result of a computer security breach by a consultant working for the agency.

A total of 694 files were exposed to the Internet for an undisclosed period of time, through an unspecified file-sharing program. While a forensic investigation has been conducted by at least one computer security firm, the minister did not confirm whether or not the files had actually been accessed.

The information included names, addresses, medical histories, work histories, sex and date of birth.

In a backgrounder to the lengthy news release, the provincial government confirms that until now, there was no government policy requiring outside consultants to adhere to government security protocols on access to information.

This situation appears to have existed despite five years of preparation before the government implemented privacy sections of a new access to information law. The law was implemented on January 16 and the security failure occurred on January 22. it was disclosed three days later.

The actions taken by the province's chief information officer in the wake of the breach include installing new software, holding educational sessions for employees and other actions that presumably were not done since the chief information office was created and well before the privacy rules came into effect.

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AG considers Sept '07 report to cover improper retention or misappropriation of public money or other similar action

In his annual report for 2007, Auditor General John Noseworthy includes his massive September 2007 Report on a Review of Constituency Allowance Claims from 1989-90 through to 2005-06 as a report under section 15 of the Auditor General Act.

As the AG cites, section 15 provides:

Where during the course of an audit, the auditor general becomes aware of an improper retention or misappropriation of public money or another activity that may constitute an offence under the Criminal Code or another Act, the auditor general shall immediately report the improper retention or misappropriation of public money or other activity to the Lieutenant-Governor in Council.

Under the AG Act, the auditor general is required to provide the report to the minister of finance.

Under a similar provision in the new Green bill on House accountability and integrity - in force in September 2007 - Noseworthy was required to advise six offices of the report, including the Speaker, the Attorney General, the Premier and the Minister of Finance.

The Auditor General has refused all public comment on the September report, citing the provisions of the Green bill. Under section 45, the Auditor General is prohibited from confirming or denying the existence of such a report on a member or other official of the legislature except to include a reference in his next annual report.

Bond Papers contacted the House of Assembly earlier in January asking if the Auditor General had filed any section 15 reports in addition to those related to certain companies, three former members of the legislature and five individuals currently facing criminal charges. The official response was to decline comment on the question. The report does include information on the former members of the legislature, but nothing that had not been included in previous reports since the focus of the report was broader in scope and purpose.

There is no constraint in the Green bill on the six offices receiving a section 15/section 45 report similar to the restriction on the Auditor General.

Under the order in council authorizing the September 2007 report, the Auditor General was detailed to conducted annual audits of the House of Assembly for the periods Fiscal Year 1999 to Fiscal Year 2003 and to review constituency allowance spending from 1989 to 2004 to determine if overspending occurred beyond approved amounts. neither of the two reports cited by the Auditor General as resulting from that order in council appears to meet either term of the order.

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Allegation versus news

Geoff Meeker asked VOCM news director Gerry Phelan about VOCM's coverage of the cell phone story.

According to Phelan, VOCM reported the cell phone accusation against the Premier but only after he admitted to the offence. Then there was this curious comment that VOCM reported it "reluctantly" and that he was "chagrinned":

VOCM did follow the story the next day when the premier admitted to the infraction, Phelan said. However, they did so reluctantly.

“We ran it that evening, much to my chagrin because it was still a non-story,” Phelan said. “How often do you have to react to someone making an allegation? I still have a problem with (reporting on) someone making an allegation that may or may not be true. Where do you draw that line? Where do you stop?”

Okay.

So if VOCM doesn't report unproven allegations, why is there a story on a 79 year old man accused of impaired driving? He's not named but the accusation against him hasn't been proved. How come there's a story on there reporting this at all?

Or what about the police officer accused of impaired driving and refusing the breathathalyzer? Unproven but widely reported by VOCM both on air and on line.

Withholding the accused's name seems hardly sufficient to avoid violating the VOCM "standard" standard of not reporting unproven allegations. After all, the news director apparently reluctantly reports admissions of guilty so reporting an accusation should leave him apoplectic, not just feeling a little chagrin.

