Controversy seems to follow the man
...and his friend ...Mayor Bob Chiarelli



 (To full stories, follow links, below)

Hydro Ottawa board got $500,000 in fees
Hydro Ottawa paid $531,000 over the past two years to members of its board of directors, advisory board and the wife of an advisory board member for consulting...  (The Ottawa Citizen, May 8, 2004)

Ottawa Hydro deals fail 'smell test' 
Consulting deals handed out by Hydro Ottawa to its own board members don't pass the "smell test" for corporate governance, experts say.  (The Ottawa Citizen, May 9, 2004)

Shortliffe overloaded 
If Hydro Ottawa's directors aren't paid enough for their work on the company's board, city council should give them raises -- not let them take consulting...
(The Ottawa Citizen, May 11, 2004)

Councillors demand probe into 'unethical' Hydro board 
City councillors are calling for an independent investigation and sweeping management reform after the Citizen revealed that ... 
(The Ottawa Citizen, May 11, 2004)

How to fix the problem 
It's time to pull the plug on Glen Shortliffe and his cronies over at Hydro Ottawa.
(The Ottawa Citizen, May 11, 2004)

Shortliffe never contacted ex-energy minister 
Former Ontario energy minister John Baird said he never heard from the person who says he was paid to lobby against provincial...  
(The Ottawa Citizen, May 12, 2004)

Shortliffe should explain 
So what was it we paid Hydro Ottawa chairman Glen Shortliffe for? You'd have to forgive the poor old City of Ottawa taxpayer for being a little confused.
(The Ottawa Citizen, May 13, 2004)

Deception at Hydro Ottawa 
Re: Hydro Ottawa board got $500,000 in fees, MAY 8.
(The Ottawa Citizen, May 13, 2004)

Mayor belongs on hydro hot seat
When Hydro Ottawa board chairman Glen Shortliffe explains himself to Ottawa city councillors today, the mayor should be in the hot seat right beside him. Shortliffe would never have collected more than $150,000 a year for part-time work at Ottawa Hydro if Bob Chiarelli hadn't agreed to what amounts to an under-the-table salary in the first place.
(The Ottawa Citizen, May 18, 2004)

City orders review of Hydro payments  
The city's corporate services committee unanimously ordered an independent review of the structure and governance of Hydro Ottawa...   (The Ottawa Citizen, May 19, 2004)

 

Committee fails with questions to mayor
It was a bad day for Mayor Bob Chiarelli Tuesday, but it would have been a lot worse if any of his council colleagues had the guts to ask him the obvious question. Why did he approve what amounts to a substantial salary for Hydro Ottawa chairman Glen Shortliffe, and not tell other city councillors about it? ...  
(The Ottawa Citizen, May 20, 2004)

 

Hydro sets dismal example
Congratulation to the Citizen, especially columnist Randall Denley and reporters Ken Gray and James Gordon, who have obviously...   
(The Ottawa Citizen, May 25, 2004)

 

Don't let hydro board, mayor off the hook 
The Citizen has provided very good coverage of Hydro Ottawa's past practice of offering consulting contracts to advisory board...  
(The Ottawa Citizen, May 28, 2004)

 

Brooks to ask staff to explore Chiarelli's Shortliffe deal
Rideau Councillor Glenn Brooks will file an inquiry with city council today asking staff to explore whether Mayor Bob Chiarelli had the power to come to a consulting-services deal with Hydro Ottawa's chairman, Glen Shortliffe.
(The Ottawa Citizen, June 9, 2004)

 

City lawyer chosen to probe Hydro Ottawa  
Lawyer Kent Howie has been appointed to conduct an inquiry into the structure and governance of Hydro Ottawa. 
(The Ottawa Citizen, July 12, 2004)

 

Councillor demands audit of Hydro deals 
Councillor Eli El-Chantiry has called for the city's new auditor general to investigate the $531,000 in consulting contracts ... 
(The Ottawa Citizen, July 28, 2004)

 

Mayor should quit hydro board 
It turns out that the mess at Hydro Ottawa was a bit bigger and smellier than we imagined. The city auditor-general says payments
from Hydro to its directors or their companies were actually $1.2 million, not the $545,000 previously reported...  (The Ottawa Citizen, June 28, 2005)

 



                                           --- Full stories below ---


 

 
Hydro Ottawa board got
 
$500,000 in fees

Hired on as consultant for utility, chairman denies he's in conflict of interest


Ken Gray
The Ottawa Citizen

Saturday, May 08, 2004

Hydro Ottawa paid $531,000 over the past two years to members of its board of directors, advisory board and the wife of an advisory board member for consulting work.

 
He was chosen as Hydro chairman by Mayor Bob Chiarelli
after former chairman John Hamilton resigned, citing political interference in his job.

 

Chief beneficiary of these payouts was Glen Shortliffe, the board's chairman, whose consulting firm, Glen Scott Shortliffe Enterprises Inc., received $166,000 in 2003 and $129,000 in 2002, said Ron Stewart, president and chief executive officer of the city-owned utility.

