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Auditor gives O'Learygate a makeover

Come one. Come all.

See the amazing contortionist Auditor General of Manitoba bend and twist herself into unnatural and painful positions as she tries to shape a new reality from the scandal known as O'Learygate.

In fact, the role of Brian O'Leary, who gives his name to the scandal, is not even explored in Auditor Carol Bellringer's "special audit".

O'Leary, the superintendent of the Seven Oaks School Division --- and former NDP campaign manager --- guided the division's illicit foray into illegal development of Swinford Park with public money. And he still gets a pass in Bellringer's books.

The special audit took 20 months--yes, that's twenty months--to answer three main questions.

Q: Was the Seven Oaks School Division's land development project lawful?
A: No.

Q: When they got caught, did they admit what they were doing?
A: No.

Q: Who's to blame?
A: Ah, there's the rub...

Bellringer worked long and hard to massage that answer. First she threw up a bunch of straw man questions to obscure the evidence.


" Did Seven Oaks dispose of other surplus land and if so, did they comply with the Public Schools Act?"

Uh, who said they did?


" Was the decision process by the Public Schools Finance Board to approve a new high school to replace West Kildonan Collegiate Institute clear and transparent? "

Uh, who cares?


There's a half dozen more irrelevent eye-glazers that the media, as the NDP hoped, jumped on, ignoring the real meat of the story.

When it came to apportioning blame, Bellringer applied the same principle that the NDP uses to determine who is to blame for auto theft. In the NDP's case, it's obviously the owners of the cars that thieves steal.


In O'Learygate, it's not the people who entered the illicit land development and covered it up. It's the Public Schools Finance Board which "should have known" that Seven Oaks was going to go into the land development business.

Yet, a careful reading of the facts in the special audit tells the true story.

For starters, Bellringer confirms that Seven Oaks School Division lost well over $300,000 in its ill-fated land development project, something reported exclusively in The Black Rod in June, 2005---two years and two months ago.

But that's the end of the story. Let's start at the beginning.

In January, 2001, Seven Oaks School Division wanted a new high school to replace West Kildonan Collegiate. But the government isn't approving new schools unless every seat in a division is filled and there's no other option.

In Seven Oaks, the option was to renovate West K. That was minor stumbling block for the school board.


They hired a planner to, you know, do some preliminary work on a new high school, if, you know, there happened to be a new high school in the works.

They liked his report which suggested they buy twice as much land as they needed for a school, then subdivide the excess into a new subdivision. The profit would cover the cost of land for the school, and all would be hunky-dory.

So they bought the land. And asked the Public Schools Finance Board to reconsider the WKCI renos in favour of a brand new high school.

While the finance board considered the request, the Seven Oaks board applied for rezoning, held public hearings on the new (still unapproved) school, and bought even more land to provide better access to the new (still unapproved) school.

Six months later, guess what? The Public Schools Finance Board rejected their plan.
No new high school.
Minor hurdle, said the Seven Oaks school board.

They continued holding public hearings (the city and community were opposed to a new school at the site) until September, 2002 when they told the community they would hold on to the land for a new junior high school they hoped to eventually build there.

In the meantime, they had all this surplus land just sitting there. So they asked the PSFB for permission to sell it. They just forgot to tell the PSFB they were going to be their own developers.

In fact, their request kinda said the opposite.

"The request stated that SOSD hoped "...to sell the excess land to developers or builders in the near future." (P. 19, Special Audit: Property Transactions in the Seven Oaks School Division.)

They got the okay to sell the land with the normal provisions--put it out to tender, bring the bids to the schools finance board, and have a meeting with them to pick the best offer.

Then something funny happened. Okay, not exactly funny so much as extremely troubling, to the point that it calls Carol Bellringer's judgement into question.

On April 3, 2003, there was a meeting to discuss a request to shorten the tender process from 4 months to 30 days.

Three people were at the meeting: a representative of the Public Schools Finance Board, someone from the Seven Oaks School Division, and David Palubeski, the planner with Lombard Group North, who were working with Seven Oaks on the subdivision.


Three people.
Who gave three completely different accounts of what happened at that meeting.

In the news business, this is known as ONE HORKING BIG RED FLAG.
In the auditor general business, it's passed off with a shrug.

* The PSFB staff member said he left the meeting with the understanding Seven Oaks was selling "staked" land, i.e. undeveloped lots and there had been absolutely no discussion that Seven Oaks School Division was going to do any servicing of the lots.

* Palubeski said he left with the impression that the Public Schools Finance Board knew that the school board planned to get into the land development business.

* And the Seven Oaks School Division attendee couldn't remember a thing about the meeting.

Uh, huh.

Bellringer doesn't find any of this the slightest big suspicious. Or what happened next.

In July, 2003, Palubeski went to the Seven Oaks board and recommended that all the tenders for the land be rejected because, to quote Bellringer's report, "the builders would take an unreasonably large portion of the profit."

The solution---do it yourself and reap the profits.

The SOSB thought that was a wonderful idea. There was only one small problem. They were supposed to bring the tenders to the schools finance board as per the rules.

The solution? Don't tell the finance board about the tenders. Problem solved.

Neither did the Seven Oaks School Board provide the PSFB the land service agreements as required by the rules. While that would have revealed the school board was in the land development business, it was a good thing that "an oversight" kept the information from the schools finance board. Whew , lucky break.

Not for the Public Schools Finance Board though.
Carol Bellringer says it's their fault the Seven Oaks school board kept them in the dark.
"PSFB did not follow up to ensure compliance with their motion." she writes.

And then it all fell apart. On May 2, a taxpayer sent an e-mail to the Minister of Education advising him that it appeared the Seven Oaks School Division was engaged in a land development project, and asking whether this was a legal activity for a school board.

Only one word describes the next two weeks:
PANIC!!!!!!

You can read all about the desperate moves to cover up the unauthorized rogue land development by the SOSD in The Black Rod archives from Sunday, June 19, 2005 (yes, two years ago): FLAGGING O'LEARYGATE: The 3 Stages of Cover-Up.

In a nutshell, the board of the Seven Oaks School Division went running to the Public Schools Finance Board to get the land development approved retroactively and to bail out the SOSD from potential lawsuits if the project was stopped because it was unauthorized and in breach of the Public Schools Act.

No biggie, says Bellringer.

In fact, she deliberately kept the whistleblower's complaint out of the chronology of the Seven Oaks development scandal so that the subsequent unusual and unexplained actions of the school board and the schools finance board are without context.

And she shows no curiousity at the amazing memory loss of everyone involved.

Nobody, it seems, can remember the details of the meeting where the Swinford Park development received its belated approval.Well, its belated pre-approval.

Bellringer notes, without comment, that crucial information was missing from the minutes of that panicky meeting--namely the names of the presenter, the mover and the seconder of the motion to approve the land settlement agreements. And that a subsequent examination showed that the motion had been "pre-approved only" and still needed to be ratified at another board meeting.


Nope. Nothing suspicious there.

Cut to the chase: the money.

to be continued...

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