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.
I’ll let you know from the outset that this article – I suppose “Report” might be a better word – alleges that the MacLauchlan government “hoodwinked” both the Information Commissioner and the Guardian by releasing a forged and significantly altered one-page “proposed loan budget” for the $950,000 e-gaming loan which IIDI provided to the Mi’kmaq Confederacy of Prince Edward Island (MCPEI) in 2011, after PEI”s Information Commissioner, Karen Rose, ordered the Head of the Department of Economic Development and Tourism at the time, Hon. Heath MacDonald, to provide it to the Guardian “in its entirety,” in what appears to be a brazen act of defiance, continued cover-up of the e-gaming project, and non-compliance with the law.
Hon. Heath MacDonald, Current Minister of Finance
The more I dig into the E-gaming scandal, the more I discover just how fraudulent and corrupt the entire affair really was. A head’s up. This is a very long read, not for the faint-of-heart: but if you really want to know how Wes Sheridan and Robert Ghiz’s lawyer, Billy Dow, helped McInnis Cooper law firm appropriate roughly a million dollars of money belonging to Islanders for work that was never undertaken – in direct contravention of the law – then pour yourself a extra-large coffee, get comfortable, and read on.
The final pieces to the complex e-gaming puzzle concerning the $950,000 e-gaming loan came from a few documents which Capital Markets Technology (CMT) has just filed with the PEI Appeals Court in conjunction with their Appeal of Judge Campbell’s decision in January, 2018, which imposed additional security costs of $300,000 on CMT for the additional defendants added to the case at that time.
Gary Scales, Regional Lead Partner for PEI, McInnis Cooper Law Firm
CMT’s current Motion is asking the Appeal Court to consider new evidence, and was submitted with a number of documents attached with the Motion. When the Motion was filed and stamped, the documents became public, and I obtained a copy of them. CMT apparently only received the documents very recently, when one of the defendants, McInnis Cooper lawyer Gary Scales, filed his “Affidavit of Documents” on the main lawsuit. These documents are “revealing” to say the least!
Before I get into explaining the details of how Billy Dow – acting on behalf of the Ghiz government – authorized the use of loan money to McInnis Cooper AFTER government ended its involvement in the e-gaming initiative, in contravention of explicit terms within the loan agreement, let me first explain how the MacLauchlan government apparently created a “false” document by altering the original one-page budget for the e-gaming loan in what appears to be a bid to hide information about three “third party contractors” from the public, after being ordered to provide that budget document to the Guardian by Information Commissioner Karen Rose.
The E-gaming Loan Budget Shell Game
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 provided to the Mi’kmaq Confederacy of PEI (MCPEI) by Island Investment Development Inc. (IIDI) for $950,000 (which I’m calling “e-gaming proposed budget #2”).
The AG also noted that an initial funding application had previously been prepared for a non-repayable contribution from Treasury Board for $1.2 million (what I’m calling “e-gaming proposed budget #1”). However, to keep the e-gaming project secret, a decision was made to have McInnis Cooper law firm revise that first budget to bring the total down to $950,000 (without reducing the scope of the project) in order to come below IIDI’s $1 million “ceiling” for granting loans, after which MCPEI would submit it to IIDI. That way, the e-gaming project would remain secret.
Although the Auditor General referenced these two versions of the e-gaming budget in her report, she did not provide any details about the specific budget lines in those budgets – neither the “deliverables” nor “amounts” – for either funding application.
Finally, to keep things from getting too confusing, for the purpose of this investigative report, I’m calling the version of the $950,000 loan budget that was approved and disbursed by IIDI (e-gaming loan budget #2) then eventually obtained by the Guardian in an Access to Information request in early 2017, “e-gaming loan budget #3”. And that’s because “e-gaming budget #3” – which should have been identical to e-gaming loan budget #2, wasn’t identical at all. And because that Guardian version has been the only version of the e-gaming loan budget that’s been made public until now, let’s start with that one.
