Duff in the Hole #nlpoli #cdnpoli

Dwight Ball’s announcement last week about Liberal Party funding was a good example of how relatively simple mistakes can turn a good-news announcement into a major public relations problem.

Another aspect to the story is a good example of how false information can make the story worse.

Conflict of interest curiosity

Under the 1995 Conflict of Interest Act, a public officer hold is defined as any person who “receives a salary or other remuneration, in whole or in part, from money voted by the legislature…”.

That would make a cabinet minister a public office holder under the meaning of the Act.

Pretty simple, right?

There are also sections of the House of Assembly Act  that cover conflict of interest for elected members. There are provisions that tell cabinet ministers what to do.

They all come down to the same basic points.  People can’t further their private interests using information they gain from their public office.  In addition, cabinet ministers who may find themselves in a conflict of interest have a couple of options on how to handle a specific case, should it arise.

The simplest way for a cabinet minister to avoid an appearance of conflict is to place any business interests in a blind trust as soon as he or she is appointed to cabinet.

The reason is pretty simple:  lots of things come before cabinet or a cabinet committee, especially at budget time.  If you had certain types of business interests, the “leave the room” or “get someone else to do it” procedures set out in the House of Assembly Act would basically mean some ministers would spend more time out of the cabinet room than in it.

The Premier sensibly put his interests in such a blind trust after the October 2003 election.  He may have taken a while to do it and he may have moaned and complained as he went through the process but ultimately, his approach is the most sensible way to avoid political problems. When you have important work to do, there’s no reason to be distracted by issues that can be easily avoided.

Odd then, that the Premier has apparently made no such rules for his cabinet.  In response to reporters’ questions today, the Premier said that handling potential conflicts of interest would be a matter for the new health minister to sort out with former Tory party president Paul Reynolds ( in his role as Commissioner of Legislative Standards) but, for his part, Danny Williams advised Oram to put things in a blind trust.

Advised him?

Odder then, that Oram has been in cabinet – as business minister – but hasn’t bothered to sort out this issue before now.  A blind trust is a really simple, practical solution to a very real potential political problem.

And the whole thing is odder yet again considering that in 1997, then-Premier Brian Tobin issued cabinet conflict of interest guidelines that added to the requirements already in legislation.

1) Ministers shall place in a blind trust all assets, financial interests or other sources of income within the definition of "private interest" in S. 20 (e) of the Act, except for those that are an "excluded private interest" within the definition of S. 20 (a) of the act;

(2) Trustees for these blind trusts shall be other than members of the Minister's immediate family; and

(3) Ministers shall cease to serve as directors or officers in a company or association, as referred to in S. 20 (e) (iii) of the act.

Tobin acted amid accusations of a conflict of interest involving one of his ministers.

Maybe that’s what Danny Williams referred to before the 2003 election when he laid out his own ethics and accountability commitments to the people of Newfoundland and Labrador:

We've seen blatant abuse of office and taxpayers' money, allegations concerning conflict of interest, questions of fundraising contributions, and suggestions of impropriety during leadership conventions. These are very serious issues that are eroding the people's confidence in government. [Emphasis added]

Who knows?  Maybe he had other issues in mind.

But there’s no doubt he was aware of the issues and concerned enough about them to issue a suite of promises on ethics.

He didn’t mention a specific commitment on cabinet ministers and conflicts of interest but it seems passing strange that he hasn’t given his ministers any specific instructions on conflict of interest for his own cabinet.  If nothing else, clear instructions remove needless political problems like we said already.

The Premier certainly has the power, authority and everything else needed to set the rules for his own cabinet.

So how come he has decided to let Paul Reynolds sort it out?

-srbp-

The Year of Living Dubiously #nlpoli

Conflict of interest is great thing to deal when there is a chance of stopping it or dealing with it, not six or seven years later.

Back in 2006, conflict of interest was all the rage.

Noting the problems with conflict of interest wasn’t.

No room for dissent? No time for silence. #nlpoli

The controversy about The Rooms' recent request for proposals is not about Muskrat Falls.

Maybe someone at The Rooms or within the provincial government thought that was the problem when Des Sullivan raised concerns about it.  After all, Des is well known as a critic of Muskrat Falls.  That might explain why Dean Brinton, The Rooms' chief executive,  issued a very short statement that apologized for using Muskrat Falls as an example when explaining the Crown corporation's policy about conflict of interest for advertising agencies responding to the proposal request.

Let us assume that Brinton made a really superficial mistake because otherwise  his response is insulting and condescending.  Any reasonable personal understood our ought to have understood that Sullivan was concerned about the implication that critics of the provincial government could not bid on government work.

Brinton didn't deal with that at all.

Rumpole and the Black Letter

Local barrister Averill Baker is threatening to sue the Crown prosecutors for persecution based on their recent application to have her tossed off a case for being in a conflict of interest.

The nature of the conflict of interest is complicated.  There may be much the public doesn’t know from court documents that earlier were sealed.

Ms. AB once represented the victim in a break-in her late client was alleged to have conducted.  In the course of the break-in and attempted robbery is alleged to have shot one of his alleged co-conspirators.

A conflict of another sort apparently broke out in the court room when the lawyers and the accused got together to hear the judge’s decision on the conflict of interest.

The accused, Philip Pynn, kept trying to interject.  The judge ordered him to clam up and when he didn’t, reminded the young fellow he could have the Sherriff’s officers gag him.

