Following my recent Facebook post of a quote from Premier King saying interlocking corporations within the same family are “one corporation” and subject to the Lands Protection Act’s limit of 3000 acres of arable land, I received a number of requests for the “source” of that quotation, so I’m providing a link to the video clip.
I really don’t envy Premier King. He has some historically-difficult decisions to make in coming days. Islanders will need to show strong support to make it a little easier for him to make the right decisions on a number of critical issues.
I’m certain Denny truly wants to see PEI return to what was originally intended with the Lands Protection Act, but standing up to the Irvings and forcing them (and probably others) to divest land holdings will not be an easy thing for him to do. But his day of reckoning is fast approaching, and land isn’t the only issue demanding a courageous response from him.
For example, what’s King going to do about the whistleblower lawsuit? Is he going to fight those three women in court or settle? By my reckoning, the PEI government has already failed to meet the deadline for filing a defense.
And what’s Premier King going to do about the e-gaming lawsuit? Stewart McKelvey lawyers are still representing the PEI government on the case, yet it is now known that the lead lawyer – Jonathan Coady – failed to comply with Supreme Court rules to disclose all relevant documents: thousands of key e-gaming documents (some of which are currently being acquired through Access to Information requests) have been withheld.
It is also now known that Coady misled the court (and plaintiffs) by failing to disclose that many other key e-gaming documents once in the possession of the PEI government are now “missing” (e.g., Brad Mix’s emails from 2010-12).
Premier King has been attending lots of events and public functions during old home week – when news about the Irving purchase of Brendel land broke – and he has been doing a good job of representing PEI during the busiest part of our tourist season.
But Old home week is over now, so a public statement from the Premier responding to this land issue would seem prudent.
This issue isn’t going away, so nothing is to be gained by delaying a response; it only increases suspicion that the passion, sincerity and ethical integrity evident in the statement given during the election campaign may have since evaporated.
The public revelation earlier this week that 2,200 acres of farmland in the Bedeque area was acquired by Rebecca Irving – one of Mary-Jean Irving’s two daughters – came as a shock to many Islanders.
Using a secretive corporation acquisition and/or transfer scheme to avoid submitting a second application to IRAC to purchase the land may seem like a shrewd legal maneuver to exploit a “loophole” in the Lands Protection Act; however – and notwithstanding a growing consensus that the problem is a “loophole” in the Lands Protection Act that needs to be plugged [today’s Guardian editorial was titled “Close the Loop”] – it seems to me that this errant line of thinking is only diverting attention away from what actually happened. It appears to me that the Irving family brazenly broke the law, and the PEI government’s main legal counsel (Stewart McKelvey) helped.
If there’s a loophole in the Lands Protection Act, why hasn’t someone pointed out what it is?
Consider the outcome of Irving’s first bid to acquire the 2,200 acres following established rules, regulations and legislation, along with the rationale provided by government for not approving the application.
On February 5, 2019, Rebecca Irving incorporated a new company (Galloway Farms) then submitted an application to IRAC two days later to purchase the 2200 acres in conjunction with two other Irving-owned companies (Indian River Farms & Long River Farms).
IRAC recommended to the previous Liberal government’s Executive Council that the Irving application not be approved. Executive Council followed that advice and declined approval.
On the same day the election was called (April 2nd) the Minister then responsible for IRAC and the Lands Protection Act, Hon. Richard Brown, stated clearly what the rationale for the rejection was:
“It was not political,” Brown said. “The decisions and the recommendations come out of IRAC. That’s an independent body.”
Brown said the purchase was denied because the size of the land holdings was substantial.
“We applied the rules of the Lands Protection Act,” Brown said. “The beneficial owners are one family, basically.” [Guardian, April 3, 2019].
And “one family” translates into “one corporation” under the Act, no matter how many companies may have been involved.
A very precise definition of “corporation” can be found under section 1(d) of the Lands Protection Act that should remove any confusion on this key point, regardless of how many corporations are established, or how assets may be shuffled around between the individuals in the same group, it must still be deemed to be just one corporation:
1 (d) “corporation” includes a partnership, cooperative association or body corporate whether formed or incorporated under the law of this province or any other province or of Canada or outside of Canada, and for the purposes of this Act a corporation and other corporations directly or indirectly controlled by the same person, group or organization shall be deemed to be one corporation.
By saying “…a corporation and other corporations directly or indirectly….controlled by the same…group….” the Lands Protection Act is clarifying that it doesn’t matter how many independent corporate entities are involved in determining whether the applicant seeking to purchase or lease land is still within the 3,000 acre limit of arable land specified in the Act for corporations; but rather, the particular individuals involved in the transaction and their relationship to one another. More precisely, the issue is whether the land in question is, or will be, controlled by “…the same person, group or organization.”
The fact that three Irving-owned companies first sought these 2,200 acres of land helps to see how the interconnected nature of the family business constitutes a “group”. The fact that this more recent second strategy to acquire the land only involved one Irving family member [Rebecca] from the original three applicants [Rebecca; Elizabeth and Mary-Jean] changes nothing, especially considering the purchase price was over 5 million. Just think about it for a minute: how does a person in their mid-twenties amass that kind of capital?
How much clearer can the letter of the law be? It says that a group of companies with the same people controlling themshall be deemed to be one corporation. One corporation means a 3,000 acre limit of arable land. That’s exactly what we have in play in this case: one “corporation” controlled by the same group – the Irving family.
This is the reasoning provided by former Liberal Minister (Richard Brown) to explain why IRAC and Executive Council turned down the three-company Irving application for this same 2200 acres in April, 2019. Despite the fact that three corporations were involved in the purchase, in consideration of the legal definition of “corporation” found in the Act, IRAC determined that – as Brown put it – “The beneficial owners are one family, basically.”
The Irving spokesperson on the matter, Geoffrey Connolly, totally ignores this line of reasoning rooted in both the spirit and letter of the Lands Protection Act, and is quick to subscribe to the vague “loophole explanation” theory for Irving’s purchase; but again, Connolly doesn’t say what that loophole is.
“Geoffrey Connolly, a Haslemere Farms representative, did not dispute that the transaction was allowed due to a “loophole” in the Lands Protection Act.
Keep in mind that Connolly is not only a partner in the Stewart McKelvey law firm, he is also a shareholder in Irving-owned Indian River Farms, and an corporate officer with Irving-owned Long River Farms.
I’m sure that Connolly and select members of the Irving family would much prefer a loophole in the Lands Protection Act that can be exploited to their advantage: that way, although perhaps still not very savoury or ethical in the eyes of most Islanders, at least the purchase would be”technically” legal.
But what if there is no loophole in the Lands Protection Act to explain Irving’s purchase without government approval? What if the law was broken? That’s a whole lot more serious for both the Irvings and Connolly.
So I’m throwing out a challenge to Geoffrey Connolly or any member of the Irving family, or perhaps a senior member of the government (e.g., Minister or Premier): If Irving acquired the 2,200 acres as a result of an existing “loophole” in the Lands Protection Act, can you please point out exactly what that loophole is, and where it can be found in the Act?
From where I’m looking, it appears you didn’t exploit a loophole in the Lands Protection Act for your client Mr. Connolly, you helped your client break the law.
I have not posted on e-gaming for quite some time, due to delays by the former Premier and Liberal government (RIP) frustrating my efforts to get access to information on e-gaming records from government.
In the spirit of giving credit where credit is due, I’m publishing this short article as a genuine, heartfelt expression of appreciation to the new Deputy Minister of Economic Growth, Tourism and Culture, Erin McGrath-Gaudet, for her honest answers provided in her most recent letter to the Information Commissioner in a key e-gaming Access to Information review which I initiated in January, 2019, and is still ongoing. I expect a written Order from the Commissioner within a few months.
I’ll need to provide you with just a bit of background, but I’ll avoid making a deep-dive into a fascinating story of how a simple request for documents (that the Liberal government knew at the time I submitted my request had been deleted, and could have told me in a second) turned into an 8-month make-work project generating a 2-inch file.
Why I asked for Brad Mix E-gaming Records
After reviewing all the affidavits in the e-gaming lawsuit in late 2018, I decided to file several targeted Access to Information requests. One issue that struck me as particularly important was that the CMT lawyer was making reference after reference in his oral argument and Affidavit Exhibits to missing emails from Brad Mix.
All relevant documents should have been disclosed to CMT’s lawyer by the government – and CMT had been told that they had been – but given evidence of e-gaming meetings in which Brad Mix participated, it didn’t make sense there were no documents from him. So I decided to ask government myself with an Access request.
Unlike the email accounts of Melissa MacEachern, Rory Beck and Chris LeClair who vacated their positions (which the Auditor General reported in her 2016 e-gaming report had all been deleted) Brad Mix has held the same position at Innovation PEI for over a decade. How could his emails be missing unless some unauthorized person decided to delete them?
Why I Asked the Information Commissioner to Review the File
I received a few calendar entries from Brad Mix’s GroupWise Account with my Access request, but no emails, email attachments, or hard-copy files for that matter; so I wrote to the Information Commissioner in January, 2019 asking if she would review the file.
I know the Commissioner has already put in many, many hours on this file; and since last October, I’ve personally put in at least 100 hours researching and preparing documentation, etc., which has mostly been responses to written materials submitted to the Commissioner by the Department.
With multiple requests for time extensions to undertake more thorough searches, I would never have dreamed in a million years that during the entire past six months the Department (and Brad Mix) knew from the get-go that all the records for the time period in my Access request had been deleted, and that was known by them since 2015.
I’ve wasted countless hours of my time over this, and was completely frustrated in my e-gaming investigative work, all on account of the former Liberal government’s stonewalling and lies.
The July 10, 2019 letter from Ms. McGrath-Gaudent provided answers to seven (7) hard questions from the Commissioner, and the Deputy Minister managed to accomplish something which the Liberals promised but were unable to doduring their entire 4-year tenure: tell Islanders the truth.
Ms. McGrath-Gaudet somehow compelled Mr. Mix to answer the questions directed at and about him honestly, no matter what the consequences might be; and given the nature of the revelations, I expect there will no doubt be some consequences.
In particular, read the response Ms. McGrath-Gaudet provided to question six from the Commissioner:
#6. Did you interview Brad Mix relating to these missing records? If so, did he provide an explanation for the missing emails? E.g Did these time periods correspond with a change of position for Mr. Mix, or a period of absence from work?
“Mr. Mix reports that in 2015 he was looking through his archive for emails. It was at this time he discovered that emails in his archive for periods of time appeared to be missing. Mr. Mix states that he did not understand what had happened as he could not locate emails for many files and contacts throughout 2011 and 2012. Although Mr. Mix advises that he does delete some transitory emails that he won’t use again (as he is permitted), he unequivocally states that he has not and does not intentionally delete other emails. He states that he was distressed by the discovery of missing emails.” (My emphasis).
Mix mentions that he had a phone upgrade around that time and thinks that may have caused the records to go missing. One wonders how archived files on a server could possibly be affected by a phone upgrade, and even more puzzling is that it was only during that critical e-gaming period. How is it that files from 2013 on were left intact?
These are disclosures that are at one and the same time very refreshing and very disturbing. Had the Liberal party simply been honest with me when I submitted my request last October (and with the Information Commissioner) and disclosed that there was no point searching for the records I had requested because they had all been deleted, then there would most certainly have been significant consequences for both the Liberal government and the Motion Hearing that happened over four days in the PEI Supreme Court back in April, commencing on election day. That’s disturbing.
What’s refreshing is that this truthful and insightful information has finally come to light by a new Deputy Minister under a new PC government which has taken charge of the file.
Brad Mix’s answer to question six may also pose a legal problem for Stewart McKelvey, the law firm representing the provincial government in the CMT lawsuit. Lead lawyer, Jonathan Coady, has been saying for years that he has disclosed all relevant information in accordance with Supreme Court of Prince Edward Island procedural rules and requirements. He clearly hasn’t. Nor has he disclosed the fact that Brad Mix’s e-gaming records had been deleted.
I wonder how many other people involved in e-gaming had their records destroyed?
So a very sincere kudos to you Ms. McGrath-Gaudet! The King government is clearly following through on promises made to Islanders that a PC government will trust Islanders with information and be truly open and transparent. Keep it up!
It’s perhaps not surprising that Dennis King has not made a big deal about the key anti-corruption policies embedded within the PC Policy Platform. Granted, there was never a question about government corruption; the need for systemic government reform; or for that matter “e-gaming”; in any of the leader debates, so there weren’t any easy access points for him to bring them up. However, you could argue that if they were really that important to him he could have brought them up at some point.
However, from the very outset – of both the PC Leadership race and the election campaign – King indicated that he intended to take the high road, avoid mud-slinging of any kind, and to focus on finding solutions rather than criticizing others for creating or worsening problems.
And he has demonstrated that, focussing on fostering a spirit of cooperation and collaboration among his leadership colleagues, even clapping enthusiastically for them whenever they put forth good ideas in the debates. That’s entirely understandable as a prudent campaign strategy, especially given the looming possibility that he’ll have to work closely with the other leaders if he becomes Premier and forms government.
Let’s face it: It’s really hard to talk about the importance of “anti-corruption” policies without first pointing out the corruption that happened under successive Liberal governments, making the introduction of those policies necessary.
And I suppose it’s also not surprising that the mainstream media outlets have said virtually nothing about the strong policies in the NDP, Green Party and PC Party platforms aimed at increasing the degree of integrity, true openness, and accountability within government – drunk as they are on the potent and conscience-numbing brew of massive Liberal government election advertising revenues.
CBC created what is purported to be a comprehensive overview of each Parties’ stand on policy issues, yet mentions nothing about what the Parties have put forward as policies to bring about government reforms aimed at increasing the degree of integrity in government, or decreasing the power of the 5th floor (Premier and Cabinet).
That’s really unfortunate, because the NDP, Green Party and PC Party are all offering substantive policy initiatives to improve how government will function more ethically, with increased integrity.
For example, CBC’s most recent version of its “Promise Tracker” (April 17, 2019) says nothing about government integrity policies or promises of reform, and why would it? The CBC has shown absolutely no interest in reporting government corruption, scandals, destruction of documents, or cover-ups.
In fairness, Kerry Campbell did put up an article on CBC’s website after the PC Platform was made public that drew some attention to these policies, “P.E.I. PC Party pledges updates to legislative assembly,” but this information did not – to my knowledge – get the same play on CBC radio or Television, which they most definitely deserved, and I suspect that no more than a handful of Islanders even know about them.
Peter Bevan-Baker just released a detailed and very commendable summary of what the Green Party will do to increase government integrity: “Greens commit to implementing meaningful accountability measure for government“. And although these are bold and important policy measures – most of which are also included in the PC Policy Platform, and all of which would likely be supported by Dennis King – it is only the PC Party that has committed to systemic and transformational measuresdirectly aimed at taking away power from the ruling government, measuresthat have been blatantly used by the Liberal government during their last two terms to block efforts to get information about government malfeasance, and prevent actions from being taken by the Attorney General to launch legal investigations and/or proceedings to address that malfeasance.
I’ve taken the page from the PC Policy Platform document and highlighted two unique and incredibly powerful policies which not only encourage more openness, transparency and accountability – e.g., more “integrity and ethics” within government – but also take away the two most important powers employed by the MacLauchlan government over the past four years to (1) render the Attorney General’s Office impotent to do anything but assist in the cover-up of e-gaming corruption; and (2) block access to having key witnesses come before Legislative Standing Committees.
Read the two policies highlighted in red – keeping in mind that it is only the PC Party that has committed to implementing these historic and urgently-needed measures:
How is it that these incredibly forward-thinking, systemic policies have not been headline news stories after decades of government corruption and abuse, made possible only because these policies have not been in place?
Just imagine – taking the power invested in the Office of the Attorney General away from the Premier and Cabinet and giving it to the entire Legislative Assembly. Wow!
Just imagine – allowing a MAJORITY of opposition member on Legislative Standing Committees to be able to call any key witness they want, and the government would be unable to say “no”. Wow!
If Dennis King and the PCs do form government and implement these policies – which I am confident King will do – our provincial government will never again be able to quash Motions brought forward by Opposition MLAs to bring key witnesses before Legislative Committees – something the MacLauchlan government did over and over and over again, with neither apology nor apparently any shame.
To me, the most disgusting aspect of this entire election campaign has been the way the mainstream media – and by mainstream media I mean the CBC, Guardian and Eastern Graphic – have seemingly done everything within their power to avoid mentioning the rampant corruption of the past two Ghiz and MacLauchlan Liberal governments. Shame.
Avoiding mention of the past sins and crimes of the Liberals is one thing; but to deliberately refuse to fully inform Islanders that one political party – the Progressive Conservative Party of Prince Edward Island – intends to remove the tools that allowed that corruption, thereby ensuring it never happens again, is not only really sad, it’s irresponsible journalism and, quite frankly, totally despicable.
A FOUR-PART SERIES EXPOSING E-GAMING AS AN ELABORATE CONSPIRACY TO COMMIT FRAUD
Introduction to Part 4 and Series Summary
My four-part e-gaming investigative series presents documentary evidence showing how $1,210,000 of public dollars was first fraudulently acquired by key players in the PEI government, then funnelled through the Mi’Kmaq Confederacy of PEI to McInnes Cooper law firm.
It’s important to point out that this amount was not the total government funding that went into the e-gaming initiative. In fact, the Auditor General, Jane MacAdam, was not able to determine what the full cost of the e-gaming project was to Island taxpayers. She was refused access to many government documents by the MacLauchlan government, and got no documents from McInnes Cooper law firm. In the end, she was forced to qualify what she did discover by saying: “At a minimum, government incurred costs of $1.5 million on the e-gaming initiative,” [Section 1.7, p. 2].
Most of the difference between the amount I’ve been using in this series ($1,210,000), and the $1.5 million identified by the AG, results from my exclusion of the earlier grant of $232,000 provided to the Mi’Kmaq Confederacy of PEI before McInnes Cooper was brought onboard by the PEI government to manage the e-gaming project in February, 2010 [Grant #1 in the following chart]:
The four key financial components comprising the $1,210,000 amount (as presented in the above chart) are: (a) Grant 2; (b)Loan; (c) (Grant 3) and (d) Payment.
The details explaining how each of these components was acquired fraudulently are presented separately in each of the following segments of this investigative series:
Similarly – given the blatant violations of key provisions of the CPA Code of Professional Conduct and Chartered Professional Accountants and Public Accounting Act – I will be filing a complaint with the Chartered Professional Accountants of Prince Edward Island against three registrants or CPA members – David Arsenault, Neil Stewart, and Cheryl Paynter – for their respective roles in jointly conspiring to conceive, prepare and execute a fictitious project grant to pay the final $100,000 McInnes Cooper law firm demanded from the PEI government for the e-gaming project, in clear violation of Rule 205 of the Code of Conduct cited at the outset of this article.
The Fraudulent Manner in which the Final Grant was Acquired
It’s impossible to overstate the degree of premeditated, calculated planning that was employed to acquire the final grant needed to “make McInnes Cooper law firm whole” – as Kevin Kiley put it to AG staff – which was the remaining $100,000 needed to acquire the full $1,210,000 amount promised by Wes Sheridan.
Recall that the e-gaming project was formally terminated on February 24, 2012, after the Deputy Minister of Justice at that time – Shauna Sullivan-Curley – obtained a legal opinion that concluded that for the provincial government to proceed any further with the scheme would be “criminal”. That created a huge problem for Sheridan – and McInnes Cooper – how was he going to honour his promise to provide all the funds?
To start with, as I’ve already outlined in Part 2 dealing with the e-gaming loan, no more advances were supposed to be legally issued on the loan after February 24, 2012; in fact, since there was no longer any hope of repayment (repayment of the loan was contingent on the project being successful), the only moral and legal option was to call in the loan immediately, since it was effectively “in default” the minute the project ended. But of course, that didn’t happen.
As well, as I explained in Part 3 of this series, there was no possibility that an e-gaming initiative could be successful or should proceed without government’s involvement after February 24, 2012. Legislation would be required to establish a financial transaction platform, upon which internet gaming depended, and could only come from the PEI government, and the PEI government had already decided it was not going to provide that legislation.
Yet, as previously noted, McInnes Cooper law firm continued to generate invoices to use up the final amount of the $1,210,000, which it hadn’t already acquired by the time the project formally ended. It remains a real head-scratcher for me that additional invoices for roughly $100,000 were generated and submitted by McInnes Cooper in the two months following the project’s termination, as was noted by the Auditor General in Section 3.33 of her e-gaming report:
Not only were those subsequent e-gaming invoices completely fraudulent in nature – in that no legitimate e-gaming work could be justified after February 24, 2012, the money used to pay those fraudulent invoices, came from a “third grant” which was itself phoney, and completely fraudulent. In fact, when McInnes Cooper submitted a final e-gaming invoice to IIDI for $390,000 in the fall of 2012, no amount of that final bill should have been regarded as a bona fide “outstanding” bill and paid, but that’s exactly what happened. As the AG noted:
Read the above clip from the AG report slowly and carefully:
IIDI would “release the balance of the loan funds committed to the project” – this was effected by Billy Dow, the lawyer handling the e-gaming loan, despite the legal provisions within the loan agreement stipulating that no further loan funds were to be advanced after the project ended:
“Atlantic Lottery Corporation (ALC) would buy from MCPEI a legal analysis relating to internet gaming for $60,000” – Sheridan fraudulently obtained this $60,000 by using taxpayer’s money to have the PEI Lotteries Commission (of which he was the “head”) pay for a report he already had access to for free; and,
“Innovation PEI would provide a grant to MCPEI for $100,000 – a totally fraudulent grant drawn up to fund a totally fictitious project, as will be explained in more detail below.
But also note that the AG stated that: “The Deputy Minister of Finance met with the local Law Firm at that time and reached an agreement whereby government would pay all outstanding bills, except for approximately $30,000.”
When Kevin Kiley, a McInnes Cooper lawyer, was asked about the “settling of the McInnes Cooper account,” that incomprehensible $390,000 bill, he said he had no recollection of any meeting with Deputy Minister David Arsenault, nor any recollection of discussions with the Mi’Kmaq Confederacy for that matter, the ‘client’ ultimately on the hook for the law firm’s outstanding bill. In fact, the only thing Kiley could recall was that McInnes Cooper “wrote off some of the bills”.
Consider the notes from the draft report of the interview that Kevin Kiley had with staff from the Auditor General’s office in 2017:
But a meeting with the Deputy Minister of Finance, David Arsenault, did in fact happen, as the AG confirmed, and sometime after that meeting, Arsenault contacted Neil Stewart to share his plan for coming up with the money that emerged from his “agreement” with McInnes Cooper.
Part of that plan was to have IIDI “take the hit” for the loan, so Arsenault asked Neil Stewart not to go to Treasury Board (despite the “security agreement” that Wes Sheridan had provided on the e-gaming loan), and to also put together a final grant application for MCPEI in the form of a phoney project application for $100,000 that would pay that final portion of McInnes Cooper’s $360,000 bill, that mysterious $100,000 generated after the project ended.
I obtained a copy of an email from Neil Stewart discussing this scheme after it was filed with the PEI Supreme Court in the Capital Markets Technology (CMT) lawsuit:
This letter is proof positive of a “conspiracy” to fraudulently acquire money under false pretences. And four senior government personnel did the conspiring: David Arsenault, Neil Stewart, Melissa MacEachern and Cheryl Paynter – three Chartered accountants (Arsenault, Stewart and Paynter) and a Ph.D in economics (MacEachern): they all need to take responsibility for betraying the public trust on this important matter and somehow be held accountable, notwithstanding the passage of time:
It Was All About Keeping E-gaming “Secret” – Right up to the Bitter End
When David Arsenault asked Neil Stewart to have IIDI provide “provision” (e.g., assume the “loss”) for the $950,000 e-gaming loan, what he was really asking is for IIDI officials to help him and Wes Sheridan keep Treasury Board, the Official Opposition, and the general public completely in the dark about the e-gaming loan – a defaulted loan that should have been reported -and “written-off” by Executive Council as a complete loss, as soon as the project ended on February 24, 2012.
The email chain associated with the above email from Stewart shows that it was not only Neil Stewart who was in on this strategy, but also the Deputy Minister of Innovation and Advanced Learning at the time, Melissa MacEachern. Six minutes after receiving Stewart’s email about Arsenault’s plan to come up with the money to pay off McInnes Cooper (above) Melissa MacEachern, responded with the following concern:
Stewart responded just four minutes later to put her mind at ease about how he could accommodate the loss:
The key admission here is Stewart’s conclusion that: “There is no way to collect this debt unless treasury pays for it;” and of course, that was never going to happen, despite that being the only “security” provided for the loan – e.g., Wes Sheridan’s written promise that if the loan goes into default, the PEI government would pay it off. That never was loan “security” – but a convoluted deception, that didn’t escape the Auditor General’s attention:
Enough about secrecy, deception and unsecured loans…let’s get back to that final grant for $100,000.
The Final $100,000: A Textbook Case of Fraud
Going back to Neil Stewart’s initial letter to Melissa MacEachern, notice that he matter-of-factly stated that the Deputy Minister of Finance (David Arsenault) – working under the Minister of Finance at the time, Wes Sheridan – is “asking that IPEI provide a grant to Mi’Kmaq Confederacy of $100K, with the funds going to the Bill [McInnes Cooper].” This is an important detail – “with the funds going to the bill” – because when they proceeded to write up that grant application, they didn’t mention anything about that bill, but indicated that the grant was for future project work to be undertaken by the Mi’Kmaq Confederacy.
Was Don MacKenzie – the Executive Director and legal counsel for the Mi’Kmaq Confederacy at the time, and who was subsequently appointed as the head of the PEI Law Society [not to mention a member of the e-gaming working group] – ever even consulted about this scheme, or in anyway involved in this fraudulent endeavour? Not in any substantive way. He wasn’t copied on the correspondence; however, he most definitely came to know about it at some point since he had to sign over that $100,000 grant cheque to McInnes Cooper after it was issued.
Did MacKenzie come to IIDI asking for a grant for a Mi’kmaq project he had in mind? Definitely not. Yet, consider carefully what the AG said about how the grant was drawn up for a future Mi’Kmaq Confederacy project:
Can you imagine applying for a $100,000 PEI government grant and being told “just send us a short email…that’ll suffice for an application”? Not likely!
What was the “economic growth opportunity” that would allow MCPEI to “explore further opportunities in economic development?” The AG didn’t indicate that in her report, but she did mention that the “approval sheet” and “grant agreement” indicated what the funds were slated to be used for; and although she didn’t specify what that would be exactly, she did state that the project “was indicative of events yet to occur.” She then concluded that to put it that way was “misleading,” but let’s be frank – it wasn’t just misleading, it was entirely fraudulent.
Months ago, when I first conceived this four-part series, I decided to submit an Access to Information request to find out exactly what those “events yet to occur” were on the grant application, knowing full-well that whatever they might be, they were completely made up and were “never-going-to-happen” events. Here is what I asked for:
I planned my research and writing to ensure that I would get that information in time to complete the four-part series before the provincial election. What I sadly didn’t properly factor into my planning was how this Liberal government feels no obligation to respect citizen’s rights, nor legal deadlines prescribed in the law pertaining to the release of access documents.