E-gaming Loan Budget #3
Shortly after the Auditor General released her Special Report on E-gaming on October 4, 2016, the Guardian submitted an Access to Information request seeking a copy of the $950,000 e-gaming loan agreement IIDI provided to MCPEI. A copy of the loan Agreement was released; however, the “one-page” budget breakdown of the proposed deliverables, along with projected costs for the project, was withheld.
The Guardian then submitted a request to the Information and Privacy Commissioner to have the matter reviewed, and Karen Rose eventually ruled that the document had to be released to the Guardian in its entirety.
The Guardian published an article on March 15, 2017, with a link to the budget document. Although the article remains on the Guardian website, the link to the document no longer works; however, a “screen capture” graphic of the document was also embedded in the article and presented all the information, except for the last two budget line items:
Although line item #12 is illegible, and line item #13 is missing entirely, the Journal-Pioneer version of this article actually listed all the budget line items, and reveals that #12 is: “Establish financial transaction platform for P.E.I. – $135,000,” and the last item, #13, is: “Reimburse MCPEI for expenditures already funded – $100,000.”
The fact that the amounts attributed to each of the 13 lines in the proposed budget don’t add up to $950,000 should have raised a red flag that the document had been altered, but it appears no one did the calculation, or gave it much thought if they did. The total amount that is missing is $25,000, but the exact amount of the loan Premier MacLauchlan had written off as a complete loss in 2017 – according to Public Accounts Fiscal Year Ended March 31, 2017 (p. 13 ) – was exactly $950,000.
Neil Stewart, Current Deputy Minister of Finance
How are we to account for the $25,000 shortfall in the proposed budget for the e-gaming loan provided to the Guardian by the Head of the Department of Economic Development and Tourism (Hon. Heath MacDonald), or possibly the Deputy Minister at the time, Neil Stewart? I’ll address that question a little later. For now let’s jump back to the beginning of the e-gaming loan story and take a look at the initial funding proposal and budget first put together by McInnis Cooper for MCPEI.
E-gaming Loan Budget #1
Kevin J Kiley, Chair of the Board of McInnis Cooper
It was impossible for me to investigate the matter of the $950,000 e-gaming loan any further without having access to the original loan application and proposed budget, given the limited information about the original budget in the AG e-gaming report.
The detailed information came to me from one of those documents Capital Markets Technology (CMT) just made public as an attachment to its Motion filed on September 24, 2018 – a Memo from McInnis Cooper lawyer Kevin Kiley to chartered accountant Mike O’Brien, who was an accountant contracted by McInnis Cooper and one of five people on the E-gaming Working Group. Before looking at what is in that document, let’s first consider what the AG said about the first e-gaming loan budget.
Jane MacAdam, PEI’s Auditor General
In section 3.35 of her report, the AG notes that in early fall, 2011, a draft Treasury Board submission was prepared with a proposed budget of $1.2 million, but it was never submitted. As she explained:
“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.
In his Memo to Mike O’Brien, Kevin Kiley also explains the motivation for the change in plans regarding the strategy to access funding for the e-gaming project:
“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)
The AG provided no further details about that initial grant application; however, a copy of the proposed budget was included in Kevin Kiley’s September 25, 2012 Memo to Mike O’Brien:
Although the first 12 budget line descriptions of the “deliverables” are identical to those in e-gaming loan budget #3 (the version the Guardian received), the amounts have been significantly altered to bring the total down to $950,000. As well, the “Confederacy Expenditures in 2010” – at the very bottom with Budget #1 – became line item “13” in the Guardian version.
What’s missing in the budget version the Guardian received are the three “third party contracts” totaling $185,000, which begs the question: “Did McInnes Cooper axe these budget line items in the revision they did to bring the total budget below the IIDI $1 million threshold to $950,000?” Spoiler alert: “No.”
Let’s move on to the actual budget submitted to IIDI to see how that version compares to the version released to the Guardian.