Bit extreme, but not something judges are known to do for people who aren’t disrupting proceedings.

In any event, the judge told Ms. AB she had to stand aside.

Ms. AB found it all troubling.  As CBC reports,

"This is a sad day," Baker said.

"I have lost one of my most important clients, as I say, he's been with our firm since 2005, and we were the victims of an attack by the Crown," said Baker.

One might think so.

Think that way, that is, unless one was familiar – as Ms. AB ought to be – with the way the courts have ruled on the business of conflict of interest.

The court standard is laid down in the decision on an application in R v. Brissett.

The Crown applies for a disqualifying order, on account of alleged conflict of interest, removing the Defendant’s two solicitors of record from defending him on charges of the first degree murder of Demar Ranglin and the attempted murder of Joseph Cunningham.  No date has been scheduled for the trial.

To this point, Mr. Brissett has been represented by Mr. Stephen Bernstein and Mr. David McComb.  The prosecution submits that because Mr. McComb previously acted as counsel for Mr. Cunningham, his current counsel, both of whom practice in the same law firm, are in a conflict of interest position in purporting to defend Mr. Brissett in a trial where Mr. Cunningham is not only a principal Crown witness but also an alleged victim of one of the crimes charged.

As it turned out, the firm acted for the fellow so long ago that neither of the two partners could recall it.  But that’s as maybe, as far as the courts are concerned.

The court laid out the principles succinctly.

First,  there was the matter of the timing of the application.  The Crown must raise the conflict issue as soon as possible.  Incidentally, in the case with Ms. AB, they did so almost immediately after laying the charges against Pynn.

Second, was conflict and the duty of loyalty to the client.  That’s essentially the nub of the problem:  one cannot serve two interests simultaneously.

Third, there’s the duty to preserve client confidences.

Fourth, the duty of confidence continues – as the lawyers put it – after the retainer ends.

Fifth, the right to counsel of choice is not absolute. in other words, you don’t always get the lawyer you want, especially if he or she must be disqualified.

After going though the details of the case, the judgment posed a simple set of questions.

[75]…Would a fully informed reasonable observer seeing these circumstances of successive representation perceive any or all of the following:

(1) a realistic risk or possibility that confidential information secured by the law firm in its retainer by Cunningham would be used in the attempt to discredit Cunningham in Mr. Brissett’s trial?

(2) that Cunningham would likely hold the belief that a cross-examiner from the law firm which previously represented him was in a position to challenge aspects of his testimony based on knowledge originating in prior confidential communications made as a client of the firm?

(3) that Cunningham would be more likely to agree with leading questions and suggestions by a cross-examiner from the law firm that had represented him as a client for fear of disclosure of some confidential information divulged to the law firm when a client?

(4) that a lawyer from the firm which had Cunningham as a prior client might be less effective aggressively cross-examining Cunningham on behalf of Mr. Brissett on account of undue caution relating to the apparent use of confidential information previously obtained from the witness/prior client?

[76]     In my view, a reasonable member of the public would, on the record here, answer these questions affirmatively and, as a result, have significantly less confidence in the administration of criminal justice should counsel from the Robbins, Bernstein firm be permitted to cross-examine their prior client – the concept of undivided loyalty and public faith in the justice system would be significantly tarnished.

Even with what is in the public, it would seem that Ms. AB was in a pretty clear violation of the principles described in Brissett. The fellow she once represented would inevitably be called as a witness. 

Ms. AB would have to cross-examine him and – at that very point – she’d be caught with a conflict of interest, even if only in appearance.  If there was anything more involved that the public doesn’t know, the the conflict could well be more than just a matter of appearance.

Ms. AB can fulminate all she wants.  The black letter of the law would seem to be firmly against. That’s likely why, at an earlier hearing, she didn’t bother contesting the application. Initially she’d talked tough but in the end, she didn’t do anything.

If someone offers to bet on Ms. AB suing the Crown over the whole matter, then take the bet.

She’ll likely back off that one too.

Black letter, and all that.

- srbp -

Conflict of Interest and the Nalcor board appointments #nlpoli

2050 hrs – Mulligan Update – scroll to the end

Leo Abbass is the mayor of Happy Valley-Goose Bay.

He is a staunch of supporter of the Conservative Party.  He is such a staunch supporter of the Conservative Party – federal or provincial – that he can sometimes take on the appearance of the Pushme-Pullyou from Doctor Dolittle.

Nalcor and Conflict of Interest #nlpoli

Is anyone else having trouble trying to figure out what all the fuss is about Cathy Bennett, Nalcor, and conflict of interest?

Seriously.

Here’s the story in a nutshell.

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-

Conflict of Interest: the Norwegian Model

Revised: 8:15 AM

If Danny Williams checks with the Norwegians on good standards of corporate governance, he will quickly realize just how bad an idea it is for his administration to have established so many conflicts of interest involving the Hydro Corporation, its board chairman, the Premier's Office and one local company.

As announced on Monday, the chairman of the Hydro Corporation now sits on the board of Aurora Energy. Dean MacDonald took the place of Brian Dalton, president of Altius Minerals, a company that is currently looking for an interest in Hydro's Lower Churchill project and which is also undertaking a refinery study as announced by the Premier in February. Altius established Aurora in 2003 and remains its second largest shareholder.

