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Episode #14: Remembering the Loyalty Card Program

Paragraph 127 in CMT’s original Statement of Claim read:

127.  In October of 2011, the Loyalty/VIP Program was given approval by the Department of Tourism and Culture and representatives of CMT created a survey to determine what local business operators would be looking for in such a program.

Jonathan Coady responded to that claim  in paragraph 32 of his “Statement of Defence” saying Government had “no knowledge of the allegations” made by CMT in paragraph 127.  The PEI Government denied the existence of the Loyalty Card Program completely in both the first Statement of Defence filed April 09, 2015 and the second Statement of Defence filed June 14, 2018 . 

memory eraserWhen I read that over a year ago I thought to myself: “If a PEI government department official gave approval to CMT/Simplex to develop a Loyalty Card program, and CMT then conducted a survey of local business operators to see what they would want such a program to entail – well, that shouldn’t be too hard to confirm.  And if that happened, then it’s not logically possible that the government could – at one and the same time – develop a Loyalty Card program and have no knowledge of that program, without suffering some kind of  mass government-wide amnesia.”

Premier Ghiz also swore that he never heard of the Loyalty Card Program in Cross – examination; but then again, he also swore he didn’t know what happened to all his chief of Staff’s documents he signed to have destroyed, claiming not to have read what he signed (a one page form) ] – the “Q” is from lawyer John MacDonald; the “A” is from former Premier Ghiz:

Ghiz - Loyalty Card

I had also come across a document that had been filed with an Affidavit in the 2013 Securities Investigation  from “Eddie Francis” addressed to Melissa MacEachern, then Deputy-Minister of Tourism and Culture. who was apparently heading up the Loyalty Card initiative at the time. That email unequivocally confirmed that there was indeed a PEI Government Loyalty Card program involving CMT/Simplex, and that program wasn’t simply discussed as a possibility, but had been officially declared a “go”.

I wrote a couple of previous articles about this issue, the first one over a year ago, then another when I obtained 207 pages of Loyalty Card documents through an Access to Information Request in January, 2019, which I made public as a Package at that time.

CMT entered those documents as “fresh evidence” in the Supreme Court Motion Hearing, so I was anxious to see how Judge Campbell would respond to the claim made by Coady that his PEI government defendants had no knowledge of the program, now that he had 207 pages in front of him all about the Loyalty Card Program.

Jonathan Coady – having denied any knowledge of the program – had obviously not produced any of the Loyalty Card records, notwithstanding CMT’s allegations in its Statement of Claim making all of those documents materially-relevant. I also wondered what Campbell would say about him withholding relevant documents?

What Judge Campbell Said About the Loyalty Card Program

When I obtained those 207 pages of Loyalty Card Program government records nearly a year ago (January 4, 2019) I wrote a blog article title Government Amnesia and the Loyalty Card Program which I  concluded by writing:

 ” I can hardly wait to see how Jonathan Coady … proves his claim that his clients – agents of the PEI government – had no knowledge of the Loyalty Card program. “

Well, the movie didn’t live up to the trailer! Coady didn’t explain anything about his client’s amnesia about the Loyalty Card, and Campbell never asked him about it. Nor did  Campbell say anything about the fact that those materially-relevant documents which CMT filed from an Access to Information request had not been produced by Coady in his document disclosure, as required by the Rules of Court.

So what did Campbell say about the Loyalty Card Program? Not much. Other than that CMT, FMT/764 and Maines had absolutely nothing whatsoever to do with it and nothing was lost financially because it never went forward. In Paragraph 361 he states: “Neither CMT, 764, or Maines were mentioned as being involved in those contracts,” but then he obviously feels compelled to deal with those 207 pages of documents that mention “Eddie Francis” on almost every page, and says in paragraph 373:

Paragraph 373: While Maines may have been an instigator in getting Simplex and the Department of Tourism and Culture into discussions about a loyalty program, the contract with respect to that project was strictly between Simplex and the Department.  Similarly, there were references to an individual named Eddie Francis in the additional materials filed by the plaintiffs at the commencement of the hearing. The documents show that he was actively involved in email discussions with Tara Jackson of Tourism PEI in refining details of the proposed program. That does not change the fact that the plaintiff corporations CMT and 764 were not parties to the contract under which that work was undertaken.

The evidence clearly shows that CMT and 764 (FMT) were indeed “parties” to the Loyalty Card Program – Judge Campbell either doesn’t  understand the nature of the corporate affiliation between these two companies or is deliberately choosing to ignore it….either way, it completely skews everything he says about Maines and CMT/FMT because he’s interpreting the facts through a broken lens.

The Truth?

To understand the significance of the “Loyalty Card Program” in CMT’s claim it’s first necessary to grasp the fundamental nature of the CMT/FMT offer to the PEI Government to establish a Financial Transaction Hub in PEI, and the terms and conditions of the “recruitment package” that the PEI Government provided to CMT/FMT.  There were several components to the overall project, one of which was the establishment of a Financial Transaction Platform, another was to attract new businesses to PEI and also to create business for the “Hub” with initiatives like the Loyalty Card Program.