E-gaming Loan Budget #2
In the same September 25, 2012 Memo to 0’Brien, Kiley also presents the “revision” of this initial budget stating: “We were requested to create a Business Plan for the Confederacy to be submitted to Innovation PEI,” adding that it was the “final version” of the Business Plan requesting $950,000, then explaining how…”this project amount was broken down as follows”:
Cheryl Paynter, former DM of Innovation & Advanced Learning; current DM of Tourism PEI
Just like the $100,000 “Grant application” that Cheryl Paynter fraudulently put together back in late 2011 when she was Deputy Minister of Innovation and Advanced Learning, creating a “fictitious project” [For this full story, see my article: “Why is Cheryl Paynter still CEO of Tourism PEI?“] that was never going to happen, absolutely no mention of the plan to use $600,000 of the $950,000 loan to pay bills which McInnes Cooper had already incurred on the e-gaming project was made to the IIDI Board by McInnis Cooper or MCPEI when the loan application was brought to the IIDI board for consideration and approval. As the AG noted:
No kidding! I’m sure if the IIDI Board members had been told the truth about the intended purpose of the funds, they never would have approved the loan.
To formally declare – within legal documents and funding contracts – that you intend to spend $950,000 on 16 detailed “deliverables” indicative of future work, when the plan is actually to use that money for expenses already incurred for work having nothing to do with the proposed budget….mostly meetings and discussions….well that’s a clear case of FRAUD in my books.
Yet, Premier MacLauchlan stubbornly maintains that no public servant did anything wrong? Wes Sheridan, as Minister of Finance at the time, was the main architect behind the plan to access the loan in that fraudulent manner, and he was also the excuse McInnis Cooper used to run up hundreds of thousands in costs, by meeting with Sheridan every other day, texting him, calling him, or taking his calls:
So, it’s not at all surprising that the loan money was – for the most part – never spent on what it was actually supposed to be spent on; or that the budgeted amounts were massively inflated for certain deliverables, because the plan with that loan from the get-go – unbeknownst to the IIDI Board – was to turn it over to McInnes Cooper.
But here’s the thing…by not informing the IIDI Board of their true intention for the use of the money, they proceeded to sign a loan agreement that clearly stipulated that the money was not only to be disbursed for paid invoices and only paid invoices – which didn’t happen – the agreement also included a clause that explicitly stated that monies not yet disbursed to cover paid invoices in accordance with the budget WERE TO BE RETURNED IF THE PROJECT ENDED!
That’s where the real fraud happened, and I’ll get to that in a minute, but I first want to discuss the way in which IIDI failed to properly disburse and account for the funds making it possible for the money to be redirected from the specified “deliverables” to McInnes Cooper’s own bank account.
To do this it will be helpful to first compare the three different versions of the budgets so we can see how the amounts attributed to specific budget lines in each version were seemingly completely arbitrary in nature, and were freely manipulated for non-project or work-related reasons.
A closer Look at the Three Versions of the E-gaming Loan Budgets
To do a proper comparative analysis of the three versions of the e-gaming loan budgets, the information from all three budgets has been entered into a spreadsheet. This was a relatively easy task, since the “Deliverables” remained constant; however, as you can see, the costs for those deliverables changed significantly.
The “red” amounts in the $950,000 budget column that McInnis Cooper prepared and MCPEI submitted to IIDI (budget #2 in column #2) are the amounts that differed from budget #1, the version that was never filed with Treasury Board. Similarly, the red amounts in Budget #3 are the amounts that differ from budget #2.
The first thing to notice is that what the Guardian received through Access to Information was clearly tampered with, in that it doesn’t even add up to $950,000, as I noted earlier. But the most glaring difference between the budget submitted to IIDI and the budget released to the Guardian, is the removal of any mention of the three “third party” contractors: Simplex; Patrick Orr; and Edleman Canada.