Norsk Hydro's policy makes it clear that such conflicts of interest cannot be tolerated.

6.4 Financial interests in other businesses

As a Hydro employee or Board Member, you should avoid having a personal ownership interest – directly or indirectly – in any other enterprise if it compromises or appears to compromise your loyalty to the Company. Before making an investment in a company that competes with the Company or does business with the Company (such as a supplier), other than acquiring less than one percent (1%) of a listed company, your immediate superior shall be consulted. Special attention should in all circumstances be given to potential conflicts of interest as described in
section 6.1.

6.5 Activities with a competitor, supplier or other business associates

Before engaging in any activity that may be perceived to advance the interests of a competitor or a supplier (or other business associates) at the expense of Hydro’s interests, including serving on the board of such company, you shall consult with your immediate superior.

The bit about consulting with a superior isn't important. In this instance, MacDonald likely accepted the Aurora appointment with the full knowledge and approval of Danny Williams.

The key part is that such a blatant set of conflicts of interest as evidenced by the MacDonald appointment should never have existed in the first place. If it turns out that the Premier did not know about the matter - remember Henley v. Cable Atlantic and Deano's penchant for not telling Danny stuff - then the episode suggests that Dean MacDonald exercised monumental bad judgment.

If Altius is pitching to Hydro as it is, then Dean MacDonald should categorically not be sitting on the board of a company in which Alitus is the second largest shareholder. If Altius is involved in a refinery project which would likely also fall under Hydro to exploit if government joins in, then Dean should absolutely, positively not be involved.

The same goes for Danny Williams involvement in announcing Altius' private-sector venture on the refinery.

Anyway you slice it, this situation causes problems.

It seems Danny Williams doesn't care about conflict of interest unless it involves someone he's ticked off with. Don't forget that he engineered a blatant conflict of interest to exist in his use of the Hydro president as lead negotiator on the Hebron file. Odds are good, he'll think nothing of further connecting Alitus and the provincial government. In his ongoing efforts to get control of the offshore regulatory board, Williams is trying to create the ultimate conflict of interest in the offshore oil governance game.

Danny Williams would do well to consult the Norwegians on good corporate governance. They can teach him a great deal.

The only problem might lie in the fact that implementing their advice would expose Danny Williams to a great deal of criticism for decisions he's already taken.

Why GRAP explanations are crappy

Trevor Taylor's explanations of the GRAP - Government, Rogers, Allstream, Persona - fibreoptic deal don't add up.

Here's why:

1. There is no reason to spend public money on a private sector deal like this one.

- According to Persona chief operating officer Paul Hatcher, the project was already underway, at a cost of $82 million with Persona contributing $30 million of its own money.

- The announcement on November 2 was for a $52 million project.

- The private sector companies could easily finance the project themselves - obviously - and deliver benefits to consumers by improving their own competitive position.

2. The GRAP will not deliver province-wide 911 service.

- If the provincial government wanted to develop a secure, government-operated emergency communications system, then it could do that separately from this project.

- There is no mention of emergency service in the initial government news release. The news release focuses on competition, all of which the private can obviously and should obviously bear by itself.

- For the province's ownership stake, it will have access to its own fibreoptics system. But, to ensure redundant access to allow secure 911 operation, the provincial government should purchase service from all providers, including Aliant.

3. The province doesn't need to compete with the private sector where service exists already.

- Under this GRAP deal, the provincial government will become a business partner with private-companies competing directly with Aliant - an established service provider.

- The provincial ownership stake will generate cash but this cash amounts to a hidden tax on telecommunications in addition to any other taxes it levies on businesses like this.
4. The Premier's relationship with the proponents is too close for comfort.

- Some media outlets are reporting that Dean MacDonald (Persona) and Ken Marshall (Rogers) were employees of Cable Atlantic.

- In fact, they were business partners with the Premier, as detailed in Henley v. Cable Atlantic:

Danny Williams: 93%
Dean MacDonald: 4.5%
Ken Marshall: 0.6%

- Under provincial conflict of interest legislation, the Premier would be obliged to remove himself from any process in which he has a conflict of interest.

- In this instance, there is a perceived or potential conflict of interest so, prudently, he should have removed himself from any process involving these players; that just covers his own backside.

- The provincial government has acknowledged a concern about conflict of interest. According to Trevor Taylor, this proposal took longer than it otherwise might have because of concern about a perceived conflict of interest.

We'd agree. A perceived conflict of interest should have caused greater concern - and a greater degree of openness - about this deal.

Nalcor’s Dark Secret #nlpoli

Since its creation, Nalcor has existed in a perpetual conflict of interest of one kind or another. 

SRBP raised the issue of conflict of interest 2006 when Dean Macdonald – then chair of Nalcor’s board – accepted an appointment to the board of a company Nalcor was doing or was planning to do business with.

Nalcor has been in another sort of conflict of interest in it acted as lead negotiator for the provincial government and as an oil company at the same time.  On the one hand its interest should be in maximising benefits to the province while on the other hand, its interest should be to lower costs in order to maximise corporate profits. The two things cannot exist side-by-side as the Hebron agreement demonstrates.

Again, SRBP pointed this out in 2006 when the Hebron talks fell apart and on several occasions subsequently.

Time hasn’t changed much.