Remember, the MOU was signed with FMT (not Simplex).  CMT/FMT was the local company through which all “hub” programs would flow – including the Loyalty Card Program. In particular, CMT would benefit immensely from the Loyalty Card Program by acquiring access to customer information  which the Loyalty Card Program would make available for subsequent marketing campaigns.

There needed to be a financial transaction “hub” – ideally one that had access to the SWIFT global network – which CMT/FMT would be providing for a range of businesses, as well as the PEI Government, to tap into. But there also needed to be new “clients” recruited for the hub, something CMT/FMT undertook to do with its existing global network of contacts.

There were no “contracts” signed between the PEI Government and CMT/FMT for those recruitment efforts for the same reason there was no contract signed between the PEI Government CMT/FMT with the Loyalty Card Program: CMT stood to benefit as much as the PEI Government from every new client, including from Tourism PEI’s Loyalty Card/VIP Program.

Wes Sheridan was pushing for “gaming” clients and when Maines delivered Virgin Gaming, Sheridan let the officials at Innovation PEI know that he wanted to “marry e-gaming with the financial transaction platform” projects.   Why? Because it was CMT/FMT delivering both components, and the platform for further expansion.

The Loyalty Card “contract” that Judge Campbell makes so much of may have been with Simplex, but that was because Simplex was – as the Auditor General fully understood – CMT’s “Technology Partner.” The AG understood that it was a “joint effort” between CMT and Simplex with both the Financial Transaction Platform and the Loyalty Card Program:

Section 4.3:  In May 2011, the former Deputy Minister of Tourism and Culture MacEachern] contacted the Vice President of Business Development for CMT [Maines] regarding the establishment of a loyalty card program for PEI. The work on the loyalty card program overlapped the E-gaming initiative and involved both Capital Markets Technologies and Simplex. … .”;

Judge Campbell can’t seem to grasp that Simplex was CMT/FMT’s “technology partner” and while the technical aspects of the Loyalty Card Program fell to Simplex (and another company in the UK, which Simplex subcontracted work to because Simplex was too busy to meet the PEI Government timeline for the Loyalty Card Program launch) CMT/FMT was  diligently working on the “marketing aspects of the program” during the very same time period.  

It was Paul Maines as CMT/FMT V-P of Business Development who the Deputy Minister approached – not the other way around. Campbell says Maines “instigated” the project, but it was Melissa MacEachern who did that. Consider the following email from MacEachern to Paul Maines on May 4, 2011: 

Hello Sir

And what those “High level thoughts’ were was included in the email as what was envisioned:Loyalty ObjectivesAnd of even more interest to Maines and CMT/FMT I’m sure was the potential for a business partnership with the program by being the service provider:

Areas of Collaboration

When MacEachern learned from Maines that CMT/FMT could deliver the Loyalty Card Program through the transaction hub, MacEachern gave the project the “go”…in an email to Eddie Francis – an employee of CMT – not Simplex.   So who exactly was Eddie Francis?

Judge Campbell refers to “Eddie Francis” in Paragraph 373  of his ruling (as cited above) acknowledging he had some involvement in the Loyalty Card Program.  He doesn’t explain his involvement, and sees nothing significant with his involvement, and goes on to conclude that CMT/FMT was  in no way involved with the Loyalty Card Program contract with Tourism PEI.

Here’s what Eddie Francis swore in his 2013 Securities Commission Affidavit:

My engagement.JPG

Why would Eddie Francis swear that he was “engaged by CMT/FMT” to lead the sales and marketing division of a project called the PEI Loyalty/VIP Program” if that wasn’t true?

The partnership with the “sales and marketing”  component of the Loyalty Card Project was, in fact, entirely between CMT/FMT and Tourism PEI, with Tara Jackson working on behalf of Tourism PEI; and Eddie Francis working on behalf of CMT/FMT, again, as he swore in his Affidavit:

Francis 2

Campbell’s only reference to Francis acknowledges only that the “…documents show that he was actively involved in email discussions with Tara Jackson of Tourism PEI…”  His  involvement on behalf of  CMT/FMT was a little more extensie than sending and receiving a few emails, as is evidenced by the fact that CMT/FMT sent Eddie Francis to London, England “twice” doing work on the Loyalty Card/VIP project.

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Campbell seems bent on saying anything and everything he can in his Ruling to highlight a separation between the two corporate entities (CMT and Simplex) while choosing to completely ignore the fact that the PEI Government recruited CMT/FMT  to establish in PEI – not Simplex – knowing CMT had exclusive North American right to the Financial Transaction Hub in PEI and the Loyalty Card Program was just one additional revenue stream for CMT/FMT as would have been companies like Virgin Gaming.

The Consequences?