It would appear that the $75,000 allocated for Patrick Orr was added to line item #2, which increased by exactly the same amount, $75,000; that the $50,000 allocated for Edleman Canada was added to line item #3, which increased by exactly the same amount, $50,000; and that the $60,000 allocated for Simplex was added to line item #12, which increased by exactly the same amount, $60,000.
The $25,000 discrepancy in the total amount between Budget #3 and Budget #2 comes from a reduction of exactly that amount in line item #7. I don’t have any information to explain that discrepancy, but what first came to mind when I saw the difference is that whoever was doing the tampering was anxious about the particularly high amount in that line item because it clearly was money that was “kept” by McInnis Cooper, but could never have been spent as it should have been, since there were no agreements to finalize with gaming operators. So it must have been reduced, but not later accounted for with a addition of the same amount to another budget line item – in other words, “sloppy tampering.”
The manner in which the “costing” of these “deliverables” were completely disconnected from any concern for what the actual costs would be, apparently fudging and padding for ulterior motives, randomly moving significant amounts from line item to line item, is truly mind-boggling. For ten years as the Executive Director of the PEI Association for Newcomers to Canada I prepared countless grant applications for both the federal and provincial governments – including during the time Robert Ghiz was premier – and any discrepancies between “budgeted” and “actual” costs were scrutinized by government officials with laser precision, down to single dollar amounts, so witnessing the carefree manipulation of these budgets with this e-gaming crew is personally a hard pill for me to swallow.
Nowhere is this disconnection more shocking – and blatantly corrupt – than line item #1 – “Non-disclosure Agreements with Operators.” These non-disclosure documents are usually one or two page templates that every law firm or business would already have on file. And if not, it would literally take 10 minutes for a lawyer to type one up. You can even download “free” disclosure agreements from various legal websites in Canada, including LawDepot. Basically they say: We want to talk to you about something you can’t talk to anyone else about…so sign “here” to confirm you won’t! That’s it! Yet McInnes Cooper budgeted $75,000 for that “deliverable” in the original proposal they put together, then reduced it to $50,000 and paid themselves that amount from the $950,000 loan disbursement for that. Unbelievable!
But the really criminal part of this sorry story of corruption and greed in downtown Charlottetown, PEI isn’t the way in which both the Auditor General and Information Commissioner were apparently duped with a forged document, or possibly “two” forged documents (I’ll explain later); it’s the fact that McInnes Cooper essentially stole nearly $1 million from PEI’s public purse for (1) work that was never done, with (2) money they had a LEGAL obligation to return to government. I’ll deal with each of these claims separately.
The Deliverables that were Never Delivered
The following chart shows how – as a result of the e-gaming project never being launched – most of the “deliverables” were never delivered:
The above chart lists all 16 budget lines and includes the three “third-party contracts” left out of the budget version provided to the Guardian. We know that Simplex finally did receive payment of $60,000, and Kevin Kiley mentioned in his letter to Neil Stewart and Steve MacLean on December 12, 2011 that: “Edleman Canada has provided us with three invoices totaling $27,920 (saving of $22,078.40 on budget).”
And in another fascinating read that was among the new documents filed by CMT was a 23 page dialogue between the AG office and Kevin Kiley that’s dated October 3, 2017 (Is the Auditor continuing her investigation without the public being aware?) where Kiley confirms that nothing was produced by Edleman Canada:
Don MacKenzie, Executive Director & Legal Counsel for the Mi’kmaq Confederacy of PEI
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 – who was the head of the PEI Law Society at the time – did attend meetings with Wes Sheridan and McInnis Cooper, sign documents, authorize drawdowns on the trust fund at McInnis Cooper, etc.
At a minimum, 78% of the “deliverables” in the $950,000 simply could not have happened. As for the rest of what was “possibly” done, most appears to be significantly inflated.