I also submitted a request for documents on that initial grant discussed in Part 1, which again was used to pay past bills but likely also presented some ‘future’ project since grants are not supposed to be issued to pay bills, but to engage in new work of some kind. I’ll not be getting those documents by the prescribed date under the law.
Let’s Just Get Past the Election!
In the same way that I’m now being denied access to the substantial documentation filed with the e-gaming Motion Hearing on election day by Judge Gordon Campbell (See: Are Liberal Politics at Play in the PEI Supreme Court E-gaming Case?) I’ve just been told not to expect a response to my Access request for those final e-gaming grant documents until after the election. I received this disappointing news last Friday (April 12, 2019):
When I was candidly informed by the Access worker that: “I know that these decision letters will not be issued by the due dates,” I couldn’t help but wonder whether she also knew WHY these decision letters will not be issued to me by the due dates, and if she does, why I wasn’t given that information as well.
I’m guessing the decision-making thought process went something like this: “ummm…. we know Kevi’s going to write an article that informs Islanders how crooked the Liberal government really is, which could cost us a few votes, so we’re gonna hang unto them until after the election.” As my two daughters used to say when they were teenagers and it was the fad: “Whatever!”
It’s frustrating, because I carefully planned my research and writing so I’d be able to see just how “detailed” the bogus project for the final $100,000 grant really was and share that information with the general public. I’m now kicking myself a bit for relying on the legal requirement within the Freedom of Information and Protection of Privacy Act that obliges the Head of government departments to provide access within a prescribed amount of time (30 days). When I eventually get the documents I’ll share them in a blog post. It should be interesting to see what the person actually writing up the grant documents (Cheryl Paynter I believe) came up with when she most likely asked her boss (Melissa MacEachern): “What the heck am I supposed to say the project will be about?” and likely received the following response: “Just use your imagination!”
Well, there you have it! A complete overview and breakdown of how $1,210,000 promised to McInnes Cooper by Wes Sheridan was successfully delivered against all odds, for work that was never done, on a scheme determined to be criminal. Impressive!
One has to marvel at the sheer audacity – not to mention tenacity – that a dozen or so key senior players in government and law firms together diligently employed to achieve this unlikely goal over a tumultuous 2 1/2 year period of time, all the while keeping their efforts almost completely secret from everyone else, within government, the Official Opposition, and the general public.
Now that we know how McInnes Cooper acquired the $1,210,000, I wonder if the government we’re about to elect will (1) take the next logical step to rectify this sorry saga and get to the bottom of where all that money went after it was deposited in McInnes Cooper’s bank account; (2) hold the scoundrels accountable for their respective roles in the elaborate fraudulent scheme; and (3) demand that the money stolen from Islanders is returned to government?
I don’t recommend a “hold your breath” strategy: I suggest we all just keep breathing normally as we collectively embark on a more ethical road with the resolve to ensure that this kind of skullduggery never happens again!
Every Friday I watch CBC’s weekly political panel hoping to hear some insightful commentary on the most important political issues and events of the previous week. And every Friday I’m left massively disappointed, shaking my head in disbelief at what I hear from Paul MacNeil and Rick MacLean .
CBC’s weekly political panel offers such an important opportunity for our public broadcaster to inform Islanders about truly significant social and political developments, yet MacNeil and MacLean now seem incapable of offering more than off-the-cuff personal opinions, petty observations on style, and superficial comments focussed on political personalities and how they “perform”.
Islanders are hungry for meat and potatoes,…but these guys just keep spoon-feeding us pablum!
When asked about the debates that took place this past week, you’d think MacLean was asked to comment on a ringside boxing match. He appeared genuinely disappointed that no one delivered a “knock-out” punch, or a ‘gotcha’ zinger soundbite; seemingly lamenting the political-pundit-killing prospect that the good-old days of confrontational “one-up-em” conflictual political discussion and debate might be over in PEI. See for yourself:
MacNeil, on the other hand, dismissed the debates as largely irrelevant, said nothing about their substance, and characterized them as a “test run” for the upcoming CBC debate next week. Wow!
I’m convinced he didn’t attend or watch the debates at all; or, if he did, has contracted “early-onset political-pundit alzheimers” and has lost the ability to detect what’s truly significant in a political forum or debate. Either way, perhaps he should no longer be pretending that he’s the person best qualified to inform Islanders about what;s politically-significant at the end of each week.
I attended the first two debates, and watched the other two online. They were hugely significant, even historic. And yes, there was a tremendous amount of substance that could – and should – have been discussed by MacLean and MacNeil.
At the first three debates on Environment, Land and Agriculture, there was an unprecedented discussion about the crises currently facing our environment, land, water, farm families and rural communities; along with a brutally-honest critique of industrial agriculture with a consensus agreement (among the NDP, Green and PC leaders) on the need for a new direction for Agriculture. That’s something I’ve never before witnessed in a leader’s debate or forum leading up to a general provincial election. What did MacNeil and MacLean have to say about all that? Nothing. Absolutely nothing!
There were also significant commitments made by all Parties at the debates – other than the Liberals, that is – to take decisive and immediate action to confront the problem of the depletion of soil quality and erosion, with an honest discussion of the rapid depletion of Soil Organic Matter from industrial agricultural methods; as well as a promise to establish a Land Banking system, with discussion on how that might happen; commitments to enforce the three-year crop rotation legislation, something that has not happened under the Liberals; and so much more.
Nor was Premier MacLauchlan’s conspicuous empty chair at the Leader’s debate on the Land mentioned, not to mention the unprecedented civility and cooperative spirit displayed by the other three leaders who did attend – something that warmed the hearts of so many Islanders, and was commented on extensively by many who attended or watched the Land debate, both at the debate itself, and for days following on social media. Again, unprecedented. Again, not mentioned by MacLean or MacNeil.
But most disappointing of all was the failure by both political pundits to mention policies put forth by the PC Party yesterday aimed at preventing government corruption and restoring integrity and ethics in government; policies including:
(1) Separating the Attorney General from the Minister of Justice – something I proposed during the PC leadership debate, and has since been proposed as a “integrity” policy option for the federal government, following the SNC-Lavalin affair;
(2) Establishing a truly “arms-length” ethics Commissioner reporting to the Legislative Assembly, not the Premier and Executive Council;
(3) Establishing an independent and “arms-length” Ombudsman; and the one I especially appreciate, after watching the Liberal government defeat motion after motion after motion from opposition MLAs to call witnesses to various standing committees to get to the bottom of critically-important issues like e-gaming and the land during the past four years;
(4) Structuring Legislative Committees so they have a MAJORITY of opposition members.
These land-breaking policy commitments were apparently not worthy of mention by MacLean and MacNeil, as they took a largely dismissive tone with their largely empty comments on the PC Platform:
Do these two political commentators not realize how incredibly significant and forward-thinking these policies are? Especially the simple, cost-free change to the structure of Legislative Standing Committees that will ensure that a governing party will no longer be able to prevent Legislative Committees from getting the information they need to truly “get to the bottom” of the issues of importance being explored by these committees? Something that didn’t happen under the Liberals with both the e-gaming investigation by the Standing Committee on Public Accounts, and the land issue by the Standing Committee on Communities, Land and Environment given that almost every Motion which opposition MLAs brought forward to bring key witnesses before the respective Committees was defeated by the Liberal members on the Committee holding a majority?
MacLean and MacNeil led Islanders to believe that the PC platform was just “the same ole, same ole,” and then after giving that false impression, they rattled on with the same old tired lines that every ill-informed political “talking head” has at the ready in his tool box – and relies on when they don’t have anything else to say that’s actually insightful – such as: “they have a shopping list longer than my kid’s wish list for Santa,” or “but how will they pay for their promises?” Yawn.
Most disappointing of all is the fact that neither MacLean nor MacNeil have even once mentioned since the election was called the “Words that Must Not be Named” – E-gaming Scandal . It’s like they’re oblivious to the fact that the upcoming election – including the selection of the early April 23rd election date – is entirely hinged on a panicked last-ditch effort by the Liberal government to get re-elected before the full, explosive truth about the e-gaming scandal comes out in the upcoming Court Hearing; which, coincidentally (NOT), begins the same day we vote.
Come to think of it, neither MacLean nor MacNeil bothered to mention the research I uncovered this week about how the Ghiz and MacLauchlan governments have allowed Robert Irving to acquire more than 7,500 acres of farmland during their successive Liberal tenures. Why is that not a significant revelation worthy of political comment?
MacNeil keeps saying how the Liberals are on point, how they haven’t made any missteps, or how they have the best coordinated delivery of advertising and policy/promise announcements so far. Who cares? Why is any of that important?
We don’t want to hear praise for an effective political strategy of cover-up – made possible only because the Liberal Party is wealthy and powerful and can afford ads in newspapers like the Eastern Graphic – we expect our weekly political commentators to shed some light on what’s being hidden from Islanders, and by so doing, contribute to a truly informed electorate.
I’d say it’s time to do some real homework and step up to the plate Mr. MacNeil and Mr. MacLean! Or maybe CBC should ask someone else for their political opinion from time to time.
“There has to be a record that people can go back to, and I might say future historians can go back to…..This is something that we take to heart, recognizing the importance of it, and will indeed be implementing.”
I had just obtained copies of some new documents that had been filed in the PEI Supreme Court, including the following Employee Record Removal Form for former Liberal Premier of PEI, Robert Ghiz:
What’s important to note about this form is that a premeditated and deliberate choice was made to “delete” all Ghiz’s network files and emails. When that option is selected, it’s against the law to do so without first copying and storing all the government records in the accounts.
It’s also important to note that there’s absolutely no possibility that Robert Ghiz didn’t have documents or emails that referenced the e-gaming project….I won’t go into explaining why in this article.
So the key question I wanted answered is whether MacLauchlan made sure Ghiz’s e-gaming records were copied and stored before the destruction order was issued. He most certainly knew that he had both the duty and legal obligation to ensure those records were retained. But were they?
When Wade MacLauchlan assumed the position of Premier after Robert Ghiz formally stepped down in early February, 2015 – months before he was elected Premier in the May, 2015 provincial election – MacLauchlan had a meeting with the provincial Archivist, Jill MacMicken-Wilson, along with staff from the Freedom of Information and Privacy Office (FOIPP), where he was made fully aware of the laws and procedures governing record management and retention. We know this because he shared that information in the Legislative Assembly on November 30, 2016, as recorded in Hansard, p. 1933:
Normally, the practice for senior government officials leaving office is to keep all electronic network documents and emails, and have Information Technology Shared Services (ITSS) simply disable the accounts to ensure they can no longer be accessed by the person no longer in that position. A “proxy” account is then set up to allow whoever might be replacing that individual access to the government records so he or she can carry on with the work, ongoing files, or unfinished projects. No where would this access be more important than with the position of a new and inexperienced Premier.
We all know how much easier it is to find documents – and especially, “information” within documents – using electronic keyword searches than by sorting through thousands of pages of hardcopy files; but for some unexplained reason, getting rid of Ghiz’s electronic files was a priority for Premier MacLauchlan, and they were ordered destroyed just a couple of weeks after he was elected Premier.
It was Brian Douglas who signed the destruction order (you may recall from Part 2 of my “Conspiracy to Commit Fraud” e-gaming series that Mr. Douglas was one of the Island Investment Development Inc. (IIDI) Board members who approved the $950,000 e-gaming loan back in the Fall of 2011), but he clearly would not have had the authority to make that call on his own.
In my previous January article reporting the destruction of Ghiz’s electronic documents and emails, I stopped short of making the claim that all Ghiz’s e-gaming FILES were destroyed, knowing that MacLauchlan had received instructions on the legal requirement to retain them. If electronic files are deleted, they must first be copied and archived in hard-copy form. To find out whether this had happened with Robert Ghis’s government records, I decided to submit an Access to Information Request asking for those records.
In both email and telephone discussions with the Access person handling my request, I was informed that she had discovered that – as a result of another Access request – 14 boxes of documents from Robert Ghiz had been retained, and that they had been organized in folders by “subject”. To ensure that I would be able to definitively answer whether Ghiz’s e-gaming documents had either been kept or destroyed, I asked for all documents using three key subjects: E-gaming; Capital Markets Technology (CMT); and Bruce MacDonald.
At this juncture, it’s important to recall that PEI’s first and only “Securities” investigation [File # 001] was launched against Capital Markets Technology on a phoney allegation that the owner of CMT had defrauded a “woman with cancer” of her life savings. The claim was completely bogus, and to prove that, CMT hired a former RCMP officer turned private investigator, Bruce MacDonald, [RB Mac Investigations]who produced a substantive report exposing that no formal complaint nor evidence backing up such a complaint was ever submitted to government.
An advanced copy of that report was sent to Ghiz’s close friend and lawyer, Billy Dow, just before Ghiz announced he was stepping down as Premier on November 13, 2014. That same report was actually released to the general public and media the day after Ghiz’s resignation announcement, and was subsequently tabled in the Legislative Assembly. It was that bogus allegation and Securities Investigation that derailed CMT’s business plans in PEI, and eventually spurred the law suit. There is no possible way that Ghiz would not have had documents relating to, or mentioning, Bruce MacDonald.
I filed my Access to Information request on January 28, 2019 and received a decision letter yesterday (April 11, 2019). The relevant paragraph is as follows:
The electronic search shouldn’t have taken 20 minutes. In fact, it shouldn’t have taken any time at all: Ghiz’s electronic documents and emails – his e-gaming files included – were ALL deleted back in May, 2015. Perhaps the folks in Premier MacLauchlan’s office working on my request didn’t realize I already knew that, and wanted me to believe they were still intact.
At at any rate, what I really wanted to find out with my access request for Ghiz’s e-gaming documents I’ve now discovered: someone, somehow, at some time, for some unknown reason, abducted Ghiz’s e-gaming records and an Amber Alert has now been issued declaring them officially “missing”.
I’ll be filing a “missing records report” with the Information and Privacy Commissioner asking her to investigate this matter. Maybe she can find out where they went….she’s really good at her job.
In a recent CBC article reporting on Executive Council’s decision denying three Irving-owned corporations applications to purchase roughly 2,200 acres of farmland in Bedeque, the Minister of Communities, Land and Environment, Hon. Richard Brown stated:
“What we’re doing is applying the law of the Lands Protection Act here and we’re going behind the corporate veil and seeing who are the owners of these corporations,” said Land, Communities and Environment Minister Richard Brown.
The Guardian’s coverage of the same story noted that Minister Brown’s stated reason for Executive Council’s decision to deny each of the 32 separate applications for parcels comprising the total 2,200 acres had absolutely nothing to do with politics or the election, but was entirely based on the recommendation Executive Council received from IRAC, which was based on the law:
“But Richard Brown, who is the minister of communities, land and environment, said executive council made the decision based on the recommendations of IRAC. “It was not political,” Brown said. “The decisions and the recommendations come out of IRAC. That’s an independent body…..We applied the rules of the Lands Protection Act,” Brown said. “The beneficial owners are one family, basically.”
The beneficial owners are one family basically! Finally, an official acknowledgement from the Liberal government that the Lands Protection Act never intended “one family” – regardless of the number of corporations those family members form – to accumulate more than 3,000 acres of arable land.
In the case of the Brendel Farms applications, there were three such corporations: Indian River Farms, Long River Farms, and Galloway Farms (a new Irving-family owned corporation created 2 days before the applications to purchase Brendel Farms were submitted). The owners of those three corporations are Mary-Jean Irving and her two daughters, Rebecca and Elizabeth. But of course there are other well-known members of the Irving family, and other corporations.
Given the fact that none of the 32 parcels were approved, it’s likely safe to assume that the “one family” [Irving] – with all their interlocking corporations – has already reached its land-holding limit of 3,000 arable acres. What wasn’t covered in the mainstream media regarding recent land applications by the Irving family is the decision Executive Council made on another Irving-owned corporation application for Land purchase decided on March 26, 2019…the same day the Premier called the election.
Minister Brown didn’t mention in his interviews with either the CBC or Guardian that on the very same day that Executive Council denied the Brendel Farms land purchase, it APPROVED an application for roughly one hundred acres, submitted to IRAC by Island Holdings Ltd.. another Irving-owned corporation with just two directors – Robert K. Irving and James K. Irving. Why not? Here’s the info on Island Holding Ltd. from the PEI Business/Corporate Registry:
Of course, Robert K. Irving also owns Cavendish Farms, which as a processing plant is apparently subject to the land holding limit stipulated in section 3 (5) of the Lands Protection Act, which places a five (5) acre aggregate land holding limit on industrial processing corporations. And Robert Irving – President of Cavendish Farms – a corporation which also operates through other Trade Named companies (e.g., Green Acres Produce and Poole’s Corner Potato Storage) – is also a co-owner of Island Holdings Ltd.
I took a few hours today to see exactly how much land Island Holdings Ltd. has been allowed to acquire – research which was only made possible just a few months ago, when Scott MacKenzie, CEO of IRAC agreed to add a “name search” field, and a “current owner” field, on IRAC’s databank of land purchase & Lease applications – and I was shocked with what I discovered.
First of all, since 1997, Island Holdings Ltd. made 198 applications to IRAC to acquire various-sized parcels of land, either by purchase or lease, and EVERY SINGLE ONE OF THOSE APPLICATIONS WERE APPROVED!
I also did a search using “Island Holdings Ltd.” in the “current owner” field, to see if any parcels were ever sold to another corporation or non-resident [something that would have produced an IRAC record in the same databank], and NOT A SINGLE PARCEL OF LAND OWNED BY ISLAND HOLDINGS LTD. SHOWED UP IN THE SEARCH.
There is the possibility that Island Holdings Ltd. sold land to an Island resident – such transactions would not have to be approved by Executive Council, and would not show up in the IRAC databank. However, I highly doubt any land purchased by Island Holdings Ltd. was ever sold: the clear objective of Irving-owned companies, including Island Holdings Ltd., has consistently been to accumulate more land, not sell it.
As well, it is not clear what percentage of Island Holdings Ltd. land holdings are arable or non-arable. However, again, the intention would clearly have been to acquire farmland for potato production for the french-fry plant, so one can assume that the lion’s share of the parcels were arable farmland. If there were any purchases of non-arable land (such as woodlots) it’s likely they have long-since been cleared and transformed into potato land.
So exactly how much land did the 198 parcels acquired by Island Holdings Inc. add up to?
Can someone within the Liberal government – preferably the Premier or Richard Brown – explain how a man owning a processing plant that’s supposed to be limited to 5 acres has somehow been allowed to amass this land simply by forming another company? Is Robert Irving not part of the Irving family? If Mary-Jean Irving and her two daughters were denied purchase of the Brendal Farm acreage because it was not in accordance with the Lands Protection Act, why was Robert Irving approved to purchase another 100 acres of land the very same day? And what’s the total now owned by all the Irving-owned corporations?
Premier MacLauchlan – enough already with the deflection and subterfuge on this critically-important issue. And Minister Brown – you had absolutely no problem telling Islanders that the decision to turn down the Brendel Farms applications was not “politically-motivated,” but based on the recommendation of IRAC – so you disclosed what IRAC’s recommendation was in that case…..so can you also tell us what IRAC’s recommendation was on Robert Irving’s application to buy another 100 acres (via Island Holdings Ltd) which Executive Council approved the very same day?
And while you’re at it – since Island Holdings Ltd. now appears to be 4,553.15 acres over the 3,000 corporate limit – can you also tell us how many of IRAC’s previous recommendations on Island Holdings Ltd. applications were overturned by Executive Council after they hit the 3,000 limit?
It appears to be a blatant and shameless violation of the Lands Protection Act which the Liberal government has been keeping secret from Islanders and lying about for a very long time. I really hope I’ve made some grave miscalculation, or there’s some additional information I’ve overlooked on this one.
I’d happily eat crow, and apologize for publicizing this information if it’s inaccurate. To be honest, I’d much rather have been in error than to have exposed such corruption and deceit by our own government! Can someone else reading this please take the time to double-check the database and recheck the math? Just type “Island Holdings Ltd.” in the search field of IRAC’s Land Application databank and you should get the same list I got.
I’ve put the data I found in that databank into a chart, with columns for (a) the application date, and (b) the number of acres for each of the 198 parcels approved, in chronological order. I’ve also colour-coded the parcels in blocks to show which individual parcels had the same application date. You’ll have to enlarge the following chart to see the data more clearly.
A FOUR-PART SERIES EXPOSING E-GAMING AS AN ELABORATE CONSPIRACY TO COMMIT FRAUD
They say that if you want to find out the truth about a secret scandal: “Follow the Money.”
Well, that’s the approach I’ve adopted with this four-part series on the PEI E-gaming story, and my investigation has indeed uncovered documentary evidence that $1,210,000 was first acquired by key players in the provincial government using various convoluted strategies, and was then funnelled through the Mi’Kmaq Confederacy of PEI to McInnes Cooper law firm, where almost all of it evaporated without explanation.
There was never any accounting of exactly where the money ended up – other than McInnes Cooper’s bank account – nor was there ever any attempt by the MacLauchlan government to get that information, despite clear reporting obligations within the loan and grant contracts requiring the recipient of these government funds to provide “Paid invoices” and give a full account of who ended up receiving the money.
To recap: there were four key financial components comprising the $1,210,000 amount:
(3) $60,000 Payment [Source: PEI Lottery Corporation, March 2013]; and
(4) $100,000 grant [Source: Innovation PEI, January 2013].
This article deals with #3, the $60,000 payment to McInnes Cooper originating from the Atlantic Lottery Corporation (ALC). It’s a much simpler story to tell than the e-gaming loan, but how it was acquired is no less disturbing nor less fraudulent.
Finding More Money for the Defunct E-gaming Project
When the PEI government decided to end the e-gaming project on February 24, 2012, McInnes Cooper law firm had not yet “spent” all the $1,210,000 Wes Sheridan had committed to the e-gaming project. That fateful decision didn’t stop McInnes Cooper from creating further invoices which they submitted to the Mi’Kmaq to receive the full amount promised. As the Auditor General pointed out in her e-gaming report:
In fact, work continued until the remaining $100,000 was used up – on what exactly, we have no idea. Might it have been for work other than e-gaming? No. Kevin Kiley told staff at the AG office that: “their work was at the direction of MCPEI” and exclusively on the e-gaming project. But what could MCPEI possibly have directed them to do with e-gaming after the PEI government ended the project?
Might that post-project e-gaming work have been to explore the possibility of establishing an e-gaming hub in PEI without the province’s involvement? No. For two reasons.
Reason #1: The province ended the e-gaming initiative after receiving a legal opinion that to proceed with the project would be “illegal” – in fact, it would be a calculated attempt to deliberately circumvent provisions within the criminal code.
It was Shauna Sullivan-Curley (then Deputy Minister of Justice) who was apparently uneasy with the e-gaming project and solicited a legal opinion from an off-Island lawyer with expertise in aboriginal law, Tom Isaac. He declared the e-gaming project would be both illegal and criminal.
After receiving his legal opinion, Sullivan-Curey wrote an email to Matt McGuire (then Deputy Minister of Intergovernmental and Public Affairs) at 7:53 pm on February 14, 2012 – also copied to Steve MacLean (then Clerk of Executive Council) – saying:
“He [Tom Isaac] says that we would be getting involved in something that without our acknowledgement would clearly be criminal, and our acknowledgement would not be sound in law (he said it would be based on a “legal falsity”).”
Steve MacLean responded exactly 41 minutes later saying: “That’s the most clear legal opinion I’ve seen in a good while.” To which Ms. Sullivan-Curley promptly responded: “Yes, he [Tom Isaac] was flabbergasted that the province was considering doing this.”
Reason #2: Any continued work on the e-gaming project by McInnes Cooper and the Mi’Kmaq Confederacy made absolutely no sense, and would have been useless, because an e-gaming project could not happen without provincial government participation. Why? Because only the provincial government could enact the required legislation needed to establish the regulatory framework that was essential for internet gaming, and the provincial government had absolutely no intention of doing that. As the Auditor General explained:
Time to Pay Up!
Despite creating fictitious invoices for work that was never done on a project that had already ended and could never be revived, McInnes Cooper law firm lawyer Kevin Kiley had no scruples about demanding payment for those invoices just a few months later.
In October, 2012, Kiley contacted Neil Stewart at IIDI to – as staff with the AG office stated in the transcript of her interview with Kevin Kiley on May 18, 2017 – “collect on the account” (para. 25), submitting a final invoice for $390,000, $100,000 of which, according to the AG, was for work undertaken on e-gaming after the project formally ended on February 24, 2012.
In early September, Premier Ghiz appointed Chartered Accountant David Arsenault Deputy Minister of Finance. One of the first items on Arsenault’s agenda was to sit down with Wes Sheridan (then Minister of Finance) and come up with a way to honour Sheridan’s ill-fated promise to provide $1,120,000 to the Mi’Kmaq Confederacy for the e-gaming project. That Sheridan made this promise was confirmed by Kevin Kiley during his interview with staff from the Auditor General’s office:
“12(b) Who provided you with assurance that you would receive payment for your work? Were these assurances provided in writing? Why or why not?
Mr. Kiley wasn’t concerned because government gave MCPEI assurances that they (government) will make them whole.There was nothing in writing.”
By the time David Arsenault got involved with trying to figure out how the government could come up with the outstanding bill from McInnes Cooper to honour Sheridan’s promise to “make them whole,” Sheridan had already hatched an idea that would get him $60,000 for that bill from the ALC.
Sheridan wasn’t only the Minister of Finance, he was also the head of the PEI Lottery Commission, so with his ALC connections he decided to sell an obsolete legal opinion, that the Mi’Kmaq had received years earlier, to the Atlantic Lottery Commission – that they never asked for nor wanted – a document he already had free access to, all so he could create what can only be described as phoney paper trail for money that he never intended to put into the PEI government’s general revenue.
Sheridan had apparently met with Kiley in June, 2012 to discuss this plan; however, Kiley couldn’t recall that meeting when he was asked about it by AG staff. But he did indicate that he had some recollection that Wes was planning to bring the ALC on board the derailed e-gaming train around that time:
“Exploring a mechanism where ALC could play a role in this”? What possible role could the Atlantic Lottery Corporation play in a government e-gaming scheme that had already been deemed criminal? A project that had already been totally scrapped months earlier? Well, we now know exactly what role Sheridan had in mind for the ALC.
Sheridan’s plan to get the ALC to buy a legal opinion provided to the MCPEI years earlier – an opinion that was worthless didn’t exactly impress the Auditor General: here’s what she said about the sale of that legal analysis:
Although the AG did a great job uncovering and reporting this scheme in her report, her description of it as “problematic” was massively underwhelming – it was completely fraudulent.
Let’s unpack that claim a bit: PEI was exactly $60,000 poorer and McInnes Cooper was exactly $60,000 richer because Wes Sheridan created a paper trail showing he purchased something for the government which the government already had on file and was useless. Senior staff at the ALC told the AG they never requested the report, and why would they have? The entire hair-brained e-gaming hub scheme was an illegal pipe-dream that, at that time, was totally dead in the water.
The acquisition of this $60,000 portion of McInnes Cooper’s outstanding bill was entirely acquired by fraudulent means. And as for the money belonging to the Mi’Kmaq? Not really. When it was finally processed, Wes informed Kevin Kiley that there wasn’t any need to have the cheque go through the Mi’Kmaq, but that the ALC would send it directly to McInnes Cooper:
So where are we at with this four-part series and the reconciliation of McInnes Cooper’s fraudulent claim/bill for $1,210,000? They got that initial $100,000 grant back in 2011; they got all of the $950,000 e-gaming loan by January, 2013; they got $60,000 from Wes Sheridan’s clever idea to have the ALC purchase the legal opinion; bringing the total received to $1,110,000. They then generously offered to reduce their final bill by $30,000.
