Monday, March 11, 2019

BC Auditor General Bellringer's next task? BC Liberal Minister of Finance having used internal auditor for Partnerships BC report

Internal Audit

Report on - Government of B.C.

"More than half of the contract files reviewed did not contain adequate documentation."

Table of Contents. Section. Page No. Abbreviations . ..... Internal Audit and Advisory Services evaluated Partnerships BC's governance, mandate, roles and ..
 That should have resulted in a FULL Audit of Partnerships B.C. in 2015

Video of Question Period

Blain, Larry and  Partnership BC

Question Period: Leader John Horgan asks about conflict-of-interest ...

Oral Questions


J. Horgan: Yesterday we were discussing in question period the conflict of interest that was unearthed with Michael Graydon, the former chair of the B.C. Lottery Corporation, and we reviewed the conflict-of-interest rules. The minister assured us that a review was done.

According to the conflict rules for members of government boards…. This is what the document says: “A director should not use his position with the organization to pursue or advance their personal interests.” It seems a reasonable proposition. I think most British Columbians would be assured that government is doing their level best to ensure that insiders don’t get special treatment.

So it’s with some satisfaction, I suppose, that I bring another issue to the floor for the minister and the Premier to respond to. That’s one Larry Blain, who would be known to the government as the transition coordinator of the 2001 Liberal election victory and later went on to become the CEO, and later the chair, of Partnerships B.C.

My question to the Premier is: did Larry Blain comply with the rules, as I just articulated them, with respect to members of government bodies ensuring that they were not in a conflict of interest?

Hon. M. de Jong: Let me say this, first of all, about the organization, one that we are immensely proud of, Partnerships B.C., which has really set the standard in Canada for the advancement of 3P procurements. Let me further say this about Mr. Blain and the time that he spent involved with that organization, which was a key time. His contribution to the advancement of 3Ps was incredibly important. The success of those programs speak for themselves in terms of the countless projects that were delivered on time and on budget.

Madame Speaker (Linda Reid): The Leader of the Official Opposition on a supplemental.

J. Horgan: A ringing endorsement from the Minister of Finance.

Mr. Blain’s career at Partnerships B.C. began when he was appointed the CEO in 2003. He remained in that position until the fall of 2010, when he stepped down as CEO and then became chair of the board. Then, five days later, Partnerships B.C. awarded a $95,000 contract to a company called Aardvark Insights.

Now, Aardvark Insights has one company director, and his name is Larry Blain. So that means, as I read it, that the chair of Partnerships B.C. and the board gave a contract to a contractor named Larry Blain. The chair of the board is also named Larry Blain. Perhaps the Premier or the Minister of Finance can clear up if that is, in fact, one and the same person.

Hon. M. de Jong: There are very clear guidelines in place that apply to Crown agencies, Crown corporations, that stipulate the circumstances under which procurements for both services and products must occur. We expect all agencies, Partnerships B.C. included, and all leaders within those agencies to comply with those guidelines.

Madame Speaker: The Leader of the Official Opposition on a further supplemental.

J. Horgan: Partnerships B.C., in defending what, in my opinion, is the indefensible, said that Mr. Blain recused himself from board meetings whenever they were discussing issues that he might have been consulting for on behalf of Partnerships B.C. So we did an inventory of the contracts that were let to Mr. Blain and the projects that he was working for. It seems odd to me that he would have recused himself from more meetings than he actually chaired, because he had so much involvement in each and every one of the projects.

As the minister outlined, Mr. Blain really was Partnerships B.C. It was his idea. The Liberals created Partnerships B.C. because he said it was a good idea. They paid him a princely sum — if princes are paid modest millions, a princely sum — over the course of a decade, and then, to put a cherry on top, when he stepped down from his service to the people of British Columbia and moved from the executive suite into the chairman’s suite, he gave himself a contract. That rings conflict of interest.

To the Premier: is this the type of government that she’s going to continue to run, one where insiders can give contracts to themselves?

Hon. M. de Jong: The code of conduct and the expectations of the government are clear. They require all agencies and the leadership within those agencies to comply with the very strict requirements around the procurement process.
The standard actually extends beyond that. Not only are the requirements complied with to ensure that there is no conflict but also that there not be any appearance of conflict. That is the standard that we expect of all agencies. That is the standard that we expect of all those who lead those agencies.

