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Unfair, inaccurate, misleading, inappropriate: judge comes down hard on Collingwood transactions

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In AWARE News Network
Nov 2nd, 2020
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Justice Frank Marrocco

Justice Frank Marrocco releases report online today.

Four people were at core of Collus sale, rec centre investment

This is the first in a series of three reports on the Collingwood judicial inquiry, dealing with key findings made by the judge

By Kate Harries AWARE News Network

Four people – former MP Paul Bonwick; his sister, former Collingwood mayor Sarah Cooper; his former business associate, the town’s deputy mayor Rick Lloyd; and his friend, former Collus Power CEO and president Ed Houghton – were at the core of what a judicial inquiry has characterized as transactions stained by undisclosed conflicts, unfair procurements and lack of transparency.

Along with Cooper and Lloyd, note is taken of the role played by former councillor Ian Chadwick in failing to declare a conflict of interest, joining the other two members of council in undermining a flawed process.

In a statement read out online today, Justice Frank Marrocco said his inquiry uncovered significant matters – including unfair bidding practices, inaccurate and misleading town council reports and the misuse and inappropriate disclosure of the town’s confidential information.

“In other words, behaviour that, left unaddressed, undermines the foundational core and reputation of a municipal government,” Marrocco said.

Link to Marrocco report

The inquiry, which was held over 61 days in 2019, heard from 57 witnesses and examined 18,000 pages of transcripts and 440,000 documents. It arose from a February 2018 resolution of Collingwood council requesting the investigation of two major transactions – the 50 per cent share sale of the town’s utility and construction of a multi-use recreational facility.

The Collus sale is dealt with in Volume 2 of the report. Evidence to the inquiry showed that the plan originated with Houghton – then CEO of Collus Power, CEO of the town’s water utility AND the town’s executive director, engineering and public works – who floated the idea to Barrie-based PowerStream CEO Brian Bentz, in a December 2010 breakfast meeting.

Neither the mayor, nor the CAO of the time, nor town council knew of this discussion but in January, 2011, Bonwick had become aware and contacted Bentz to offer his services as a consultant on the sale.

In February 2011 Houghton retained KPMG to analyze ownership options. When the consultant’s report went to council a few months later, Houghton had altered its recommendations to add an option he called a “strategic partnership.”

The initial impetus for the sale had been a 2014 campaign promise by Cooper (supported by her brother who was a member of her campaign team) for the town to reduce debt and find efficiencies. But that goal had been lost in Collus Power’s objective of obtaining more resources and pursuing growth, Marrocco notes.

Council learned in camera about the proposed sale in June 2011. A “Task Team” was struck. A Request for Proposals was issued in October 2011.

The report states: “Both before and during the RFP process, Mr. Houghton and Deputy Mayor Lloyd, who were members of the Task Team, shared confidential information with Mr. Bonwick, including sensitive information about the other bidders’ presentations and the Task Team’s deliberations. Mr. Bonwick passed the information onto PowerStream to assist with its bid.”

It wasn’t until November 2011 that Collus Power and the town announced publicly for the first time that they were pursuing a sale of up to 50 percent of the utility to a strategic partner.

After PowerStream was declared the successful bidder, despite its bid being $3.85 million less than the bid from Hydro One, Houghton engaged a corporate lawyer to “paper” the transaction, the report states. Cooper and Lloyd ignored warnings from town solicitor Leo Longo that Collingwood might need legal advice independent of that received by Collus.

Council members voted in favour in January 2012, but unbeknownst to them, PowerStream was assisting in drafting the bylaw authorizing the sale. Houghton removed provisions in the bylaw allowing the town solicitor and council to review changes to the sale terms before the final agreements were signed. “The town solicitor and the CAO wanted these protections,” the report states. “Their view did not win the day.”

An even more tangled tale resulted in the proceeds of the Collus share sale going to a sole-source design-build contract in excess of $12 million to supply and construct arena and pool facilities from an “uncommon” construction material.

The contract is the subject of Volume 3 of the inquiry report; in it Marrocco details evidence, some of which  he rejects from various witnesses including Lloyd and Houghton, and cost differences that were artificially inflated by $3.39 million.

Bonwick received a success fee of $756,740.42 from the successful bidder, four days after council approved the project in August 2012.

The four key players in both transactions – Bonwick, Cooper, Lloyd and Houghton – are described as people who knew each other well. “Their family relationships were generational, and their personal relationships were complex and interrelated.”

Not part of the inner circle were two people:

The town’s CAO Kim Wingrove, recently hired from a provincial government position, who was excluded from discussions and foiled in her efforts to institute transparency and accountability processes. Bonwick told the inquiry he found her behaviour “bizarre” after she became upset at one meeting, but Marrocco states: “I do not accept that Ms. Wingrove was an unstable, ineffective, or unprofessional public servant.”

She was terminated in an in-camera session on April 2 2012, before the share sale transaction was finalized. Lloyd triumphantly emailed Bonwick from in-camera that Wingrove’s “most important” termination was “DONE!!” She was fired after she refused to resign and Houghton added the role of acting CAO to his other responsibilities.

The other outsider was John Brown, Wingrove’s eventual replacement, an experienced CAO whose questioning of agreements that had been made between Collus and PowerStream led to increasing tension. Brown tried but was unable to determine how crucial details of the deal were decided upon or whether the town’s interests were adequately protected throughout the transaction.

Marrocco notes that during this time members of the public were raising “fair and troubling concerns.”

“The evidence I heard and the conclusions I have drawn show that those concerns were well founded,” he states. “When the answers to legitimate questions are dismissive, spun, or obfuscated, public trust further erodes.

“When trust is lost, the relationship between the public and its municipal government may never be the same.”

Marrocco makes 306 recommendations, some of which will involve provincial action with changes to the Municipal Act and the Municipal Conflict of Interest Act, others specific to Collingwood, and many that inquiry lawyer Kate McGrann said “are foundational to good governance across the province.”

Recommendations 1 and 2 call for a redrafting of the Municipal Act to make clear that a mayor cannot provide unilateral direction on behalf of council, without council’s agreement or approval.

“The Province of Ontario should amend sections 225 and 226.1 of the Municipal Act to remove the inaccurate description of the head of council as the chief executive officer of the municipality,” Recommendation 1 states. “The head of council of a municipality is responsible to council and does not have the authority to bind council.”

Recommendation 13 is that the group of family members covered by the Municipal Conflict of Interest Act be expanded to include, at the minimum, a spouse, common-law partner, or any person with whom the person is living with as a spouse outside marriage, a parent, including stepparent, and legal guardian, a child, including stepchild, a grandchild, siblings, aunt, uncle, nephew, niece, first cousins; and in-laws, including mother- and father-in-law, sister- and brother-in-law, and daughter- and son-in-law. Presently only parent, spouse and child are included.

Recommendations 229-264 deal with a Lobbyist Registry, which should include “all those who are paid or represent a business or financial interest whose objective is to influence elected officials or staff at the Town of Collingwood.” The report states there’s nothing wrong with lobbying, but it needs to be done in the open. The pubic should know who is doing it, to whom, when and to what purpose.

See also:

Secrecy, conflicts in Collingwood deals point to holes in Ontario’s integrity rules, judge finds

Role of mayor, role of lobbyists addressed in Marrocco report

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