Keep in mind that the e-gaming project literally “never got off the ground,” and no work could have been undertaken with nearly all the “deliverables” in the project 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 how significant this was:
The AG says there were “significant cost overruns” at the time the loan was disbursed, but how is this possible? Other than approximately 100 meetings with Wes Sheridan, Don MacKenzie, McInnis Cooper lawyers and Mike O’Brien – a few communications with a handful of third parties – no substantial amount of work was completed.
And notice that 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 McInnis Cooper prepared for MCPEI and submitted to IIDI had 16 budget lines) so was the document the AG received the same one as the one given to the Guardian? One would expect that she would have noticed and reported that the budget totalled $925,000 rather than $950,000 if that was the case; she is, afterall, PEI”s Auditor General. And she also states 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 obviously needs further investigation.
But let’s get back to figuring out how McInnis Cooper ended up receiving all that money for work they never did. It should never have happened, because the (2011-12-12) Innovation PEI E-gaming Loan Agreement with the Mi’kmaq clearly stipulated under section 22.214.171.124 that:
“Disbursements will be based on 100% of actual invoiced costs” (p. 1)
…and the Auditor General both noted this fact and reported that this kind of thing usually didn’t happen:
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.” Wow! And here’s the real kicker:
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).
And here’s the “double-kicker”:
“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 what happened to be mentioned in memos or emails, just imagine what discrepancies likely existed that weren’t highlighted in documents. And the AG reported that some of the work McInnis Cooper “invoiced” MCPEI for from the loan fund 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].
The Circumvention of the Legal Requirement to return loan funds to IIDI by PEI Government Lawyer Billy Dow
It’s important to know a bit about where the $950,000 loan money came from in the first place. All three “grants” issued to MCPEI by IIDI came from the PEI Enterprise Development Fund managed by Innovation PEI, according to the AG, but she only reported that the $950,000 loan came from Island Investment Development Inc. (IIDI). In fact, the money came out of the Century 2000 Fund, which has very strict requirements for ensuring monies loaned are secure.
The fund is managed by Finance PEI for IIDI; however, the person who had the primary responsibility for ensuring that those funds are managed properly at the time, was Ghiz’s right-hand legal counsel, Billy Dow.
The Century 2000 Fund website page states that: “IIDI invests federal immigrant funds through low interest term loans to Prince Edward Island businesses where there will be positive economic gains to the Province”.
In IIDI’s Annual Report for 2017, it states that loans from the Century 2000 Fund – money that comes from the Federal government through it’s Immigrant Investor program – “…seeks similar security packages as would be ordinarily sought by a traditional chartered bank.”
Yet, as the AG mentioned several times throughout her report, there was NO tangible security on this loan, and it was Wes Sheridan who pushed for approval on those terms (a “letter” from him promising the money was secure that ended up meaning nothing).
But it was Billy Dow who had both the legal responsibility and the power to withhold the money if the terms of the loan weren’t being met – and they weren’t – but he turned the money over to McInnis Cooper anyway, even though the project had ENDED, and section 2.5 of the loan agreement expressly stated that disbursements were NOT to occur under those conditions.
Let’s unpack that provision of the loan agreement a bit: “…all previous advances to date shall be refundable by the Borrower to the Lender, unless such advances have already been incurred by the Borrower in good faith and in keeping with the terms of the Loan.” The Project ended on February 10, 2012. Although some money had been advanced to McInnis Cooper – which shouldn’t have been, according to the AG:
WILLIAM F. DOW, Q.C
What is especially significant to note here is that Billy Dow proceeded to register the securityAFTER the e-gaming project was no longer supported by government, thereby allowing McInnis Cooper to legally access the previously disbursed funds, despite the fact that the “deliverables” in the contract had not been delivered as per the loan requirements, nor would they ever be delivered.