That left just another $100,000 for the PEI government to somehow come up with and justify as a legitimate expenditure of PEI tax dollars. As you’ll see in Part four of this series, there was no legitimate way to come up with that $100,000, so they did what they had been doing all along: they again committed fraud.
Ten days before the provincial election was called (March 15, 2019), I predicted that Wade MacLauchlan would set the election for Tuesday, April 23rd, despite the PEI Election Act stipulating that elections are normally held on a Monday.
A lot of people have since asked me how I was able to guess the election date. It wasn’t hard: there really wasn’t any other way the Premier could avoid having very damaging information against the former Ghiz government – and his cover-up of the e-gaming scandal – become public on a grand scale before Islanders go to the polls.
Local media and political reporters such as Stu Neatby and Kerry Campbell are pretty much obligated to do stories on actual court proceedings like the CMT lawsuit once “court is in session,” and I’m certain a number of revelations will become public during the four days of hearings on the original defendant’s “Motions to Dismiss” – scheduled to be heard April 23-27, 2019. But what have we heard from the media on e-gaming since the writ was dropped? Nothing.
I was especially surprised that on the impromptu CBC political panel segment on Compass the day after the election was called, neither Rick MacLean nor Paul MacNeil so much as mentioned the upcoming e-gaming court dates when asked why the Premier would set such an early election date. Both stated they expected him to wait until the scheduled opening of the house on April 2nd, so he could present a budget and gain a significant advantage and head-start in the election campaign for his Party. Both agreed that the April 23rd date for an election made no political sense, but they just couldn’t bring themselves to utter the words “e-gaming scandal.”
But here’s the thing: the lion’s share of the new information and arguments that will be presented to the judge on election day and the following three days – after we’ve already chosen a new government will be available to the public before the actual court hearing takes place. The problem is, without the local media reporting on that information, Islanders won’t know what that information will be.
I will be checking daily for the cross-examination transcripts and factums likely to be filed with the court in advance of the court hearing in early April – making them public documents and giving me (and hopefully all media political reporters) a couple of weeks to report on what those documents contain.
What I have since discovered is that all factums and related material were due to be filed yesterday (Friday, April 5, 2019) and will be available to the public early next week.
Given the amount of Liberal ads presently flowing into local media outlets on a daily basis, I suppose it was predictable that Liberal scandals like e-gaming would take a back seat, with the torrent of advertising revenue that comes only once every four years. And there’s certainly no shortage of other election and campaign news to report. But not reporting on e-gaming at this critical juncture represents a significant journalistic failure in my opinion, and can only be characterized as a massive disservice to Islanders.
I will be publishing the remaining two segments of my four-part e-gaming series “A Conspiracy to Commit Fraud,” before election day, as well as additional articles from new information contained in the Factums and Cross-examination transcripts (when they’re finally filed and available). But to be honest, what I publish on my blog is unlikely to reach more than a few thousand Islanders, and all voting Islanders should have access to important information and news about the past actions of the Ghiz and MacLauchlan Liberal governments that may affect how they vote on election day.
Hopefully, revelations contained in my articles will finally break the spell that’s keeping reporters with local media from publicly uttering the words “e-gaming scandal” during the election campaign.
The full truth about e-gaming is destined to eventually come out and become a national media story…of that I’m certain: it would only be fitting that Islanders heard it first from our local media.
To sum up: These upcoming court dates are not the “trial”: they are dealing with several motions which aim to throw out the CMT lawsuit as a “slanderous, frivolous and vexatious” legal action. Such a claim is ludicrous, and to me these motions were filed nearly a year ago for one and only one reason: to delay the real case – the trial – from happening until the Liberal government could take another shot at getting re-elected and securing another four years of governance.
If you want to hear a different opinion about the PEI e-gaming story than the dismissive one the Liberals have been telling, listen to the following award-winning podcast out of Ottawa from a few months ago, featuring Canada’s top investigative reporter, Robyn Doolittle, and the Guardian’s own Stu Neatby. It’s especially fascinating to hear Neatby speak candidly about e-gaming corruption and fraud in this podcast; comments I have yet to read in Guardian articles.
[Head’s up: There are a couple of annoying advertisements in this podcast, so be patient – the rest of the material is worth it! If you move the cursor to start at 3:05 you’ll skip the biggest ad at the beginning]
The Latin motto for the PEI Law Society was adopted from the provincial Coat of Arms and reads: “Parva Sub Ingenti” which translates: “The small under the protection of the great.” This official declaration that, like the provincial government, lawyers rule over the rest of us, should give us pause. That they also rule over themselves – in that they are self-regulated – should give us even greater pause.
With their understanding of the law – and access to the legal system – lawyers can indeed protect the small if they so choose; however, without proper oversight and trustworthy disciplinary procedures and processes to address wrongdoing, they can also easily act out of self-interest to ingratiate themselves or serve those who are not at all small and weak, but large, wealthy and powerful.
The evidence I am providing should convince any reasonable person that inappropriate and illicit actions by Mr. Dow, warranting significant disciplinary action, did in fact happen. I trust that the PEI Law Society will therefore find merit in my formal complaint against William F. Dow (aka “Billy” Dow).
I look for the day when the PEI Law Society’s motto will be changed to: “Magna Dominata est in multa” – “The great ruled by the many”.
Law Society of PEI
49 Water Street, Charlottetown, PE C1A 1A3
April 3, 2019
Re: Complaint against William F. Dow
By this letter and accompanying documents (Appendices “A” & “B”), I am formally filing a complaint with the PEI Law Society against William F. Dow (Carr, Stevenson and MacKay).
The page on the PEI Law Society’s website providing information on the complaint process states that there is no time limit for filing a complaint, noting that complaints should name the lawyer, indicate what he/she did or failed to do, as well as the time of the alleged complaint(s).
My complaint relates to a number of actions (or failures to act when actions were warranted) covering the period February, 2010 to January 2013, during which time Mr. Dow was retained by the PEI government as outside counsel on the E-gaming and Financial Transaction Platform projects (subsequently referred to in this letter as the “e-gaming project”).
In particular, I believe that Mr. Dow violated numerous provisions of the PEI Law Society’s “Approved Code of Conduct,” throughout the nearly three-year period he acted as legal counsel for the PEI government on the e-gaming project, by failing to protect the interests of his client (PEI government & PEI residents).
Although the nature and style of my supporting documents are somewhat unconventional for a complaint to the PEI Law Society, I trust that you will nonetheless take the time to review the material contained in both appendices. The information in both articles is presented in a narrative style to make it more understandable and contextualized: both documents have already been published on my blog: “Ethical and Social Commentary on Life in PEI,” [https://Kevinjarsenault.com].
These two documents are part of a series of articles on e-gaming (“A Conspiracy to Commit Fraud”) and present the findings of a two-year investigation into this matter. A considerable number of source documents supporting the claims made in these articles – and this letter initiating a complaint – are too voluminous to provide in hard copy form. However, they can be easily accessed and downloaded from links contained in these two documents from my website.
As described in my articles, the nature of my complaint against Mr. Dow is two-fold: (1) that Billy Dow had a conflict of interest while representing the government on the e-gaming file; and, (2) that Billy Dow both acted and failed to act in ways that did not properly serve and protect his client, the PEI government, especially regarding his handling of the $950,000 e-gaming loan issued to the Mi’Kmaq Confederacy of PEI from the PEI Century Fund.
I identify some of these actions (and failures to act) with more precision below; however, the more substantive information and contextual details supporting these allegations will not be restated here; again, they can be found in the supporting documents (and the sources provided therein).
Previous Complaint Against Billy Dow
I am aware that a previous complaint alleging that Mr. Dow had a conflict of interest with his involvement in the e-gaming file was previously filed with the PEI Law Society by the former Leader of the PEI New Democratic Party (Michael Redmond), and resulted in a disciplinary committee ruling that Mr. Dow was not in a conflict of interest.
Redmond’s complaint related specifically to Mr. Dow’s involvement in the signing of a Memorandum of Understanding (MOU) in the late summer/fall of 2012 between the PEI government and Trinity Bay Technologies (TBT) [a wholly-owned subsidiary of Capital Markets Technologies (CMT)]. This issue is not the basis of my complaint.
New documents have recently come to light, as a result of filings with the PEI Supreme Court, revealing that Mr. Dow’s involvement in the e-gaming file did not begin with his involvement with the MOU in 2012, but that he was retained by the PEI government to act as outside counsel on the entire e-gaming project much earlier, in February, 2010. Mr. Dow continued to act in that capacity up to and beyond the date the PEI government ended the e-gaming project on February 24, 2012.
Conflict of Interest
My allegation that Mr. Dow was in a conflict of interest stems from the fact that while acting as the PEI government’s legal counsel on the e-gaming file, Mr. Dow purchased shares in Capital Markets Technologies (CMT) in July, 2011 when CMT was in discussions with the PEI government on possible involvement with e-gaming; in particular, discussions pertaining to the establishment of a financial transaction platform in PEI and the recruitment of gaming companies to PEI. The details pertaining to this matter are contained in Appendix “A”.
The Law Society of Prince Edward Island’s “Approved Code of Professional Conduct” defines a conflict of interest as follow:
“A ‘conflict of interest’ means the existence of a substantial risk that a lawyer’s loyalty to or representation of a client would be materially and adversely affected by the lawyer’s own interest or the lawyer’s duties to another client, a former client, or a third person.” (p. 9)
On page 3 of the Code of Professional Conduct, section 3.4-1 it further states:
“A lawyer must not act or continue to act for a client where there is a conflict of interest, except as permitted under this Code.”
3.4-1, para. 1 goes on to say that:
“The risk must be more than a mere possibility; there must be a genuine, serious risk to the duty of loyalty or to client representation arising from the retainer. A client’s interests may be seriously prejudiced unless the lawyer’s judgment and freedom of action on the client’s behalf are as free as possible from conflicts of interest.” (my emphasis).
It is my contention that having invested in Capital Markets Technologies, a company which the PEI government and the “E-gaming Working Group” (Mr. Dow attended meetings of this Group as the PEI government’s legal counsel on the file) were in discussions with to be the company that would provide gaming company recruitment services – as well as to establish a financial transaction platform owned by Simplex (CMT had exclusive North American rights to Simplex’s technology) providing the technical infrastructure required for e-gaming and other financial services – Mr. Dow had a conflict of interest, and he should not have been acting as legal counsel for the PEI government on this matter.
3.2-2 of the Code of Conduct states:
“When advising a client, a lawyer must be honest and candid and must inform the client of all information known to the lawyer that may affect the interests of the client in the matter.”
Having purchased shares in CMT, Billy Dow clearly had a conflict of interest with the e-gaming file, yet he failed to inform his client, the PEI government, of his investment in CMT until September, 2012, which was long after his legal work on the e-gaming loan (as well as other matters related to the e-gaming file) was undertaken. I believe that Mr. Dow had both an ethical and legal obligation to disclose this information from the date he made the investment (July, 2011) and to also remove himself and his law firm as legal counsel on this file.
Dow’s legal work on the E-gaming Loan
In addition to a complaint that Mr.
Dow was knowingly acting as legal counsel for the PEI government on
an ongoing project file in which he had a conflict of interest, there
are also specific actions (and failures to act) which Mr. Dow
undertook (or didn’t undertake) which failed to protect his client’s
best interests; actions which were, in fact, contrary to, and in
violation of, various established government procedures, protocols
and laws. The full details and sources for these actions (or failures
to act) are contained in Appendix “B”and include:
Authorizing the advancement of $50,000 to another Law Firm (McInnes Cooper) prior to the signing of a “Letter of Offer” for the loan – with no security agreement in place, which was required by Treasury Board policy and the Financial Administration Act;
Authorizing the advancement of an additional $700,000 to McInnis Cooper law firm prior to the e-gaming loan general security agreement being in place in contravention of PEI policy and laws;
Failing to ensure that the Borrower (Mi’Kmaq Confederacy of PEI) – and the agent acting on behalf of both the Mi’Kmaq Confederacy and PEI government as the e-gaming/Financial Transaction Platform “project manager” [McInnes Cooper] – complied with section 1.1 of the Loan Agreement stipulating that the proceeds of the loan “…will be used by the borrower to finance the continued development and establishment of an interactive gaming regulatory and taxation model for the province of Prince Edward Island.” Mr. Dow knew – or should have known – that when he advanced the initial transfers of $50,000 and $700,000 they were not for “continued development,” but for past expenses incurred by McInnis Cooper law firm unrelated to the budget deliverables presented in the Loan Agreement (Appendix “A” of the Agreement);
Failing to ensure that the Borrower (Mi’Kmaq Confederacy of PEI) – and the agent acting on behalf of both the Mi’Kmaq Confederacy and PEI government as the e-gaming/Financial Transaction Platform “project manager” [McInnes Cooper] – were in compliance with section 1.2 of the Loan Agreement stipulating that “Disbursements will be based on 100% of actual invoiced costs as summarized in Schedule ‘A’ ” [Schedule “A” being the budget amounts for the specified deliverables].
Failing to act on section 2.5 of the Loan Agreement to protect his client (the PEI government) when the e-gaming project was terminated by the PEI government on February 24, 2012; specifically, insisting that the $750,000 advanced on the loan – but not yet “released” for use, since the necessary security agreement had not yet been registered – be returned by the borrower, as stipulated in section 2.5 where it states: “…all previous advances to date shall be refundable by the Borrower to the Lender;” in the event the e-gaming project ended.
Registering the security for the e-gaming loan on February 28, 2012, after his client (the PEI government) had terminated the project, thereby releasing the $750,000 previously advanced to McInnes Cooper law firm in contravention of section 2.5 of the Loan Agreement; and,
Authorizing subsequent advances for the remaining balance of the $950,000 e-gaming loan months after the project ended ($100,000 in December, 2012, and the final $100,000 in January, 2013) in contravention of section 2.5 of the Loan Agreement.
It is my belief that the client’s (PEI government’s) interests were seriously prejudiced as a result of Mr. Dow’s personal financial interest in the e-gaming project [his purchase of shares in Capital Markets Technologies], especially, but not necessarily limited to, his handling of the e-gaming loan which the PEI government issued to the Mi’Kmaq Confederacy of PEI (MCPEI) in a Letter of Offer dated December 12, 2011 – which was legal work on the e-gaming file that Mr. Dow undertook for his client after purchasing shares in CMT.
I also believe the evidence shows that Mr. Dow assisted in, and possibly encouraged, dishonest and illegal acts associated with his handling of the e-gaming loan in that many of these actions were in direct contravention of Treasury Board policy and provisions of the Financial Administration Act, as was verified by the Auditor General in her final report on the E-gaming, Financial Transactions Platform, and Loyalty Card initiatives. Again, the details of her allegations of inappropriate and illegal activities are contained in both attached appendices.
The Law Society of Prince Edward Island’sCode of Professional Conduct states in section 3.2-7:
“When acting for a client, a lawyer must never knowingly assist in or encourage any dishonesty, fraud, crime or other unlawful conduct, or instruct the client on how to violate the law and avoid punishment.”
Initiation of a Business Plan with TBT/Simplex
Another matter that may warrant disciplinary action against Mr. Dow is his initiation of a Business Plan (MOU) with Trinity Bay Technologies Inc. (TBT), which he apparently undertook without direction to do so from his client.
Although Mr. Dow has stated that he was unaware at the time that Trinity Bay Technologies Inc. was a wholly-owned subsidiary of CMT – the company he had an investment in at the time he initiated the Business Plan – his taking this action would suggest otherwise. That he did in fact undertake this action was verified by the Auditor General. She referred to this action only as “unusual”; however, it would seem that it was entirely inappropriate, and likely violated one or more provisions of the PEI Approved Code of Conduct.
Dishonesty, Fraud when the Client is an Organization
3.2-8 of the Code states:
“A lawyer who is employed or retained by an organization to act in a matter in which the lawyer knows that the organization has acted, is acting or intends to act dishonestly, fraudulently, criminally, or unlawfully, must do the following, in addition to his or her obligations under rule 3.2-7: [my emphasis]
(a) advise the person from whom the lawyer takes instructions and the chief legal officer, or both the chief legal office and the chief executive officer, that the proposed conduct is, was or would be dishonest, fraudulent, criminal or unlawful and should be stopped;
(b) if necessary because the person from whom the lawyer takes instructions, the chief legal officer or the chief executive officer refuses to cause the proposed conduct to be stopped, advise progressively the next highest persons or groups, including ultimately, the board of directors, the board of trustees, or the appropriate committee of the board, that the proposed conduct was, is or would be dishonest, fraudulent, criminal, or unlawful and should be stopped; and,
(c) if the organization, despite the lawyer’s advice, continues with or intends to pursue the proposed wrongful conduct, withdraw from acting in the matter in accordance with the rules in section 3.7. [My emphasis].
I have no knowledge concerning whether Mr. Dow acted on provisions (a) & (b) of section 3.2-7; however, the documentation clearly shows that he failed to withdraw from acting as the PEI government’s counsel on the matter in accordance with the rules in section 3.7.
Regardless of whether Mr. Dow was acting on instructions from provincial government officers and agents – including the Minister of Finance at the time, Wes Sheridan – he nonetheless had a legal duty – and ethical obligation – to ignore such instructions (and report them to the appropriate authorities) if they contravened established government policy and law, and withdraw from the file: he did neither.
Mr. Dow was not acting on behalf of these officers and agents, but the provincial government (PEI residents), and as the PEI Approved Code of Conduct states in section 3.2-3:
“Although a lawyer may receive instructions from an officer, employee, agent or representative, when a lawyer is employed or retained by an organization, including a corporation, the lawyer must act for the organization in exercising his or her duties and in providing professional services.” [My emphasis].
It further states in section 3.2-3, para. 1:
“While the organization or corporation acts and gives instructions through its officers, directors, employees, members, agents or representatives, the lawyer should be satisfied that it is the interests of the organization that are served and protected.” [My emphasis].
Appropriate resolution or remedy
The PEI Law Society’s website page providing information and instructions on filing complaints states that a complaint should answer the following question: “What do you see as an appropriate resolution or remedy?”
Mr. Dow had a duty to his client to protect the funds in the e-gaming loan, yet he failed to ensure that key provisions of the Loan Agreement were met prior to disbursing those funds to the borrower. This was especially the case with sections 1.1 and 1.2 of the Loan agreement that stipulate that only invoices for future work indicated in the Loan Agreement budget deliverables would be reimbursed (1.1), and that claims would be exclusively based on paid invoices (1.2), yet neither of these conditions were met prior to Dow advancing the loan funds.
Equally as concerning is Dow’s failure to call in the loan when the project ended on February 24, 2012 since it was already in default at that time, given the repayment terms stipulated in the Loan Agreement. Rather than securing the previous transfers ($750,000) that had not yet been released to the borrower, which was required under section 2.5 of the Loan Agreement, he proceeded to register the security agreement four days after the project ended, thereby allowing the release of the money to the borrower.
Especially concerning was his authorization of the transfer of the final $200,000 almost a year later on a defaulted loan without paid invoices.
The obvious remedy for this part of my complaint is to have Mr. Dow restore all funds ($950,000) that were paid out in contravention of provisions in the Loan Agreement so as to reimburse the PEI government (taxpayers) of these unnecessary financial losses.
In terms of additional disciplinary action against Mr. Dow relating to my complaint that Mr. Dow failed to disclose a significant and persistent conflict of interest in this matter, I would leave that to the judgment and discretion of the PEI Law Society; however, I would hope it would be more substantial than reminding him of his duty with a recommendation that he do better in the future.
“I realize that the Leader of the Opposition [James Aylward] has suggested that there be particular discipline against leading or senior public servants. Those public servants have not done anything wrong, notwithstanding allegations to the contrary.”
A FOUR-PART SERIES EXPOSING E-GAMING AS AN ELABORATE CONSPIRACY TO COMMIT FRAUD
+ + + + + + + + + + + +
Part Two: The E-gaming Loan
Chapter 1: The E-gaming Loan
In the Auditor General’s Special Report on E-gaming, it was noted that the main funding provided by the PEI Government for the e-gaming project was a loan issued to the Mi’kmaq Confederacy of PEI (MCPEI) by Island Investment Development Inc. (IIDI) for $950,000.
There was absolutely nothing typical about this loan. It wasn’t really even a loan, other than in appearance and name, but a contrived grant presented as a loan, as the Auditor General, Jane MacAdam noted in her report, There was never any hope of repayment.
The revenue-sharing agreement between the PEI government and the Mi’Kmaq shows the extent to which the e-gaming project was principally a PEI government project, despite McInnes Cooper’s protestations to the contrary. Initially the idea was to obtain the entire e-gaming project funding as a grant, but that total amount was subsequently cobbled together from four separate sources for one and only one purpose: to keep the e-gaming project arms-length from government and secret, and completely hidden from the public.
Chapter 2: Keeping the E-gaming Loan Secret
Although the e-gaming project hadn’t really gotten off the ground in any substantive way by the summer of 2011, by early fall 2011, McInnes Cooper had somehow generated invoices totalling $750,000. What they did to earn this money remains a mystery, and from the Auditor General’s report it appears that the invoices from McInnes Cooper law firm mostly comprised over 100 meetings with Wes Sheridan.
In Section 3.35 of her report, the Auditor General notes that in early fall, 2011, McInnes Cooper – on behalf of the Mi’Kmaq Confederacy – put together a Treasury Board submission requesting a “non-repayable contribution from government” of $1.2 million to fund the costs of the e-gaming initiative.
“Innovation PEI did not have sufficient funds in its budget to issue a grant, and could only do so if a special warrant was approved. This would require an order-in-council which is a public document. The grant request was never submitted. Subsequently, the local law firm prepared documentation to request a loan through IIDI rather than a grant.” P. 20.
Innovation PEI did not have sufficient funds in its budget to issue such a grant, and would have needed a special warrant from Executive Council for the grant submission, so as the AG noted, the e-gaming working group opted for a more elaborate way to get the “grant” – by processing it as a loan application to IIDI – but significantly amended the terms of the normal IIDI loan agreement to ensure it would never have to be repaid. In fact, it was an 11th-hour play by the Minister of Finance, Wes Sheridan, to access funds on the eve of an election.
According to a December 2, 2015 CBC news article, PC Leader James Aylward revealed during Question Period that the Ghiz government put the e-gaming loan into the system on Saturday, October 1, 2011, the last possible moment before the Monday provincial election:
“Government’s own documentation shows this loan was placed in their system on Oct. 1, 2011,” said Aylward during question period. “This timeline becomes hard to follow, because Oct. 1 was a Saturday … right on the eve of our provincial election,” Aylward continued.
Chapter 3: Getting IIDI Board Approval
Island Investment Development Inc. (IIDI) is a crown corporation reporting to the Minister of Economic Development and Tourism [Innovation and Advanced Learning at the time], so the e-gaming loan required IIDI board approval. The board members of IIDI who approved the loan were as follows:
In what appears to be an attempt to pin the entire e-gaming scandal on Wes Sheridan (and protect pubic servants still working in government) the current Minister of Finance, Hon. Heath MacDonald, told the legislative assembly on November 16, 2016 that IIDI did not approve the e-gaming loan saying:
“The IIDI board is a very important board. We’ve seen the economic growth right across the province. From my recollection the IIDI did not approve this loan.” [Hansard, November 16, p. 1465]
This was not true: the IIDI most definitely approved the e-gaming loan.
On October 6, McInnes Cooper submitted a Business Plan (Loan application) to the Board of IIDI on behalf of the MCPEI. IIDI board members initially raised concerns about the request with various government officials, including Neil Stewart – CEO of Innovation PEI and a member of the IIDI board – who communicated his concerns to the Deputy Minister of Finance, Doug Clow (copied to Michael Mayne), pointing out what would be required to get approval from IIDI, highlighting that the IIDI Board could not approve the loan without any security.
Notice from the last sentence of the first paragraph in Stewart’s letter that he already viewed the entire e-gaming project as a “consulting” project saying: “IPEI doesn’t have the budget to absorb $1M in consulting fees.”
Neil Stewart’s concern about not having security was on target, and IIDI formally deferred the request for the $950,000 loan as a result of MCPEI not providing security.
Eight days later (October 27, 2011) the IIDI Board approved the loan based on a “letter of guarantee” provided by then Minister of Finance, Wes Sheridan.
Chapter 4: The Fraudulent Reduction of the Loan Request
Avoiding making the e-gaming project funding public by seeking a loan from IIDI created another challenge for Wes Sheridan and McInnes Cooper law firm. IIDI was not legally-authorized to approve loans of more than $1 million, so it became necessary to reduce the amount of the original treasury board submission to bring it under the IIDI approval threshold. By adopting this strategy, McInnes Cooper and Wes Sheridan were able to keep the e-gaming project secret.
But the IIDI loan application created another problem for the IIDI Board: both the Financial Administration Act and Treasury Board Policy also required that “letters of guarantee” must be approved by Executive Council which – like the original plan to make a funding submission to Treasury Board for the entire $1.210,000 – would have been recorded in an Order in Council making the e-gaming project public knowledge. The solution to this problem was simple: circumvent the law and proceed without bringing the loan guarantee to Executive Council for approval. This deliberate, illegal maneuver was noted by the AG in her report:
“The [e-gaming] loan was approved by the Board of Directors of IIDI and was secured by a guarantee letter from the former Minister of Finance [Wes Sheridan]. This guarantee letter was provided without executive Council approval required in Treasury Board policy and the Financial Administration Act and impacted the transparency on the file.” [Section 3.27, p.18].
What the AG really meant to say when she said this illegal act “impacted the transparency on the file,” was that it effected an illegal cover-up!
Not only does the Financial Administration Act require Executive Council approval of loan guarantees, Treasury Board policy also stipulated that the loan should have been reported to Treasury Board in the quarterly reports once it was determined to have a “specific provision for loss” (e.g., would need to written-off); however, there was never any mention of the e-gaming loan in those quarterly reports, right up until the time the Auditor General appeared before the Standing Committee on Public Accounts on November 2, 2016, p. 135: where she said the following to committee members:
Chapter 5: The E-gaming Loan Application
The first thing to note about the e-gaming loan application is that the law firm that would eventually receive the money from the loan was the same law firm that prepared the loan application: McInnes Cooper.
The most authoritative source of information about the e-gaming loan application genesis and process comes from McInnes Cooper documents, only recently made public (September 24, 2018) when they were filed in the PEI Supreme Court in conjunction with the Capital Markets Technologies (CMT) lawsuit.
One such document is a memo from McInnes Cooper lawyer Kevin Kiley to chartered accountant Mike O’Brien – contracted by McInnes Cooper and one of five members on the E-gaming Working Group. In that memo, Kiley explained the motivation for the change in plans regarding the strategy to access funding for the e-gaming project noted earlier:
“The change from $1,195,000 to $950,000 did not reflect any change in the scope or anticipated costs of the project. but rather was changed to allow the Confederacy to meet the funding thresholds of Innovation PEI.” (p. 2)
In other words, McInnes Cooper arbitrarily reduced the numbers of three of the budget lines in the initial funding request with the idea that they’d make that money up using other strategies. The intention was to hold Wes Sheridan to his initial commitment so the law firm would receive the full $1,195,000 amount stipulated in the original business plan.
