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Government's dismissal of Crown corporation's board indicates NDP is paying attention to Alberta's ABC sector

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Oneil Carlier

Yesterday's government news release is short and to the point. But it grabs a reader's attention like a cannon shot across the bow.

A lot of people in Alberta government agencies, boards and commissions -- the so called ABC Sector -- will be paying close attention to the contents of this news release and the news stories about it that are likely to follow. The attention indicates the NDP government of Premier Rachel Notley is paying attention.

"The Board of Directors of the Agriculture Financial Services Corporation has been dismissed after an examination into senior executives' expense and procurement practices," the official statement begins.

AFSC, in case you've never heard of it, was until yesterday a provincial Crown agricultural lending and insurance corporation run by a private sector board of directors. Among its better known services are crop insurance and hail insurance.

"An examination, spurred by an anonymous tip, uncovered problems with senior executives' expenses and the corporation’s procurement practices," the news release continued.

This is followed by the official statement's only colourful quote, by Agriculture Minister Oneil Carlier:"The report's findings point to a culture of entitlement in the last administration that Albertans firmly rejected in the election, a culture of entitlement that will not be tolerated by this government."

The examination of the AFSC was conducted by the province's Chief Internal Auditor. The auditor's report concluded that, in the words of the government news release:

  • "Some expenses related to travel, meals and hospitality were not necessary for AFSC's business, and expenses were generally not properly authorized
  • "Senior executives accepted gifts, such as event tickets, meals and golf from vendors, and vendors covered costs related to AFSC corporate events
  • "For more than half of the vendors examined, AFSC's requirements for fair, open, competitive or transparent procurement processes were not met"

"The Auditor also recommended that a further human resource investigation be conducted to consider appropriate disciplinary action against the implicated senior executives," the release said.

On page 7, the report recommended "disciplinary action be considered against" the president and managing director, the Chief Operating Officer, and the vice-president, innovation and product development.

The 20-page report identifies expenses "that were not clearly reasonable or necessary in performing work duties," including limo trips for senior executives from Edmonton to Central Alberta and return to attend Christmas parties, more than $5,000 for a dinner in Japan for the president, managing director and an associate at which it is unknown if anyone else attended, and close to $20,000 spent on a share of Oilers luxury boxes for 10 games in 2011. (Page 11.) There were also more than $12,000 in Starbucks gift cards purchased between 2012 and 2015. (Page 12)

The news release said the report has also been handed over to law enforcement officials to investigate.

While news reports said Carlier did not provide their names, the three executives suspended with pay are clearly identified by the AFSC website as Brad Klak, president and managing director, Merle Jacobson, COO, and Wayne McDonald, VP innovation.

Klak, who is paid $670,000 a year, is a former executive assistant to Ernie Isley, who was minister of agriculture under premiers Don Getty and Ralph Klein.

The corporation's dismissed six-member board of directors was made up of Klak, George Groeneveld, Dean Gallimore, Harold Schmaltz, Patrick Bieleny and Ian Reynolds, who are also named on the corporation website.

Groeneveld is a former Conservative MLA for the Highwood riding south of Calgary and minister of agriculture under premier Ed Stelmach. He told a Postmedia reporter he thought he was being singled out because he was a former PC MLA. "I just hate to see something political affect my fellow board members and indeed some of the staff," he told Postmedia.

In the same Postmedia story, PC interim Leader Ric McIver accused Carlier of taking part in an effort to "throw political mud."

The dismissed board has been replaced by the government with a three-member interim board made up of senior Government of Alberta employees.

Ed Knash, agriculture VP with government-owned ATB Financial, was named as interim CEO. Interim Board chair is Bev Yee, deputy minister of Agriculture and Forestry.

The last time the government of Alberta did something like with an appointed board this was on June 12, 2013, when Conservative Health Minister Fred Horne fired the board of Alberta Health Services for refusing his order to tear up legal contracts with senior AHS executives in an effort to save the government of premier Alison Redford political embarrassment.

Eventually, the Tory government was forced to admit the AHS board was right and pay up what it had agreed. But AHS was run thereafter by a single administrator appointed by the government until the NDP took over and restored board governance to the province-wide health service in October 2015.

The NDP will take a different approach with the AFSC board. Yesterday’s news release said the search for a new AFSC board in which the government can have confidence will begin at once.

This post also appears on David Climenhaga's blog, AlbertaPolitics.ca.

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