Explosive New Evidence: An Ongoing E-Gaming Investigation

1Wade Snorting PNP Files

“Those public servants have not done        anything wrong, notwithstanding              allegations to the contrary,”

   –  Wade MacLauchlan [CBC, November 15, 2016]

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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.

Heath MacDonald

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

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 egaming loan budgetloan 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:

950,000 Loan Document sent to Guardian, March, 2016

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

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 Kiley

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.

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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.

Michael O'Brien

Michael O’Brien

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:

E-gaming Proposed Budget #1

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”: 

E-gaming Proposed Budget #2

Cheryl Paynter

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:

Didn't Inform Board of Outstanding Debt     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.

Wes Sheridan

Wesley Sheridan

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:

Sheridan Meeting Invoices

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.

Final egaming budget comparisons

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:

Finalized assessment of work done from e-gaming budget

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:ongoing advice

Don MacKezie

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:

AG deliverablesThe 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  1.1.1.2 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:

Paid Invoices Required in Letter of Offer

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.

Clause in Loan Agreement

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:

Registration of the Security

William Dow

WILLIAM F. DOW, Q.C

What is especially significant to note here is that Billy Dow proceeded to  register the security AFTER 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:

Letter from Dow to Kiley, December 22, 2018 Screen Capture

And as the Auditor General noted, there really never was security in place for the loan:Security for LoanIf 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:Repayment from Project Revenues Screen Capture.JPGIn 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,” whatsoeverso 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

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.]:

Kiley email to Stewart and MacLean, December 12, 2011 Screen Capture

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:

VII. ORDER

[79]  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?

What’s next?

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!

Reporting Covenants

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:

Jordan Brown:   : sthorne@gov.pe.ca     Wade MacLauchlan:  premier@gov.pe.ca

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.

Or Finally…..

3.  Send a link of this article to Opposition MLAs with a call for action

Here’s a list of PC Opposition MLAs:

Here’s contact information for Green Party Opposition MLAs.

Here’s contact information for PC Party Opposition MLAs.

 

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3 Responses to Explosive New Evidence: An Ongoing E-Gaming Investigation

  1. PaulaErnest Gallant says:

    Make’s me sick to think that these are the people we elected to represent us . Totally disgusted.
    No wonder when elections come around ,voter turnout is down to 60%.

  2. Ivor Sargent says:

    Congratulations Kevin for your excellent investigative journalism.
    I can personally vouch for the fact that McInnes Cooper and Wes Sheridan were also in collusion to defraud landowners in Kings County in 2008 with relation to the Hermanville/ Clearspring wind farm project. Details of an investigation into this matter will soon be made public.

  3. Karl Proude says:

    So sad, and you wonder why some of our flake politicians are jumping ship. I just wish more people would update themselves on P.E.I.corruption.But just ask them a question about Trump,they know all about it. Pleased to see we have a great young lad (Nick Arsenault) running Green in the Evangeline area. After all If I remember right it was Sonny Gallant that made the motion to block the E-gaming committee from calling Chris LeClair,former chief of staff,Melissa MacEachern former deputy minister, and also Paul and Garth Jenkins . Sonny Gallants words were. What duty is it going to solve by bringing them in here and embarrassing them he asked? Spoken by a politician that should jump ship and take his pension and save the embarrassment of losing.very dissapointed in a man that I once had respect for thus turned into a McLaughlin party puppet.pr

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