A copy of that original proposed budget – drawn up for the Treasury Board submission that was never submitted – was included in Kevin Kiley’s September 25, 2012 Memo to Mike O’Brien:
This original budget was subsequently amended to bring it under the $1,000,000 IIDI threshold when submitted to IIDI as a loan application.
Chapter 6: The E-gaming Loan Agreement
Normally, loans issued by IIDI contain specific provisions which protect the funds and ensure loans are either (a) repaid as per the terms of the loan agreement, or (b) recouped from securities. The purpose of these loan agreement provisions re: securities is to ensure that the funds are recovered if the borrower is unable to repay the loan. Such was not the case with the e-gaming loan.
And not only were at least some of the IIDI board members kept in the dark about the deliverables in the budget being largely fictitious, with the lion’s share of the $950,000 intended to cover past bills at McInnes Cooper, the loan agreement included a specific provision legally designating the money be used for future activity!
The Letter of Offer issued to the Mi’Kmaq Confederacy on December 12, 2011 stipulated under Section 1 that the proceeds “…will be used by the borrower to finance the continued development and establishment of an interactive gaming regulatory and taxation model for the province of Prince Edward Island,” however, $750,000 was in fact used not for “continued” anything, but to cover past bills submitted by McInnes Cooper.
The AG noted this as well, pointing out that the loan agreement did not inform IIDI board members that $750,000 of the requested $950,000 had nothing to do with the “deliverables” in the submitted budget, but would be used to pay-off McInnes Cooper law firm’s prior expenses.
Loan Agreements are legal documents designed to protect the interests of the lender, but this wasn’t the case with the e-gaming loan. The e-gaming loan agreement was significantly amended to essentially transfer all the risks from the borrower to the lender (e.g., the PEI government aka “taxpayers”). As the AG explained:
As well, IIDI loan agreements contain both a “general security agreement clause” and a “priority agreement clause” – as did the e-gaming loan, stated as follows in section 4.2:
However, with the obsession to keep the e-gaming project secret and once-removed from government, the Executive Director of IIDI chose to override the IIDI board – along with this specific provision within the loan agreement – and “waive” the priority agreement. The AG also noted this in her e-gaming report:
In addition, a clause was added to the loan agreement that essentially turned the loan into a “grant” by making repayment contingent on the project being successful. More precisely, loan payments would come exclusively from e-gaming revenues, and 95% of all revenues belonged to the province, so in effect, the loan to the Mi’Kmaq wasn’t really a loan at all, but an elaborate scheme to keep the e-gaming project secret while accessing nearly a million dollars of taxpayer’s money and having it transferred to McInnes Cooper law firm via the Mi’Kmaq Confederacy.
Chapter 7: Hiding “Third Party” Contracts
When McInnes Cooper reduced the initial budget from $1,195,000 to bring it under the $1 million IIDI threshold ($950,000) it didn’t remove the third Party contract deliverables contained in the original budget [items #14 (Simplex); #15 (Patrick Orr}; and #16 (Edleman Canada)], but arbitrarily reduced other line items in the budget, as indicated in red:
According to a December 12, 2011 Letter Kevin Kiley sent to Neil Stewart and Steve MacLean [then clerk of Executive Council], this was the version of the budget submitted to IIDI, and was the final budget approved by IIDI. Kiley’s letter was written the same day the e-gaming loan agreement was signed, so we can trust that what he said was accurate, since it was he and his law firm that prepared and submitted the budget to IIDI.
But this is not the version the PEI government provided to the Guardian, after the Information & Privacy Commissioner ordered the Head of the Department to provide the e-gaming loan budget – which was redacted from the loan agreement provided to the Guardian in response to an Access to Information request – after the Guardian sought a review by the Commissioner. The MacLauchlan government removed all references to the three contractors in the version presented to the Guardian, by arbitrarily increasing three budget lines by exactly the same amounts designated for the three third-party contracts (see items in green)!
Might a decision have been made to pay the third party contractors from other sources, and that the version of the e-gaming budget approved on December 12, 2011 was at a later date amended? No.
Kevin Kiley confirmed in the above-noted letter that Simplex was paid $30,000 from the e-gaming loan budget, and also stated amounts for both of the other two third-party consultants were included as part of the budget deliverables with the e-gaming loan, yet there was no mention of them in the version of the budget released to the Guardian.
Chapter 8: Dow’s Premature Advancement of Loan Funds
Dow’s mishandling of the e-gaming loan started before there was even a formal loan agreement in place, when he advanced $50,000 to McInnes Cooper on November 29, 2011, contrary to the standard operating procedures in place at IIDI which stipulate that no advances on loans were to be made to the borrower prior to the signing of a Letter of Offer, which in the case of the e-gaming loan, only happened on December 12, 2011.
As the AG pointed out in her e-gaming report, that $50,000 should not have been advanced to McInnes Cooper by Billy Dow before a letter of offer was signed and loan security was in place:
Dow then advanced an additional $700,000 to McInnes Cooper ten days after the Letter of Offer was signed – but prior to the registration of the security. He did, however, stipulate in a December 22, 2011 Letter concerning that sizable transfer that:
“These funds are forwarded to you on the express conditionthat they not be released until we receive the duly executed promissory note and general security agreement as set out [in] sections 4.1 and 4.2 of the said offer to finance.”
Sections 4.1 and 4.2 of the said offer to finance read as follows:
How much clearer could the legal provision in the loan agreement be?
It is unclear why Dow transferred $750,000 of the e-gaming loan (coincidentally, the same amount of the prior expenses McInnes Cooper had amassed even before submitting the loan agreement) knowing the funds could not be legally accessed by the law firm.
It is likely that the intention was to provide the security agreement shortly thereafter; however it was not provided or registered until after the project formally ended, and herein lies the most grievous and unethical action taken by Dow with the e-gaming loan.
Chapter 9: Dow’s Registration of Security after Project ended
The evidence clearly shows that Dow failed to enforce the provisions of the loan agreement to protect the PEI government’s (and taxpayer’s) interest. His actions were not only unethical and a clear betrayal of public trust, but a blatant violation of several provisions of the PEI Law Society’s Code of Conduct.
Dow’s actions as legal counsel for the government on the e-gaming loan constitute the second part of the two-fold complaint I’m filing with the PEI Law Society against Billy Dow, and this article is being filed with that complaint as a supporting document (Appendix “B”).
Section 2.5 of the loan agreement expressly stated that further loan disbursements were NOT to occur if the project ended:
This key legal clause stipulating that “all previous advances to date shall be refundable by the Borrower to the Lender,” unless such advances were already incurred by the Borrower in good faith “…in keeping with the terms of the Loan” was completely ignored by Dow. Rather than calling in the loan, Dow took it upon himself to register the loan security four days after the project had ENDED on February 24, 2012!
Which brings us to what Billy Dow, as legal counsel for the government handling the $950,000 loan agreement, did to ensure McInnes Cooper received the full amount of the loan, contrary to the legal provisions of the loan agreement designed to protect the public’s interest (and money). As Dow stated in his December 22, 2011 letter – the funds could not legally be released until the security was in place. So rather than acting on section 2.5 of the loan agreement after the government ended the e-gaming project on February 24, just four days later (February 28, 2012) Billy Dow registered the security for the loan, thereby authorizing McInnes Cooper to access and appropriate the $750,000 which had been previously advanced from the e-gaming loan funds.
Perhaps even more shocking is the fact that the remaining $200,000 which had not been transferred to McInnes Cooper was given to the law firm months later: $100,000 in December, 2012, and the remaining $100,000 in January, 2013.
To me, this is an even more egregious act than his failure to report his investment in Capital Markets Technology (CMT) which he made a few months earlier (July, 2011), a conflict of interest which may explain, in part, why he failed to act on the provisions within the e-gaming loan agreement to protect the PEI government (and taxpayers). The e-gaming loan was at that time viewed as a key driver for the e-gaming project, and as I explained in some detail in my previous article (Preamble to Part 2) CMT was the principal company the e-gaming working group were (literally) banking on to establish a financial transaction platform in PEI.
Read section 2.5 of the loan agreement once more and note in particular the following words “unless such advances have already been incurred by the Borrower in good faith and in keeping with the terms of the loan“:
What “in good faith” means in the context of a project which was formally ended by government meant is that legitimate expenses had already been incurred in line with the actual deliverables presented in the budget, the work had been done, and invoices had been submitted to IIDI for payment of those amounts. We know that most of it went to unrelated expenses from the documents, but we also know that the proposed work was not – and could not have been – done.
Using the $950,000 e-gaming loan budget made public by the MacLauchlan government – however reluctantly – we can see that nearly 90% of that work simply could not have happened, given that the project essentially ended before it got off the ground:
Once the project ended, Billy Dow should have immediately acted on section 2.5 to secure the funds that had already transferred, but not yet released to McInnes Cooper. Especially given the fact that the budget deliverables in the loan – the “work” – was not completed, and in most instances, not even initiated.
The budget submitted to and approved by IIDI listed 16 budget lines and included the three “third-party contracts” that were left out of the budget version provided to the Guardian. We know that Simplex finally did receive payment of $60,000, $30,000 of which came from the e-gaming loan funds, and Kevin Kiley mentioned in his letter to Neil Stewart and Steve MacLean on December 22, 2011 that: “Edleman Canada has provided us with three invoices totaling $27,920 (saving of $22,078.40 on budget)” which he indicated would be paid from the e-gaming loan. What work did Edleman do, if any?
And in an Interview Transcript that took place between the AG office staff and Kevin Kiley dated October 3, 2017, Kiley confirmed that nothing was produced by Edleman Canada:There is no information provided by the AG – or any other information or explanation that I’ve been able to find – that accounts for the $100,000 provided to the Mi’kmaq Confederacy, although Don MacKenzie, Executive Director of the Mi’Kmaq Confederacy of PEI at the time, did attend some meetings with Wes Sheridan and McInnes Cooper, sign documents, authorize drawdowns on the trust fund at McInnes Cooper, etc.; however, it’s hard to imagine that work was substantial or worth $100,000.
At a minimum, nearly 90% of the “deliverables” in the $950,000 e-gaming loan simply could not have happened. As for the rest of what was “possibly” done, most appears to be significantly inflated, especially charging $50,000 for non-disclosure agreements which should have cost next to nothing [I allowed $5,000 for this item in the above chart].
Keep in mind that the e-gaming project literally “never got off the ground,” so work with nearly all the “deliverables” in the project could not have been undertaken by virtue of that fact. Even the Auditor General made note of this in her report; however, she didn’t really provide a sense of just how significant this was:
The AG says there were “significant cost overruns” at the time the loan was disbursed, but how is this even possible? Other than approximately 100 meetings with Wes Sheridan, Don MacKenzie, McInnes Cooper lawyers and Mike O’Brien – and a few communications with a handful of third parties – no substantial amount of work was ever completed with the e-gaming project.
The AG states in the above section that the version of the budget she received “contained thirteen deliverables, each with a corresponding timeline and estimated cost”…..the budget released to the Guardian had 13 budget lines (whereas the budget McInnes Cooper prepared for MCPEI and submitted to IIDI had 16 budget lines) so was the document the AG received from the department the same one as the one given to the Guardian? It doesn’t appear so.
The Auditor General stated that each of the budget line items in the version she received had a “corresponding timeline,” but none of that information was present with the version given to the Guardian. Were there actually two separate “alterations” of the actual budget submitted to IIDI? One for the AG and one for the Information Commissioner and Guardian? This clearly needs further investigation.
Chapter 10: Honouring Fraudulent Claims and Invoices
“Disbursements will be based on 100% of actual invoiced costs” (p. 1)
…and the Auditor General both noted this fact and reported that claims were completed by IIDI without first receiving “paid invoices” as required:
Just think about that for a minute: “unpaid invoices were provided to IIDI staff and IIDI completed the claims to support drawdown of loan funds.” As a result of this breach of this specific provision of the loan agreement, the AG was unable to even verify that the funds were used to pay legitimate e-gaming costs:
“IIDI did not reconcile the disbursements on the loan with the actual payments made by the local law firm. Therefore we could not determine whether the loan funds were used to pay the invoices as indicated on the claim.” (Section 3.50, p. 23-24).”
What’s even more shocking to learn – although not that surprising given the breadth of fraudulent activity with the e-gaming loan – is that there were both discrepancies between the claims submitted to IIDI and the payment details that emerged in other correspondence, including information showing that some of the e-gaming loan funds provided to McInnes Cooper were used to pay invoices that had absolutely nothing to do with the e-gaming project, as the AG also noted:
“In fact, we noted three instances where there were discrepancies between the claims prepared by IIDI and the payment details in other correspondence from the local law firm.” [Section 3.50, p. 24]
If the AG just happened upon discrepancies in the course of her reviewing other memos or emails, one can only imagine the full extent of those discrepancies with invoices that had absolutely no connection to the approved budget; or, for that matter, either MCPEI or e-gaming:
“In addition, we noted instances on the invoices where the local law firm was billing MCPEI for providing legal and investment advice to the former Minister of Finance [Wes Sheridan] on an investment decision for the PEI Lotteries Commission, a provincial Crown Corporation.”[Section 3.23, p. 17].
Chapter 11: E-gaming Loan Cover-up by the MacLauchlan Government
Once the government withdrew support for the e-gaming initiative on February 10, 2012, any hope of recovering the money that Dow allowed McInnes Cooper to appropriate by finalizing the registration on February 28, 2012 was gone. The loan was totally unrecoverable given that the amended loan agreement stipulated that “repayment” would come exclusively from e-gaming revenues:In fact, IIDI had already reported the entire $950,000 loss on the loan in it’s fiscal year ending March 31, 2013, as noted in the Consolidated Financial Statements in their Annual Report (see p. 13). However, this was reported “anonymously” as an entry in the Notes Receivable under “Impaired long-term small business loan” with no “explanatory notes,” so with that obscurity, along with the general secrecy surrounding the entire e-gaming project at the time, apparently no one – including opposition MLAs – made the connection.
Ironically, despite all Wes Sheridan’s assurances of loan security, the entire $950,000 amount was reported by IIDI as a “total loss” in the very same fiscal year it was disbursed!
Notwithstanding Wes Sheridan’s “guarantee” letter assuring that the loan was secure and would be repaid to IIDI, as the Auditor General noted in section 3.6.2 of her report, IIDI failed to mention that the loan had “security” in it’s Audited Financial Statements prepared by Arsenault, Cameron & Best Chartered Accountants….the “Arsenault” being the Deputy Minister of Finance at the time, David Arsenault, who was heavily involved in assuring that McInnes Cooper had all their “outstanding” bills paid later in the Fall of 2012, as will be explained in detail in Part 4 of this e-gaming series.
So, despite the fact that the $950,000 loan was a complete write-off from February 10, 2012, when pressed by the opposition in the Legislative Assembly about the status of the e-gaming loan 2 1/2 years later, then Minister of Economic Development and Tourism, Allen Roach emphatically stated:
“Again, as I’ve stated I think about four or five times already, it’s a confidential deal agreement between Finance PEI and the Mi’kmaq Confederacy. What I can say is that loan is not in default.” [Hansard, November 26, 2014, p.468].
Roach was wrong on both counts: the money was gone for good, which eventually became public knowledge. The MacLauchlan government refused to release the loan agreement, or any honest information about its status, but when the Guardian submitted an access to Information request, and the MacLauchlan government still refused to release the e-gaming loan budget, as noted earlier, the Guardian appealed to the Information Commissioner, Karen Rose, and she ordered the government to release it, ruling that the document was not a “confidential deal agreement between Finance PEI and the Mi’kmaq Confederacy.”
A key part of the ongoing cover-up of the e-gaming loan relates to the failure of both the Ghiz and MacLauchlan governments to demand an accounting of the loan from the Mi’Kmaq Confederacy and McInnes Cooper, as per the terms and conditions of the loan agreement. Specifically, section 9, “Reporting Covenants”:
To my knowledge, financial statements have never been provided to the PEI government from the Mi’kmaq Confederacy of PEI, nor has MacLauchlan demanded they be provided. We know the $950,000 was funnelled through the Mi’Kmaq to McInnes Cooper – we have no clue where it ended up after that!
Chapter 12: The MacLauchlan Government Cover-up of E-gaming
From the very beginning of his tenure as Premier, Wade MacLauchlan has made a valiant attempt to convince Islanders that he was serious about getting to the bottom of the e-gaming scandal. It was only days after the election back in 2015 that he asked the Auditor General to investigate the matter; however, in retrospect, that was clearly a strategic ploy to keep the real story about the e-gaming corruption secret.
Passing the file to the AG not only allowed him and his ministers to repeatedly refuse to answer questions from opposition PC MLAs during Question Period in the House, it gave him a way of creating the illusion of a thorough investigation while at the same time preventing the Auditor General from accessing the documents and information she needed to do a proper audit. So much so that she had to include a separate section in her report to explain the “Scope limitations” of her audit. And more to the point, MacLauchlan refused to provide her with government records:
“We requested from government all relevant texts including instant messages and PINS. There were none provided by government even though we were advised, and have evidence that some government business relevant to these files was conducted through these forms of communication.”
And thousands of e-gaming documents were destroyed by the Liberal government, including all the e-gaming files of Robert Ghiz’s chief of staff, Chris LeClair; Melissa MacEachern and Rory Beck. The AG said the e-gaming records of other staff may have also been destroyed, but investigating that issue further wasn’t part of her mandate – she discovered the deleted files of those three senior bureaucrats heavily involved in e-gaming only by chance.
The information Commissioner is currently undertaking an investigation into missing e-gaming records of Brad Mix as a result of a review I initiated after I didn’t receive e-gaming records that I know for a fact exist, in an Access to Information request. I expect her final ruling will verify that his e-gaming records have mysteriously gone missing; however, that ruling won’t be completed and made public until May, well after the April 23rd election.
Premier MacLauchlan was most likely aware that most of the e-gaming project files were kept secret at McInnes Cooper law firm when he asked the AG to do her investigation into e-gaming, yet he did nothing as Auditor General and Minister of Justice at the time to help her access them, after the law firm refused to turn them over to her. She contemplated taking court action herself, but declined saying it would only delay the final report by years, expecting her legal action to be challenged every step of the way.
Despite being hampered and stonewalled, the AG was still able to uncover a tremendous amount of information that considered in its entirety makes the e-gaming project clearly the most corrupt initiative of any government on record. And despite a dedicated effort to limit and frustrate the AG in her investigation, the Premier had the audacity to make the following statement on the first day of the opening of the Fall sitting of the Legislative Assembly, just after the AG report on e-gaming was made public that:
“The Auditor General had full access through interviews and documents to everything that went on around that, around the egaming proposition, I’ll call it.” [Hansard, November 15, 2016]
Despite Wade’s promise that he intended to “do things differently” from what his predecessor Robert Ghiz did, he has been the most secretive and evasive leader this province has ever had, and no where has that been more true than with e-gaming.
I’ll conclude this article with a few comments on the quote at the top of the article:
“I realize that the Leader of the Opposition [James Aylward] has suggested that there be particular discipline against leading or senior public servants. Those public servants have not done anything wrong, notwithstanding allegations to the contrary.” — Premier MacLauchlan, Hansard, November 15, 2016].
Not only was Premier MacLauchlan unwilling to discipline senior civil servants who broke laws, refused to report what they were doing as required by Treasury Board policy, etc, as outlined in detail in this article, he rewarded the five individuals who approved the e-gaming loan and kept it secret as follows:
He promoted Neil Stewart to be the keeper of the public purse by making him Deputy Minister of Finance.
He promoted Doug Clow to his current position of Vice-Chair of the Island Regulatory Appeals Commission.
He appointed Michael Mayne the Head of Health PEI.
He promoted Brian Douglas Clerk of Executive Council.
He made Richard Gallant the Executive Director. Workforce and Advanced Learning SkillsPEI.
When Premier MacLauchlan told the Legislative Assembly on that opening day after the AG report was filed that: “It is not the practice of our government, nor my practice as Premier, to throw public servants under the bus,” he wasn’t kidding!
A FOUR-PART SERIES EXPOSING E-GAMING AS AN ELABORATE CONSPIRACY TO COMMIT FRAUD
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Preamble to Part Two: The E-gaming Loan
PEI Law Society Complaint against Billy Dow
This article is a supporting document (Appendix “A”) in a formal complaint I’m filing with the PEI Law Society against lawyer William F. Dow (“Billy Dow”). I’m convinced that the documentary evidence supports my belief that e-gaming involved an elaborate conspiracy to commit fraud. This article deals with Billy Dow’s role in that conspiracy, especially pertaining to the e-gaming loan.
To prove a conspiracy to commit fraud, it is necessary to first map out chronologically how a plan came together to access provincial government funds for the e-gaming project, and how that plan was then executed over approximately a 2 1/2 year period of time. That involves a careful overview of the decisions and actions that were taken by key players within government to acquire and transfer $1,120,000 to McInnes Cooper law firm, funnelling it through the Mi’Kmaq Confederacy to create the impression that government’s e-gaming initiative was a legitimate third-party project independent from government. It wasn’t. As Robin Dolittle noted in her 2015 Globe and Mail investigative report on e-gaming: “The fact that the [e-gaming] plan was illegal – and had elsewhere been used by the Mafia – is one of this story’s more mundane details.”
McInnes Cooper lawyers told the Auditor General (Jane MacAdam) – in the course of her investigation into e-gaming – that the Minister of Finance at the time, Wes Sheridan, had made an initial commitment of $1,210,000 to the Mi’Kmaq Confederacy of PEI (MCPEI) which was, in turn, to be paid to McInnes Cooper to manage the project.
Although McInnes Cooper consistently claimed that the law firm only represented MCPEI, insisting they only did work on the e-gaming project for the MCPEI under the auspices of a “solicitor-client relationship,” Minister Sheridan told the Auditor General (AG) that McInnes Cooper acted as the project manager for e-gaming, and that was the conclusion the AG also reached, based on documentary evidence. MacAdam viewed the reason provided by the law firm for refusing to provide her with e-gaming documentation – solicitor/client privilege – as completely groundless:
“As well, during our work we obtained documentary evidence, where the local law firm [McInnes Cooper] requested payment on final invoices and stated they were assisting both government and MCPEI by acting as project manager on the file.” [AG E-gaming Report, section 3.16, p. 15].
“The local law firm [McInnes Cooper] would not discuss this file with our office, citing solicitor/client privilege, with their client MCPEI. However, project management services are not protected by solicitor/client privilege.” [AG E-gaming Report, section 3.17, p. 15].
Acquiring the total amount of $1,210,000 Wes Sheridan promised to the MCPEI involved a dedicated and calculated strategy to (a) approve the e-gaming loan in contravention of the Financial Administration Act; (b) arbitrarily change budgets to present the work in such a way as to hide the actual costs, even when the scope of the project wasn’t altered; (c) ignore financial monitoring and reporting requirements; (d) disburse funds to McInnes Cooper without the required invoices and claims, in contravention of financial management protocols and procedures; and (e) ignore and fail to act on specific provisions of the e-gaming loan agreement that would have protected government’s interests. The source documents and details concerning these matters will be provided in a subsequent article, which will also be submitted with my complaint (Appendix “B”).
All of this was done with the single-minded goal of accessing the full amount of $1,210,000 initially agreed upon, and apparently promised by Wes Sheridan. This happened despite the fact that most of the work specified as “deliverables” in the e-gaming loan budget were not completed, and in most instances, not even begun. Rather than acting in compliance with the PEI Law Society’s strict Code of Conduct, Billy Dow failed to protect his client’s interest, most likely because he had a personal and financial stake in the e-gaming – and subsequently, “Financial Transaction Platform” – initiatives.
Billy Dow’s “Conflict of Interest” in E-gaming
Lawyer Billy Dow’s key contribution to – and participation in – fraudulent activity primarily involved his handling of the e-gaming loan of $950,000, although that was by no means his only involvement in the e-gaming project.
On March 2, 2017, former Leader of the PEI NDP Party (Michael Redmond) filed a complaint with the PEI Law Society against Billy Dow alleging a “conflict of interest” as a result of Dow’s involvement with the signing of a Memorandum of Understanding (MOU) between the PEI government and Trinity Bay Technologies Inc., a wholly-owned subsidiary of CMT. Dow had purchased shares in CMT in July, 2011, and was involved in the MOU that was signed more than a year later – something the Auditor General called a “perceived conflict of interest.”
In his Written Response to Redmond’s complaint, Dow argued – as he had had previously stated in a 2015 Letter he sent (via email) to Globe and Mail reporter Robyn Doolittle – that he was totally unaware that TBT was a wholly-owned subsidiary of CMT, and when he became aware, he took immediate steps to remove himself from the file:
Redmond initially filed a complaint with the Secretary-Treasurer of the PEI Law Society, who ruled that there was no conflict of interest. He subsequently appealed that decision to the PEI Law Society’s Disciplinary Committee. In its Decision, the Committee also concluded that there was no conflict of interest, and that no disciplinary action against Dow needed to be taken, stating in its report:
Redmond’s allegation that Billy Dow had a conflict of interest was limited to Dow”s involvement in the Memorandum of Understanding (MOU) between Trinity Bay Technologies/Simplex and the PEI government. Although Dow claimed that he didn’t know Trinity Bay Technologies was a 100%-owned subsidiary of CMT, it’s hard to accept that as being true, given the fact that Dow failed to disclose the full extent of his prior involvement in spearheading the MOU, although no hard documentary evidence or first-hand testimony has yet surfaced proving Dow knew he was in a conflict of interest involving himself with the MOU. One can only speculate as to why Dow misled Ms. Doolittle concerning the full extent of his involvement with the MOU when he stated:
“In in the summer of 2012 I was asked by Innovation PEI to review an MOU that had been prepared by a company known as 7645686 Canada Inc, dba Trinity Bay Technologies. I did not prepare or negotiate the MOU. I reviewed the MOU and advised Innovation on what the document meant.”
What Dow failed to disclose is that the MOU – and the business arrangement with TBT that the MOU initiated – was Dow’s idea!
After learning from a fellow CMT Investor that PEI was on the cusp of possibly losing out on the development of the Financial Transaction Platform to Nova Scotia, Dow began communications with CMT’s lawyer (Gary Jessop) to draft the MOU and send it to him. Court documents confirm that Dow sent it to Cheryl Paynter and Melissa MacEachern with Innovation PEI for signature. It’s important to note that no changes were made to the MOU by Dow or Innovation PEI. The Auditor General was aware of this fact and reported it as “unusual” activity for external legal counsel (Dow):
To be clear, “Innovation PEI’s external legal counsel” at the time was Billy Dow.
The Auditor General went on to point out precisely why the MOU was unusual:
Ponder this revelation for a moment: “…the request for the business arrangement” came from Bily Dow, the external legal counsel retained for the e-gaming project, who was at the time an investor in CMT. Yet, Dow’s version of events submitted to both the Globe and Mail and the PEI Law Society was that his involvement in the MOU was limited to only a “request to review.”
