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Bellringer, O'Learygate and Crocus: The NDP's Hallowe'en House of Horrors

Transcripts of meetings of Legislature committees are generally pretty dull reading. So why, we asked ourselves, were we getting a chill up our collective spines.

Suddenly, it was clear. Without knowing it, we had entered----

the NDP's Hallowe'en House of Horrors.

Page after page of last week's regularly scheduled Public Affairs Committee meeting were filled with demonic scenarios, ghosts of scandals past, and disgraces risen from the dead to scare us once again.

Continue reading at your own risk. There are no treats here.

Audits that go bump in the night or, Don't Call Me Quasimodo

Carol Bellringer knows how fishy it looks for her to be auditing her friends and colleagues at Manitoba Hydro.

But she's determined to plow ahead, the public's concern for ethics be damned.

"I don't actually believe that I do have a conflict, but we do acknowledge and accept the fact that there could be that perception with the public," Bellringer, Manitoba's Auditor General, told the Public Affairs Committee.

The committee got an in-camera briefing from Bellringer on plans for a speeded up special audit ordered by new Finance Minister Rosann Wowchuk to address a whistleblower complaint into mismanagement at Manitoba Hydro. Afterward, Bellringer made a brief statement in the public session.

"I was indeed a member of the board of directors of Manitoba Hydro prior to my appointment as Auditor General. I was on the board from September 15th, 2004, until my appointment in July of 2006. I was chairing the audit committee, and I was on the board. I therefore signed off on the financial statements for the '05 and '06 fiscal years. There has been a reference to my signing off on the '03-04 drought year, which was not the case."

So there, you haters. Just because she was a trusted member of the same management team that's currently under scrutiny, doesn't mean she can't (ha ha ha) be scrupulously fair in judging their work, and, if need be, her own audits and knowledge of Hydro affairs.

Isn't that obvious?

And if it isn't, she told the committee, "the office has implemented a number of safeguards that we believe will--certainly we're hoping that-- they will alleviate any concerns."

Bellringer then proceeded to bamboozle the MLA's with ways she's devised to keep control of the investigation in her own hands while making it appear the opposite.

She's "had discussions" with the Institute of Chartered Accountants of Manitoba.

Translation: I'm looking for loopholes to get around rules against conflict of interest. If I can convince the Institute of CA's to give me the okay, I'll be invincible against allegations that I'm breaching ethics, or ... whatever. Bite me.

And, she added, she's looking for a former auditor general from out-of-province to "oversee the entire process."

Translation: Bellringer's hand-picked consultants will conduct the audit, the hired auditor will "oversee" their work, and Bellringer will "oversee" him, writing the final report and submitting it to the Legislature.

The real issue is control, and Bellringer isn't giving it up to anyone else.

The government is counting on her.

* She sat on the whistleblower complaint for four months and did nothing with it.

* Then, once it became known in August that the Public Utilities Board had a copy of the complaint and was examining it, she tried to snatch control of the issue away from them.

* She announced with great fanfare that she intended all along to do a major study of Hydro's risk assessment practices and policies, which would incorporate the whistleblower's complaints, and which would take at least another year and a half.

Then, last week, as the various news media began running stories about the whistleblower complaint, the NDP moved to get ahead of the storm by ordering a special emergency audit from Bellringer, with results expected in about three months.

Bellringer, who has now had the file on her desk for nine months during which she's done nothing, says she can complete the job in the required time -- provided you overlook her cozy personal and professional relationships with Hydro board and staff.

Hey, Bob, call me.

Oh, and she's signalled to Hydro and the government that if she, and she alone, decides there's nothing to the whistleblower's complaint, she's going to deep-six the risk assessment study.

Starting an 18-month audit in the spring of 2010 would mean you finish it just about the time of the 2011 provincial election.

And who wants that, right Greg Selinger?

Do you want to know how frightening the idea is of this Auditor General throwing ethics to the curb so she can control the investigation of her boardroom pals?

The next chapter of the Public Affairs committee has the gory details. Read it and you'll know why Carol Bellringer must have no role in auditing Manitoba Hydro.

The Ghost of O'Learygate Walks Again or Tories: Dumber Than Carved Pumpkins

The second item on the agenda of the Public Affairs Committee was the special audit Carol Bellringer conducted in 2007 into "Property Transactions in the Seven Oaks School Division."

Do these elements sound familiar?
- Financial mismanagement by a board of directors connected closely to the NDP,
- huge losses,
- a whistleblower,
- a hasty coverup,
- a bogus audit, and
- two layers of whitewash from Carol Bellringer.

The Black Rod exposed this scandal, named O'Learygate after the man at the centre, Brian O'Leary, the NDP's former campaign manager. He most recently made the rogue's gallery again with the revelation of the NDP's 1999 election fraud on his watch, another horror Premier Selinger wants to forget.

Longtime readers of The Black Rod know the details of O'Learygate, so we won't belabor the point. New readers can catch up at

In a nutshell, the Seven Oaks School Board secretly used taxpayers' money to buy land, develop it and sell it off as residential lots. The board had been denied permission to build a new school, so they planned to create the demand for the school through the new subdivision they would create, plus the profits would pay for the land needed for the school.

They ran into two problems. They lost their shirts on the land development. And they got caught by a whistleblower.