City ignores own conflict of interest law...and own previous motion

Update: It's Saturday. Grab the Telly for yet more on the slimy operations at City Hall.

on Monday night passed, Council ignored one of its own resolutions - as well as the by-law on conflict of interest described below. That motion, passed in 2002 mandated that council send the issue of salaries to an independent panel before each election and that the incoming council would accept the recommendations.

Despite the fact that all but three of the current councilors voted on that motion, none of them paid any attention to it.

In the meeting on Monday night, city officials reminded council of the need to rescind the 2002 motion. They ignored it and carried on anyway.

Meanwhile, the Telly reports that newbie council Ron Ellsworth (whose election campaign expenses are still larger than his newly inflated salary, but only just) will introduce a motion on Monday...to rescind the 2002 motion, not the one every is complaining about.

unrepentant, the Boor Mayor continues to lash out at all those who oppose him.

Grab the Telly. Vintage small town politics.

Sad but true.

_________________

St. John's City Council is in hot water with residents of the capital.

At Monday night's meeting, without putting it on the agenda, providing any form of advance notice, and without mentioning it in the budget at all, councilors voted themselves a retroactive pay hike that will see some of them getting cheques for thousands of dollars.

According to The Telegram, council made the decision without consulting staff or an outside sources. They merely sat around a table, did some quick math and boosted their pay.

It was a unanimous decision. Some councilors, like Shannie Duff ought to have known better that the process council used was pathetically inappropriate. However, given Duff's long career on council it is possible she was overcome by a moment of group-think.

Newbie councilor Ron Ellsworth offered a lame excuse: apparently he works hard. He may work hard, but the method he chose to reward himself is so ridiculous as to defy explanation.

As for Tom Hann, the whole affair beggars imagination. The guy who has railed against council for its secretiveness and for its alleged massaging of the books at Mile One stadium has now simply become one of the people he used to criticize. How quickly he was absorbed into the collective when Andy, Doc and the boys started talking about paycheques.

The guy who was a fixture of the Open Line shows along with Sue and the Moon man has now been struck mute. His silence is deafening. Should Hann pop up on Monday - after he sees which way the wind is blowing - to rescind the motion and offer apologies, citizens of St. John's should take his conversion with a grain of salt.

Keep an eye on him. The salary issue was too obviously wrong and his willingness to go along with it too easy. Hann was elected having spoken out about the need for financial propriety at City Hall. In this instance, the watchdog helped load the getaway van.

The issue here is solely one of process and the process used is wrong.

The process is wrong because council violated its own by-laws by using the method it did.

By-law 103 on conflict of interest to be specific:

3.(1) No member of Council shall vote on or speak to any matter before the Council or any committee thereof where:

(a) the member of Council has a pecuniary interest directly or indirectly in that matter; (Amended 97/12/01; #1401)

There is no more direct pecuniary interest than a councilor's own remuneration for the job of serving on council.

Conflict of interest is why in every other elected body, the remuneration for elected officials is passed to third parties to decide. Even if council must, by law, vote on its own salary, the salary should be set by someone other than council and adopted without debate.

The question now remains what to do.

Council has no choice but rescind the motion granting the raises. Who better to do it than Doc O'Keefe, the deputy mayor. To do otherwise would merely confirm that council behaves exactly as they have been accused of behaving: without regard to the law.

Once rescinded council should appoint a panel of three persons - none of them being former councilors - and give them 30 days to report on a new method of setting council remuneration from this point forward. Under no circumstances should council grant retroactive pay and under no circumstances should citizens have to deal with this spectacle again in four years' time.

Danny Williams: At odds with himself...again

Courtesy of vocm.com, the latest comment by Premier Danny Williams [right] on the Hibernia South project he cancelled last week:

...He says the inherent conflict of interest is the feds supporting the CNLOPB while they [the federal government] own part of the project. ...

There's the case, ladies and gentlemen, against the provincial government having an equity stake in any offshore oil or gas project. How could the provincial government hold veto power over a project it has a financial interest?

Bond readers have already heard about a conflict of interest involving the provincial government and the offshore. It's one of the reasons why the oil companies weren't too fussy about Danny's idea of having the same guy who was negotiating the government's tax take also sitting to negotiate his potential seat at the operators table.

It was a conflict of interest. Bond Papers hit on the notion, then had the conflict of interest issue confirmed by industry sources.

Hebron talks could likely get started if Premier Williams agreed with himself. Sadly, he finds it more productive to argue with himself on more and more issues, instead. With such a diversity of opinion just within a single brain, Danny Williams can actually be a team of one.

Public policy by Sybil.

What a concept.

"Show me the shoes and I'll piss on them", or Danny Williams' latest jihad

Meanwhile, the Council of the Federation meeting is going to be fun, given Danny Williams latest "screw you" message to his fellow Premiers.

The shoeshine guys outside the meeting will be doing a raging book of business patching up the nine pairs of first minister loafers from across Canada the feisty Newfoundland and Labrador premier is set to soak.

In the same story at vocm.com, the Premier Dan is quoted as saying:

Williams says he wants the federal government to make all of the provinces whole however if they experience a financial setback while Newfoundland and Labrador gain more money, then so be it. [Emphasis added]

That's what he said; you get to listen to these things while a blizzard rages outside your house.