Nor were there paid invoices attached to those deliverables that were already incurred “in keeping with the terms of the loan.” What is ironic is that Billy Dow, in a letter he sent to Kevin Kiley on December 22, 2011 informing him he was advancing $700,000, gave strict instructions that McInnis Cooper not release those funds until there was a “general security agreement” in place:
And as the Auditor General noted, there really never was security in place for the loan:If a project was well on its way to being successful, with a solid promise of healthy revenues, one could perhaps understand how enthusiastic promoters of the project would ‘take a chance” and advance funds from a government loan fund with little or no security. But for Billy Dow to have given McInnis Cooper law firm the go-ahead to pocket money for alleged “services” not tied to the deliverables in a loan agreement, after the project was officially mothballed by the PEI government, with zero chance of repayment, that was – in my opinion both unforgivable and criminal.
The Cover-up of the Loan Default by Minister Roach
Once the government withdrew support for the e-gaming initiative on February 10, 2012, any hope of recovering the money that Dow allowed McInnis Cooper to appropriate by finalizing the registration on February 28, 2012 was gone. It was totally unrecoverable based on the terms of the loan, which stipulated that “repayment” would come exclusively from e-gaming revenues with a successful e-gaming project:In fact, IIDI had already reported the entire $950,000 loss on the loan in the fiscal year ending March 31, 2013, as noted in the Consolidated Financial Statements in their Annual Report (see p. 13). However, this had been reported “anonymously” as an entry in the Notes Receivable under “Impaired long-term small business loan” with no “explanatory notes,” whatsoever, so with that obscurity, along with the general secrecy surrounding the whole e-gaming project at the time, apparently no one 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, IIDI didn’t even bother to mention that “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, heavily involved in assuring that McInnis Cooper had all their “outstanding” bills paid later in the Fall of 2012.
As well, Treasury Board had implemented a new policy in January 9, 2013 requiring IIDI to submit quarterly reports that were to include information on any loans that had a specific “provision for loss,” but IIDI never did report the $950,000 e-gaming loan loss to Treasury Board.
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 and the Information Commissioner would later rule that the Guardian’s request for a review of the MacLauchlan government decision to withhold the budget for the loan was valid, and that the document was not a “confidential deal agreement between Finance PEI and the Mi’kmaq Confederacy.”
Will the Information Commissioner Investigate this matter?
Karen Rose, PEI Information & Privacy Commissioner
I’m really hoping Karen Rose, the Information Commissioner, will investigate whether the document she ordered Hon. Health Macdonald to release to the Guardian was altered to remove critical information, and if she finds that to be the case, that she recommends to the Attorney General that a charge be laid against the person and/or persons responsible. All the evidence I’ve seen points to the conclusion that the three “third party” contractors were indeed part of the “budget” submitted to IIDI with the $950,000 loan, as I’ve outlined above in the comparison of the three budget charts.
Further evidence of this is found in another document that was attached to CMT’s recent Motion, confirming that the three contractors were included in the loan budget; namely, a Memo from Kevin Kiley to Neil Stewart and Steve MacLean (then Clerk of Executive Council) dated December 12, 2011 [Note: The “Letter of Offer for the loan and second disbursement of $700,000 happened two days later on December 14, 2011, so the budget was obviously finalized at that time – See AG Report, Exhibit 3.1, p. 13.]:
Given the now known facts on this matter, it would seem that decisive and immediate action is warranted by the Information Commissioner, especially in light of the nature of the Order she issued to the Head of the Department: The wording of which was as follows:
 Pursuant to subsection 66(2) of the FOIPP Act, I order the head of the Pubic Body to disclose the record at issue to the Applicant, in its entirety.
On the face of it, it certainly appears that the Head of the Department (Hon. Heath MacDonald at the time of the Guardian’s Access Request late in 2016):
(1) obstructed the Commissioner in the performance of her functions under the Act;
(2) failed to comply with her order to provide the original, final budget submitted to IIDI “in its entirety” by
(3) “altering,” “falsifying” and “concealing” information in the government record ordered released, in contravention of specific provision within section 75 of the the FOIPP Act:
75. Offences (1) A person shall not wilfully:
(c)obstruct the Commissioner or another person in the performance of the functions of the Commissioner or other person under this Act;
(d) fail to comply with an order made by the Commissioner under section 66, or by an adjudicator under subsection 68.7(2);
(f)alter, falsify or conceal any record, or direct another person to do so, with the intent to evade a request for access to the records.