C. James: The Finance Minister said this is about appearances and appearances of conflict. Well, appearances of conflict are all over this entire story. As a consultant for Partnerships B.C., Larry Blain advised other Crown corporations on various projects. In fact, in late 2011 B.C. Hydro billed Partnerships B.C. for work done by Aardvark Insights on Site C. One of the directors of B.C. Hydro was — wait for it — Larry Blain.

So just to recap, Partnerships B.C., chaired by Larry Blain, contracted with Aardvark Insights, owned by Larry Blain, which did consulting work for B.C. Hydro, governed by Larry Blain. Can the Minister of Finance tell us how, possibly, conflict-of-interest rules could have been followed with these intertwined relationships?

Hon. M. de Jong: The member may or may not be aware that the internal audit in the advisory services division conducted a review, as it has of a number of Crown agencies. It does so with the specific objective of ensuring that proper processes and procedures are being applied across the fold, including the procurement process.

Whilst one can suggest that by recusing and taking steps that are provided for that that is a means of ensuring that the procurement process is properly followed, the standard that we set and expect of agencies and the leadership within those agencies goes beyond that. There must not, not only not be a conflict; there must be no appearance of a conflict.

Madame Speaker: Victoria–Beacon Hill on a supplemental.

C. James: Let’s take a look at the B.C. Liberal standard. Between 2003 and 2010 Larry Blain was paid nearly $4 million as the CEO for Partnerships B.C. Then, as the chair, he billed $188,836 in fees and expenses. But that’s not all. Mr. Blain also served on the boards of the Transportation Investment Corporation, Powerex and B.C. Hydro, which paid him $264,000 for his services at the same time. So between director fees and expenses and Partnerships B.C. consulting contracts, Larry Blain received $621,000 from taxpayers over four years, all wearing different hats.

Can the Minister of Finance explain how Larry Blain was able to keep all of those various roles and reporting relationships appropriately separated?

Hon. M. de Jong: First of all, I think it bears emphasizing that the roles performed by Mr. Blain and the remuneration that he received were all in the public domain. So I would caution or at least observe that it would be inaccurate and unfair to suggest today that somehow this represents some kind of a revelation.

I will further say this about the work that Mr. Blain undertook on behalf of the province at Partnerships B.C. I can go through a list that begins with the Interior heart and surgical centre, the Cancer Centre for the North, the Canada Line….


Madame Speaker: Members.

Hon. M. de Jong: The examples of Partnerships-led projects that have set the standard for 3P procurement right across Canada, that ensured the taxpayers of British Columbia were well served, that saw those projects come in on time, on budget — sometimes ahead of schedule and under budget — is lengthy and one that we are very proud of in British Columbia.

B. Ralston: There’s more. While wearing his Aardvark Insights hat and working as a consultant for Partnerships B.C., Mr. Blain also consulted for SaskBuilds, which is the Saskatchewan equivalent of Partnerships B.C. SaskBuilds paid Partnerships B.C. $150,000 to advise them on two long-term care and hospital projects, but it appears that Mr. Blain was also working as an independent consultant who obtained a contract directly from SaskBuilds for $18,000 on the very same projects.

The minister has spoken of no conflict and no appearance of conflict, so can he explain how Mr. Blain was able to work as chair of Partnerships B.C., as a contractor for Partnerships B.C. and a contractor with companies directly connected to Partnerships B.C. all at the same time?

Hon. M. de Jong: Well, let me say to the member and members opposite that I hope it’s no secret to them that the work undertaken by Partnerships B.C. garnered the attention of agencies right across Canada. We’re proud of that fact.


Madame Speaker: Hon. Members.

Hon. M. de Jong: I should think that members would celebrate the fact that, for example, Canada’s furthest-northern airport sought advice from Partnerships B.C. on how to advance that procurement and construct the new airport in Nunavut. I don’t think there’s any secret. We’re very proud of the fact that Partnerships B.C. undertook their work in a way that garnered positive attention from not just across Canada but elsewhere in North America, and that’s a testament to the success of the 3P model here in British Columbia.

B. Ralston: Clearly, the Minister of Finance doesn’t want to grapple with the essence of these questions. When you wear as many hats as Larry Blain, things get quite confusing. He was working for SaskBuilds as a contractor. He’s working for SaskBuilds as a partnerships B.C. consultant and also serving as the chair of Partnerships B.C. He expensed trips to Saskatchewan in April, June and October of 2013 to Partnerships B.C.