Once again, it's pretty easy to see Premier Dan at war with himself on the same issue. At the same time as he claimed it would be unthinkable to reduce Newfoundland and Labrador's federal hand-outs, he's quite happy if someone else gets shafted.

Sucks to be them, so to speak.

That sort of bumpf plays well at home among some people, but it will go over like the proverbial flatulence episode in a house of worship. Expect the upcoming council meeting to be a bit on the stormy side, much as the October 2004 meeting would have been had Danny sat his backside in the chair reserved for him. Premiers were more than a bit miffed with Danny's posturing that put his own interest above everyone else's. Same guy. Same message as he is spreading now.

Back then he found an excuse and stormed out of the meeting with all the melodramatic - histrionic (?) - flair he could muster. He did it solely to avoid the tongue-lashing some of his counterparts had ready for him.

Will he find an excuse to storm out or skip the meeting this time? Or will there be fireworks to light up the winter evening in Toronto?

The only thing for sure is that it is highly unlikely Danny Williams will get anything out of his latest crusade except a bunch of ticked off provincial premiers.

and they dissed Lono's Code of Conduct

In light of the ongoing fiasco over handing themselves a hefty raise by breaking their own rules, St. John's city council has likely caused a bunch of residents of the capital to ponder their votes in the last election.

They are probably thinking too about the stunning silence of council candidates who paid no attention to Simon Lono's code of conduct. Lono, an at large candidate, unveiled a simple set of principles he said would guide him as a councilor. The candidates who didn't ignore Lono altogether on this point thought the idea was irrelevant since they would always act in an open and transparent manner, putting the public interest ahead of their private interests.

Yeah, well, recent actions demonstrate that council just didn't get it then and they still don't get it. Even the councilors who voted to postpone their pay hikes spoke about the whole matter as a simple misunderstanding.

Tom Hann - who simply echoed sentiments of several councilors including the mayor - said something to the effect that if the whole reason for the hike had been properly explained, residents would have understood.

Barrrrrrmp.

Wrong, Tom.

The point was never about raises.

It was about the sneaky way council set about doing it.

Against council's own rules.

Rules that council was prepared to chuck because they were inconvenient.

Rules that required openness and transparency in the process by sending the matter of council pay to an independent committee.

So, ladies and gentlemen, I give you once again, the Lono Code of Conduct for city councilors in St. John's. Note especially the parts of the code that apply in this case.

Did any member of council come close to adhering to these simple principles?

Code of Conduct
for members of
St. John's City Council

As an elected representative of the people of St. John's, I will:

*• Act in the public interest. I will work diligently for the public interest of the City and not for any private or personal interest, representing the will of residents and treating all persons, claims and transactions in a fair and equitable manner.

* • Behave in an ethical, open and transparent manner. On being elected, I will publicly disclose all my business and personal interests and will abstain from council debates and decisions in which I have a financial interest, organizational responsibility or personal relationship that could present or appear to present a conflict of interest; I will not accept or use gifts, services or opportunities offered to me which could present or appear to present a conflict of interest; I will not use for personal or private purposes City resources that are not available to the general public of St. John's.

* Conduct public business in a civil and respectful manner. I will debate in Council Chambers, and in all public and private forums, in accordance with rules established by Council, Robert's Rules of Order and basic good manners; I will inform myself and focus on the merits of the question under discussion, maintain courtesy and fairness in debate and refrain from defaming, demeaning, interrupting or attacking the character or motives of other members of the City Council, boards, commissions, committees, staff or the public.

* Maintain open communications with citizens of St. John's and staff of the City. I will consult with City residents and businesses on matters of municipal policy, planning and programming; communicate decisions and other information affecting residents and businesses in a timely fashion; and engage City staff to understand their concerns as public employees.

Conflict of interest you say, Danny?

[Updated - 1400 hrs 02 Aug 06, as noted]

CBC radio is running a story [link added] this Regatta Day focusing on Liberal party allegations that Danny Williams took a large donation from INCO to help cover the costs of the recent Premier's meeting yet criticized the Liberals for taking a political donation from INCO while it was the government party.

Danny Williams was unavailable for comment, according to CBC, but his personal publicist said the whole concern Williams had had applied only during the negotiations over the Voisey's Bay contract. That's when Williams was concerned about a conflict of interest apparently.  Now?  No problem.

According to CBC, Williams' publicist acknowledged the Premiers' political party had accepted donations from INCO at other times including in 2003 during the provincial general election. As CBC's web story reports,

Williams also banned the company from Tory fundraisers in 2002.

"We didn't want to be in a conflict of interest position, or be perceived as being compromised, quite frankly," Williams said in 2002. [quote added]

Apparently, the fact that INCO is trying to negotiate with the province over the smelter/refinery complex location wasn't in the publicist's notes.

For want of a telephone call

For the want of a nail, the shoe was lost; for the want of a shoe the horse was lost; and for the want of a horse the rider was lost, being overtaken and slain by the enemy, all for the want of care about a horseshoe nail.

- Benjamin Franklin

For if the trumpet give an uncertain sound, who shall prepare himself to the battle?

- 1 Corinthians 14:8

_________________________________________________

Consider the irony.

Four telecom companies in Newfoundland and Labrador - Persona Communications, Bell Aliant (TSX: BA.UN-T), Rogers (TSX: RCI), and MTS Allstream (TSX: MBT) - are embroiled in a controversy involving a government deal that will likely affect their corporate bottom lines and all because the companies involved neglected two words:

Public relations.

