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Richard Cloutier led off his new CJOB morning show Tuesday with a bang - a big exclusive about a story we have been tracking for months, the O'Learygate scandal.

He reported that Robert Goluch, executive director of the Public Schools Finance Board, has been removed from his job.

The government won't say so ("human resources matter"), but it's universally believed Goluch was shuffled off to Intergovernmental Affairs because of the Swinford Park development. The Seven Oaks School Division acted as the developer of a housing subdivision in defiance of restrictions placed on school boards by the Public Schools Act, and now claims innocence because the Finance Board gave it's approval.

Cloutier noted the scheme lost money. That's the first time that's been revealed to OB audiences.

Any reader of The Black Rod has known it since June, when we scooped the city with our analysis of the hidden facts obscured in the government report.

(The readers of the daily newspapers are still in the dark because their reporters can't read a report, can't add numbers and won't admit the obvious -- they missed it.)

Listening to Cloutier, it sounded like Goluch got fired for being responsible for approving the development project.

We beg to differ.

If Cloutier had read the official report into Swinford Park, or at least understood it, he would know Goluch got fired for the biggest crime of all, embarassing the Education Minister Peter Bjornson.

Not by approving Swinford Park, as Cloutier suggests, but by mishandling the cover-up.

Goluch was like John Dean, who was assigned to do a fake internal investigation into Watergate to give Richard Nixon something to "prove" the White House had nothing to do with the scandal.

Goluch was assigned to "investigate" a whistleblower's complaint, but instead failed to even ask about the validity of the complaint. Instead he wrote up the response for the Minister's signature, making it seem that everything was above board and the citizen was a fool.

When the complaint was raised in the Legislature, Bjornson at first said he knew nothing about it. But the paper trail proved that Bjornson had known about the deal for a year. Even worse the blow-off crafted by Goluch had not worked, and the Opposition scored points in the House because the scheme flew in the face of the law written in black and white.

The report hurredly prepared for Bjornson last spring, detailed how illegal the scheme was, how the plan had gone forward without any of the normal rules being followed by the school board under Superintendant Brian O'Leary, and that the revenues had been overstated by a million dollars.

When the cover-up unravelled, somebody had to take the fall, and it wasn't going to be Bjornson, or his NDP pal O'Leary. Exit Goluch.

Cloutier had O'Leary as a guest but didn't understand his central role in the scandal. He let him wiggle off the hook.

O'Leary is like G.Gordon Liddy, where the means justify the ends.

Cloutier, to his credit, tried to show that Swinford Park was going to lose money as we had reported. O'Leary countered by saying it would make half a million dollars because the new school building will be an asset on the new books.

The problem is that, as Cloutier should have known, the last person you can trust to deliver the numbers is Brian O'Leary.

His last try turned a loss of at least $200,000 into a "profit" by misstating almost a million dollars in revenue. The accounting was so bad the Minister ordered a special audit and took the final accounting out of the hands of the school division.

So where is the new profit figure coming from? How did the old, inflated figure get into print in the first place anyways? Is there a new audit which hasn't been made public? Tell us, Brian.

O'Leary told Cloutier the school division will profit by getting an asset ie- a new school. That appears to be the crux of the scandal. It was a school shell game and to O'Leary the ends justify the means.

Seven Oaks got not one, but two new schools (a brand new Middle Years school to replace the aging and soon to be abandoned West Kildonan Collegiate, and a new high school in, guess what, another new subdivision) when they weren't on the Finance Board's capital project list.

So all the other school divisions got cheated because they played by the rules.

Cloutier had a guest who understood all this because she had read the report, Adrienne Batra of the Taxpayers Federation. But she wasn't brought into the studio to grill O'Leary and ask the right questions, so he got away with his new bafflegab excuse.

She knows the taxpayers got scammed and wants the auditor general to investigate --not Goluch, but Bjornson.

Batra kept focused on the true problem here - that Bjornson got a complaint, ignored it, let it be covered-up by the same people breaking the law, plead ignorance when he was confronted in Question Period, and then claimed it was all OK because the illegal scam had made money, when in reality taxpayers had been put on the hook for this failed end-around the system.

It was all put together by NDP appointees at PSFB and NDP school board officials, right under the nose of the NDP Education Minister.

The Manitoba Tories also called for the Auditor General to be brought in. They deserve credit for forcing the story out into the open and making the Doer government release a report. But they deserve no credit for their spin on the Goluch matter.

The Tory announcement refered to Goluch asking: "Why is a dedicated civil servant being made a scapegoat for these wrongdoings?"

The Tories try to put all the blame on the NDP (not that they don't deserve it); maybe it's because his head didn't roll and the Tories expect they'll have to work with Goluch in another administration. But Goluch is hardly a role model of efficiency in this scandal.

The official report found:

- " (Goluch) did not ask about the validity of the complaint raised "

- " No explanation with respect to SOSD’s land development activities was offered "

- " the concern raised by the citizen complaint was not properly investigated. The letter prepared (by Goluch) for the Minister’s signature was incorrect and inappropriate "

- " is clear that until September 2004, the PSFB did not follow standard practice and procedure regarding the disposal of land in the Swinford Park development."

- " Moreover, the PSFB did not exercise due diligence regarding SOSD’s request for the disposition of land in the Swinford Park area."

The Black Rod would like to know:

- Exactly when did Goluch realize O'Leary's grand plan for Swinford Park, the adjacent Grady Bend and now for the Riverbend (east) side of Main Street, was contrary to the Public Schools Act the PSFB is bound to enforce?
- Did Goluch realize this was illegal BEFORE he did not investigate the complaint, and instead tried to get the Minister to blow off the concerned taxpayer?
- If so, why is Goluch being rewarded with a new job, instead of having to answer for what his part was in O'Learygate?

If we didn't know better we'd think the Tories didn't review the official report before proclaiming Goluch's elevation to civil service sainthood.

If what he did on O'Learygate is the standard for a dedicated civil servant, then we're all in trouble.

And nobody is in more trouble than Tory leader Stu Murray, who should recognize that cover-up is not part of the job description of anyone working in the civil service in Manitoba.
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