Mr. Shortliffe's hiring was approved by the governance subcommittee of the board on the recommendation of Mr. Stewart. He was hired to lobby against the province's Bill 210, which froze electricity rates across Ontario, the Hydro president said. That bill created $24 million in losses for Hydro Ottawa, Mr. Stewart said.

Mr. Shortliffe receives $12,000 a year for the Hydro position.

"I don't think this is a conflict of interest," Mr. Shortliffe said. "It's how I get remunerated by Hydro Ottawa."

Mr. Shortliffe said he works three or four days a week for the utility. "I do quite a bit more than chair the board."

"That's not a conflict of interest, not for the time I put into Hydro Ottawa," he said.

Mr. Shortliffe was the top federal public servant as clerk of the Privy Council from 1992 to 1994.

Mr. Shortliffe was author of the the report that created the amalgamated City of Ottawa.

He was chosen as Hydro chairman by Mayor Bob Chiarelli after former chairman John Hamilton resigned, citing political interference in his job.

Among the other payments to board members, John Gorman's firm, PACE communications of Ottawa, received $132,000 in 2003 and $52,000 in 2002, Mr. Stewart said. Mr. Gorman is a member of Hydro's advisory board.

Mr. Stewart said PACE did community relations work in Kanata concerning Hydro reliability problems there and consulting work on an electricity line following the Terry Fox Drive extension.

Advisory board member Adam Chowaniec of Tundra Semiconductor was paid $5,000 for background work on technology, Mr. Stewart said.

Precept Inc., a firm associated with Mr. Chowaniec's wife, Claudia, received $48,000 for formulating business planning and strategy for the utility, Mr. Stewart said. Ms. Chowaniec is president of Precept.

The information about board contracts was contained in the 27 pages of consolidated financial statements of the Hydro Ottawa Holding Inc. that was distributed to city councillors this week.

"For the year ended Dec. 31, 2003, the corporation purchased certain professional services from directors and advisory board members of the corporation of $350,000 (2002 - $181,000)," the statement read.

The payments were approved by the governance subcommittee of the Hydro board whose chair is Pierre Richard, Mr. Shortliffe said. Mr. Richard is a lawyer with Lang Michener and was the co-campaign chairman of Mr. Chiarelli's 2003 re-election bid.

Mr. Chiarelli, who is also on the Hydro board, vigorously defended Mr. Shortliffe.

The expenditures were "absolutely" proper and the process was above board, the mayor said.

Directors were required to make a declaration of interest, Mr. Chiarelli said, and the payments had to be approved by the audit and governance committees of Hydro.

The process was "open and transparent," the mayor said. "None of us have anything to hide."

The utility required a person who was well-informed about Bill 210 and Mr. Shortliffe was that man, Mr. Chiarelli said.

"We needed to have someone at the table," the mayor said. "He got paid for it and paid very well for it."

When Mr. Shortliffe was hired to the $12,000 chairman position, there was "no way that we contemplated him spending this kind of time" on the job, Mr. Chiarelli said.

The mayor called the expenditures "totally appropriate."

However, Bay Councillor Alex Cullen said he doubted that such a payment situation would be allowed by the city, but was approved at the city-owned utility.

"The relationship appears to be incestuous," Mr. Cullen said.

Ottawa has a huge number of consultants ready to do work, Mr. Cullen said.

"There are lots of qualified people in the community without the appearance of conflict of interest," Mr. Cullen said. He called the consulting contracts of Mr. Shortliffe "astounding."

"All I can see is conflict of interest," Mr. Cullen said.

Mr. Stewart said the hiring of Mr. Shortliffe was done properly.

The awarding of the contracts was "objective. I don't know exactly how it appears," Mr. Stewart said. "The fact of the matter is (Mr. Shortliffe) is very well qualified and has also been chairman of the board. He brings that much extra weight to it when he does represent the utility.

"He is in a unique position to represent and advocate on our part," Mr. Stewart said.

"We've got a highly qualified individual who is doing work for us and we're compensating him. We could retain someone else to do the work ... it would be as much or more, and I don't think it would be as effective."

 The Ottawa Citizen 2004


 
 
 

Ottawa Hydro deals fail 'smell test'

'Not in best interest' for board to be seen paying themselves, law professor says

James Gordon
The Ottawa Citizen

Sunday, May 09, 2004

Consulting deals handed out by Hydro Ottawa to its own board members don't pass the "smell test" for corporate governance, experts say.

 
"Why not open up the tendering process, because one thing courts have consistently said over the decades is perception is as important as reality."

 

The utility company, which is owned by the city but operates independently from council, paid $531,000 over the past two years to members of its board of directors, advisory board, and the wife of an advisory board member.

University of Ottawa law professor Errol Mendes says even the potential negative perception of the payouts, which include $129,000 in 2002 and $166,000 in 2003 to board of directors chairman Glen Shortliffe's consulting firm, should have been enough to stop them.

"Why not open up the tendering process, because one thing courts have consistently said over the decades is perception is as important as reality," says Mr. Mendes, who teaches, consults, and researches corporate governance.

He adds that if board members engage in material transactions they have an interest in, the deals should be ratified by shareholders and be in the best interest of the company.