Despite acting as legal counsel for the government, being an investor in CMT, Dow would obviously want to see the project succeed, and when it looked like CMT (with it’s TBT subsidiary) was going to take its business to Nova Scotia, Dow took it upon himself to initiate a new business agreement. And it wasn’t just any business agreement, but one that contained exclusivity clauses that would prevent CMT/TBT from discussing its business proposals for a financial transaction platform with any other party, including the Nova Scotia government. And of course the PEI government made the same legal agreement with CMT/TBT promising an exclusive relationship during the time the MOU was in effect. The alleged breach of those exclusivity clauses by the PEI government is what resulted in the CMT lawsuit.
It was Dow’s connection with a Capital Markets Technologies (CMT’s) investor which put CMT at the very centre of the e-gaming initiative in the summer of 2011. Given that inside and intimate knowledge, it is simply not reasonable to believe that Dow would not have known that the company (Trinity Bay Technologies) wasn’t registered by the local e-gaming company for the purpose of setting up Simplex’s Financial Transaction platform for e-gaming.
Whether Dow knew or didn’t know TBT was essentially the same corporate entity as CMT is of little consequence; the basis for my allegation that Dow had a conflict of interest stems from the fact that he was retained by the PEI government long before any discussions about a MOU took place – months before he purchased shares in CMT – and that he was at that time aware that CMT was the principal company involved in the entire e-gaming project.
Part I of my Two-fold Complaint Against Billy Dow
The first part of my two-fold complaint against Billy Dow is that he was indeed in a conflict of interest with the e-gaming file, but not simply because of his later involvement with the MOU involving TBT, but because of his involvement in handling the e-gaming loan with the Mi’Kmaq Confederacy.
Dow’s primary conflict of interest resulted from his investment in an e-gaming company (CMT) that would only become profitable for its shareholders if the e-gaming/financial transaction platform project got off the ground and was successful. That platform could be used for many things, e-gaming being one of them, so even if e-gaming failed to launch, there was potential for financial rewards for Dow as long as CMT could successfully negotiate a deal with the provincial government to establish the financial transaction platform.
The e-gaming loan for $950,000 that Dow handled for Innovation PEI and the PEI government was at the very heart of the e-gaming working group’s strategy for success with both “e-gaming” and the establishment of a financial transaction platform, and at all times, CMT was the principal company involved with that strategy.
Without getting into too much detail, CMT had exclusive North American rights to technologies and services owned by Simplex, a company in the U.K., and the plan was to set up the financial transaction platform and processing infrastructure needed to make e-gaming a reality in PEI. Billy Dow attended e-gaming working group meetings and, as an investor in CMT, was clearly aware of how CMT factored into the overall e-gaming/financial transactions platform strategy.
In early summer of 2011, the drive to establish an e-gaming financial transaction platform was the principal focus of attention with the e-gaming working group. Although Dow told Robyn Doolittle in a letter that he “…was told that the Company [CMT] was involved in technology related to the banking industry,” he knew full-well when he invested in the company that CMT was being considered by the PEI government to establish a financial transaction hub in PEI and, in addition, to bring gaming companies to the Island, such as the one CMT did manage to attract to PEI around that time, Virgin Gaming.
Dow’s knowledge of CMT and how CMT was involved with the e-gaming/financial transaction platform project was both intimate and extensive. According to Kevin Kiley, as relayed to staff at the Auditor General’s office in the course of an interview held May 18, 2017, Billy Dow was retained and was acting for the government on the e-gaming file from the very first meeting establishing McInnes Cooper as the e-gaming project manager back in February, 2010 (See, paragraph #2) as is clearly indicated in paragraph 5 in the interview transcript:
“Mr. Kiley indicated that he was advised government lawyer was Bill Dow as well as Barb Stevenson until about Fall of 2010. They met with the working group from time to time.”
And Kiley later confirmed (in Paragraph 2 of the “final comments” section) that Dow had been specifically enlisted by the province to provide the PEI government with legal counsel on the e-gaming project:
“Government subsequently confirmed with us, on or about March 10, 2010, that they had retained the law firm of Carr, Stevenson and MacKay to represent it in the [e-gaming] initiative.”
This fact was further confirmed in Gary Scale’s Statement of Defence filed with the PEI Supreme Court where it states:
“Scales was advised by PEI on or about March 2010 that PEI had retained its own external counsel, Carr, Stevenson & McKay (“CSM”), to represent PEI in dealings with respect to the e-gaming initiative. CSM attended and prepared legal documents for PEI.” (p.1)
When Dow was challenged by the Globe & Mail, Opposition Members, and Michael Redmond’s complaint to the law society he failed to disclose the fact that he had been retained as external legal counsel for the government on the e-gaming initiative in February, 2010, but spoke only of his much later involvement in the 2012 MOU, which he clearly minimized to an extent that can only be construed as intended to mislead.
As McInnes Cooper lawyer Kevin Kiley noted in the above-noted transcript of his interview with staff from the Auditor General’s office, “Simplex was identified as being able to give them the processing capability they needed,” for e-gaming, and more specifically, “processing capability” meant the financial transaction platform. Again, Billy Dow was invested in CMT, the North American exclusive agent for Simplex, so the only way for Dow to profit from the e-gaming/financial transaction platform owned by Simplex was through CMT.
Dow was therefore clearly in a conflict of interest when he represented the government’s interest with his handling of the e-gaming $950,000 loan, given his personal financial interest in seeing the e-gaming/financial transaction project go forward and be successful.
It is impossible to determine the extent to which this personal interest clouded his ethical and professional judgment; however, given the extent to which he failed to act to protect government’s (and taxpayer’s) interest with his handling of the e-gaming loan – which will be outlined in detail in my next article “The e-gaming Loan” – the facts suggest it was significant.
So, the first part of my two-fold complaint to the PEI Law Society is my allegation that Dow’s conflict of interest began when he purchased shares in CMT on July 28, 2011 [See List of Securities (p.9), tabled in the PEI Legislative Assembly, May 13, 2016], well over a year after Billy Dow and his law firm were retained by the PEI government on the e-gaming file, and months before he represented the government [Innovation PEI] with his involvement with the e-gaming loan.
The second part of my two-fold complaint involves numerous unethical and illegal decisions and actions undertaken by Dow, which amounted to a failure to protect the government’s interests re: the e-gaming loan which Premier MacLauchlan was forced to write-off as a complete loss shortly after becoming premier in 2015.
Those actions will be presented in detail and explained in “Part 2” of this 4-part series – which I hope to have completed and posted in another few days.
I sincerely hope I’m wrong with my prediction and that the election happens much later in the Spring, or even next Fall: Islanders deserve to see the same information on e-gaming that the Judge will be presented on April 23-27, 2019 before deciding who should be in government.
Last Friday on CBC Compass, political panel members, Rick MacLean and Paul MacNeil, both talked about how it would make absolutely no sense for the Liberal government to call the election before opening the House on April 2nd and presenting a budget. MacNeil said it would be a “major sign that the ship Liberal is in disarray” and MacLean said “the idea of not presenting a budget before you go to the polls really makes no sense.” Take a listen:
What MacLean and MacNeil obviously failed to factor into their predictive analysis were the dates of the upcoming e-gaming court hearing.
Why I predicted April 23 is my belief that MacLauchlan is terrified of the information and news coverage that’s going to come out from the four (4) days of court hearings scheduled with the Capital Markets Technology (CMT) lawsuit in the PEI Supreme Court starting on April 23rd. By the time the first news reports on that come out, the voting will be all but over!
I’ve been working diligently on the final three segments of my promised 4-part series titled “A conspiracy to commit Fraud,” and hope to have the major part of that series “Part 2: The e-gaming Loan,” out before the end of this week.
I will be checking daily for the cross-examination transcripts and factums likely to be filed with the court in advance of the court hearing in early April – making them public documents and giving me (and hopefully all media political reporters) a couple of weeks to report on what those documents contain.
That the MacLauchlan government would make one final attempt to hoodwink Islanders on something so serious and keep them in the dark about e-gaming is scandalous. So much for openness, transparency and accountability.
We’ve endured a 4 year stretch of cover-ups, deletion of documents, obfuscation and denials from the MacLauchlan government. His calling the election just ahead of the e-gaming court hearing in a bid to gain re-election is a fitting “swan song” for this death-bed government.
swan song. A final accomplishment or performance, one’s last work. … This term alludes to the old belief that swans normally are mute but burst into beautiful song moments before they die.
It looks like tomorrow (Tuesday, March 26, 2019) will be a big day for Minister of Communities, Land & Environment, Hon. Richard Brown. Not only is he having his nomination meeting as the Liberal Candidate in a bid to remain MLA for District 12: Charlottetown – Victoria Park, he’s also likely going to have to make a decision (with the rest of Executive Council) on whether to approve 32 separate applications for land parcels submitted to IRAC by three Irving-owned corporations totalling a little more than 2,200 [2280.80] acres of prime farmland in the Bedeque area.
I provided all the details about those applications – including screen captures of the Corporate/Business Registrations for the three Irving-owned corporations (one of which only came into existence on February 5, 2019, 2 days before the applications to purchase those 32 parcels were filed with IRAC) in a previous article titled “The Irving Land Grab in PEI,” so I won’t plough that same ground.
I’m posting this by way of an update on what many in the farming community are calling a watershed moment for the MacLauchlan government regarding where it stands on the protection of PEI’s farmland and whether it intends to be faithful to the spirit and intent of the Lands Protection Act.
No Answer on the 2,200 Acres at the NFU Convention
I’m sure Minister Brown was expecting a question about this critically-important decision Cabinet will have to make at the NFU Annual District Convention held on March 19, 2019. He got one from farmer Randall MacFarlane, with a passionate appeal to bring back a strong message to all Cabinet members that the Executive Council must not approve these applications.
Although IRAC made recommendations on all 32 applications on Thursday, March 14, Minister Brown was able to inform Randall that he had not yet received or been informed about the recommendations, so he had no comment.
Brown received IRAC’s recommendations on all 32 parcels the very next day, March 20, 2019.
Executive Council normally meets every Tuesday, but now and again skips a week, as they did last Tuesday (March 19, 2019). It’s therefore expected that Council will meet tomorrow, and all members will have been given copies of IRAC’s recommendations and have had plenty of time to review them. What might those recommendations have been? We’ll never know: recommendations from IRAC are not made public and can’t be accessed through the Freedom of Information process.
What we can expect on a go-forward basis
If Executive Council makes decisions on those 32 parcels tomorrow we won’t likely know what they are for at least another week (e.g., the Order in Council for the March 12th Executive Council meeting wasn’t posted online until March 21st).
When Brown was pressed at the NFU convention (by me and others) why the initial questions about the total land holdings of Irving, Vanco Farms, Gebis and all corporations weren’t provided in his presentation to the NFU, he indicated that it was his intention to “dig deeper” and provide that information in a final report. When can we expect that? He didn’t say. Before an election? Not likely.
Executive Council should not be making any decisions on those 32 parcels until that detailed information is uncovered and made public. It will – therefore – be both shocking and very unfortunate if any of those parcels are approved for sale before that information on Irving-family land holdings is forthcoming.
Even if it is determined that the three Irving family-owned corporations seeking these additional 2,200 acres are still within their land limits if the parcels are approved, they still shouldn’t be approved, given the clear intent of the Lands Protection Act to keep processors out of the farming business (the Act allows processors to own just 5 acres).
I had such a positive response to my first music video/slideshow I decided to put together another one to post. I actually wrote this song many years ago, and I believe it’s more relevant today than it was when I wrote it. I recorded it with guitar, piano, some strings and a synthesizer. Again, no professional musicians or drums, and no proper mixing and mastering.
I still can’t believe the Liberal government (under Ghiz) contracted a consulting company to find ways to make PEI more “corporate friendly”. [See my Facebook Post on this]. It was that discovery that prompted me to do this post.
Bottom line: we don’t need huge global corporations to come here to further ravage our poor Island and exploit our workforce. We need an economic development strategy that truly cares for our land, water, trees and people, guided by a philosophy that aims to enrich, not just extract. This song/video highlights the fact that transnational corporations are all about siphoning off wealth from the earth’s resources and people.
Although wolves are noble and beautiful animals, they are predators all the same. They hunt the weakest who can’t escape their power. Such might be a wise strategy for wild animals near the top of the food chain – culling out the weak and the sick in other species – but people shouldn’t act like wild animals, and powerful transnational corporations shouldn’t act like wolves.
We need to stand strong against this brutish approach. We must pursue a vision that is both sustainable for our fragile Island resources and also cares for all our citizens.
Denny King and I have discussed my ongoing role with the PC Party to provide policy direction for the Party, especially regarding land policy. I look forward to working with Denny and the PC Party to make PEI a truly “people-friendly” province that protects our land, water and natural resources and implement plans and processes that favour local, small businesses….not transnational corporate wolves!
TRANSNATIONAL CORPORATE WOLVES
Darkness encroaching Vision’s hazy It’s a sign of the times to be scared Or a little crazy Dazed and confused By the echoes of the howls The wolves are on the move, arise They’re gaining ground
The wolves are on the move again Listen, can you hear Lying crouched, eyes intent, another victim disappears The wolves are on the move again Hurry, gather near Let’s get together, before we disappear
Over seas, plains and mountains They roam the whole wide world Their communication networks and transportation trails are everywhere With the borders all gone, carnal competition is the law There’s no more time for fine cuisine; wolves like it raw
Keep together now, or we’re lost They’ll divide and conquer The sick and tired will be the first to go, like they were never there The rest will be weakened; taken, one by one Take heart, but take care of each other Wolves are on the run
I wrote the lyrics, composed the music and put together the slideshow on March 21, 2019. The recording is neither mixed nor mastered, and I unfortunately had no professional musicians to help in the endeavour, so the quality of the recording is not great – it may sound a bit better through earbuds or headphones rather than a computer speaker alone. My focus was on the importance of the message, not the quality of the production.
Minister Richard Brown brought a glossy slide show to the National Farmers Union Annual District Convention on Tuesday, March 19, 2019, presenting the preliminary results of his promised and long-awaited review of non-resident and corporate land holdings in PEI.
In a nutshell, the results of the review offered aggregate data showing the total land acreages owned by non-residents and corporations in 2018, contrasted with those same totals over the past 10 years. Various graphs offered the percentage of land owned by residents, non-residents, resident corporations and non-resident corporations.
The report told us whether land holdings in these various categories have increased, decreased or remained the same over the past 10 years; they provided no insights into what’s really happening with land ownership in PEI, and failed to answer the key questions the NFU asked a year ago, which the Minister assured the NFU would be answered in the non-resident and corporate review of land holdings, especially questions concerning the total land holdings of specific corporations and affiliated companies of Cavendish Farms, Vanco Farms, and the Great Enlightenment Buddhist Institute Society (GEBIS).
The slide show presentation was completely anonymous, and did not address the issue of whether individuals and/or corporations are using loopholes in the Lands Protection Act to circumvent the intention of the Act, allowing them to amass more than the 1,000 acre limit for individuals and 3,000 acre limit for corporations. Let’s not forget that this objective was the publicly-stated intention of the review by Minister Brown when it was first announced, as was stated in a recent Guardian Article:
“In April 2018 Minister of Communities, Land and Environment Richard Brown said he’d asked IRAC to conduct a major review of land ownership on P.E.I. to see whether anyone was breaking the rules. At the time he said he hoped the review would be ready to present to committee by the fall of 2018.”
What Minister Brown actually presented to the NFU Convention was something completely different – aggregate totals with no breakdown, no analysis, no insights, and no names, neither of individuals or corporations.
One slide showed a significant increase in corporate land holdings over the past decade – 85,000 acres – but was accompanied with no analysis of that increase in terms of how many corporations (or interlocking companies owned by the same individuals or families) own that land. Perhaps there were 200 corporations owing 300,000 acres back in 2008 and 25 owning 385,000 in 2018…it’s anybody’s guess – with no explanation or breakdown, we just don’t know.
In other words, the review offered no answers whatsoever to the key question asked by the NFU; namely, whether certain individuals, families and corporations are circumventing the spirit and intention of the Lands Protection Act so they can acquire land holdings that far exceed what the Lands Protection Act says they can own, something NFU farmers are certain is in fact the case. After nearly a full year, we are absolutely no closer to getting those answers from government.
And here’s the really maddening thing about this kick-the-can-down-the-road cynical charade: I – or any other researcher – could easily tabulate the total land holdings of individuals and families owning specific corporations such as Cavendish Farms, Vanco Farms or GEBIS. That is, if the government wasn’t continuing to block access to the cumulative corporate data present in the Business/Corporate Registry by allowing us to search only corporations one-at-a-time, but not individuals who may own multiple corporations, listed either as named or numbered companies.
If a simple “name search” feature was added to the Corporate/Business Registry – as was recently added to the Lands Protection Act Application Databank – it would literally take a few days to uncover all the interlocking corporations of which certain individuals are directors and shareholders, thereby allowing a quick tabulation of the total land holdings associated with those individuals, thereby answering the simple question whether those individuals and parent corporations exceed the land holding limits specified in the Lands Protection Act.
My frustration and anger with this insulting government response to the NFU members eagerly awaiting answers from Minister Brown – who have been pretty patient, especially given the urgency of the issue – resulted in a tense exchange between me and Minister Brown in the Q & A session following the slideshow presentation:
Kevin: Minister Brown, I was here last year and I don’t think there was any question that what the National Farmers Union wanted to know is “can we get information on especially Irving, Vanco farms, GEBIS or any other corporations, in terms of whether or not, through interlocking corporations, which as Edith Ling pointed out in her presentation you have the power to close as a loophole – goes against the intent and spirit of the Lands Protection act?” People wanted to know – the NFU wanted to know – whether or not the exemptions are exceeding the 3,000 arable acres. And I said at the time that I could find that out myself in three days if the government would allow a simple search on the corporate registry. That’s not happened – it’s been brought up by the opposition PC Party a number of times in the House. but there’s never been an answer. This aggregate, ambiguous data about trends is not answering the question, it’s evasive, and it’s not open and transparent. I’m going to ask you a yes or no question: “Will you and/or your government put a simple search feature in the corporate registry so I can give the answer to these people and the rest of the Island, whether or not corporations are – through interlocking entities – violating the spirit and intent (and perhaps even the letter) of the Lands Protection Act: Yes or No?
Minister Brown: You can go online right now and call up any corporation in Prince Edward Island and see the directors, and the presidents and the officers of the company….
Kevin: One at a time…but you can’t do the research Mr. Brown….
Minister Brown: 99% of the time, it’s the directors, presidents and the officers of the corporations [who] are the ones that own the property, so it’s transparent in terms of wanting to know this company, who’s the directors, who’s the officers and who’s it’s president, and it’s vice-president. Those things are online individually.
Kevin: You’re not answering my question. Can you put a search feature in so when I type in a name like Mary Jean Irving, I will see a list of all the corporations that’s she’s a director of, and then through the interlocking kind of simple math, we can then do a total [calculation] of the acreage of the land held by each of those corporations, and answer the question finally, rather than deliberately avoiding answering the question.
Minister Brown: I’ll commit to you today, I will write the Office of the Privacy Commissioner and ask for permission to allow that search to happen. We have a law with the protection of privacy, we have a right to privacy, we have an Act that allows people to have a right to privacy. We’re one of the very few countries that still have privacy laws for people, and I will commit here today that I will write a letter to the Privacy Commissioner requesting that be done.
Kevin: You don’t need to, because I was able to have Scott Mackenzie add that search feature to the Lands databank, and I’ve already inquired independently, and it’s not a breach of privacy; in fact, you said yourself a minute ago that those names are already public information on an individual corporate basis. I want access to that feature, so I can put a list together. It’s a simple, simple thing. And if you say no, or the government says no, then what you’re really saying is: “We don’t want you to know”…and that’s what we’re asking.
Minister Brown: I made a commitment here today that I will be writing a letter to the Privacy Commissioner asking her permission to put that [search feature] on [the Corporate/Business Registry].
So the only commitment we got from the Minister was that he would ask the Information and Privacy Commissioner a meaningless question for which we already know the answer: he promised absolutely nothing else.
Can we expect the Liberal government to implement the “name search” feature on the Corporate/Business Registry so we can find out the answers to these crucially-important questions ourselves? No.
Will any of the other political parties implement the “name search” feature in the Corporate/Business Registry if they were to form government? That’s a question that needs to be asked each political party.
In the meantime, our provincial government will continue to aid and abet the individual families and corporations currently making a mockery of our Lands Protection Act. It’s shocking to realize that the Liberal government is apparently prepared to continue hiding from Islanders the truth about what is happening to our land.
This is unacceptable: it’s unethical, undemocratic, and makes our own government totally unaccountable, lacking the kind of transparency and ethical standards we have every right to expect from those who we elect to represent our interests, not the interests of a few wealthy corporate entities.
Share this post, and posts from others that shed some light on what’s going on here, so we can make as many Islanders as possible aware of the urgent need to make this an election issue before we go to the polls.
The National Farmers Union (NFU) will hold its Annual District Convention at the Milton Hall tomorrow (Tuesday, March 19, 2019). Registration begins at 9:30am and the day ends at 4pm. It promises to be an interesting day. Anyone can attend, a lunch is served, and the cost is $20. The full agenda can be found here. Speakers will include:
Jean-Paul Arsenault who was very involved in the Carver Commission round of public meetings on the land;
Mike Van den Heuvel who is conducting a study on water levels, and will likely speak about high capacity wells, supplemental irrigation, etc.;
Laurie Loane from the Agricultural Sector Council who will speak on various technical programs available to farmers and farm workers; and,
Hon. Richard Brown, Minister of Communities, Land and the Environment. What Minister Brown will speak about is anybody’s guess, but he’ll probably be asked lots of questions about the Lands Protection Act as well as high capacity wells.
One question the Minister is sure to be asked is whether the Liberal government plans to allow Cavendish Farms to dig more high capacity wells in conjunction with a proposal it submitted to government to “study” the impacts of high capacity wells last Spring. That proposal was submitted notwithstanding the fact that there is currently a moratorium on high capacity wells until such time as the study that Mike Van den Heuvel (Rivers Institute & UPEI) is currently undertaking is completed, which is not expected until 2021.
Some Background on the Cavendish Farm Proposal
Cavendish Farms submitted a high capacity well proposal to government last year (April 6, 2018) but no one knew anything about it until it was mentioned during a presentation which Cavendish Farms (Robert Irving; John MacQuarrie & Jubs Bristow) gave to the Communities, Land and Environment standing committee on November 1, 2018.
John MacQuarrie [former Deputy MInister of Agriculture with the PEI government, now Director of Environmental Sustainability with Cavendish Farms] made the following comment during that presentation:
That’s why we developed a proposal that we presented to government back in April that combined UPEI, that combined the rivers institute, agriculture Canada, three watershed groups and ourselves to look at: Can we put some science around investigating the potential for irrigation on PEI? Because we’re not saying it can be done everywhere. In fact, we know that every field can’t be. What we’re saying is – and it was part of our presentation – there is a way forward where we can collect the evidence to really determine how can irrigation be done sustainably in PEI. So that was a proposal we developed and put forward. [ Meeting Transcript, November 1, 2018, p. 74]
There was obviously lots of interest in MacQuarrie’s revelation following the hearing. On November 14, 2018, PC MLA Steven Myers challenged the government about this proposal from Cavendish Farms during Question Period:
Steven Myers: Question to the minister: How many meetings has government had with the Irving’s and Cavendish Farms to discuss their secret proposal?
Richard Brown: What’s wrong with companies coming forward with proposals in order to grow the economy, grow jobs here on Prince Edward Island and do it in an environmentally sustainable way? Why should we not sit at the table with these companies as we sit with any farmer or any company that wants to come here to Prince Edward Island?
Cavendish Farms denied there was a “secret” proposal in a prepared news release, stating that the proposal submitted to government was asking groups to support the research being done so scientists can determine if irrigation will be detrimental to the aquifer or put Island water sources at risk.
“If the research shows that there’s no impact, then the next step would be to look at lifting the moratorium on specific case-by-case applications.”
What this suggested was that new high capacity wells could be dug without first lifting the moratorium, which seemed like a contradiction, and to some, a way for Cavendish Farms to circumvent the moratorium.
Under pressure to be transparent, Cavendish Farms gave the PEI government permission to share the Proposal and it was tabled in the Legislative Assembly the following day.
Where’s the confusion coming from?
Since last November, Minister Brown has been adamant that there will be no more high capacity wells allowed until the UPEI study is complete in 2021.
As recently as March 7, 2019 – during a CBC Island Morning interview – dealing with the question of why the government’s draft Water Act regulations recently released for public consideration and review held back on releasing (despite being completed) the regulations concerning water extraction and high capacity wells, Minister Brown stated:
“We are still under a moratorium on high capacity wells. We are not proposing to lift the moratorium on high capacity wells without science. And lots and lots of science, and plus, with public consultations.”
Kerry Campbell did a good job pushing Mr. Brown to explain how he could have the regulations drawn up for high capacity wells without the science, but then argue that he can’t release them for review because the science wasn’t completed:
“We’re going to potentially have a Spring election. You have regulations which you have developed, so you’ve made some decisions on what to do with high capacity wells, but you’re not sharing that with the public…Do you not see that there might be a transparency issue if you’ve developed the regulations but go into an election without sharing them with the public?”
Brown told Campbell that he would go back to the committee to ask that the extraction regulations (including high capacity well extraction) be released, but to date that has not happened.
So the main reason why I’m posting this information today is that I’ve heard credible rumours that the group at Cavendish Farms who originally hatched the project proposal to allow for some high capacity wells (on Cavendish Farm contract grower fields) are growing increasingly upset that the government is not giving the project the “go ahead”. Is there a divide within government on this?
Although Richard Brown seems solid on his promise that there will be no high capacity wells until the longer-term study is completed, which will be at least 2021, what I find concerning is the statement in the proposal that:
“….government officials directed Cavendish Farms to identify watershed group collaborators as a first step toward considering sites for new permits. In response Cavendish Farms has met with and secured agreements with 3 watershed groups to collaborate in a project to demonstrate a sustainable approach to irrigation.”
Who exactly were these government officials? I suspect – since both the Department of Communities, Lands and Environment and the Department of Agriculture and Fisheries are mentioned as potential participants on the project, that the supportive push for the proposal came from Deputy Minister of Agriculture John Jamieson, and because it’s Richard Brown who is ultimately responsible for the Water Act and whether the moratorium on high capacity wells is lifted or remains in place, he’s been forced to deal with the fall out.
With the key scientist undertaking the UPEI study – also noted as participant in the Cavendish Farms project proposal. Mike Van den Heuvel. and the Minister responsible for the Water Act, Richard Brown, both speaking at the NFU Convention tomorrow, perhaps by the end of the day there will be some more clarity about what our government is planning with regards to our groundwater, whether the Cavendish Farms proposal is now off the table, and whether we’re likely to see those high capacity well regulations prior to an election.
Will there be a general election this Spring, or will Premier MacLauchlan wait until the Fall? Half the people I ask say the Spring…..the other half say the Fall. Let’s break down the options.
The eight (8) month campaigning period for the referendum on electoral reform began on February 1, 2019, so unless the government takes drastic measures to intervene and amend the referendum legislation when the House opens at 2 pm on April 2, 2019 – the options are either to have an election this Spring, or early in the Fall. The last day an election can be called for the Fall is September 3, and it must be held not later than September 30, 2019. With a federal election scheduled to take place on or before October 21, 2019, the most logical option would be to have a Spring election.