When the whistleblower started asking questions, Education Minister Peter Bjornson lied to him and said everything had been done properly.

Tipped off that the jig was up, the Seven Oaks board worked frantically to get their land development approved retroactively, breaking every rule set up to catch and prevent such mismanagement.

The Doer government was eventually shamed into ordering a special audit which Bellringer conducted, shamefully. The Seven Oaks School Division produced two sets of accounts.

One showed that they lost more than $300,000 on the land deal, but the other miraculously turned the loss into a profit. How? By declaring that they valued the land they didn't sell at $819,000 if they sold it to themselves for a new school. Therefore, if they eventually wrote themselves an imaginary cheque for $819,000, they would erase the actual loss they paid to others, and "make" an imaginary profit of $500,000.

Makes sense to me, said Bellringer, without breathing a word about
- the lies told to the whistleblower,
- the lies told to the Public Schools Finance Board which was never notified about the land development,
- the outbreak of amnesia by the people who made the deals, or
- the panicky meeting where the paperwork was retroactively approved despite the rules that should have prevented it.

At the Public Affairs committee, Gerald Farthing, Deputy Minister of Education, was asked if his department ever independently verified the value of the land that Seven Oaks claimed was worth $819,000. Nope, he said.

Bellringer admitted she took the school division's word for it. In other words, Seven Oaks was allowed to audit themselves and the Auditor General rubber stamped it.

Is it any wonder that Bob Brennan, Hydro's CEO, welcome the special audit with a great big smile?

Hey, Carol. Call me.

Oh, and don't forget about the pumpkins. The Conservative members on the Public Affairs Committee, particularly Rick Borotsik and Heather Stefanson, were so totally unprepared they didn't know or understand a single thing about the very issue they were supposed to be examining. They hadn't spend even a minute researching O'Learygate as demonstrated by the appalling ignorance of their questions.

Bellringer showed her contempt for them by failing to bring, or professing she hadn't at hand, information the Tories wondered about but hadn't taken the time to learn themselves.

It was a scary performance by a bunch who claim they're ready to be a government. Now there's a nightmare.

Crocus The Undead Rises From the Grave

You can't kill it. No matter how many times the Crocus Scandal has been proclaimed dead, it rises to walk the land to scare investors (and Greg Selinger) all over again.

The Public Affairs Committee of October 2009 was examining the "Auditor General's Report - Examination of the Crocus Investment Fund, May 2005". Yep, it's taken four years for the legislators to get around to the Crocus audit. If that doesn't scare you, what will?

The MLA's by this time were acting like the undead themselves, showing little interest in the topic, when unexpectedly Larry Maguire (PC-Arthur-Virden) began asking pointed questions.

"He's alive. He's alive," we shouted.

Well, almost.

Maguire was questioning Hugh Eliasson, Deputy Minister of Competitiveness, Training and Trade, and a former member of the Crocus board. He asked in the most convoluted, mind-numbing way about what Greg Selinger knew as Finance minister at the time the Crocus Fund had turned into a de facto Ponzi scheme.

"Also, at times, I think he's even indicated that they knew about the fact that people were still investing, being encouraged to invest in Crocus at that time, when, in fact, the funds that were coming in were hardly offsetting the amount that some of the previous shareholders, earlier, were taking out."

I wonder if you can just elaborate on any of those occurrences, in fact, confirm that, in fact, sometimes the funds coming in and being collected and still encouraged to be collected in that '04 period, some of the latter parts of it were, in fact, hardly covering what was going out."

Eliasson ducked the question.

But despite the deputy minister's zombie-like mindless adherence to regurgitating the party line, he did reveal two new pieces of information regarding the Crocus debacle.

Eliasson sat on the board as a government representative from April 2000 to April 2001. He said he eventually resigned when he couldn't reconcile "the conflicting duties that a director had and a deputy minister had."

"…I began to seek legal advice as to what remedies could be taken, and there are several remedies that members of a board can take when they're presented with a conflict, but none of them seemed sufficient to me to give me sufficient comfort to carry out both those duties simultaneously, which is why I resigned from the board in April of 2001."

Mr. Maguire: And so you pulled yourself out because of the conflict of interest you felt because you were directly involved in the department in policy making? Am I correct there?
Mr. Eliasson: I wouldn't characterize it as a conflict of interest. I would characterize it as two duties that were in conflict or potentially in conflict.

And Eliasson finally answered the question everyone has been asking since the day the investment fund imploded five years ago. The government appointed a director to the Crocus Board to look after the interests of the public taxpayer. What was that representative telling the Finance Minister as the fund crashed and burned?

Eliasson took 102 words to answer the question. We can summarize his answer in one: nothing.

How can that be? Liberal MLA Kevin Lamoureux asked.

Mr. Lamoureux: You indicated the Province's appointment to the board was more for the shareholders' interests as opposed to the Province's interests. Was there any obligation at all in terms of that representative reporting to the Minister of Finance?

Mr. Eliasson: The director did not have an obligation to report to the Minister of Finance. The director owed his duty-his or her duty-to the shareholders of the corporation, and the actions of the director should have been in the best interests of the shareholders.

In other words, according to the NDP, they appointed a director to the Crocus board of directors to represent the taxpayer, but once appointed, he couldn't tell the government anything.

If that reasoning doesn't send shivers up your spine, you're dead.

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