"If it appears directors of a company are getting deals for themselves and using company funds for themselves, it's not in the best interest," he says. "There's a great, great danger of corporate boards engaging in self-dealing."

Mr. Shortliffe said Friday that the deals didn't constitute a conflict of interest, and he reaffirmed that position yesterday. He maintained the money was remuneration by Hydro Ottawa, and that his $12,000 annual salary only covers the time he spends chairing meetings.

Hydro Ottawa president and chief executive officer Ron Stewart said Mr. Shortliffe's hiring was approved by the governance subcommittee of the board. The chairman was hired to lobby against the province's Bill 210, which froze electricity rates and cost the utility $24 million, Mr. Stewart said.

But according to Wesley Cragg, director of the business ethics program at York University's Schulich School of Business, there's no excuse for handing out consulting fees to board members.

"It doesn't matter how many committees it goes through -- it's irrelevant," he says. "It's pretty obviously and straightforwardly a conflict of interest."

He adds that he's amazed the company doesn't have bylaws prohibiting board members from getting those jobs, and that over time there would be many questions about impartiality and appropriateness.

While Mr. Shortliffe argued that he worked three or four days a week for the utility, and that it's "not a conflict of interest, not for the time I put in at Hydro Ottawa," Mr. Cragg says it doesn't justify consultation hiring.

"Those kinds of board positions are ones you take on as voluntary, or quasi-voluntary," the professor says. "As a basic principle for bodies like this, if you're going to join, accept that you're not going to do business with it.

"It's a public service you're engaging in, and if you're going to join as a public service, there's a personal cost for that."

He suggests that if the board believes members should be compensated for time they put in as directors, they should pay a stipend instead.

Bay Councillor Alex Cullen agrees.

"As far as I'm concerned, if the chair is to represent Hydro Ottawa and wants to lobby, that's fine if the company pays for the flight, hotel, and out-of-pocket expenses," he says. "But when you're hiring a consultant, that's a whole different ballgame."

He says if Mr. Shortliffe wants more money for his services, he should make that recommendation to city council.

"This town is the consulting capital of Canada, and there are many excellent firms that can do the work while avoiding the perception of a conflict."

Mr. Shortliffe has one supporter in Vijay Jog, a finance professor at Carleton University's Eric Sprott School of Business.

"If the board followed the process to see if he had the right expertise and he adds the right value, I don't see why it would necessarily be a conflict of interest," Mr. Jog says. "In some instances, the board members may be the most qualified."

He argues that the process seems to have been followed properly, and that he can't imagine in the current corporate climate why a company would approve deals without due diligence.

"The question should be: is the board constituted correctly?" he says. "If you don't like the process, you have a completely different issue."

 The Ottawa Citizen 2004


 
 
 

Shortliffe overloaded

The Ottawa Citizen

May 11, 2004

If Hydro Ottawa's directors aren't paid enough for their work on the company's board, city council should give them raises -- not let them take consulting contracts on the side.

A Conference Board of Canada report on Hydro Ottawa's governance last summer noted that directors must be independent, with no "material ties to the management (or the) corporation," and that pure clarity is needed when a director gets a contract to provide services.

But the process by which the company let $531,000 in contracts over two years to members of its various boards (including Hydro Ottawa's chairman, Glen Shortliffe) and their relatives couldn't be completely transparent.

 
If he wants to play a more active role, he should resign from the board and consult full-time.

 

Even if the contracts followed all the rules -- there's no indication they didn't -- Ottawans can only speculate about what pressure, real or imagined, board members might have felt to approve Mr. Shortliffe's $295,000 worth of work.

Mr. Shortliffe is paid a $12,000 stipend as chairman of the board, and that's not enough if, as he says, he works for the company three or four days a week.

Though if he's doing that, he's more involved in the company's day-to-day business than he ought to be. A chairman's job -- like that of any director -- is to help guide the company, not to run it himself.

Mr. Shortliffe, like the other directors who did contract work, cannot be worker and boss simultaneously. If he deserves more money as board chairman, he should get it.

If he wants to play a more active role, he should resign from the board and consult full-time.

 The Ottawa Citizen 2004


 
 

Councillors demand probe into 'unethical' Hydro board

Giving sitting members $531,000 for consulting work raises calls for management overhaul

Ken Gray
The Ottawa Citizen

May 11, 2004

Ottawa Hydro chairman Glen Shortliffe's consulting firm was paid $166,000 in 2003 and $129,000 in 2002 to lobby against a provincial bill that froze electricity rates. A total of $531,000 in consulting work was granted to board members or people with close contacts to the board.

CREDIT: John Major, The Ottawa Citizen

 

Hydro Ottawa president and chief executive officer Ron Stewart, above, has said the awarding of contracts to Glen Shortliffe's firm was done properly.

CREDIT: Rod MacIvor, The Ottawa Citizen

 

City councillors are calling for an independent investigation and sweeping management reform after the Citizen revealed that Hydro Ottawa paid $531,000 for consulting work from firms linked to its board of directors and advisory board.

Ottawa Hydro chairman Glen Shortliffe's consulting firm was paid $166,000 in 2003 and $129,000 in 2002 to lobby against Bill 210, a provincial bill that froze electricity rates. Mr. Shortliffe is paid $12,000 a year for chairing the board.