Most people guessing the election will happen this Spring also likely believe that Wade will wait until the House opens on April 2nd to drop the writ. This gives government a preferential “first-out-of-the-gate” opportunity to grab all the media attention for the first day of the writ period with the announcement; it allows the government to essentially map out its election platform in an uninterrupted Throne Speech, immediately shut down the legislative assembly, and get a decisive jump on other political parties in the election campaign.
I don’t think the election will happen in the Fall; and I don’t think the government will take extraordinary measures to push it to next Spring; nor do I think the election will be called on the opening day of the Spring sitting of the legislative assembly.
Here’s my prediction.
There will be a Spring election on Tuesday, April 23, 2019, and the election writ will be dropped next week.
And here’s my rationale.
According to Section 5(1)(b) of the PEI Elections Act, general elections in PEI must happen on a Monday, and they can’t take place for at least 26 days – but not more than 32 days – after the writ is dropped. However, because Monday April 22 is Easter Monday, it will likely be pushed to Tuesday, April 23rd.
If MacLauchlan waits until the House opens on April 2nd to drop the writ , the election won’t take place until early May, and that’s a big problem for the Liberal government’s long-standing strategy to keep the truth about the e-gaming scandal and the merits of the CMT lawsuit hidden from public view.
The Liberal government has been stalling on the next big e-gaming court date for nearly a year, when a Motion to Dismiss was first filed against Capital Markets Technologies (CMT). But that elaborate delay-tactic is fast coming to an end.
Both parties will be back in court on April 23, 2019, with four consecutive days, and the government will not likely want the that e-gaming information to become public knowledge just before an election if it can avoid it.
The long process leading up to the scheduled April 23rd CMT court date involved the filing of affidavits, the production of records, and submission of factums from both sides; as well as the cross-examination of witnesses. The transcripts from those cross-examinations will become public on April 23rd, as well as all the additional information and arguments pertaining to this case. I expect the revelations will be devastating to the Liberal government.
Let’s not forget that the MacLauchlan government came into power promising to do things differently; to govern with ethics; to be open, transparent, and accountable. Yet, it has consistently done everything in its power to hide the sordid truth about e-gaming.
That charade is quickly coming to an end, and my prediction of an April 23rd election date is premised on the calculation that Wade will need the election to be over and done with before the CMT hearing happens if his Party is to win any seats at all.
It’s also my understanding that the PNP whistleblower lawsuit will be commencing in May. As well, the Information Commissioner, Karen Rose, will be filing a decision on the MacLauchlan government’s decision to withhold e-gaming records from me, in an access request, also sometime in May….so time is definitely not on Wade’s side!
I sincerely hope I’m wrong with my prediction and that the election happens much later in the Spring, or even next Fall: Islanders deserve to see the same information on e-gaming that the Judge will be presented on April 23-27, 2019 before deciding who should be in government.
But I’m also convinced that the extent of the corruption and malfeasance that will be revealed in CMT’s defence of the government’s cynical Motion to Dismiss their e-gaming case will be devastating for the Liberal government and every Liberal MLA vying for a seat in the PEI Legislature.
As some of you may be aware, I’ve been attempting to convince IRAC to tear away the veil of secrecy on its Land Databank so Islanders can easily and quickly find out how many parcels of PEI land a given person or corporation has applied to purchase.
Last Monday, the day before the NFU Forum on the Land for PC Leadership candidates, I called the CEO of IRAC, Scott MacKenzie, to ask if my request to have an additional search field added to the online portal to the databank would ever be acted upon. I told him straight-up that I was calling so I could relay his response to the attending crowd and general public at the NFU Forum the following evening.
We actually had a very relaxed discussion, which soon came to the point of my call and the following exchange:
KEVIN: “I’ve checked and it’s [IRAC’s Land Databank] not been changed, and I’m just wondering what the rationale is for not adding some different search features.”
SCOTT: “Well, it hasn’t been changed yet, but it’s in the works. Our IT fellow is looking at doing that…I talked to him a couple of weeks ago and said we want to get this done. And Kevin, we’ll give you credit for it. I’m kinda hoping that this week, we’ll be able to get that done.”
I asked him if “kinda hoping” might turn into another year of waiting and he assured me the new search field would be in place by the end of the month.
So I woke up this morning thinking: “Well, it’s the end of the month….” and bingo, just like that, I got an email from Scott MacKenzie:
The change has been made to our database search features on our website. Searches by name may now be done. See link below:
With giddy excitement, I nervously clicked on the link, and the following page appeared:
I quickly typed “Irving” into the virgin search field, and in less than a second, voila! – I was scrolling through a list of every application for a parcel of land which Irvings had applied to purchase in Prince Edward Island since 1993. Amazing!
Over the past few years, I have received hundreds of messages from Islanders expressing support for the work I’ve been doing to investigate and write about social and political issues affecting Islanders. For the most part, my writing has focussed on identifying and explaining problems, scandals, cover-ups and how the MacLauchlan Liberal government has not been acting in an open, transparent and accountable manner.
I have also been writing about significant challenges facing our Island economy and environment, especially issues and problems related to land and water, as well as issues and problems concerning social and economic development.
It was largely these supportive messages and encouragement from so many Islanders that inspired me to seek the leadership of the Progressive Conservative Party.
Since entering the leadership race, I’ve been releasing targeted policy “solutions” to many of the problems identified in my research, and I’ve been publishing new articles on a regular basis, and this will continue right up to the leadership Convention on February 9, 2019. These policies address issues related to “integrity” within government (or the lack thereof), as well as significant problems and damaging trends negatively affecting our wider economic, environmental and social life in Prince Edward Island.
I have been receiving a tremendous amount of support for these policies and program ideas I’ve been putting forth as solutions, along with numerous and much appreciated “best wishes” for success in my leadership campaign.
The hard truth is that successful political campaigns need two things: financial donations to cover essential costs, and volunteers to identify and “get-out” the vote.
One thing and one thing alone will decide the next leader of the PC Party – VOTES!
Political campaigns are successful when enough people work to “identify” and “get-out” the vote for a particular candidate. That means reaching out to people to invite them to become PC members before the January 18, 2019 cut-off for candidates, and then making sure these new members actually “vote”.
I have a great team of volunteers currently in place; however, to be successful in this leadership bid, I’ll need to bring more people on board to help with this outreach. We have an exciting strategy in place to accomplish this, and if you’re willing and able to join my team to help out with this outreach campaign, please contact me either by email (email@example.com) or by phone (902-626-7254). No amount of time you may have – even an hour or two – is too little, so don’t worry that by putting your name forward you will be making a commitment you won’t be able to fulfill.
Each candidate had to pay a $7,500 entrance fee to the PC Party just to enter the leadership process. That was a significant investment for me, but when I decided to run I also decided I’m 100% committed to this campaign! I’m keeping my costs to an absolute “bare bones” budget; however, essential campaign expenses include the costs for the campaign launch; gas to travel to different communities and events across the Island; and I’m also hoping to be able to take out at least one advertisement in Island newspapers before the Convention. So even though my budget is bare bones – the total costs for this campaign will likely be around $10,000, so I’m appealing to supporters to consider making a donation to my campaign.
The good news for anyone wanting to donate is that the available tax credit on political donations is actually quite generous. If you donate $100, you’ll receive $75 of that amount back in just a few months when you file your taxes. The available tax credits are based on the contributions as explained below:
75% on the first $100 donated,
50% on the next $450 donated,
33.3% on the next $600 donated
The maximum overall tax credit of $500 is reached with a donation of $1,150. The maximum donation per person is $3,000 per calendar year.
If you are able to contribute to my campaign and would like to take advantage of your available tax credit on your 2018 tax return, you’ll need to make your donation before next Tuesday, January 1,
You could also split up your donation into two years to maximize the amount of tax credit you receive. For example, if you donate $100 before the end of 2018, then another $100 in early January, your $200 donation would only cost you $50.
You can mail a cheque made out to the PC Island Fund to me at:
32 Father Brady Lane, Ft. Augustus, PE C1B 0X8
Or donate online. Donations made online by clicking the following “donate” link are automatically attached to my campaign:
If my instincts are correct, filing Motions for “Summary Judgment” in the CMT lawsuit may go down in history as the stupidest thing a herd of panicked defendants has ever done! Why?
Well, because the Supreme Court of Canada has set clear precedents in recent land-mark decisions that whenever a Motion seeking summary judgement is granted to defendants, they are obliged to provide the plaintiffs – in this case “Capital Markets Technology” (CMT) – with a complete “Affidavit of Documents” on the matter so they have fair access to justice and can – as the Supreme Court put it – “put their best foot forward” to prove the claims made in the pleadings they initially made in their statement of claim against the defendants. Well, Supreme Court judge Gordon Campbell approved five (5) separate motions for summary judgment and mapped out a pretty tight timeline leading up to several days scheduled next April, 2019 when those summary judgment Motions will all be heard and decided.
And here’s the problem for the 16 defendants – who are now arranged into five different ‘groups’, each with its own lawyer and legal requirements to file an affidavit of documents: the defendants are almost certainly going to start throwing each other under the bus as they play the “blame game” in a frantic effort to save themselves.
The bus is already “en route” with this coming Friday – November 30th – being the deadline for filing those documents…with cross-examination of witnesses scheduled for January, 2019.
Here’s what I think is going to happen:
Some of the defendants won’t file their documents claiming they were lost or destroyed or – like Paul Jenkins has already claimed – his computer was “hacked” and some anonymous force out to destroy e-gaming records in an obscure individual’s hard drive somehow succeeded [Question: “how do you get your cloud-based gmail or hotmail or whatevermail files “deleted” when your computer is hacked?]
Some of the defendants will claim that documents don’t have to be produced because they are protected by “Solicitor-Client” privilege, even where both the parties involved (sender and receiver) aren’t even lawyers.
Some of the defendants will pretend that no records exist on certain matters relating to e-gaming because the things the plaintiff claimed happened never happened.
The mandatory production of records deadline is always a watershed moment in a law-suit. It’s when the “rubber hits the road” so to speak, and if you’ve claimed things happened that didn’t happen, or denied things happened that really did happen – the historical record of what ACTUALLY happened will expose any false claims made in the initial pleadings by the defendants as convenient fiction (aka “lies”).
I suspect the defendants never dreamed that CMT would have somehow been able to find the means to pony up a million dollars in security costs, or afford the legal costs required to advance the case to this stage…..but it somehow did, and here we are….Tick-Tock….Tick-Tock….
I’m especially looking forward to getting copies of the filed documents to dig a little deeper into the claims made by the defendants that fall under excuse #3 – that certain records “don’t exist” because things didn’t happen – because I’ve already anticipated that one to be false on a number of fronts, and I’m now on the verge of blowing those lies out of the water as I start receiving stacks of e-gaming documents from about a dozen different access to information requests I filed a couple of months ago.
The PEI government’s group of defendants – with Jonathan Coady as their legal counsel – has clearly created a major problem for themselves by making outrageous claims in the initial pleadings saying all kinds of ridiculous things, like they had no knowledge of the Loyalty Card Program. As I’ve already explained in a recent article, my access request on that one – although I’ve yet to receive the documents – confirmed that there are at least 207 pages of Loyalty Card Program government documents. So will Jonathan Coady now produce those Loyalty Card Program records on Friday? Or will he attempt to maintain the fiction that the government has no knowledge of the program to the court?
And here’s another prediction I’ll put money on: What the PEI government lawyer “Billy Dow” (affectionately known as “pops” by Liberal insiders) told Globe and Mail reporter Robin Doolittle [as well as the PEI Law Society when Michael Redmond filed a complaint alleging Dow was engaged in a conflict of interest] was that he wasn’t in a “conflict of interest” when he bought shares in Capital Markets Technology and then later reviewed a Memorandum of Understanding (MOU) which the PEI government drew up with Trinity Bay Technologies (TBT) -TBT being a 100%-owned subsidiary of CMT- because he didn’t know that TBT was a subsidiary of CMT at the time. Really? The government’s lawyer does a legal review of a binding, exclusive contract with a company and he doesn’t know anything about the company? C’mon!
I think the documents – if they are released by one or more of the defendants, which I believe they will be – will show that he most certainly knew that TBT was owned by CMT, and was indeed aware of his conflict of interest as was Premier MacLauchlan.
Why do I think that? Because Gary Scales – a McInnis Cooper lawyer – left the group of government defendants a while back and got his own lawyer, and will likely have no reason not to disclose documents that shift the focus from him and his law firm to Dow and the government – like I said – it’s going to be a bumpy ride for them all as “…the wheels on the bus go round and round, round and round…” on the e-gaming bus!
And perhaps more shocking than the complete unravelling of the defendant’s respective “defences” will be the revelation that the Premier – who promised to “do things differently” – will finally be exposed as the Premier who systematically misled the Legislative Assembly time and time again in an attempt to execute an official cover-up of the entire e-gaming scandal.
Listen to the Premier’s December 15, 2016 response to Jamie Fox’s questioning about Billy Dow’s purported e-gaming “conflict of interest” – I suspect Billy Dow is likely to be thrown under the bus at some point, but I’d wager it won’t be by Jamie Fox as the Premier suggests in this video!
If this same amount of money had been loaned out to Islanders wanting to start small businesses in communities across the province at $100,000 increments it could have promoted the emergence of 568 new businesses in Prince Edward Island!
Flipping through this morning’s Guardian [November 15, 2018] I came across a full-page ad trying to entice farmers to buy a new type of seed. It presented young Island farmer Grant Doyle, standing in front of a field of corn under the word “FARMER” with the subcaption: “It’s fun to do; it’s a job that doesn’t feel like work.”
Nice ad. The Corn looks amazing.
“Fun to do?” That certainly wasn’t my experience growing up on a potato and mixed grain farm in Maple Plains, and I can’t imagine many farmers having much fun during the past few weeks with our record-breaking wet Fall. So I’m thinking: “Who’s behind this? Can’t be a farmer!”
A little further down the page the ad moves from an enticing “image” to the actual point with the words: “When the Doyles chose to grow Corn and Soybeans, they chose Dekalb brand seed.” O.k., now I know where this is going – Dekalb is a recent genetically-engineered seed technology developed by Monsanto…but that’s not immediately obvious in the ad.
Like a lot of corporate advertising, when they are required by law to provide certain information they’d rather hide, they use a tiny little font that requires accompanying technology to read. Well, I own such technology and used it to make the words legible! In part, it states: “Round-up ready technology confers genes that confer tolerance to glyphosate [Round-up]…” What the fine print doesn’t tell us is that Dekalb has also been genetically-engineered to confer tolerance to another powerful herbicide – Dicamba.
This is the new “normal” within the world of GM crops, now that many of the weeds which glyphosate used to be able to easily kill all by itself have themselves become tolerant to that powerful cancer-causing poison. For years, the solution to increasing tolerance to glyphosate was simply to add more and stronger applications… but that strategy has pretty much run its course.
More recently, to keep the lucrative cash-cropping chemical train rolling, Monsanto has further tinkered with corn and soybean DNA to make it possible for farmers to now also apply other powerful herbicides in combination with glyphosate, including Dicamba. Who could have seen this coming? Well, actually, a lot of people.
Back in 2005 – when the PEI government held legislative hearings on whether PEI should become a GMO-free zone – I made a presentation to the committee and presented recent scientific research showing how the use of herbicide-tolerant seeds (which companies like Monsanto had promised would make it possible for farmers to use less herbicides) had actually significantly increased the amount of poisons being applied to crops. Here’s a small piece of what I said to MLAs on the committee taken directly from the standing committee transcript:
“Now I’m sure this committee has already heard this claim from GMO proponents. However, it is a claim that is simply not supported by the available scientific evidence over time. I’m leaving a copy of a study undertaken by Charles Benbrook, titled Genetically-Engineered Crops and Pesticide Use in the United States, The First nine Years. This definitive study proves that industry claims that GMO crops lead to pesticide reduction are both misleading and unfounded. The report draws on official United States Department of Agriculture data on acreage planted the GE crop varieties from 1996 through 2004 and it’s coupled with USDA data on the volume of pesticides applied to corn, soybeans and cotton. Although it is true that there was a net reduction in the use of pesticides in the initial three years of widespread GE commercial cropping from 1996 to 1999, in the last six years of the study there’s been a steady increase in the use of pesticides for the total acreage of GE crops in the United States.
As you can see from the data in this report – the uncontested conclusion is that – and this is a quote from the report – “GE corn, soybeans and cotton have led to 122 million pound increase in pesticide use since 1996.” Now why did this happen? Various factors are given in the report, but essentially the main reason given is because the ecological adaptations predicated by scientists have been occurring in the case of RoundUp Ready crops for the past three or four years and appear to be accelerating and certainly this is the evidence from another study, the same institute has done on the rapid change in the overall environment in Argentina. In other words, pests are developing immunity to the poisons as predicted.
Back in those days, Minister Richard Brown was a little more appreciative of my research than he has been recently. When I finished my presentation, he made the following comment:
Richard Brown (L): Thank you. Kevin, a pleasure. Like always, a great report you did. Now I know why you have a PhD.
The predictions made at the time about how increasing tolerance would make it necessary to eventually abandon a strategy of using genetically-engineered crops to control weeds hasn’t happened, but only because Monsanto executives decided it would be a more profitable approach to have their scientists engineer plants to withstand more and stronger types of poisons in combination with Round-up. What insanity!
“The rapid emergence of chemical-resistant superweeds has led to the development and use of even more toxic herbicides. This includes 2,4-D and dicamba, both of which have been clearly linked to non-Hodgkins lymphoma,1 a type of blood cancer originating in your lymphatic system. Lymphoma is the No. 1 cancer in the U.K.2 In the U.S., lymphoma accounts for about 4 percent of all cancers, affecting an estimated 72,200 Americans each year. Other documented health hazards associated with phenoxy herbicides such as dicamba include developmental and reproductive problems. This is particularly chilling considering the fact that use of these herbicides has risen several-fold since the early 2000s, and their use is now seeing a rapid increase as dicamba-tolerant crops are replacing glyphosate-resistant varieties. Dicamba has also been implicated in canine malignant lymphoma, raising the risk by as much as 70 percent in some dogs following exposure.
If PEI farmers rotating potatoes and grains (including soybeans) believe this new Monsanto offer is the way to go – and don’t accept the facts about how these deadly chemicals are an increasing danger to all Islander’s health – perhaps the fact that Dicamba also causes malformations in potatoes will dissuade them from jumping on the high-tech DeKalb bandwagon.
Manitoba farmers are already ringing the alarm bells. The Manitoba Cooperator published an article last year titled “Dicamba drift a new danger for potato growers,” to alert growers of this new threat, citing research undertaken by Andy Robinson, a potato agronomist with North Dakota. From the article:
Oddly shaped tubers are a risk from both glyphosate and dicamba exposure. NDSU research shows both chemicals can affect tuber production. Photo: NDSU
“Robinson has completed a study looking at the impacts of dicamba and glyphosate residues on potato. Data will be included in a forthcoming publication, but the study showed that exposure to the two herbicides reduced marketable yield and size over multiple years.“These herbicides are not friendly to potato,” said Robinson.”
There are so many reasons why PEI has to move away from monoculture food production which relies on intensive chemical farming – the requirement to use more and more toxic chemicals with increasing potency is one of them. Dekalb is not a solution to the problem – it is the problem.
I’ve spliced together two clips from yesterday afternoon’s session of the Legislative Assembly proceedings to contrast the essential difference in how Liberals and Conservatives understand the role of government in ensuring a vibrant and just economy: one from the Premier and one from Brad Trivers. They were both speaking to a self-serving Motion by the Liberal government to “Recognize the Strength of the Provincial Economy.”
The Premier boasted at one point that the PEI economy is “RED” hot because of Liberal policy, but he neglected to mention how our red hot economy is also structurally unfair and “burning” a whole lot of hard-working Islanders.
Brad Trivers did a great job of explaining how it may be true that the economy appears to be doing well, but unfortunately, much of the wealth being generated by our booming economy is not benefiting an increasing number of Islanders, but demanding that they work longer and harder only to become poorer than they were before.
A PEI Progressive Conservative approach to governance would stimulate the economy by encouraging the growth of small businesses, but at the same time ensure a more equitable distribution of wealth through higher wages to workers, which would lift thousands of Islanders out of poverty and not just further enrich a handful of the wealthiest Island families who are currently the preferred (and all–too frequent) recipients of multi-million dollar loans and grants from the Liberal government.
Trivers explains how we can have an “economy on a tear” that – as he put it – “..rips the fabric of society apart,” creating a widening gap between a growing number of poor Islanders, and a shrinking number of people who are getting richer and more powerful.
A Progressive Conservative approach to governance would stimulate economic activity with lower taxes for small businesses – as well as higher wages for workers – which businesses would be able to pay by not having to give so much tax to government.
Wealth shouldn’t be siphoned from workers by government in the form of constantly increasing fees and taxes,only to be then funnelled into the hands of the most powerful – simply because they are the most powerful, and can hire people to work at wage rates that don’t allow those workers to even afford their basic needs from month to month!
Premier MacLauchlan loves to talk about the “Debt–to-GDP” ratio, but as I explained in plain language in my Guardian Guest Opinion published on December 11, 2017 titled “Relying on the GDP is Unethical,” [https://www.theguardian.pe.ca/…/opinion-why-relying-on-gdp-…] the Debt to GDP method of measuring the health of an economy is not only seriously flawed, but flawed in favour of benefiting the economic elite, e.g., banks and corporations, not ordinary citizens.
The premier really has to start acknowledging how his use of those economic indicators is both misleading and deceptive and start addressing the “Wealthy-to-Poor” ratio which Liberal economic policies are worsening within PEI.
Cheryl Paynter is currently a Chartered Professional Accountant (CPA) in good standing with the Institute of Chartered Accountants (ICA) of Prince Edward Island. She is also currently the CEO of Tourism PEI, and was the CEO of Innovation PEI from November, 2011 to 2016.
Given what Ms. Paynter apparently did in contravention of the CPA Code of Professional Conduct in January 2013, it’s baffling to me how she’s managed to keep her good standing with CPA-PEI, not to mention her job as CEO of Innovation PEI until 2016, then her job as CEO of Tourism PEI. I’ll explain.
The other day, I posted a short article on my website titled, “Why wasn’t Wes Sheridan charged with ‘Misappropriation of funds’ and ‘fraud’? explaining how former Minister of Finance under Robert Ghiz, Wes Sheridan, had directed the Atlantic Lottery Corporation (ALC) to purchase an e-gaming report that Sheridan already had in his possession, and no one at the ALC wanted or asked for, as part of a fraudulent scheme to come up with $60,000 to give to McInnis Cooper law firm as partial payment for an outstanding e-gaming bill of $360,000. In that article, I provided the following information:
“He [Wes Sheridan] must have thought to himself that given that the e-gaming project had already ended in February, 2012, there was no possible way to justify any further e-gaming loans or grants, so – in his dual role as both Minister of Finance and Chair of the PEI Lotteries Commission – Wes Sheridan came up with an ingenious (but illegal) scheme to either keep the other PEI Lotteries Commission board members and staff at the Atlantic Lottery Corporation (ALC) completely in the dark about what he was really up to – or mislead them by pretending to have to “buy” a report that he already paid for [since the AG took care to point out that senior staff at the ALC told her that they did not “request” the report, and that they had purchased it on the direction of Wes Sheridan]…..as part of a fraudulent scheme he concocted to access funds to pay that troublesome $60,000 outstanding e-gaming bill balance from McInnis Cooper law firm.”
When I wrote, “…there was no possible way to justify any further e-gaming loans or grants,” of course I was correct in saying that – given that the provincial government’s role in the e-gaming project had already formally ended months earlier – but what I didn’t explain is that Cheryl Paynter, as CEO of Innovation PEI – went ahead and processed another grant application that was, in fact, another “e-gaming” grant for $100,000, to acquire the final portion of the outstanding $360,000 e-gaming bill owed to McInnis Cooper law firm. But Paynter was careful to hide that fact by providing false information about what the grant money was actually to be used for. In fact, she came up with fictitious future work in the grant application documents which never happened, nor was ever intended to be undertaken. By so doing, the grant application disguised the true intention of the grant by generating a misleading and deceptive paper trail. But the Auditor General, Jane McAdam, somehow managed to detect this ruse, which she reported in her special e-gaming audit.
Before looking at what the AG wrote about that infamous e-gaming “Grant #3,” first consider this quick recap of the timeline revealing how the Ghiz government was first confronted with an outstanding $390,000 e-gaming bill from McInnis Cooper law firm, then devised a plan to pay it off:
On September 4, 2012, David Arsenault, (Principal with Arsenault, Cameron, & Best Chartered Accountants) was appointed Deputy Minister of Finance by Robert Ghiz.
In October, 2012, “The local law firm [McInnis Cooper] e-mailed government requesting payment for the balance of their outstanding e-gaming bills.” [AG Report, Exhibit 3.1, p. 13].
The Deputy Minister of Finance – David Arsenault – then met with McInnes Cooper and “reached an agreement whereby government would pay all outstanding bills, except for approximately $30,000,” which McInnis Cooper agreed to “write off” leaving an outstanding balance of $360,000.
As the Auditor General noted in section 3.51 of her report, the “plan for payment” Arsenault concocted to cover the remaining $360,000 included the following:
A– Island Investment Development Inc. (IIDI) would release the balance of the loan funds committed to the project ($200,000). This was from the $950,000 loan approved by Neil Stewart, Michael Mayne and Doug Clow, in contravention of the Financial Administration Act, which Wade McLauchlan was forced to “write off” as a complete loss to Island taxpayers shortly after becoming premier; something the AG said should have happened years earlier, but didn’t, presumably to keep the e-gaming fiasco hidden;
B – Wes Sheridan would direct the Atlantic Lottery Corporation to buy from the Mi’kmaq Confederacy an e-gaming report related to internet gaming for $60,000, an amount which MCPEI would then turn over in its entirety to McInnes Cooper.
This still left a deficit of $100,000, so the final part of the “plan for payment” was to put in for another grant from Innovation PEI – but of course, the rules governing grants from the “Enterprise Development Fund,” out of which all three e-gaming grants came, didn’t allow Innovation PEI to issue a project grant to pay outstanding bills which had been incurred from previous project activities, so Cheryl Paynter apparently did some “outside the box” (and rules) creative thinking and came up with a “pretend” project to put on paper so she could access the money.
When you read what the AG said (below) about this clever (but very unethical and clearly illegal) maneuver, keep in mind that as a result of a legal opinion obtained by the Deputy Minister of Justice (Shauna Sullivan-Curley) from an out-of-province lawyer in late 2011, the PEI government had formally ENDED its role in e-gaming project in February, 2012. Nonetheless, Wes Sheridan carried on with his e-gaming obsession as a rogue minister, in cahoots with McInnis Cooper and MCPEI, well after that date, with 25% of that $390,000 McInnes Cooper bill ($97,500) being incurred AFTER the PEI government formally pulled the plug on the e-gaming initiative.
This should have meant that no more tax dollars would go to any further e-gaming work undertaken by any other parties (e.g., McInnis Cooper and MCPEI)…but of course we now know that’s not the way things unfolded.
Read carefully what the AG wrote about e-gaming “Grant #3,” providing the final $100,000 amount used to pay McInnes Cooper:
The AG’s statement that the creation of an “approval sheet and grant agreement”indicating events “yet to occur” was“misleading” would definitely be a contender for the “understatement of the year” award! These shenanigans clearly constituted a calculated case of blatant falsification of documents and fraud.