Here's how.

Public relations is about connecting a company with the public interest. It is about gaining and maintaining public support by developing awareness, information, attitudes and behaviour.

Public relations these days is very much about an organization's reputation: attitudes over time.

And time is the key element.

Public relations professionals will you that in order to gain and maintain support, people have to know. The only way they know if you tell them.

None of the companies involved told what needed to be told in a timely way. The companies involved with government in laying new fibre-optic cables across the province waited until the end of the process - once the deal was done with the provincial government - to tell people that a deal was even in the works.

Naturally, public interest was peaked. Spending public money gets their attention anyway. And when two of the three companies behind the deal are headed by individuals with a long-standing business and personal relationship with the Premier, they are bound to wonder what's up.

The information the companies and the provincial government gave initially was limited and confusing. One company spokesperson - Paul Hatcher of Persona - described an $82 million project already underway with no mention of the federal and provincial government money involved. The government announcement added up to only $52 million.

Public comments by business and political leaders in the wake of a fire at Bell Aliant's St. John's headquarters seemed to smooth the ground for the government announcement. But, a week later, as the full scope of the project slowly seeped in the public domain, questions mounted. A week after the announcement, news stories spread across the country alleging that the public money actually came as a result of a deal among buddies rather than something that was actually in the wider public interest. [For a telecom industry/business view, see here.]

The controversy will likely be fueled in the second week by bumbling comments by the finance and business ministers as well as contradictory comments by innovation minister Trevor Taylor and Persona's chief operating officer Paul Hatcher, another Cable Atlantic alumnus.

In an interview with NTV's Issues and Answers, Taylor played up the government's purchase of fibre-optic strands for $15 million. Hatcher told the Telegram that the provincial government cash was needed to fund the expensive portion of the project, namely the sub-sea connection into Nova Scotia.

As the Telegram story put it:

More than a year ago, the consortium pitched the undersea cable to the province - they had $37 million and asked the province to make up the shortfall.

To make matters worse, while concerns about public safety were raised by the Premier himself as the deal was being approved, Taylor said this weekend that province-wide 911 service is being examined. The cost and technical feasibility of expanding broadband to Labrador will also be studied with no commitments being made at this point.

Underneath the whole controversy are allegations of unfair dealings of a government with companies headed by individuals who hold appointments to the province's hydroelectric corporation, both of whom are the Premier's former business partners.

As easy as it is to decry suspicion of politics and politicians, Trevor Taylor gave credence to this aspect of the affair by confirming that the proposal had been reviewed by cabinet at least twice in the past year and rejected on both occasions out of concern of a perceived conflict of interest. Ordinary residents of the province can hardly be faulted for wondering why a single incident suddenly erased the concerns if the politicians were worried about real or perceived conflict of interest twice before. If the deal was good now, it was good then.

To a public relations professional, that sort of suspicion - even if based on appearance rather than fact - is the most damaging. Releasing information when the proposal was first made would ensure awareness and accurate information. Tackling head-on the questions about conflict of interest at the outset would have sent reassuring messages about government and corporate sensitivity to ethics questions. Early and complete disclosure instills confidence.

For Bell Aliant's part, the issue is more one of opportunity lost. The company simply has missed every chance to deal frankly with its telecom service to the province. Its competitors have relentlessly pointed to the supposedly exorbitant cost of leasing space on Aliant's fibre-optic cables. They have pointed to increased service to the public. Aliant has been silent on the existing surplus capacity in the system and the likelihood that consumer prices will drop anyway as a result of deregulation of the nation's telecom industry.

This deal has put Bell Aliant is in a hard competitive spot anyway. It will hardly lose anything by speaking more forthrightly about how this project will affect them and their customers. On the face of it, would speaking publicly about the controversial deal make it less likely that Aliant can get the government account back or that it can win any other telecom contracts?

Bell Aliant can deal authoritatively with technical issues. The company can speak frankly about its service, costs and long-term telecom issues. By speaking openly and frankly, the company will give its consumers the chance to see - if they don't already - a company that is interested in more than the customer's bank account.

But look at it this way, as well: if early and complete disclosure instills confidence, then silence is taken as consent. Every negative comment made by Aliant's competitors about Aliant's costs and service is left unchallenged. To the ordinary consumer, that looks like an admission of guilt or fault.

To be sure, each of the companies involved has first-rate marketers handling corporate advertising. The bigger companies - like Rogers and Aliant - have competent public relations professionals on the payroll. Persona uses a well-connected and creative advertising firm in St. John's. Nothing said here is a slight to them and their competence.

What seems to be missing in this controversy is an understanding in the corporate headshed that there is more to public relations than issuing a happy-faced news release supporting the latest marketing venture. If the in-house team of general public relations practitioners lacks the specialized skills - and they are specialized - to handle a controversial government relations and media relations issue, then there are plenty of practitioners who can lend a hand.

If all you have is a marketer, understand that advertising is built on image. PR handles your reputation and a competent PR professional will make sure that your media appearances are considerably more successful than Dean Macdonald's recent foray to the local open line shows or a short-lived trip into another corporation's boardroom. [See here, here and here.]