Seems like a bit of a, editorial double standard or at least a highly malleable one.

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Eastern Health: only 4 of 21 accreditation requirements met

In the most recent accreditation review of Eastern Health, the authority met only four of 21 practices required for accreditation according to CBC News.

The report expressed concern that there were no regional policies for keeping track of patients' medications, as well as no regional procedure for sterilizing equipment and no policy on equipment maintenance.

The report highlighted problems with temperature controls, and how lab samples are taken and transported.

"The likelihood of improper samples reaching testing sites is high," said the report, which added, "incorrect results could lead to improper patient diagnosis and treatment."

The Canadian Council on Health Services Accreditation conducted a site visit in September and issued the report in November 2007. CCHSA is an independent body that audits health service practice ac4ross Canada according to nationally accepted standards.

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Way Back

The Way Back Machine is a marvellous thing.

Marvellous that is, unless you happen to be the one whose words in the past are coming back to haunt you.

Like in these examples of politicians who said one thing at one time and then did another later on.

In 2000, to begin with Ed Byrne was leader of the opposition and a fellow highly critical of a contract between Newfoundland and Labrador Hydro and Hydro Quebec. The Guaranteed Winter Availability Contract (GWAC) was the only positive result of Brian Tobin's giant election scam in 1998 in which he announced simultaneous development of the Lower Churchill and an expansion of the Upper while he was at it.

The full text of this NTV broadcast is at the end of the post, but just take a look at this bit:

As for the shareholder's agreement and the GWAC, Mr. Byrne believes that the GWAC will bring no revenue to the province and will instead be used to keep the Churchill Falls Labrador Company solvent.

He was absolutely right and it was known to quite a few at the time that the GWAC was essentially a plan to key Hydro in the black. Anyone who read the thing could see what was going on: Hydro recalled the maximum amount of power it was legally able to do under the 1969 Churchill Falls contract. Finding that it had no domestic customers for the power - quel surprise - Hydro then offered the power for sale to Hydro Quebec which picked up the same block it had just relinquished but at a substantially higher price than under the 1969 contract.

But the Way Back Machine also revealed another statement by Byrne, this one in 2004 after the fellow was named energy minister. Suddenly, GWAC was a wonderful thing, on the occasion of its renewal. The fundamental premise of the whole thing was the same, but perspectives change when one is making the announcement.

At the end of that same release, though is an even more interesting comment, this time from the Premier:

"This contract is a step in the right direction in helping this government meet its financial obligations," said Premier Williams. "Yet, we know we cannot balance our books on revenue growth alone. This is an important but small part of the solution."

Of course that's exactly how the books were balanced, by relying solely on revenue growth resulting almost entirely entirely from high oil prices.

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Ed Byrne On Churchill Falls

December 12, 2000


The day after Hydro officials released contracts signed between this province and Quebec over the Churchill Falls agreement. P.C. leader Ed Byrne was quick to respond.

On Monday, Newfoundland Hydro gave the media a briefing of two contracts signed in 1998, the guaranteed winter availability contract and the shareholders agreement. Hydro did not release a third contract, the 130 megawatt recall contract, deeming its contents too commercially sensitive. That strikes Ed Byrne as curious, since Hydro had no difficulty releasing the fact that it made $65 million profit from the three year contract - for Mr. Byrne, given that revelation, the 'commercially sensitive' excuse rings hollow. He says if Hydro won`t release the contract, it should be subject to a review by the Auditor General.

As for the shareholder's agreement and the GWAC, Mr. Byrne believes that the GWAC will bring no revenue to the province and will instead be used to keep the Churchill Falls Labrador Company solvent. And further still the shareholders agreement gives Quebec the run of CFLCO, by granting the minority shareholder the power of veto.

Ed Byrne says its time to stop the piecemeal revelations of details of the Churchill Falls contracts, details the province and Hydro defend vigorously, and he condemns as another historical resource giveaway.

The P.C.s will now push a motion in the legislature to have the contracts referred to the public accounts committee, where they can be subject to still closer scrutiny.