The question to the Minister of Finance is multiple choice. Did Larry Blain bill Partnerships B.C. for his travel to Saskatchewan as (1) the chair of Partnerships B.C., (2) the president of Aardvark Insights, his company, contracted by Partnerships B.C. or as president of Aardvark Insights, consulting directly for SaskBuilds?

Hon. M. de Jong: The answer and the commitment remain the same, and the expectation remains the same — that agencies, Crown agencies, operating in British Columbia will do so and uphold the highest possible standard with respect to conflicts of interest and perceived conflicts of interest. That is the expectation of the agencies themselves and those that lead them.

K. Corrigan: What the minister is demonstrating is having absolutely no understanding of the importance of the separation of public and private in British Columbia. You’d think that Partnerships B.C. would have gone to great lengths to make it clear how Mr. Blain’s contract work was separate from his role as board chair, but when you look at the contract we obtained under FOI, what stands out is how utterly vague it is.

In 2010 Partnerships B.C. gave a half-page description outlining the services they expected, and after that, nothing. They amended the contract five times to increase the total value to $219,000 but never described what was expected for that money.

Does the Minister of Finance consider it to be best practice that Mr. Blain was given a four-year-plus consulting contract with no description of the services to be provided?
Hon. M. de Jong: Well, what I have learned over the years is to be a little bit suspect about the documentation and the selective quotation from documentation that we are inclined to hear from the opposition in this chamber. I am more inclined to, at this stage, rely upon the findings of the internal audit review and report that was conducted with respect to Partnerships B.C. If the member has additional information that she wants to provide to me, I’m happy to look at it.

Madame Speaker: The member for Burnaby–Deer Lake on a supplemental.

K. Corrigan: I have seen that audit, and it expresses concern about conflict of interest. After the Michael Graydon conflict-of-interest fiasco, the minister pledged to ensure that other Crown corporations and government agencies were operating according to the highest standards. He pledged to ensure that the public would not be forced to question whether people in positions of authority were working in their own interests or in the public interest.

Can the minister tell the House how many other government agencies have made cozy contracts like Partnerships B.C.?

Hon. M. de Jong: Well, interesting that we learned in the supplemental question that the hon. member opposite has seen the report, or claims to have seen the report, and chooses to ignore the portions of the report that focus specifically on the issue that she has raised and indicate that those issues were generally well managed. The member can selectively try to present a story here.

I will repeat for her what I have said a few moments ago. The standard expectation of every single member of this government is that the highest code of conduct, as it relates to every feature of conducting public affairs, will be upheld by the agencies of government and by those who lead those agencies. That has been the case and will continue to be the case under this government.

Auditor General Search Results:   Partnerships B.C.


BC Legislature Hansard:
  • Comments on school district projects (Corrigan) 8465
  • Transition from CEO position and potential conflict of interest (Corrigan) 8445 (de Jong) 8443-6 (Horgan) 8443-4 (James) 8444 (Ralston) 8445

By Andrew MacLeod 22 Apr 2008 | 
The Tyee’s Legislative Bureau chief in Victoria. You can reach him here.

'How Many Bottles of Wine to Build a Hospital?' | The Tyee

Apr 22, 2008 - After it was revealed last year that Partnerships British Columbia Inc.'s CEO Larry Blain and others had enjoyed much wine and good food at ...

 ..... instead of judging whether the expenses were appropriate, the auditors checked to make sure the amounts paid out matched the supporting documentation, the approved forms were used and “that items are paid in accordance with policy.” They also compared the agency’s policies to the provincial government’s.

However, they carefully noted, “The above procedures do not constitute an audit of Partnerships British Columbia Inc.’s corporate and staff expenses and therefore we express no opinion on these amounts or on any of its individual account balances.”

‘Not an explanation’

Finance Minister Taylor and PBC’s board of directors had agreed on the limited scope of the investigation, said Davies. “That is all that’s planned.”

“It’s not an explanation, based on what you’ve just told me,” said the NDP’s Ralston. “What certainty do you have the items are even selected randomly? If you’re selecting randomly, who selected randomly? You could select to avoid the most embarrassing ones.”

More explanation is needed, he said, but the government is unlikely to insist on getting one. “It’s pretty typical of the political protection they apply to Partnerships B.C. It’s a favoured agency.”


1 comment:

e.a.f. said...

oh dear, this may be a problem.

Nice research.

Perhaps something else for Beverly to look into when she gets here to look into the other Leg. stuff.