The business landscape in Newfoundland and Labrador is littered with the carcasses of good projects that have foundered for want of some straightforward public relations support. The failures affect the bottom line, either in lost opportunities, unrecovered expenditures, or added expenses from delays. For publicly traded companies, the impact on share price - even if marginal - is still an impact that could be avoided. For all, the impact on their reputation is easy to figure out.

It might be difficult sometimes for managers to see the return on a public relations investment. But ask Fishery Products International, the Hebron consortium, IOC, INCO, Fortis and its Belize dam and now the Telecom Four about the cost of not investing in building awareness, understanding, of influencing attitudes and behaviour.

Few projects are lost irretrievably. Even if the public relations efforts were left out or botched, there is always a chance to sort out the mess.

All it takes is a phone call.

The Boyo called Brazil #nlpoli

Obviously, Premier Kathy Dunderdale got squat from her meeting with the Prime Minister on Monday. 

You can tell because all she had to say on the day of the meeting was nothing.  Her office issued a statement that – for some inexplicable reason – hasn’t turned up on the provincial government’s website.

You can also tell because a media scrum she had scheduled for Tuesday got bumped off until noon on Wednesday.

Government Abandons Energy Plan … quietly #nlpoli

These days, you have to hunt around the government website to find the provincial energy plan.  That’s despite the claim on the website – once you’ve found it – that the 2007 document “guides and defines Newfoundland and Labrador’s vision for energy resource development”.

The first pillar of that policy is something called “equity ownership.”  It’s right there on page 18:

Taking equity ownership in projects to ensure first-hand knowledge of how resources are managed, to share in that management, to foster closer government/industry alignment of interests and to provide an additional source of revenue.

Pretty clear?

Loyola Sullivan and conflict of interest #nlpoli

From the report by federal conflict of interest and ethics commission into certain actions by former fisheries ambassador Loyola Sullivan:

In June 2011, after consulting with my Office about whether he could take the position, Mr. Sullivan took up the position of Vice President of Resource Management and Sustainability at Ocean Choice International (Ocean Choice). In that position he had several interactions with Fisheries and Oceans Canada and Foreign Affairs and International Trade Canada related to matters of interest to Ocean Choice during his one-year post-employment cooling-off period. He also attended a consultation organized by Fisheries and Oceans on behalf of the Groundfish Enterprise Allocation Council.

During my examination I found that several of these interactions were made in order to persuade federal government officials to make a decision to the advantage of Ocean Choice and, in one case, to change a policy in accordance with the position of the Groundfish Enterprise Allocation Council. In my view, these interactions involved making representations. I have therefore found that Mr. Sullivan contravened subsection 35(2) of the [Conflict of Interest] Act.

-srbp-

Hebron equity and a possible conflict of interest

Premier Danny Williams provided more information in the House of Assembly on Wednesday about negotiations between the Government of Newfoundland and Labrador and the companies that proposed development of the Hebron-Ben nevis field offshore Newfoundland.

Following are extracts from the Premier's comments, followed by commentary.

1. On the equity position:

The reason we went from 8.5 per cent to below 5 per cent was because 5 per cent was a critical turning point in the joint venture agreement. The partners could not unanimously deliver more than 5 per cent to the Province of Newfoundland. Under that circumstance, there would be absolutely no agreement whatsoever. Four point nine percent is critical because when you get to 5 per cent there is an absolute veto right on all decisions.

This Province, in order to achieve 4.9 per cent, which could probably give us $1.5 billion additional return over time, was prepared to concede a veto right. We are not interested in a veto right on the project. That is the reason.

Comment: Two new significant pieces of information here.

First, we learn for the first time that an equity position above 5% would have given the provincial government a veto over management decisions. From other public comments by the Premier and others it appears that the companies either could not would not alter the joint operating agreement, hence the government's decision to accept a piece of the operation beyond royalties and other revenues at 4.9%.

The Premier's remark at the end that the province didn't want a veto is moot since the province could never have obtained one under the circumstances without likely forcing a complete renegotiation of the joint operating agreement signed in April 2005 among the corporate partners.

Second, we learn for the first time that the equity position was estimated to yield $1.5 billion in revenue that was over and above the $8 to $10 billion going to the province in royalties.

2. A. Was there a January 26 agreement or a position taken by the corporate proponents?

It was a January 26 position. That is exactly what it was. It was a position that had been negotiated down from their position over the course of two months. That is what was done between Mr. Martin and Mr. Bates, with intervention by us at certain points in time. What they did on last Thursday night, when we finally got down to the two final issues - which was equity and super royalty. When we had agreement on those issues, they reverted to the January 26 position, which included investment tax credits, which would have cost the Province about a half billion dollars. So, you had four companies that, collectively in revenues last year, made $590 billion and were looking for our Province to give them another half billion dollars. That simply was not on.

Comment: There are two new pieces of information here as well.

A. Recall that yesterday the Premier referred at one point to a January 26 agreement. The Premier categorically states today that in fact there was no January 26 agreement. He notes that there were negotiations which latterly dealt with the equity position and so-called super-royalties.

On Tuesday, the Premier said, describing the companies position: "Oh, yes, but we want all the terms that are in the January 26 agreement, with the exception of these two." Even if we grant that there was no formal agreement on January 26, it appears likely that ultimately the companies did not accept the provincial government's position on equity and super-royalties.

The Premier has said there was an agreement on equity and super-royalties; evidently there wasn't, otherwise the companies would not have reverted to their position on January 26 less two items, namely equity and super-royalties.