Other contracts went to firms associated with Hydro advisory board members John Gorman and Adam Chowaniec and Mr. Chowaniec's wife, Claudia.

Bay Councillor Alex Cullen said yesterday he is formulating a plan that would fundamentally change the electricity corporation's reporting relationship with its sole owner, the city.

The board members "have done something that is unethical but not illegal," Mr. Cullen said yesterday. "These guys aren't going to escape."

Mr. Cullen's proposal would see a breakdown of monies awarded to board members for service contracts distributed by the board; a conflict-of-interest policy for the Hydro board and its advisory board; and an increase in the number of elected officials on the Hydro board. At present, only Mayor Bob Chiarelli sits on the five-member board.

So far, Mr. Cullen is not calling for an independent investigation or an auditor's probe, pending answers to his questions tomorrow. But others are not so reserved.

Osgoode Councillor Doug Thompson called for a probe by the soon-to-be-appointed city auditor general.

"I think it is wrong, just plain wrong," Mr. Thompson said. "There should be an investigation into the letting of those particular contracts. That's terrible those contracts those guys got.

"If that happened to an elected official, I would be tarred and feathered," Mr. Thompson said. He also plans to bring the issue forward at tomorrow's council meeting.

Others on council are also urging reform. Bell-South Nepean Councillor Jan Harder, who is often at odds with Mr. Cullen, threw her support behind his initiative.

Ms. Harder said an independent inquiry or probe by council or an investigation by the new auditor general were appropriate.

She said she was concerned about the board awarding contracts to board members.

"They aren't the only experts," Ms. Harder said. "Are they getting an advantage because they are on the board? Heads would be rolling if this were a private business."

She added that Mr. Chiarelli should declare a conflict of interest at council.

"The mayor should not be able to vote on this at council because he is on the Hydro board," Ms. Harder added.

Cumberland Councillor Rob Jellett also called for a probe by the city auditor-general.

"We need to put some rules in place," Mr. Jellett said.

Kanata Councillor Peggy Feltmate said she would also like to see the results of the work done on the contracts.

Ms. Feltmate would not rule out a probe, but would want to know its terms and costs first.

"The public is looking for answers," Ms. Feltmate said. "Why was (Hydro chairman Glen Shortliffe) paid above and beyond his salary?"

Mr. Shortliffe has said the contracts were how he was paid by Hydro Ottawa. Mr. Chiarelli has also vigorously defended Mr. Shortliffe, saying that the process was open and transparent. The Bill 210 consulting required someone who knew about the bill, and Mr. Shortliffe was that person, according to Mr. Chiarelli.

Yesterday, Ms. Feltmate said the mayor should be questioned thoroughly at council because he is the city's representative on the Hydro board.

Rideau-Rockcliffe Councillor Jacques Legendre said the contracts should have been filled "in a more formally correct way ... I don't see any reason for not putting those out to tender."

Councillors Diane Deans and Rainer Bloess feel that Hydro officials should come to corporate services committee and explain the actions of the board.

Councillor Eli El-Chantiry said the whole relationship between the city and Hydro Ottawa should be reviewed.

"I don't like what I saw in the newspaper," Mr. El-Chantiry said. "It is abuse."

However, Rideau-Vanier Councillor Georges Bedard said he didn't see a problem with the way the contracts were handled.

"I really don't see how we can limit people's ability to participate in Ottawa's economy," Mr. Bedard said.

 The Ottawa Citizen 2004


 
 
 

How to fix the problem

Fire them

Randall Denley  
The Ottawa Citizen  

Tuesday, May 11, 2004

  [Denley]
 

It's time to pull the plug on Glen Shortliffe and his cronies over at Hydro Ottawa.

 
The bottom line on Shortliffe is that he is receiving
what amounts to an under-the-table salary.

 

 

Shortliffe thinks his services are so valuable that he should be paid about $150,000 a year on top of the tiny $12,000 salary he officially receives as chairman of the board. The pittance is only for chairing the actual meetings, he says, which are held every two months this year. The rest is for the three or four days a week he puts in negotiating deals, giving speeches, lobbying the province, working on the annual report, visiting Hydro offices and meeting with senior staff.

In fact, Shortliffe says he's "probably underpaid," compared to the chairman of Hydro One, who makes more than $400,000.

Give the guy full marks for brass. Hydro Ottawa is an electrical distribution monopoly with a few sidelines, not a giant corporation.

The awkwardness is that the Ottawa transition board set the Hydro chairman's salary at the laughable $12,000 a year. Apparently they didn't realize that a corporate titan was required for the job. How to fix the problem?

Ottawa city council could agree to raise the salary, but that could pose a difficulty. Then everyone would know about it, and some small-minded councillors might wonder why Hydro Ottawa needed two high six-figure guys to run it. After all, we are paying president and CEO Ron Stewart about $230,000.

The better solution was to pay Shortliffe a consulting fee instead. Who would know? Unfortunately, Hydro Ottawa hired the Conference Board of Canada to determine if their governance practices needed any improvement. Not surprisingly, the people at the conference board determined that telling the public about the consulting work given to directors would be a good idea.