E-gaming grant #3 was never intended for any future work of any kind. It was a key part of the “payment plan” devised for the outstanding $360,000 bill from McInnis Cooper – which Gary Scales et. al. confidently submitted to the PEI government on Wes Sheridan’s “promise to pay” all e-gaming invoices – which was apparently hatched by the Deputy Minister of finance (David Arsenault) when he met with McInnes Cooper after their October email to government requesting payment of that $390,000 amount. Although it appears it was part of what was negotiated by Deputy Minister David Arsenault, it was eventually obtained by then Innovation PEI CEO and Chartered Professional Accountant Cheryl Paynter and her staff.
Was Robert Ghiz – who had just appointed David Arsenault Deputy Minister of Finance in early September, 2012 – and Allen Roach (then Minister responsible for Innovation PEI and Cheryl Paynter’s commanding officer) aware of this fraudulent grant? How could they not be? But I’d like proof of that before I make that claim, so I’ll be submitting a couple of FOIPP Requests in coming days to see what other documents I might be able to obtain on this sordid affair…. and perhaps I’ll submit a FOIPP request specifically asking for any communications between Roach, Ghiz, Arsenault and Paynter on this matter, oh, and Neil Stewart as well, who most likely was also involved.
Given the fact that the AG made this information “public” in her report October, 2016, why has Wade MacLauchlan never seen fit to discipline Ms. Paynter (or anyone else) as a result of this very serious and fraudulent affair? Even if Paynter was officially “authorized,” or perhaps even “ordered,” to process the e-gaming grant #3 application using false pretenses – likely with Allen Roach’s and perhaps even Ghiz’s full awareness and blessing – that still doesn’t provide a valid excuse for a Professional Chartered Accountant to knowingly falsify financial documents and defraud a government grant fund.
As a member of the Professional Chartered Accountants of PEI, Ms. Paynter is held to the same high ethical standard of conduct as is every other member – regardless of whether she happens to be employed by a corrupt Liberal government – which makes the falsification of documents for the purposes of obtaining money under false pretences absolutely forbidden under any circumstances! The Institute of Chartered Accountants of PEIstates in it’s CPA Code of Professional Conduct:
205 FALSE OR MISLEADING DOCUMENTS AND ORAL REPRESENTATIONS
A member or student shall not:
(a) sign or associate himself or herself with any letter, report, statement, representation or financial statement which he or she knows, or should know, is false or misleading, whether or not the signing or association is subject to a disclaimer of responsibility
50. Professional misconduct
(1) The conduct of a respondent may be found to constitute professional misconduct if:
(a) the respondent contravenes this Act, the regulations or the bylaws in a manner that, in the opinion of the investigation committee or the discipline committee, relates to the respondent’s suitability to be a registrant or licensee;
(b) the respondent refuses or fails to cooperate fully in respect of a practice inspection or the investigation or hearing of a complaint;
(c) the respondent contravenes an order made under this Act; (d) the conduct is harmful to the best interests of a client or the public or to the integrity of the profession; or
(e) the conduct constitutes professional misconduct in accordance with the bylaws.
And the Act stipulates two ways in which a complaint can be initiated under section 54:
So my question to the Registrar is this: “Why haven’t you initiated a complaint against Cheryl Paynter as a result of your (implicit) duty to do so based on the statutory authority invested in s. 54 (2)?”
I’m personally swamped with other projects at the moment, so perhaps someone reading this will be inspired to initiate a complaint concerning this matter based on the statutory authority invested in s. 54 (1) [ “And so, my fellow Islanders: ask not what your mighty Island can do for you—ask what you can do for your mighty Island”]. You can obtain a complaint form here….then email it to firstname.lastname@example.org.
Once you email the complaint form, the matter will then be investigated and the “CPA Investigation Committee” may refer the matter to the “Discipline Committee” for a full hearing…..or they may not, and the endeavour will end up being a colossal waste of your time, which is probably the more likely outcome. When self-regulated professions police themselves, they seem to have a hard time imposing penalties.
But if you have a true hankering for justice, and don’t get down or discouraged too easily when you bang your head against brick walls and get nowhere trying to bring about justice, then you just might be the person called to launch a complaint against Ms. Paynter! You can read all about the complaint process here…who knows, the outcome might just surprise us all…..as Bob Dylan famously sang: “….the times they are a’changing”!
[THIS IS THE FINAL VERSION, UPDATED ON MAY 6, 2018]
The Federal Investigations Unit of the RCMP recently issued a News Release (Guardian, April 16) announcing that: “After an extensive investigation into allegations in relation to what was known as e-gaming, including conducting over 50 interviews, there was no evidence of criminality, or grounds to lay any charges.”
I have been conducting my own investigation into e-gaming over the past year, and I am now convinced the RCMP erred in their finding. My research found sufficient reason to believe Robert Ghiz and Neil Stewart each committed a crime, and charges should therefore be laid against the former Premier and current Deputy Minister of Finance.
This report systematically lays out the facts and arguments for this conclusion. I have attempted to make this report as concise as possible by providing numerous links to supporting documents and source material, rather than citing those documents even more extensively than I have.
There were many improprieties; incidents of non-compliance with government policies and procedures; apparent conflicts of interest; and occasions where provincial laws were broken with the e-gaming initiative; as was confirmed by the PEI Auditor General’s (AG) special report on e-gaming.
There may have been, therefore, other crimes committed by a number of other people involved with e-gaming, or possibly even other crimes by Robert Ghiz and Neil Stewart. However, this report deals solely with the issue of the destruction of e-gaming records ordered by Robert Ghiz and Neil Stewart, with an eye to determining whether those acts constituted a criminal offence.
The scope of the information I have considered for this report is as follows:
All e-gaming news reports on e-gaming from Island newspapers and CBC ;
All PEI Legislative Assembly Hansard records mentioning “e- gaming”;
The Auditor General’s 2016 Report on e-gaming; Special Assignment: Government Involvement with the E-gaming Initiative and Financial Services Platform;
All transcripts of the seven (7) meetings which the all-party Public Accounts Committee (PAC) of the PEI Legislature held on e-gaming;
All documents filed in the Capital Markets Technologies Inc (CMT) civil litigation legal action filed in the PEI Supreme Court; and
An interview with Sergeant Graeme Shaw with the Federal Investigations Unit of the RCMP.
To find it reasonable to believe that a person known to have broken a particular law did so with criminal “intent” demands a very high bar. To accuse someone of a crime is not a trivial matter. Laws are broken for many reasons, and seldom constitute criminal offences. I have kept that in mind throughout the course of my investigation.
Given both the seriousness and sensitivity of my finding, I have taken care to document (with links to source material) all essential and relevant facts for the arguments and claims I am making in this report.
The “guide” and evaluative “criteria” upon which I relied to make what I believe is a reasonable determination that there was indeed the commission of similar but separate criminal offences by Robert Ghiz and Neil Stewart are adopted from a recent legal precedent, a remarkably similar case just adjudicated in Ontario.
So, before getting into the details surrounding the destruction of e-gaming records by Robert Ghiz and Neil Stewart in PEI, I’ll first offer a summary overview of that case in Ontario, commonly referred to as the “gas plant” scandal. I believe that if the Ontario Provincial Police (OPP) had conducted the e-gaming investigation in PEI – using the same standards and criteria for assessing whether criminal charges should be laid as they relied on in their investigation of the gas-plant case in Ontario – they would have filed one criminal charge against Robert Ghiz, and one criminal charge against Neil Stewart.
To be clear, I am not saying that either Robert Ghiz or Neil Stewart committed a crime. I am only saying that the information and uncontested facts available at this time warrant a criminal charge being laid against both men. Whether such a criminal charge would result in a guilty ruling for either Ghiz or Stewart is obviously a matter for the courts to decide.
1. The Ontario gas-plant scandal
On January 19, 2018, former Ontario Premier Dalton McGuinty’s Chief of Staff, David Livingston, was found guilty of one count of Attempt to Commit Mischief to Data, contrary to s. 430(5)(a) of the Criminal Code, and one count of Unauthorized Use of a Computer, contrary to s. 342.1. of the Criminal Code, for destroying government documents related to the Ontario Liberal government’s decision to scrap two gas plants ahead of the 2011 election; a decision which allegedly cost Ontario taxpayers roughly $1.1 billion.
That David Livingston authorized and arranged for the deletion of sensitive government records pertaining to the government’s decision to cancel the gas plants, in breach of a provincial statute, was never at issue. In that respect, the facts demonstrated that he was guilty of contravening provisions of the provincial Archives and Record-keeping Act.
Of course, that did not mean that he was also guilty of committing a criminal offence. Timothy Lipson, the judge presiding in the case, made that distinction clear from the outset. He clarified in his Written Decision that his chief task and duty in determining whether Livingston was guilty of committing a crime with respect to either of the two charges filed against him rested on the issue of whether the Crown could demonstrate that David Livingston acted with criminal “intent”:
Prior to issuing the verdicts, Lipson said that the case turned on whether the Crown could prove beyond a reasonable doubt that Livingston and Miller ordered the computers wiped with the intent to delete data that they had an obligation to retain. (My emphasis).
How was the deletion of data first discovered and then investigated by the OPP, leading to criminal charges?
When 56,000 government documents related to the gas-plant issue were tabled with the Estimates Committee of the Ontario Legislature, committee members soon realized there were no documents from the Minister of Energy‘s office. A formal request for documents was issued by the committee; however, no documents were provided.
The committee then issued an order to force compliance with the request for documents, to which the Ministry of Energy again refused to comply, citing issues of confidentiality and document sensitivity. Eventually, the Premier’s former Chief of Staff was called before the committee and informed members that no political staff records were available. [For detailed information concerning this entire matter see: Report of the Committee’s Request for Documents From the Ministry of Energy, August, 2012].
While the committee itself was trying to obtain gas-plant records from the Ministry of Energy, on April 12, 2013, NDP committee member Peter Tabuns lodged his own complaint with the Privacy Commissioner asking for an investigation into “…what appears to be a breach of protocol and a violation of the Archives and Record-keeping Act and the Freedom of Information and Protection of Privacy Act.”
On June 5, 2013, the Privacy Commissioner tabled her Report stating:
“While I cannot state with certainty that emails had been deleted improperly by the former Premier’s staff during the transition to the new Premier in an effort to avoid transparency and accountability, it strains credulity that no one knew that the practice of deleting all emails was not in compliance with applicable records management and retention policies.” [My emphasis].
The Information Commissioner’s report also found that the provincial law had been broken:
“The practice of indiscriminate deletion of all emails sent and received by the former Chief of Staff was in violation of the Archives and Record-keeping Act, 2006 (ARA) and the records retention schedule developed by Archives of Ontario for ministers’ offices.”
The Information Commissioner’s report launched an OPP investigation just two days after it was tabled (April 14, 2013), which determined that it was McGuinty’s Chief of Staff, David Livingston, who had ordered the destruction of the gas-plant records in the Minister’s office, and criminal charges were filed against him.
On January 19, 2018, Judge Timothy Lipson found Livingston guilty of two charges: (1) an Attempt to Commit Mischief to Data contrary to s. 430(5)(a) of the Criminal Code; and (2) Unauthorized Use of a Computer, contrary to s. 342.1. of the Criminal Code. In his Ruling, Lipson stated:
Mr. Livingston’s plan to eliminate sensitive and confidential work-related data, in my view, amounted to a “scorched earth” strategy, where information that could be potentially useful to adversaries, both within and outside of the Liberal Party, would be destroyed. (Para 176, p. 61)
On April 11, 2018, Justice Timothy Lipson sentenced Livingston to 4 months in jail, 1 year probation and 100 hrs of community service.
A couple of comments from his Written Sentence are of particular relevance to the e-gaming case in PEI:
“This offence is very serious because it involves an attempt by the defendant to thwart the core values of accountability and transparency that are essential to the proper functioning of parliamentary democracy. Mr. Livingston’s plan was to deny the public its right to know about government decision-making with regard to the gas plant controversy.” (para. 49, p. 8). [My emphasis].
“Mr. Livingston attempted to frustrate the operation of the mechanisms of government accountability. A denunciatory sentence is required to reaffirm society’s legitimate expectation that those holding senior government positions conduct themselves with integrity and within the law. It was not for Mr. Livingston to unilaterally decide what the public should or should not know about the steps taken by government in its decision-making on the gas plant controversy.” (para. 57, p. 10). [My emphasis].
2. The PEI e-gaming case
As in the Ontario gas-plant case, the destruction of sensitive government e-gaming records was first discovered within the scope of an investigation seeking e-gaming records which were not provided. In the PEI case, however, it was PEI’s Auditor General, Jane MacAdam, (not a Legislative Committee) who first learned e-gaming records had been destroyed in the course of undertaking a special audit into the failed e-gaming, loyalty card program, and the establishment of a financial services platform initiative. As she noted in her report:
“We are not confident that we received all relevant government records related to e-gaming, the loyalty card program, and the establishment of a financial services platform” (AG E-gaming report, section 7.1, p. 44).
NOTE: Although commonly referred to as the “e-gaming scandal or affair,” all references to “e-gaming records” in this report are meant to also include records relating to the loyalty card program, and the establishment of a financial services platform, given that these were essentially three aspects or phases of the same provincial government file.
Why was the AG not confident she had received all the relevant e-gaming records? Because, as she went on to explain elsewhere in her report:
“E-mail accounts of some former senior government officials who were key participants in the e-gaming initiative, the loyalty card program, and/or the financial services platform were closed, deleted, and could not be recovered. We were not provided any e-mails or other government records for these individuals. We have received some records from other public bodies and sources external to government that should have been retained from these e-mail accounts.” (AG E-gaming report, Appendix: Scope Limitations, p. 4)
It was only when the AG appeared before the Public Accounts Committee (PAC) of the PEI Legislature looking into the e-gaming affair – following the release of the AG’s E-gaming Audit Report on October 4, 2016 – that it became known that the deleted email accounts and missing e-gaming records belonged to three senior government bureaucrats heavily involved in the e-gaming file: (1) Chris LeClair, (Ghiz’s Chief of Staff); (2) Melissa MacEachern, (former Deputy Minister of Tourism and Innovation); and (3) Rory Beck, (former Clerk of Executive Council).
MacAdam clarified for the committee members that “six years is the retention period for semi-active records” in the Premier’s office [[Public Accounts Committee Transcript, February 15, 2017, p. 118]; however, given the importance of the e-gaming file, those records would – or should – have been classified as “active” records to this day, and most of them would certainly have been deemed “archivable” by the Provincial Archivist.
3. Did Robert Ghiz and Neil Stewart commit a crime when they ordered the destruction of e-gaming records?
Both Robert Ghiz and Neil Stewart ordered the destruction of sensitive e-gaming records – including the email accounts of senior bureaucrats involved in e-gaming containing e-gaming records. As with David Livingston in Ontario, this was contrary to the provincial law requiring those records to be retained, specifically, s. 19.1(1) of the Archives and Records Act.
Robert Ghiz and Neil Stewart clearly intended for those emails to be destroyed when they ordered them deleted. That both Robert Ghiz and Neil Stewart broke the law when they ordered the deletion of e-gaming records is not in dispute; the issue is whether there is reason to believe they did so to “…thwart the core values of accountability and transparency that are essential to the proper functioning of parliamentary democracy,” as Judge Lipson found was the case with David Livingston. As Auditor General, Jane MacAdam, stated at the outset of her report on e-gaming:
“1.4 Throughout this report, there are numerous examples of non-compliance with legislation, policies, and controls. Although the dollars involved were not always significant, these legislative and policy requirement are designed to minimize risk to government and protect the interests of taxpayers. A number of decisions and actions demonstrated the lack of due regard for transparency and accountability.” (p. 1) [My emphasis]
The e-gaming record destruction orders issued by Robert Ghiz and Neil Stewart were certainly prime examples of both “non-compliance with legislation” (aka, “breaking the law”) and “decisions and actions” demonstrating a lack of due regard for transparency and accountability; however, it is also necessary to show that Ghiz and Stewart were aware of their moral and legal obligation not to destroy important and retainable e-gaming records to prove they acted with “intent” and therefore committed a crime.
But again, making that determination is ultimately the function and responsibility of the legal system and courts; however, all that is required to justify laying a charge for the crime of an Attempt to Commit Mischief to Data contrary to S. 430(5)(a) of the Criminal Code is a finding that there is probable cause to believe that Ghiz and Stewart attempted to commit mischief to data.
I believe the facts and arguments outlined in the following three sub-sections of this report offer sufficient cause to believe that Ghiz and Stewart attempted to commit mischief to data, and warrants laying a charge against each of them for the commission of this particular criminal code offence.
3.1 Prior knowledge of a moral and legal duty not to destroy government records
During the election campaign in the Spring of 2007, Robert Ghiz declared his intention to make government more accountable and transparent during a press conference at an event in Kensington, PEI:
“You are a Minister of the Crown. You are a representative of the people of Prince Edward Island. You have to be accountable to your constituents and to all people of Prince Edward Island. You need to make sure that you are following your own laws, your own rules and your own regulations. If you can’t do that, you should not be serving.” [Robert Ghiz, Guardian, May 24, 2007]. [My emphasis].
This particular news conference dealt specifically with Ghiz’s well-articulated platform regarding the essential importance of strict accountability and transparency regarding the fulfilling of government duties and responsibilities in accordance with all “laws, rules and regulations” in force. Just five (5) days after that news conference, Ghiz was elected Premier of PEI with a majority Liberal government.
Although Ghiz clearly understood that he had a moral duty to abide by not only the established laws, but also the rules and regulations established in government, it is nonetheless conceivable that such rules and regulations may not have been in place when he assumed office as Premier; or perhaps there were ambiguous policies and procedures in place at that time regarding the retention and disposition of government records, especially regarding electronic files and email accounts. I have investigated this matter thoroughly and found that not to be the case.
It is instructive to cite several key aspects of that policy document:
Section 6: “The Archives & Records Act stipulates that records of the provincial government cannot be destroyed or permanently removed from government custody without the development of records retention and disposition schedules or a one-time destruction order, approved in writing by the Public Records Committee.“ (p. 4).
“In requiring that records not be destroyed without proper authority, the legislation recognizes that those who work and make decisions in the public interest must be accountable for their actions and decisions. The saving of records is an essential component of accountability.” (p. 5).
Treasury Board Directives on the retention and/or disposition of government records are equally clear in establishing the importance of adhering to the objectives and intent of the legislation the provincial government had enacted to protect government documents (e.g., the Archives and Records Act): those directives leave absolutely no ambiguity, confusion or room for justifying “exceptions” to the established procedures regarding the disposition of government records, including the belief that certain records were not important or “retainable”. The decision to destroy provincial government records is legally reserved for one and only one person: the Provincial Archivist:
“All information created by or supplied to government must be regarded as government records. As such, you are bound by the provisions of the Archives Act regarding disposal of information. No recorded information should be disposed of except in accordance with the procedures outlined in the Archives Act.” (p. 220) [My emphasis].
Given the existence of clear guidelines, policy documents, Treasury Board Directives and legislation, is it possible to explain the deletion of all e-gaming documents, including email accounts, from three of the key senior-level bureaucrats involved in e-gaming in such a way as to find probable cause that Robert Ghiz and Neil Stewart did not attempt to commit mischief to data?
As already noted, the Archives and Records Act does not regard the improper or unauthorized destruction of government records a trivial matter, and therefore offers unambiguous clarity regarding the prohibition of unauthorized document destruction:
(1) No person shall, with the intent to deprive a public body, the Public Archives and Records Office or the Provincial Archivist of the custody, control or use of, or access to, a public record, (a) destroy or damage a public record; (b) erase or remove information from a public record or make a public record illegible; (c) remove or conceal a public record from the public body or the Provincial Archivist; or (d) direct, counsel or cause any person to do anything mentioned in clause (a), (b) or (c).
And the punitive consequences for causing the unauthorized destruction of government records stipulated in the Act are severe, as a result of an amendment made in early 2017:
19.1 Offence and penalty
(3) A person who contravenes subsection (1) is guilty of an offence and liable on summary conviction to a fine of not more than $10,000.
(4) In addition to and apart from the sanction provided for in subsection (3), an officer or employee of a public body who contravenes subsection (1) may be subject to disciplinary action, up to and including termination from employment. 2017,c.60,s.18
The procedures that had been put in place – and were in place at the time Robert Ghiz and Neil Stewart ordered the destruction of e-gaming records – required the creation of detailed schedules (the “chain of command” for these procedures are outlined in detail later in this report).
And we know from answers provided to the members of the Public Accounts Committee by the Auditor General that the email accounts containing e-gaming records belonging to Chris LeClair, Rory Beck and Melissa MacEachern were destroyed and permanently removed from government custody without retention and disposition schedules first being prepared and approved.
Nor was there a one-time Destruction Order approved by the Public Records Committee. In fact, such was also the case for all types of e-gaming records for these three individuals, not just electronic records contained in email or other electronic storage accounts such as text-messaging accounts:
Ms. Compton: Thank you. Lastly, and moving on to 7.7, records retention schedules, they’re enshrined in our law and they are a legal requirement. You found that the Department of Innovation and Advanced Learning, Innovation PEI and the Department of Tourism and Culture all failed to have schedules as required by law? Jane MacAdam: Yes, we did note these three entities did not have records retention and disposition schedules, complete schedules on file. [Public Accounts Committee Transcript, February 15, 2017, p. 118].
It is not surprising to learn that there were no schedules, given the fact that neither of the two individuals responsible for ordering the deletion of e-gaming records (Robert Ghiz & Neil Stewart) were authorized to order those records deleted, as per consistent provisions in the Archives and Record Act;Treasury Board Directives; and Record Information Management (RIM) policies.
In fact, there is only one person authorized to delete records, as stated above, the Provincial Archivist; and there is also only one person designated within each department or public body who is legally authorized to provide records to the Provincial Archivist for disposition – either by retaining them in archives, or deleting them. Treasury Board Directive 5.03 – Core Program Elements, outlines under section 2 (Recorded Information Management Designates) that one person must be designated in each department with the duty to manage records and liaise with the Public Archives and Records Office:
“It is imperative that one person in each department assume responsibility for all recorded information management functions within the department, regardless of type of system (centralized or decentralized) which exists. This person should be designated as the departmental Records Management Liaison Officer (RMLO).” [p.2]. [My emphasis].
This requirement is highlighted in all Records Management Policy documents of the provincial government, including the earlier referenced RIM policy regarding electronic records dated March, 2007:
“A policy on retaining official records of the Government of Prince Edward Island has been adopted and is found in Treasury Board Manual, Section 5, “Recorded Information Management Policy”. This policy provides advice on how official records, including electronic records, should be maintained, controlled, and described in a way that allows them to be efficiently accessed, retrieved and interpreted. The Policy states that Senior Records Managers and Records Management Liaison Officers are responsible and accountable for the records in their care. (p. 4) [My emphasis]
That policy charges Records Management Liaison officers with the responsibility of ensuring all records are retained, noting several practical considerations associated with the challenges of retention of electronic records, and the necessity of safe transfer and storage practices:
“A major challenge for Department Records Management Liaison Officers is to guarantee that records maintained in electronic information systems are accessible and usable for the entire length of the retention period. Rapid changes and enhancements to both hardware and software compound this challenge. As many e-mail systems have limitations in storage space that cause operational problems when messages are stored in the system beyond a specific period (such as sixty or ninety days), procedures must be in place to transfer records from the e-mail system to another electronic record keeping system to meet retention requirements. Messages should be maintained in a format that preserves contextual information
(metadata) and that facilitates retrieval and access. (p. 1)
If it was the case that “one person” was not in place – for whatever reason (e.g., insufficient resource allocation; a recent departure of the designated person without a replacement, thereby creating a ‘gap’ in administration within the record management system in that department, etc.) – one might argue such circumstances could possibly constitute a mitigating factor for Robert Ghiz and Neil Stewart to have taken it upon themselves to order the destruction of government records. That was, however, not the case.
The AG gave Public Account Committee members the name of each of the Records Management Liaison Officers (RMLOs) for each of the three departments not providing any e-gaming records, and it was those RMLOs who were unable to provide e-gaming records to the Auditor General because they had been ordered destroyed by Ghiz and Stewart.
“Okay, so it was Sally Ferguson in the Department of Finance, Leah Eldershaw in Economic Development and Tourism, Don Larter in Transportation, Infrastructure and Energy and Shannon Burke. She’s a senior records delegate in Economic Development and Tourism.” [Public Accounts Committee, February 15, 2017, P. 118].
Neil Stewart’s illegitimate issuance of an order to destroy e-gaming records supplanted the legitimate authority of the designated Records Management Liaison Officers in these three particular departments.
I could not determine that the AG had also provided the name of the RMLO for the Premier’s office and Executive Council; however, the Record Information Management: Managing Electronic Mail lists the names of the Management Liaison Officers for each government department, and the name of the RMLO for Executive Council when Robert Ghiz became the Premier in 2007 was Rose Long. In other words, as was the case with Neil Stewart, Robert Ghiz clearly circumvented and supplanted the designated Record Management Liaison Officer’s authority within Executive Council when he ordered the destruction of the email accounts and e-gaming records of Rory Beck and Chris LeClair.
In addition, the Public Archives Act designates the Clerk of Executive Council as a member of the Public Records Committee – chaired by the Provincial Archivist – which has the following duties:
14. Duties of Committee
(1) The Committee shall (a) review records retention and disposition schedules submitted to it by a public body; (b) review procedures for the retention, preservation, destruction or alienation of records identified in a records retention and disposition schedule; and (c) approve records retention and disposition schedules. (p. 10)
The Premier is not a member of the Public Records Committee, so Robert Ghiz circumvented both the authority of the designated Records Management Liaison Officer for Executive Council and the Clerk of Executive Council when he ordered the deletion of the email accounts and other e-gaming records belonging to Rory Beck and Chris LeClair.
To be clear, the “chain of command” with respect to the manner in which the legal requirements for government record retention are protected in the administrative procedures and process within the PEI provincial government requires a four-step process:
(1) All employees are provided both guidelines and technical assistance to ensure that all records they receive and/or generate are retained for eventual disposition by the Provincial Archivist;
(2) The Records Management Liaison Officer in each government body or department liaises both with staff in that government body or department, and the Public Archives and Records Office (PARO). Schedules must be completed for all records by the Records Management Liaison Officer – along with a transfer form which the RMLO signs – and forwarded to the PARO;
(3) Under the authority of the Archives Act, the Public Records Committee reviews, approves all schedules received from government bodies or departments and signs the Records Retention and Disposition Schedule as part of the consultative process. The Schedule only comes into effect when approved by the Public Records Committee.; and finally,
(4) Under authority of the Archives Act, the public records designated for retention or disposition are either “archived” or “destroyed” by the Provincial Archivist. Again, the Act makes it clear that it is the Provincial Archivist, and only the Provincial Archivist, who has the legal authority to destroy government records – or, for that matter, the power and duty to decide whether government records are “retainable” and to be archived; or “deletable” and to be destroyed:
6.2 Destruction of records
(2) Subject to the terms and conditions under which records have been acquired or obtained, the Provincial Archivist may destroy or dispose of any record in the Public Archives and Records Office, where the Provincial Arl Archivist considers that it is no longer necessary to retain the record. 2001,c.28,s.6; 2017,c.60,s.5. Archives and Records Act.
