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FLAGGING O'LEARYGATE: The 3 Stages of Cover-Up

All the mea culpas from born-again investigative reporters who missed the Crocus story are enough to get Frances Russell to write another anti-Christian column.

And instead of reciting Hail Mary's to get absolution, they've taken to chanting "Red Flags" whenever they interview or write about government officials. Sadly, it's only lip service, since they don't seem to know what the term means.

They certainly don't demonstrate that they would do anything different despite their public declarations of guilt. One only has to look at how the news media treat O'Learygate, the latest scandal under the current government's watch, one which is replete with Red Flags.

O'Learygate is named after Brian O'Leary, the superintendent of the Seven Oaks School Division --- and former NDP campaign manager --- who guided the division's unlawful foray into land development. He said he was only selling surplus land, land which wasn't needed for a new high school once the government decided it was cheaper to renovate West Kildonan Collegiate.

The government would appreciate it if you stopped reading here.

They would like you to believe that their diversionary "Report Respecting a Review of the Financial and Legal Implications of Land Transactions in the Swinford Park Subdivision" is the final word on the subject. The Black Rod has already proven it's not (see our BLACK ROD EXCLUSIVE: Seven Oaks Land Scheme Swimming in Red Ink, June 7, 2005).

We've painstakingly gone through the evidence and uncovered many more Red Flags for our suffering born-again reporters to ponder.

The first, of course, is our discovery that the Seven Oaks School Division fudged their books to show a profit on their land speculation when the true figures proved they had lost between $200,000 and $300,000 so far.

The second is the three stages of the cover-up.

Stage One: Panic

The Seven Oaks School Division was merrily playing real-life Monopoly, building little Marvin Gardens and Baltic Avenues with taxpayers' money when reality slapped them in the face. A real-life taxpayer had caught on to what they were doing and wrote to the Minister of Education in early May, 2004, asking if it was true and if it was legal?

It was true, but it wasn't legal, and that sent the SOSD into a panic.

Before the week was over there was a flurry of activity involving the school division and the Public Schools Finance Board, the putative watchdog of what school trustees do with your money. The two of them colluded to rush through the paperwork to legitimize the sale of serviced lots of land by the SOSD, breaking every rule in the book to do it. Today, nobody can remember who did what - it says so in the report.

The Department of Education did its part in the cover-up.

The Minister assigned an executive member of the PSFB to answer the citizen's letter. That person did his part--- he "did not ask about the validity of the complaint", as the Minister's own report says. Then he drafted a response which was signed by the Peter Bjornson, Minister of Education. The response, which only took three weeks, said, in effect, "Get lost."

(Sounds a lot like what they said to the whistleblower on Crocus, doesn't it?)

Stage Two: The Cover-up Cracks

For six months the cover-up held steady. In that time the PSFB members and staff personally toured the Swinford Park site and saw for themselves the development which was not permitted by law. The school division published a misleading financial statement overstating its revenue on Swinford Park by almost a million dollars. The last public meeting on Swinford was held. And somebody within the administration started asking questions.

Amid the discussions, emails and verbal reports on the land development, the SOSD was still pushing ahead, asking for approval to sell the final 20 lots in the Swinford development. But the questions just wouldn't go away.

(The government hasn't released the questioning emails. Sounds more like Crocus every minute, doesn't it.)

Coincidentally, it was during this time period that the PSFB decided that it was too expensive to renovate West Kildonan Collegiate. A new high school was now needed, and wouldn't you know it, Seven Oaks just happened to have some land in a new development set aside for a new school.

Yeah, what a coincidence.

It was also what attracted the attention of the Opposition which started to ask questions of their own about the new school.

Stage Three: The Gang that Couldn't Get Their Stories Straight

On May 2 the Opposition zeroed in on the Swinford Park Development. The jig was up.

uckily the players had had a year to get ready for this moment.

In January, the PSFB finally got around to asking for a legal opinion regarding the sale of serviced lots by the Seven Oaks School Division. The report had come back; it said "They can't do that!"

Time to clean house. Ben Zaidman, the director of the PSFB throughout the Swinford Park development, found that he wasn't going to be reappointed. His replacement, Glenn Nicholls, the former superintendent of Seven Oaks School Division, and also a contributor to the NDP party. Plus ca change, plus c'est la meme chose.

(Oh, and the government refuses to let anyone see the legal opinion. It's probably sitting in Gary Doer's office right next to the Crocus emails, which they are also refusing to make public.)

In March, the PSFB authorized the final phase of the Swinford Park development but told the SOSD not to play around with land development again.