You see the value of consultants, because the people on the board couldn't figure this out for themselves back in 2002. That's why the full, transparent disclosure in the footnotes of their financial statement is for a two-year period.

The conference board also decided that it wasn't quite right for Shortliffe to determine just what work he was going to do and how much he was going to charge for it. That arrangement gives new meaning to the term working for yourself. Now Shortliffe's consulting fees are approved by the board's governance committee. Since the board seems to be such a friendly group, it's surely not a problem.

The bottom line on Shortliffe is that he is receiving what amounts to an under-the-table salary. Maybe he's worth it and the money is well spent, but this isn't the way to go about it.

Also of note is the $184,000 communications consultant John Gorman received, $132,000 of that last year. Communications guys are as common as squirrels in Ottawa, but Gorman had the foresight to be a non-voting member of the board. Hydro CEO Stewart doesn't believe the Gorman contracts were tendered. A pretty sweet deal, especially when you consider that Hydro has its own professional communications staff.

The only watchdog the public has on this board is Mayor Bob Chiarelli, who likely doesn't have a lot of time to follow the details. Disappointingly, the mayor supports all that has gone on, and says that CEO Stewart is the one who decided that the company needed such a busy board chair. Could be, but then again, Shortliffe is Stewart's boss. What else would he decide?

The mayor anticipates that the huge flow of issues that has been occupying Shortliffe might abate very soon, thus reducing his consulting toll. That would be graceful, but not quite good enough.

The rascals who have been taking contracting work should be removed from the board and advisory board immediately. Hydro needs a board of directors who don't confuse public interest with personal gain.

Hydro Ottawa should meet the same standards for openness and disclosure as stock-issuing private sector companies. There is no excuse for doing less, and the argument that they are protecting themselves from competitors is thin indeed.

Hydro Ottawa has shown a consistent disinclination to explain its business activities to the little Ottawa peasants who actually own it. Private company, mind your business, has been Hydro's attitude. Now we see some of what has been going on behind closed doors.

If Glen Shortliffe owned Hydro Ottawa, he could run it as he likes. He doesn't. We do. It's time for him to move on. If he runs true to form, Shortliffe would bill the company for writing his resignation letter.

At least it would be money well spent.

Contact Randall Denley at 596-3756 or by e-mail, rdenley@thecitizen.canwest.com

 The Ottawa Citizen 2004


 

 

Shortliffe never contacted
ex-energy minister

John Baird says he heard nothing from Hydro chairman who says he was paid to lobby province


Ken Gray
The Ottawa Citizen

May 12, 2004

Former Ontario energy minister John Baird said he never heard from the person who says he was paid to lobby against provincial legislation that would freeze electricity rates.

In fact, given that he was both the minister and a senior area MPP, he wonders how someone could lobby against Bill 210 and not call him.

Mr. Baird's words fly in the face of statements by Hydro Ottawa president Ron Stewart that Glen Shortliffe received payments of $166,000 in 2003 and $129,000 in 2002, at least in part to lobby against Bill 210. Mr. Shortliffe's salary as Hydro Ottawa chairman is $12,000 a year.

"The alarm bells are going off," Mr. Baird said. "Any member of city council could have called and I would have picked up the phone."

 
By not registering within the allotted time,
a consultant is subject to a $25,000 fine.

 

 

He wondered what the city's sole representative on the five-member board -- Mayor Bob Chiarelli -- was doing when consulting contracts were being awarded.

Helen Reeves, speaking for Mr. Shortliffe and Mr. Stewart, said Mr. Shortliffe met many times with Mr. Baird about Hydro Ottawa's purchase of 37,000 rural customers from Hydro One. She said she did not know if they talked about Bill 210. Mr. Baird was angry about the customer purchase and that is why he revealed the lobbying information, Ms. Reeves maintained.

Ms. Reeves said Mr. Stewart and Mr. Shortliffe have been very open about the Hydro issue in the past, but will no longer comment until they meet publicly with the city's corporate services committee on Tuesday.

However in a letter to the mayor and councillors obtained by the Citizen late yesterday, Mr. Shortliffe said his services included work on Bill 210 so that the utility could keep its regulatory assets and recover $24 million. He also said he developed a business strategy related to Bill 210.

Further calling into question the nature of his work, Mr. Shortliffe is not registered as a past or current lobbyist under the provincial Lobbyists Registration Act of 1999. Searches by both the Citizen and Lynn Morrison, the provincial lobbyist registrar, did not reveal Mr. Shortliffe in its database.

"If you are a consultant, you have 10 days to register" after having any form of contact with a provincial official, Ms. Morrison said. "If he is paid to lobby, then yes," he must register.

By not registering within the allotted time, a consultant is subject to a $25,000 fine, Ms. Morrison said. No one has been charged under the act. Offenders are given notice of the infraction and, so far, all have subsequently registered, she said.

Ms. Reeves said Mr. Shortliffe did not have to register under the act because he was speaking as the chairman of Hydro and that the $300,000 in contracts was part of his remuneration for the chairman's post.