Will there be any consequences?
Will the Guardian, CBC or Eastern Graphic follow up on the information in this article, or will we have to wait for the Globe and Mail to do another story embarrassing the whole lot of us? Will reporters start asking Premier MacLauchlan and Auditor General Brown the tough questions they should be asking?
Will McInnis Cooper be made repay the money they should never have taken in the first place?
And perhaps the most important question of all: will the Premier finally take action and admit that what happened with e-gaming constitutes a serious breach of public trust involving fraudulent behavior, and to make things right it’s necessary that he not only admit that, but take whatever action necessary to fully investigate and address the entire matter and then ensure that appropriate consequences for what a full and honest investigation uncovers, starting with actions being taken on what has already been uncovered in a number of areas pertaining to e-gaming, including the destruction of government records; the mishandling of the e-gaming loan; the fraudulent grant from Cheryl Paynter, etc.?
Wade Maclauchlan came into power on a strong promise that he would “do things differently,” committing himself and his government to full transparency, honesty and accountability. To date, he has not lived up to that high standard. In fact, he has completely denied that anyone did anything wrong with e-gaming, stubbornly refused to answer questions from both media and opposition members, and mislead Islanders about how government e-gaming records were destroyed, choosing to defend his long-time friend and former Liberal premier, Robert Ghiz, rather than do the ethically-proper thing as Premier.
It’s time for the Premier to acknowledge the truth and work with the opposition parties to find a true and honest resolution to the lingering e-gaming fiasco!
The PEI media – the Eastern Graphic, CBC and the Guardian – were all initially keen to investigate and report on e-gaming. That seemed to change after it was revealed by the Auditor General in early 2017 that it was Robert Ghiz who ordered the destruction of government e-gaming records. And many Islanders remain unaware of that fact, given that neither the CBC nor Guardian have ever reported that news to Islanders, nor have ever – to my knowledge – allowed anyone else to make mention of it. Reporters stopped “digging” and “asking” and now seem content to offer the odd brief mundane update on the latest developments with the CMT lawsuit. This needs to change.
Media have a moral obligation to report the news: and government forging documents to frustrate our access to information; misleading both the Auditor General and Information Commissioner; facilitating and covering-up what essentially amounts to theft of public funds through fraud and misappropriation of public funds in contravention of provisions within loan agreements’ etc., ….all these things most definitely count as “news”.
Can anyone even remember the last time the Premier, or the Attorney General, or a Minister was chased down by a reporter and forced to answer a tough question about e-gaming?
This report has generated a good number of questions which our elected officials should be asked and forced to answer…that’s how you demonstrate “accountability”. So I really hope the media follows up on this work by making the findings from this investigation public, and then get busy digging a little deeper into the story.
If employees in a bank or local business were caught doing 1/10th of what a significant number of people involved with e-gaming did within – or in cahoots with – our government, they’d be fired in a minute and sent to jail. Yet nothing ever seems to happen to address this kind of irresponsible behaviour and rampant corruption within our government.
It’s time for a lot more Islanders to stand up and call upon those in various positions of authority and power to finally do something about the embarrassing way in which such blatant corruption and malfeasance is allowed to go on and on and on without consequence. If you’ve read this far, perhaps you’d like to take action….here are a few suggestions:
1. Send a link of this article to the government demanding action be taken:
(a) Jordan Brown & Premier MacLauchlan: Jordan is our current Attorney General, and should be calling the RCMP immediately to revisit the e-gaming matter with a new investigation. McInnes Cooper shouldn’t be allowed to hide behind false claims that all their information on e-gaming is protected by “solicitor-client” privilege…it’s not. They were acting as government “agents,” and “project managers” on the e-gaming file, as the Auditor General clearly stated in her report!