And when the Opposition started asking questions, the Minister, Bjornson, played dumb (not such a stretch) and denied knowing anything about Swinford Park. When the letter he received a year ago was produced, he "remembered" it and expressed the proper astonishment that Seven Oaks would be involved in land development.

And that's when the confusion started.

Remember that in November, Bjornson announced that it was cheaper to build a new high school in Seven Oaks than renovate West Kildonan Collegiate. The new school would go in the Swinford Park development while the newer section of WKC would be rebuilt to house a middle school.

On May 3, he repeated the same story in the Legislature.

A secret informant tells The Black Rod that during the same time period Brian O'Leary was saying that the Swinford site was "too small" for the planned new high school.

On May 12, O'Leary told a public meeting the new high school would be built on the east side of Main Street in the proposed River Ridge development.

On May 17, Bjornson told the Legislature the same thing.

But in an interview with Nick Martin of the Winnipeg Free Press published ten days later, O'Leary is back to the original story, saying the new high school is going to the Swinford site, with the middle school still planned for a remodelled WKC.

Barely two weeks later, O'Leary showed up at a community committee meeting saying the new high school was planned for River Ridge (contradicting what Bjornson told the legislature), that Bjornson gave ministerial approval for the new school in River Ridge back in February, and approval was needed ASAP so tenders could go out in November.

Whew. That's confusing. And it doesn't get any better when you look at the figures being tossed around.

The Minister says the PSFB says a new high school, to cost $10 million, is cheaper than renovating West Kildonan Collegiate.

But Brian O'Leary says the site is too small for the planned new high school, even though at 12 acres it is exactly the size of the site at River Ridge.

And building the new high school at River Ridge will cost $12 million. Plus the school division will have to dip into its own funds to buy 4 acres of land because the Minister only approved the cost of 8 acres.

You can give your head a shake. They decided to build a new high school for $12 million because a $10 million high school was cheaper than the cost of renovating WKC. And they admit the new school is going to be too small for the area when its built. And they are still stuck with excess land---the soon to be abandoned WKC site.

This passes as logic in the Department of Education.

But is there another story behind the story? In our last posting we hinted at a Grand Scheme behind O'Learygate. Was there one? Let's see.

What if…

We know the Seven Oaks School Division hired Lombard North Group as consultants for the Swinford Park development. But LNG has and had, then, another iron in the fire. They are representing the developers behind the proposed River Ridge project east of Main.

What if O'Learygate originally involved both projects. The taxpayer who blew the whistle on the Swinford Park project has done more research. He says the planned new high school spans three lots totalling 53 acres. But the school board only needs 12 acres for a school. Were they planning on buying the whole 53 acres and selling the rest as they did in Swinford Park?

Or, what if:

The Swinford project land was originally bought as contingency for a new high school.

When the PSFB scotched that plan in 2001, the school board said they would hold the land for a new middle school. But the Minister kept saying the middle school would go into a renovated section of WKC, even after he approved a new high school.

So why is Brian O'Leary now saying the middle school is going into Swinford Park and the new high school into River Ridge?

Was this all a clever shell game to get two new schools out of a Department of Education which has been reluctant to spend money on building new schools? (And let us not forget, the new high school will have the Randy Bachman performing arts facility; a new ampithaeatre for sports that O'Leary says will allow West K to have, for the first time since Bud Grant coached the Bombers, a football squad - yay team!; and a 79 place daycare, the maximium allowed under law. Oh and ample parking where nature once roamed free.)

And if that doesn't raise enough red flags, lets throw up one more.

O'Learygate is already bleeding red ink, but the official government report suggests the costs will be higher than being admitted.

The report hinted at that when it said the PSFB has ordered the school board to do a ‘special audit’ of its expenses when the Swinford project is complete. The Minister took that further when he told the Legislature he so mistrusts Seven Oaks' accounting that he has taken the matter out of their hands and has ordered an ‘independent audit.’

We wonder whether the reason for this lies in the school board meeting of April 11. That day the trustees suspended regular business to pass a bylaw to let them borrow money to cover current operating costs.

We wonder whether that has anything to do with the reference in the government report to "timing differences" which caused Seven Oaks to tie up about $900,000 in operating funds at times.

If they are related, then shouldn't the interest on the money borrowed for operating costs be added to the expenses for Swinford Park?

(And doesn’t the cute reference to "timing differences" sound a lot like the "pacing issues" the government was warned about in the Crocus scandal?)

And while we're raising red flags, The Black Rod still wants to know:
* WHO was responsible for the misleading financial statement in October, 2004, that overstated revenues from lot sales by almost one million dollars

* WHO discovered the error

* WHEN was it caught, and

* WHY did it take eight months to make it public?

And is it a red flag when one scandal begins to look exactly like the previous scandal?