However, that contradicts the corporation's consolidated financial statement. It said Hydro purchased "certain professional services" from directors and advisory board members.

Ms. Reeves confirmed Hydro did not tell its sole shareholder, the city, it had drastically raised the remuneration for Mr. Shortliffe in 2002 and 2003 until last week. Until that time, it was believed the chairman made $12,000 a year. In fact, he made $178,000 in 2003 and $141,000 in 2002. She did not know who negotiated the Shortliffe deal or whether the mayor was aware of the enormous raise.

The Hydro controversy began last week when the Citizen reported the Hydro board paid $531,000 over the past two years to board and advisory board members and the wife of an advisory board member or their associated firms.

In addition to the payments to Mr. Shortliffe, a firm associated with advisory board member John Gorman received $184,000 in contracts, advisory board member Adam Chowaniec's company received a $5,000 contract and the firm of his wife, Claudia, received $48,000.

The news whipped up a firestorm of controversy with councillors and academics questioning the ethics of board members issuing contracts to board members. Several councillors called for a probe of the board's actions.

Yesterday, city auditor Tracy McTaggart said the municipality can order her to investigate the utility only through a vote of council.

Hydro has both internal and external auditors already, Ms. McTaggart said.

The city has maintained an arm's-length relationship with Hydro Ottawa, but several councillors have complained they have had difficulty getting information from the corporation.

Complicating this information bottleneck is that Hydro Ottawa and other municipally owned electricity corporations are not subject to access to information rules.

Meanwhile, Bay Councillor Alex Cullen called for an inquiry over the confusion concerning whether Mr. Shortliffe received $300,000 in contracts or for remuneration as chairman.

He wondered why chartered accountant Deloitte and Touche called them payments for professional services and the utility calls them remuneration for the chairman's post.

 The Ottawa Citizen 2004


 

Shortliffe
should explain

The Ottawa Citizen

May 13, 2004

So what was it we paid Hydro Ottawa chairman Glen Shortliffe for? You'd have to forgive the poor old City of Ottawa taxpayer for being a little confused.

   
  • Hydro Ottawa has said that Mr. Shortliffe was paid as a contractor for lobbying work, yet he wasn't registered as a lobbyist with the Ontario government, as required by Ontario law.

  • Yet former energy minister John Baird says he wasn't lobbied by the chairman of Hydro Ottawa.

 

 

Confusion number one: We thought the board of directors of our local power company was occupied by public-spirited citizens who receive nominal fees for overseeing the utility. Mr. Shortliffe was paid $12,000 for fulfilling his duties as board chairman, but he also received $295,000 for his consulting services over two years.

Confusion number two: The justification for such compensation included the explanation that he was busy lobbying the Ontario government on power-regulation policy, specifically Bill 210, which froze electricity rates. Yet former energy minister John Baird says he wasn't lobbied by the chairman of Hydro Ottawa on that legislation.

Confusion number three: Hydro Ottawa has said that Mr. Shortliffe was paid as a contractor for lobbying work, yet he wasn't registered as a lobbyist with the Ontario government, as required by Ontario law.

Though Hydro Ottawa is a business, it isn't a private business. It's a public concern, owned by the taxpayers of Ottawa. The owners of that business are entitled to detailed explanations of what took place over the last two years.

Mr. Shortliffe needs to provide answers to these questions when he appears before the city's corporate services committee next Tuesday. And Mayor Bob Chiarelli, as the city's sole representative on the board of Hydro Ottawa, needs to explain how and why he allowed this to happen.

 The Ottawa Citizen 2004

 


 

 

 

Deception at Hydro Ottawa

 The Ottawa Citizen 2004

The Ottawa Citizen

May 13, 2004

Re: Hydro Ottawa board got $500,000 in fees, MAY 8.

Ken's Gray's article revealing possible conflict of interest in the awarding of contracts by Hydro Ottawa Holding Company and its directors reinforces the need for more transparency at this publicly owned utility. The information in the Citizen article was gleaned from a "consolidated financial statement" presented to Ottawa council in advance of the utility's annual report.

Despite repeated calls by citizens and some councillors for more openness, the Hydro Ottawa board insists on deceiving the public with annual reports that blend the performance of all of the subsidiaries into one statement. This fog applied to the financial reports makes it impossible for us, the owners, to see which units are functioning properly and which are not. Despite the fact the hydro generation unit has to be making money hand over fist, all we are told is that Hydro Ottawa lost $15 million.

What is worse, Ottawa council allows Hydro Ottawa to get away with this, despite all the problems reported regularly about the mismanagement of financial statements by other companies that operate in this same deceptive format. It is time that council told the utility, through legislation, that it must produce financial statements that show the fiscal operations of each of its subsidiaries in an open and transparent way to the real shareholders, the taxpayers of Ottawa.

Joe Hager,
Ottawa

 The Ottawa Citizen 2004


 

 

Mayor belongs on hydro hot seat

Randall Denley
The Ottawa Citizen

May 18, 2004

When Hydro Ottawa board chairman Glen Shortliffe explains himself to Ottawa city councillors today, the mayor should be in the hot seat right beside him. Shortliffe would never have collected more than $150,000 a year for part-time work at Ottawa Hydro if Bob Chiarelli hadn't agreed to what amounts to an under-the-table salary in the first place.