Part of the difficulty in assessing the Premier's comments may come from the different definitions he seems to apply to agreement depending on when he refers to his position and when he refers to the position taken by the companies. The negotiations do not seem to have followed a pattern in which items were settled and formally noted as settled. Thus, the parties - particularly the provincial team - could make a fundamental error in believing that some issues were settled when in fact they had not been.

When the Premier states there was an agreement up to this past weekend and that January 26 was a position, he is stating his interpretation of events. The companies may well have felt that from their standpoint, the January 26 position represented the basis for agreement given discussions up to that point.

We do not know when the Premier formally presented the demand for an equity position, however it appears likely that negotiations did not begin on this point until after January 26. Note that the premier did not publicly indicate that equity was a condition of an agreement until after January 26. Note as well that the Premier indicates the January 26 "position" was the result of two months of negotiations from a previous position put forward, presumably by the companies. One can easily see how such a process could lead to this document - if it is a document - being called an agreement, especially if the provincial team did not reject it formally or proceed to amend any of the contents.

By the same measure, the companies could conduct discussions in good faith, as it appears both parties did, have some legitimate misunderstandings and see the whole deal collapse at the last minute to everyone's evident consternation.

B. Was there an inherent conflict of interest in the provincial negotiating position?

The Premier refers to negotiations conducted by two representatives, namely Mr. Martin on behalf of the provincial government and Mr. Bates on behalf of the Hebron consortium.

Mr. Martin is Ed Martin, a former oil industry executive and currently chief executive officer of Newfoundland and Labrador Hydro.

These negotiations had two elements: one focused on the demand for an equity or partial ownership position in the operating consortium. The second was on royalties and other revenues to be paid to the province as economic rent for oil production as well as local industrial benefits as defined in the Atlantic Accord (1985).

To date, the Premier has not indicated how the shares in the operating company would have been managed. They could be held by an corporation like the Canada Hibernia Holding Corporation which reports to the federal energy minister. His officials would represent the federal government in making any decisions related to the federal government's shares in Hibernia, for example.

More likely, the shares would have been held by Newfoundland and Labrador Hydro as the province's new energy corporation or in a holding company managed by the revamped Hydro corporation. This would be consistent with the Premier's comment to the National Post:

With Newfoundland's business community anxiously holding out hope that negotiations will be revived on the Hebron Ben Nevis offshore oil project, Premier Danny Williams yesterday made it clear he is prepared to make the province a full-fledged partner in the multi-billion-dollar venture.

"We are prepared to have a full stake and, if necessary, at some point we will get involved in frontier exploration, whatever the opportunities are," Mr. Williams said in an interview.

Mr. Williams said his government is prepared to participate in all aspects of developing his province's offshore oil and gas resources through the provincial hydro corporation. He said he would like to model Newfoundland and Labrador Hydro after Quebec Hydro and Norsk Hydro, Norway's state-controlled energy company. [Emphasis added]

There is the strong possibility that by combining these two very different sets of negotiations in one that the province placed itself in a position whereby acquisition of shares in the operating venture could be inappropriately related to the province's royalties and other similar revenues. This would be similar to the Hibernia negotiations in which the province essentially traded off the gravity-based structure costs against future royalties.

Such a situation is implied in the Premier's comments on Tuesday that suggest the request for $500 million in tax concessions reduced the overall benefit of the equity position, even though the two issues should actually be considered separately. The equity stake had an intrinsic public policy value separate from the other "provincial benefits". As such the cost of the tax concessions ought to have been weighed against the $10 billion in royalties, not the $1.5 billion returned by the shares, or any combination of the two.

Of greater concern, though is the potential that in the second share management scenario, Mr. Martin was effectively placed in a conflict of interest during the negotiations themselves. Had the negotiations been successful in the second share management scenario, Mr. Martin would have been, for all intents and purposes, a co-owner of the Hebron development. As such, he would have naturally been concerned to lower the start-up costs of the project in an effort to maximize corporate profits. These profits would then be turned to whatever purpose the Crown-owned agency determined, including development of the Lower Churchill.

There is no question that in a typical situation, Mr. Martin as an operator, would naturally look positively on a request to lower start-up costs such as requesting forgiveness of certain taxes or the seeking of certain tax credits. No matter what a company's overall financial position, a project such as Hebron would be expected to operate as efficiently as possible, with the lowest costs and hence the maximum profits.

At the same time, though, Mr. Martin was operating as the province's chief negotiator on behalf of the public treasury. In a manner of speaking he was functioning as the tax collector. As such he would seek to maximize the revenue flowing to the public treasury; naturally this is separate from the Hydro corporate treasury. Thus, his negotiating brief ought to have given him clear direction to minimize concessions, except in so far as those concessions would bring a greater return in such things as local jobs. His public treasury role ought to have carried with it considerations separate from those of his brief as a co-owner of the development along with the major oil companies.

Under the second share management scenario, Mr. Martin appears to have been in a conflict of interest. He was on the one hand seeking to maximize the treasury returns while at the same time negotiating his way onto the Hebron management team, with its obvious concern to lower costs and maximize profits.

It is irrelevant that Mr. Martin would have been placed in this position by the provincial government itself. The provincial government appears to have been trying to achieve two separate public policy goals in the same set of negotiations. This may have contributed to the collapse of the negotiations.