The main reason for carefully laying out the legal and administrative framework which is in place within the PEI provincial government – which I have just done here – is to show how several options were readily available to both Robert Ghiz and Neil Stewart to comply with the law.
For example, if the Record Management Liaison Officers were, for whatever reason, not available when Ghiz and Stewart believed it necessary to have records destroyed, they could have still contacted someone on the Public Archives Records Committee, or contacted the Provincial Archivist directly, given that it is highlighted in all record management policy documents, Treasury Board Directives and Legislation that only the Provincial Archivist has the legal authority to dispose of government records. As spelled out in the Treasury Board Directive regarding destruction of government records:
“Information, including open or public information and assets, must be destroyed in the manner outlined in the Recorded Information Management Policy which can be located at the provincial government Intranet site at http:/iis.peigov/. For information you should contact your department’s Records Management Liaison Officer.” (P. 220)
In light of a comprehensive overview of all the legislative, policy and administrative “checks and balances” in place at the time Robert Ghiz and Neil Stewart ordered e-gaming records destroyed, it becomes clear that a significant degree of premeditated planning was required for each of them to effect the destruction of those government records while at the same time circumventing the elaborate administrative and legal framework in place to prevent unauthorized destruction of government records, all of which gives rise to and establishes grounds to believe that those acts were carried out with mischievous intent.
3.2 The “scorched earth” nature of the orders to destroy e-gaming records
So it is important to recall that “all” e-gaming files, including paper and computer files, were destroyed for each of the three individuals who had their email accounts deleted. In her report, the AG stated that she was informed that no e-gaming records of any kind existed for those three individuals:
“We requested information and were not provided with any email or other records for these individuals. So, we got nothing. We got no hard copies, we got no emails, we got no electronic records, or any records whatsoever, from these three individuals.” [Public Accounts Committee, February 15, 2017, P. 137].
As already noted, when the AG appeared before the Public Accounts Committee, she provided the names of the three senior provincial government officials from which she obtained no e-gaming records: Chris LeClair; Rory Beck; and Melissa MacEachern.
3.3 Preemptive Interruption of well-established protocols for record disposition
It is this last set of facts and circumstances which most clearly demonstrates reasonable grounds for the belief that the orders issued by Robert Ghiz and Neil Stewart to delete the email accounts and destroy all the e-gaming records for Rory Beck, Chris LeClair and Melissa MacEachern were given with sufficient ill-intent to justify laying a criminal charge of an Attempt toCommit Mischief to Data, contrary to s. 430(5)(a) of the Criminal Code.
Pay close attention to the timeline in what follows. The available evidence also shows that the former Minister of Education – who isresponsible for the Provincial Archives and Records Office – Hon. Doug Currie, and Premier Wade MacLauchlan, both mislead opposition MLAs and the general public concerning the deletion of email accounts and e-gaming records.
After the AG report on e-gaming was released on October 4, 2016, then-Minister of Education, Hon. Doug Currie, rose in the Legislative Assembly on December 1, 2016 to provide an answer to a question posed in an earlier session of the House regarding the government’s policy on retaining and deleting email records. Here is a verbatim transcript of his response as it appears in Hansard for December 1, 2016:
“When an employee leaves the public service there’s a formal questioning. The IT Shared Services disable the email account. This is good business practice. Once an employee leaves there is no business need for them to access these accounts. At the same time it means the public is not mistakenly directing inquiries to former employees that would not receive a response. Even though the accounts are disabled, following the requests the records are backed up and stored for an additional year. Following that time the records are overwritten. This is a common practice that allows for space in the server and means the government is no longer paying license fees for unused accounts. As I stated, these actions follow a regular process as employees leave the system. Since 2007, when government implemented a system to track these actions, there have been 2,481 accounts disabled. This summer IT Shared Services updated its protocol so that [a] form requesting that account be disabled must include a signature stating that the employee’s records must first have been properly filed in accordance with the public archives and records act under my ministry. This will help ensure that all the email accounts have been disabled, that records have first been transferred or stored elsewhere.” [Hansard, December 1, 2016, P.1639] [My emphasis].
Minister Currie gave the very strong impression that prior to the summer of 2016 there was no procedure, policy or requirement in force to ensure that records in email accounts were, as he said, “….properly filed in accordance with the public archives and records act under my ministry.” Such was not the case.
Treasury Board Directive 5.03 was in force when Robert Ghiz and Neil Stewart issued orders to delete email accounts containing e-gaming records and were, in fact, deleted before the e-gaming records in those accounts were properly classified and disposed as per the policy and laws in place (either by being “archived,” if classified as retainable records; or “deleted,” if classified as non-retainable) by the Provincial Archive and Record Office staff and the Provincial Archivist.
The policy and procedures in place at the time already required a “signature”; however, the “signature” required was that of the Records Management Liaison Officer within the Department of the particular employee who left his or her employment, not the signature of an ITSS staff person. Information Technology Shared Services (ITSS) division of the provincial government had no formal role or authority in the provincial Record Information Management system, and are nowhere mentioned in either the Archives and Record Act or RIM policies:
In his December 29, 2016 year-end interview with CBC, Premier MacLauchlan responded to a question from CBC Compass Host Bruce Rainnie concerning a then-active disagreement between his government and opposition MLAs regarding the “status” of the missing e-gaming records from the email accounts [opposition MLAs insisted the AG had indicated they were “deleted” in her report, but the government was insisting the accounts had only been “disabled” in accordance with normal procedures when employees left government]. The Premier more-or-less reiterated what Minister Currie had earlier reported in the Legislative Assembly:
Speaking with Rainnie, MacLauchlan said the Opposition will get names if they keep pushing: 2,500 of them. “What was called ‘deleted’ were in effect closed accounts, so that’s how many there are,” he said.
Jane MacAdam did say in her e-gaming report that it is the normal retention and disposition policy of the PEI government for email accounts of employees who leave government to immediately have their accounts “disabled,” while ensuring to keep the records in those accounts in tact for at least one year, at which time the accounts are then overwritten and deleted; presumably, once all the records have been identified and classified as either records to be “archived” or “deleted” by the Provincial Archivist:
“When an employee leaves government, normal practice is to have the email account removed. We were advised by ITSS that after a period of one year, an account that has been removed cannot be recovered. Consequently, if the employee does not manage his/her email records in accordance with policy, government records can easily be destroyed.” AG E-gaming Report, p. 41.
However, the AG also confirmed to the PAC members that Robert Ghiz ordered Chris LeClair’s email account “deleted” (not the account disabled) on October 19, 2011, just eight (8) days after Alan Campbell replaced him as Ghiz’s Chief of Staff.
Similarity, the AG confirmed that Robert Ghiz ordered Rory Beck’s email account “deleted” (not the account disabled) on September 4, 2012, less than five (5) months after he died suddenly of a heart attack on April 14, 2012
And the AG also confirmed that Neil Stewart issued an order to have Melissa MacEachern’s email account “deleted” (not the email account disabled) on October 21, 2013, six (6) months after her last day of work for the PEI government on April 19, 2013.
It appears that at no time did either Robert Ghiz or Neil Stewart contact or involve anyone from the Provincial Archives and Records Office. The AG indicated it was the Information Technology Shared Services (ITSS) staff who received the orders from Robert Ghiz and Neil Stewart to delete the accounts, although she also indicated she didn’t know the date when the account-deletion actually happened, only the dates when the “orders” were issued by Ghiz and Stewart for those accounts to be deleted. (See p. 131, February 15, 2017, Public Accounts Committee Meeting Transcript).
The facts regarding Ghiz and Stewart issuing orders to delete the email accounts of these three key senior staff – without retaining any of the records – therefore contradicts what both the former Minister of Education, Doug Currie, and Premier MacLauchlan publicly stated in two ways: (1) with respect to how normal procedures were followed (e.g., all three accounts were deleted long before a year had transpired from the date of the employee’s departure from government – in fact, it was just a few days in the case of Chris LeClair), and (2) with the nature of the action taken on the email accounts (e.g., “disabling” or “deleting”) with the facts showing that the email accounts containing e-gaming records were ordered “deleted, not simply “disabled,” as both Currie and MacLauchlan had insisted.
These facts relating to the timeline and administrative process culminating in missing e-gaming records clearly indicate that both Robert Ghiz and Neil Stewart made premeditated, focused decisions to interfere with the established procedures, laws and protocols regarding the retention and destruction of government records. They purposefully chose to contact ITSS staff, who had the technical skills to delete the email accounts, rather than anyone associated with the Provincial Archives and Records Office, or allow the designated Management Liaison Officers within their own departments to exercise her authority and responsibility for the records in the respective departments, as was required by the Archives and Records Act and RIM policies.
What remains unknown, however, are the details surrounding the destruction of hard copy e-gaming records, or documents on computer hard drives, mainframes or “cloud storage”. The AG confirmed there were no records from these three key individuals, so those e-gaming records must have been deleted from their computer hard drives, mainframes, or cloud-storage systems. It is reasonable to assume that Ghiz and Stewart likely also ordered those hard copy and hard drive records destroyed. But why?
The reasons for disposing, sorting, classifying and eventually deleting email accounts are obvious; some of which were mentioned by Doug Currie in the above December 1, 2016 citation from Hansard. But what would be the “benign” motivation to order the full-scale destruction of all e-gaming hard copy documents? The normal “out-of-sight out-of-mind” tendency is to forget about hard copy files in filing cabinets, once they are safely stored…not to seek them out and destroy them. Destruction of electronic documents on computer hard drives, mainframes or cloud-storage systems raises even more questions, given that it is both easy, convenient and inexpensive to store records electronically.
And who did the destroying of hard copy and hard drive documents? Were hard copy documents shredded? If so, when were they shredded? Who deleted e-gaming files from hard drives, mainframes or cloud-storage systems? When? Has anyone even asked provincial government employees these questions?
Many people believe there were reasons why senior government officials (and the Premier) would want e-gaming records destroyed, given the many irregularities associated with the entire failed e-gaming initiative. The Auditor General herself noted in her report that there were many irregularities, breaches of policies and procedures, and numerous occasions where laws were broken; and not only concerning the illegal destruction of government records, but also with the issuance of loans without legal authorization (monies which were eventually written-off as losses to the PEI taxpayers of approximately a million dollars).
Perhaps even more concerning is the AG’s finding that two of the three key bureaucrats whose email accounts had been deleted and e-gaming records destroyed had apparent conflicts of interest;
“We noted situations of apparent conflict of interest with two senior executives involved with these files, a former Chief of Staff, and a former Deputy Minister” (p. 3)
Again, it was later confirmed that the Chief of Staff she was alluding to in her report was Chris LeClair; and the former Deputy Minister was Melissa MacEachern.
Based on all the facts outlined above, there is clearly probable cause to believe Robert Ghiz and Neil Stewart Attempted to Commit Mischief to Data, contrary to s. 430(5)(a) of the Criminal Code. For charges to have been laid, the RCMP would have had to have been provided all of the relevant information, as outlined above, showing probable cause for criminal intent. Unfortunately, neither the Auditor General nor the Attorney General initiated that investigation. Why not?
4. Why didn’t the Auditor General or Attorney General call for a criminal investigation of e-gaming ?
Given what seems to be clear and convincing evidence of a “scorched earth” strategy to destroy all government e-gaming records with the key government staff involved in the e-gaming file, it remains puzzling why neither the Auditor General not the Attorney General of the PEI government asked the RCMP to conduct a criminal investigation into this matter.
Members of the Public Accounts Committee certainly believed the Auditor General had sufficient information to warrant her calling a public inquiry – or initiate a request for the RCMP to undertake a criminal investigation – and they challenged her to explain why she chose not to do so. Their questions, and her responses on this matter are worth presenting here, for reasons which will become clear subsequently:
But first, a brief caveat: As you may recall from information presented earlier in section 1 of this report, when the Information Commissioner with the Ontario government discovered that all records in the gas-plant file in the Minister’s office had been destroyed, she made the following statement in her report: “…it strains credulity that no one knew that the practice of deleting all emails was not in compliance with applicable records management and retention policies.” The same thing could be said about the “scorched-earth” approach taken by Robert Ghiz and Neil Stewart regarding e-gaming email accounts (and other forms of e-gaming government records). Not surprisingly, it was after PAC members heard the full scope of what had been destroyed that they asked the AG why either a public inquiry or criminal investigation had not been initiated:
Chair: Okay. I guess I’m just curious: Why did you [Auditor General) choose not to use your powers under the Public Inquiries Act to find out what happened to these missing records?
Jane MacAdam: As I indicate in the report – I think it’s in the introductory section – we gave it careful consideration, and based on the fact that there was a high probability that it could result in court proceedings. I mean, we consulted with our legal counsel as well in terms of the ramifications of using the powers under the Public Inquiries Act. It could have been costly. It could have dragged out for another year.
Chair: I might remind you it was already costly to the taxpayers of PEI too, though, right?
Jane MacAdam: Right. So it could have taken another year for me to be able to report, so given all the information that I had, I felt that it was important to report the results that we had and outline the scope limitations. [GAP – unrelated questions]
Chair: I guess my last question would be: did you alert any justice officials, the Information and Privacy Commissioner or the RCMP that government records were missing and presumably destroyed in violation of the law?
Jane MacAdam: Would you read those names off again?
Chair: The Information andPrivacy Commissioner or the RCMP or any justice officials here on PEI.
Jane MacAdam: Not the RCMP and not the privacy commissioner, but we did send a copy of our draft report to department of justice.
Chair: You didn’t send up any red flags that records were destroyed and the law was broken?
Jane MacAdam: The section of the report on records retention was shared with the Department of Justice.
Chair: What was the Department of Justice’s response?
Jane MacAdam: The points had been cleared with various senior people in government. They didn’t argue the facts. I presented the facts and they did not argue with the facts. They were aware. [Public Accounts Committee, February 15, p.27]
At that time, the Minister of Justice was the Premier; and the Premier was also the Attorney General. Opposition members and members of the public had raised concerns about this state of affairs, suspecting this apparent conflict-of-interest on the part of the Premier (who is both the Liberal successor to a former Liberal Premier Robert Ghiz, and Ghiz’s close personal friend) explained his refusal to call for an investigation by the RCMP.
When Premier MacLauchlan became aware that Robert Ghiz and Neil Stewart had illegally deleted sensitive government records, he refused to take any action to hold either of them accountable for breaching provincial statutory provisions of the Archives and Records Act , which, as noted above, unequivocally forbid the unauthorized deletion of public records and now calls for stiff penalties and consequences for employees guilty of committing such an offence (section 19.1 (3)(4) cited above). In fact, less than a year after these revelations became public, the Premier appointed Neil Stewart Deputy Minister of Finance.
The illegal act of ordering the destruction of e-gaming records by Neil Stewart was not the only incident where Stewart “broke the law” with e-gaming: the AG also noted Stewart signed off on a loan of approximately a million dollars without proper authorization as required by the Financial Administration Act (AG E-gaming Report, p.23) and was just another example in a long history of non-compliance with government policies and laws by Stewart (See: “Premier Exercises Poor Judgment,” Guardian, October 26, 2017).
The Premier has at no time shown any interest in commenting on what happened under Robert Ghiz related to e-gaming, so it is perhaps not surprising that he neither pressed charges for breach of provincial statutes nor asked the RCMP to undertake an investigation into the e-gaming affair to determine whether any crimes had been committed. The RCMP were likely aware that the Premier had no interest in going down that road when they were subsequently asked by then-leader of the NDP, Michael Redmond, to undertake a criminal investigation of e-gaming.
It should also be pointed out that the Liberal government held a majority vote on the Public Accounts Committee, and used that majority vote to resolutely refuse to allow key individuals – such as senior bureaucrats or Liberal Ministers at the heart of e-gaming – to be called before the committee for questioning, despite both the Progressive Conservative and Green Party opposition members on the committee repeatedly making those requests. Those MLAs have, not surprisingly, accused the Premier of stifling the work of the committee.
More recently, former Liberal MLA Bush Dumville (now sitting as an independent MLA) asked the Premier about his Chief of Staff, Robert Vessey’s (and the Premier’s lawyer, Spencer Campbell’s) interference with the Public Accounts Committee during the time the committee was holding meetings on e-gaming:
“My question is to the Premier: During the strategy planning with Liberal members and others on January 6th, 2017, Robert Vessey stated: the Premier wants e-gaming put behind him. Next, Spencer Campbell stated, and I quote: We are the government lawyers on this file.
Question: Were you aware that legal counsel, Spencer Campbell, was in attendance and providing legal advice to the committee?” [Hansard, April 10, p. 1446]
The Premier’s answer?: “No I was not”.
5. My interview with Sergeant Graeme Shaw of the RCMP Federal Crimes Investigation Unit
On April 24, 2018, I spoke with Sergeant Graeme Shaw with the Federal Crimes Investigation Unit of the RCMP who headed-up the e-gaming criminal investigation initiated by former Leader of the PEI NDP, Michael Redmond.
I identified myself as a freelance investigative writer, and told him I would soon be publishing the results of my own year-long investigation of e-gaming, and that I was focusing almost exclusively on the destruction of e-gaming records.
I began by saying how, in my opinion, the PEI e-gaming situation essentially “mirrored” the Ontario gas-plant situation, and asked him why David Livingston had been charged and found guilty of an Attempt to Commit Mischief to Data, contrary to S. 430(5)(a) of the Criminal Code in Ontario, while the RCMP investigation in PEI concluded there was no evidence of criminality, or grounds to lay any charges in the e-gaming case? His answer:
Sergeant Shaw:“No, it’s very different. The case in Ontario and the information that’s provided here….the cases are very different. In Ontario there were items of specific intent by the people involved in it, towards which then became evidence towards the criminal charges. Here, there’s information.”
My response:“Well they’re different in a lot of ways, but what seems to me to be essential in terms of both the substance and the intent…because in that case, there was a bit of a scandal, you know, over the gas plants, and there was a deliberate attempt to eliminate records in contravention of the Archives Act…”
Sergeant Shaw interjected and restated that he viewed the two cases to be completely different, so I then outlined a number of facts as reported by the Auditor General in her e-gaming report; facts that confirmed that the provincial law requiring records to be retained had been broken, and asked him how those facts didn’t constitute “evidence” as well as being “information”. His response:
“I’ve read that report several times as well and it’s information as well, not evidence, right. It refers to…it refers to ya know, a mismanagement of data, mismanagement of email systems within the government that I hope they’re working towards improving upon, but it’s not in any way evidence towards, ah, ya know, a criminal offence.”
Finding his distinction between “information” and “evidence” confusing to say the least, I pressed the point:
Me: “But why would they destroy such sensitive documents when the law says they have to be retained?”
Sergeant Shaw:“We look specifically at any evidence of criminal activity which requires specific intent which they ultimately had in Ontario, but which it was determined from our investigation was not present here.”
Still confused, I surmised that if the RCMP didn’t find that the records that were required to be legally retained had not been destroyed with “intent” well, there had to be some other explanation, so I asked:
Me: “So you’re conclusion was that they were deleted accidentally?
Sergeant Shaw: “No”.
Me: “Because of some protocol that was perhaps misread?”
Sergeant Shaw: “I’m not certain what the mechanism….I’m not sure what the mechanism was, ya know specifically, for them to be, whatever information to be deleted.”
Me: “But why would they destroy such sensitive documents when the law says they have to be retained and in fact they were compelled to allow that decision to be made by the Archivist and…”
Sergeant Shaw:“…the provincial government have standard operating procedures and things that I’m not privy to, I don’t know how the government works, but where they keep things for certain periods of time, they retain certain stuff, but you can’t’ keep everything all of the time…”
My interview with Sergeant Shaw made me realize that in the course of their investigation, the RCMP failed to appreciate exactly how the retention and disposition of sensitive government records actually works within government.
His statement: “you can’t keep everything all of the time,” sounded like a justification for the deletion of e-gaming records, which represents a mistaken assumption regarding record keeping within the provincial government. Such a lack of understanding would clearly have prevented the RCMP from making a proper assessment of whether probable cause exists to believe Ghiz and Stewart acted with criminal intent.
When records are deemed “retainable” by the Provincial archivist, they are kept for perpetuity, and the e-gaming records (or certainly most of them) would have met the criteria for being assessed as “retainable” records by the Provincial Archivist. Again, and this can’t be overstated, the lack of knowledge by the RCMP investigator concerning the record management laws, procedures, policies and protocols within the provincial government would have made it impossible for them to render a fair and informed decision regarding whether it is reasonable to believe that Ghiz and Stewart committed the crime of Attempting to Commit Mischief to Data. The fact that they breached virtually every aspect of the established laws and policy to get rid of every e-gaming record – long before the mandatory one year retention had transpired – clearly represents a “scorched earth” strategy surpassing even that of David Livingston in the gas-plant scandal in Ontario.
I believe this revelation alone constitutes sufficient grounds to trigger a new criminal investigation into this matter. However, I also believe this report provides sufficient facts, analysis and argument to warrant criminal charges being laid without any further investigation – a fuller disclosure of the facts will likely only happen in a court of law where the key players in the PEI e-gaming affair are compelled to offer sworn testimony under oath – something that has not yet happened.
I find Sergeant Graeme Shaw’s distinction between “information” and “evidence” to be meaningless and confusing. The issue at the heart of the e-gaming records is not one of semantics, it is one of “intent,” as Sergeant Shaw correctly stated.
To ascertain a probable case of criminal intent sufficient to warrant laying a criminal charge, it is first necessary to understand – in the most comprehensive way possible – all the attending circumstances that established the boundaries for action, the available information which the person who “acted” was privy to regarding laws, policy, procedures, work expectations, duties, limitations regarding the authority to act, etc.
When the action under investigation is “the deletion of sensitive government records” and the investigator candidly admits that “…the provincial government have standard operating procedures and things that I’m not privy to, I don’t know how the government works,” then a finding that there was no evidence of any intent to commit a crime essentially represents an admission of ignorance of the relevant facts required to make a determination regarding intent.
In other words, if there was in fact reasonable grounds to believe there was intent to commit a crime (which I believe is contained in this report) it would not have been identified as such by the RCMP, given the admitted ignorance about the very context and environment within which that possible crime would have taken place which would have precluded such identification.
In conclusion, my review of the facts, especially as outlined above in sections 3.1, 3.2, and 3.3, offers sufficient reasons to believe that Robert Ghiz and Neil Stewart acted with mischief, or at least sufficient probable cause to warrant one criminal charge of mischief to data be filed against each of them.
As with all allegations of legal wrongdoing, it remains the prerogative of a judge (or jury) to ultimately “test” that charge within the parameters of a criminal trial, where those accused are afforded an opportunity to put forth a defence to prove their innocence, while the Crown puts forward a case for the judge (or jury) to support the belief that the act was commissioned with an intention to commit the alleged crime.
As I’ve already noted earlier in this report, many questions remain unanswered: questions such as those regarding the whole-sale deletion of all e-gaming records, including hard copy documents. Those questions will likely only be answered in a trial.
If Robert Ghiz and Neil Stewart are innocent, evidence proving that will undoubtedly come out in a trial; if they are guilty, as David Livingston was found to be in the gas-plant case in Ontario, that too will likely come out in trial.
A trial will finally provide answers to the many questions still being asked by Islanders regarding the costly, failed e-gaming initiative and remove the cloud of suspicion that presently hangs over the heads of both Neil Stewart and Robert Ghiz.
SUPPLEMENTAL INFORMATION ON MOTIVES FOR CRIMINAL INTENT
As is well known, Capital Markets Technologies Inc. (CMT) is presently engaged in a civil litigation action seeking damages it alleges resulted from a breach of the terms of an MOU it had with the PEI government. The merits of CMT’s allegations have yet to be tested in court, although the judge recently ruled in favour of a Motion filed by CMT to add additional names to the case, largely based on revelations from the Auditor General’s report. There are now 16 named defendants in the action including Robert Ghiz, Neil Stewart, Chris LeClair, and Melissa MacEachern.
The Plaintiff’s Responding Motion contains information based on documents submitted as evidence relating to the destruction of e-gaming records which is of interest and relevance to my report. I am not including this as part of my “argument” in support of the belief there is sufficient evidence to warrant a criminal charge being laid against both Robert Ghiz and Neil Stewart; however if the allegations outlined in this motion are eventually proven in court, it is easy to see how criminal intent may have fueled Ghiz’s and Stewart’s decisions to order the destruction of e-gaming records.
85. DESTRUCTION OF EVIDENCE
86. Spoliation or destruction of evidence is an act of commission conducted for a purpose. The rebuttable presumption of fact is that destroyed evidence would not assist the spoliator and therefore the evidence was destroyed.
87. In this case the onus of reversing the presumption is on Ghiz and Stewart. All that the
plaintiffs can do at this time, since the evidence has been destroyed, is attempt to make
logical and reasonable inferences.
88. October 19, 2011 Ghiz Spoliation of LeClair Emails
Inference: Ghiz ordered destruction of the LeClair’s emails to hide from public view the fact that LeClair after his forced resignation set out to destroy the Financial Services Platform and promote an alternative business service platform designed to enrich Ghiz, Sheridan and LeClair personally.
Inference: Ghiz and LeClair never stopped their activities to destroy the Financial
Services Platform and promote an alternative business service platform through the
service of LeClair as an outside consultant employed by Policy Intel with favoured PEI
Inference: LeClair became that principal contact with Newcourt/Newco and Laslop, the
proposed replacement for the Simplex Financial Services Platform, and attempted to hide from public view the names of Newcourt/Newco and Laslop by misusing of section 15.(1) of the Freedom of Information and Protection of Privacy Act.
Inference: Ghiz and LeClair, knew or should have known from the very beginning, that
Sheridan was prepared to issue false statements and Sheridan in order to “win” would
attempt to destroy other persons reputations with a series of false statements.
89. September 04, 2012 Ghiz Spoliation of Beck Emails
Inference: Ghiz ordered destruction of the Beck’s emails to hide from public view the fact that Beck was involved in the E-gaming initiative (Sheridan initiative) from the very beginning as Clerk of the Executive Council and Secretary to the Cabinet.
Inference: Ghiz ordered destruction of the Beck’s emails to hide from public view the fact that Beck favoured the Financial Services Platform and that Beck was involved in the Loyalty Card Program (MacEachern initiative) from the very beginning as Clerk of the Executive Council and Secretary to the Cabinet.
Inference: Ghiz ordered destruction of the Beck’s emails to hide from public view the
direct involvement of Sheridan, Roach and Paynter in the breach of the MOU when these
individuals dealt directly with Newcourt/Newco and Laslop.
90. October 21, 2013 Stewart Spoliation of MacEachern Emails
Inference: Stewart ordered destruction of the MacEachern’s emails to hide from public
view the fact that MacEachern strongly favoured the Financial Services Platform to
promote the Loyalty Card Program.
Inference: Stewart ordered destruction of the MacEachern’s emails to hide from public
view the direct involvement of MacEachern, Paynter, Dow, and Cutcliffe in the breach of
the MOU when these individuals dealt directly with Newcourt/Newco and Laslop.
Inference: Stewart ordered destruction of the MacEachern’s emails to hide from public
view the fact that Ghiz ordered Stewart to assume the carriage of the destruction of the
Maceachern in an attempt to protect the reputation of Ghiz.