Shortliffe, who officially earns only $12,000 a year at Hydro, has been getting the flak, but the blame really lies with Chiarelli, and it goes right back to the time Shortliffe was handpicked by the mayor as board chairman.

 
Council should start by replacing Chiarelli on the board with
a councillor who has a better sense of the public interest.

 

 

"The understanding, after he was appointed, between (Hydro CEO Ron) Stewart, Mr. Shortliffe and myself," Chiarelli says now, "was that certainly Mr. Shortliffe's experience, his perspective, his networking would be of significant assistance in complementing the CEO. The understanding was that more hours would be required than merely chairing board meetings, that it would be more proactive than the previous chair. There was an understanding that Mr. Stewart would use his executive authority to add to, or to determine, reasonable additional time and effort on a fee basis for whatever was provided over and above. There was nothing specified as to the amount, the number of hours. There was a general understanding that it would be the CEO's discretion to use Mr. Shortliffe in a reasonable manner to deal with matters that were evolving in the electrical industry and with Hydro Ottawa.

"From that point on, the agreement evolved between the chief executive officer, the chair and the governance committee."

That sounds a lot like signing a blank cheque and leaving it to Shortliffe and Stewart to figure out the amount. If Stewart was really determining how much his board chairman could earn, that would be a very curious arrangement. Chiarelli says the board's governance committee approved Shortliffe's contracting deals, but that was only after the Conference Board of Canada told the board they needed this kind of approval. There was no governance committee when Shortliffe was hired, and for the first year and a half that he was billing as a consultant.

Chiarelli also points to the fact that city council approved Shortliffe's appointment, but councillors weren't told of the side consulting deal, even though they control the board chair's salary. It's difficult to see Shortliffe's open-ended consulting deal as anything other than an end-run around public scrutiny.

At the time Shortliffe was appointed, Chiarelli and council were in the midst of throwing out the old Hydro board. Such a costly replacement would certainly have been controversial.

One of the issues was the board's failure to keep council informed of what was going on. Shortliffe promised to be "as open and transparent as possible, consistent with the realities of what the corporation has to do."

That sounded good at the time, but wouldn't part of openness and transparency include telling the public about six-figure consulting contracts awarded to board members? Hydro didn't do it until the Conference Board recommended it. In reality, Hydro Ottawa is about as open and transparent as a brick wall, the same wall Hydro hides behind when asked relevant questions such as how much its executives make, or how much non-union staff received in bonuses.

When Shortliffe was selected by Chiarelli as board chair, councillors were given no alternative choices. That's curious, because there are a number of people in town with senior experience at the former municipal power utilities, but the bulk of Shortliffe's work experience was as a federal public servant. The closest he came to relevant experience was acting as deputy minister of transport overseeing monopolies like VIA Rail. At the time he was selected, he said: "I've got a very steep learning curve."

And yet by the next year, Shortliffe had become such an expert on electricity matters that his consulting expertise was worth six figures a year. Shortliffe's a bright guy, but one has to wonder.

The mayor has always run Hydro Ottawa as if it were his own company, keeping fellow councillors largely in the dark. The way Shortliffe was paid isn't an aberration, it's just business as usual at Hydro Ottawa. To be fair, if the mayor had no problem with how the board chairman was being paid, why would Shortliffe himself?

The mayor defends the Shortliffe consulting dollars as money well spent, because Hydro Ottawa is being so well run. Could be, but that's not the real issue. Why did the mayor choose not to be straighforward with the public about Shortliffe's deal?

Public opinion on this matter seems to be quite consistent. It stinks. The mayor is attempting to defend the indefensible.

Now Chiarelli says that perhaps "the shareholder," that is city council, needs to have more information about Hydro. No doubt.

Council should start by replacing Chiarelli on the board with a councillor who has a better sense of the public interest. Hydro Ottawa needs a watchdog, not another top dog.

Contact Randall Denley at 596-3756 or by e-mail, rdenley@thecitizen.canwest.com


 

 

City orders review of Hydro payments

Committee grills chairman Shortliffe, suspends contracts with board members

Ken Gray
The Ottawa Citizen

Wednesday, May 19, 2004

The city's corporate services committee unanimously ordered an independent review of the structure and governance of Hydro Ottawa after councillors put the corporation's chairman, Glen Shortliffe, through a tough grilling.

The committee ordered Hydro Ottawa to suspend contracting for services with its directors and advisory board until the review is completed.

It also asked that Mr. Shortliffe continue his contract until a shareholders meeting on Aug. 25, but that his pay be limited to a maximum of $20,000 for the period. The review will include an examination of the remuneration for members of the board of directors and the advisory board of Hydro Ottawa.

It will also probe the reporting and disclosure obligations between Hydro and its sole owner, the city.

The move yesterday came after the Citizen reported that the Hydro board had authorized payments of $531,000 over two years to firms associated with directors and advisory board members of the corporation.