McInnes Cooper needs to come clean on what they did for Islanders to justify taking nearly a million dollars of our money when there’s absolutely nothing to show for it. And they should be forced to repay the amount of that loan they appropriated which was authorized to fund other things that didn’t happen.
As well, McInnis Cooper and/or MCPEI were required to provide the province with audited financial statements to account for the money taken from the MCPEI loan – and that’s spelled out clearly and in detail within the loan agreement – but they never have. In fact, those provisions stipulate that delays in providing those documents may result in – at the lender’s discretion – significant penalties. Have they been paying those penalties? It’s definitely time someone in charge exercises that discretion!
I’m sure if it was you or me who did that with government funds action would be taken. So send the Premier and Attorney General an email to express your concerns:
2. Send a link to this article to the media, with a short “Letter to the Editor”
Social media is important – but the mainstream media still has the greatest access to the most Islanders, and all Islanders have a right to know what really happened with the e-gaming project under our former Ghiz government. You don’t have to say much in a letter to the editor to have a big impact, so besides sending a link to the CBC, Eastern Graphic;Guardan; or Journal-Pioneer news departments asking them to follow up on this story, do some interviews with government, etc., why not take a minute and put a few thoughts down on paper expressing what you think are the most important to say on the matter, and then send a short Letter to the Editor by email to the Guardian, Journal-Pioneer, Eastern Graphic.
3. Send a link of this article to Opposition MLAs with a call for action
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.
John Kingman Phillips is a highly skilled barrister, sought out by clients nationwide. He has been practicing in Ontario since 2002, and began his practice 27 years ago in Alberta. John has a wide range of experience in corporate/commercial litigation, including bankruptcy and insolvency matters, class actions, product liability actions, criminal law, professional liability, insurance litigation, employment law and private international law. John has been counsel in many precedent-setting and important cases, including the criminal case of Stinchcombe before the Supreme Court, Merrifield, the RCMP harassment case, and acting for Phil Fontaine and the Assembly of First Nations in the Residential Schools class action – resulting in the largest class action settlement in Canada and the Truth and Reconciliation Commission.
Cora Nicholson, Svetlana Tenetko and Susan Holmes – the three PNP whistleblowers who had their privacy rights violated by the PEI government – will be represented in a lawsuit by John Phillips, a Partner in Waddell Philipps, a Toronto-based law firm.
One would expect the lawsuit to be a slam-dunk case, given the fact that PEI’s Information Commissioner and privacy watchdog, Karen Rose, has already thoroughly investigated the matter and ruled that an information leak during the 2011 election involving the P.E.I. Liberal party and three whistleblowers in the Provincial Nominee Program was indeed a violation of PEI ’s privacy laws.
When the Privacy Commissioner’s report was made public in December, 2017, the matter was immediately raised in the Legislative Assembly by PC MLA and leader of the official opposition, James Aylward. The Premier accepted the results of Ms. Rose’s investigation and apologized to the three whistleblowers, but never offered compensation for the harm and losses they suffered as a result of this illegal and targeted violation of their privacy rights.
Clarifying the Process for Lawsuits against the government
I posted a note on Facebook earlier this week (February 4, 2019) indicating that the PNP whistleblowers were filing their lawsuit in this matter. Perhaps I should have been more precise: when lawsuits are initiated against the provincial government the “Statement of Claim” is not immediately filed in court and made public. The Crown Proceedings Act requires that official “notice” is given before the legal proceedings begin in court.
I’ve been told this has already happened.
As the PC Leadership Campaign winds down with the Convention happening this Saturday at the Eastlink Centre in Charlottetown, please consider making a modest donation to my campaign if you have not already done so. And thank you to all my supporters and volunteers for making this such an amazing and rewarding experience. Regardless of the outcome on Saturday, I’ll always cherish these busy few months and be grateful for all the new people I’ve met and now call friends while out on the campaign trail.