The contracts included payments to Mr. Shortliffe's consulting firm of $166,000 in 2003 and $129,000 in 2002. Until that report, council -- with the exception of Mayor Bob Chiarelli, who negotiated the deal and is the only civic politician on the board -- believed the chairman was paid $12,000 a year.

 
He confirmed that the mayor helped
arrange the payment deal for him.

 

 

Mr. Chiarelli, despite repeated questioning after the meeting, refused to directly answer whether he should have told council about the deal when it was made. Before yesterday's meeting, Mr. Chiarelli said he was looking for improvements in the way Hydro reports to the city, but he refused to back an audit or independent investigation of the payments. He voted for the review yesterday.

Mr. Shortliffe also revealed another payment to another board member yesterday. Richard Raymond was awarded $14,518 for work assisting with the acquisition of 37,000 Hydro One customers in the city.

In a prepared statement, Mr. Shortliffe admitted that the board's decisions could have been better.

"In hindsight, we do wonder whether we did enough to disclose the information effectively," Mr. Shortliffe told the committee. "We wished we disclosed it before this year."

Mr. Shortliffe was also saddened by the controversy, calling it "a uniquely unfortunate experience for me after some 42 years of public service to this city and the country."

He confirmed that the mayor helped arrange the payment deal for him.

"It was with the understanding and agreement of the mayor that Hydro Ottawa senior management would arrange for me to be compensated for my professional time," Mr. Shortliffe said.

The chairman also took some of the responsibility for the controversy that arose from the payments. "We do take some of the blame for the perception of the situation which in our media world is nine-10ths of the law," he said.

The meeting was peppered with difficult questions for Mr. Shortliffe and Hydro Ottawa president Ron Stewart.

At one point, Bay Councillor Alex Cullen loudly asked: "Am I the only person who has trouble with this?" A number of his colleagues responded with a muffled "No."

At another juncture, Mr. Shortliffe mistakenly said Hydro One instead of Hydro Ottawa. "Did you bill them, too?" Innes Councillor Rainer Bloess interjected. "No, I did not," Mr. Shortliffe responded, adding that his billing rate was $1,500 a day.

Mr. Chiarelli said Mr. Shortliffe did a fine job of operating Hydro and that the city was "well served."

Mr. Chiarelli said the process wasn't totally transparent, but that it was legal and ethical, adding that he was "proud" of the corporate work of Mr. Shortliffe and Mr. Stewart.

"Have they done a good job of politics?" Mr. Chiarelli asked. "No."

Mr. Chiarelli said he did not vote as a board member on any of the contracts given to Mr. Shortliffe or the others.

Mr. Shortliffe, a former clerk of the Privy Council -- the federal government's top public servant -- wrote the report that created the amalgamated City of Ottawa.

Hydro's consolidated financial statement was released to city staff and council this month, but not to the public. His payments and those to firms associated with members of the advisory board and the wife of an advisory board member were approved by the governance committee of the board.

Mr. Stewart maintained that Mr. Shortliffe was paid in part for lobbying against Ontario's Bill 210. However, former energy minister John Baird said he was never contacted by Mr. Stewart concerning the controversial legislation that froze electricity rates across the province. However, Mr. Baird did say Mr. Shortliffe talked to him on other electricity-related topics.

Despite Mr. Stewart's claim, Mr. Shortliffe was not registered as a past or current lobbyist under the provincial Lobbyists Registration Act of 1999. Hydro responded by saying that Mr. Shortliffe was lobbying as the corporation's chairman.

                                                         The Ottawa Citizen 2004


 

 

Committee fails with questions to

mayor

Chiarelli shares blame for Hydro mess

Randall Denley
The Ottawa Citizen

May 20, 2004

Shortliffe: Numerous triumphs.

CREDIT: Chris Mikula, the Ottawa Citizen

 

It was a bad day for Mayor Bob Chiarelli Tuesday, but it would have been a lot worse if any of his council colleagues had the guts to ask him the obvious question. Why did he approve what amounts to a substantial salary for Hydro Ottawa chairman Glen Shortliffe, and not tell other city councillors about it?

Councillors danced around this key point for more than three hours at the corporate services committee, as they beat up Shortliffe for taking the money. Not that he didn't deserve the whipping, but Chiarelli is the person who should have borne most of it.

The mayor even made matters worse by joining in the criticism of Shortliffe and Hydro CEO Ron Stewart.

"Have they done a good job of politics?" Chiarelli asked. "No."

But then you wouldn't necessarily expect the two Hydro guys to do a good job of politics. You would expect it from the mayor of Ottawa.

The manly thing would have been to deflect some of the criticism from Shortliffe by accepting it himself. As Shortliffe made clear, the mayor authorized the extra pay deal that has created all the controversy.

Rather than admit his own error in judgment, Chiarelli used all his lawyerly skills to try to divert attention from the real issues at hand.

The Hydro boys had brought Conference Board of Canada consultant Dave Brown in to show they were on the up and up. Brown had done a study of the way the board and its contracting works, and suggested changes. Specifically, he recommended that contracts for board members should be approved by a board committee, not by CEO Stewart, and that the contracts should be disclosed to the public.

Nevertheless, defence counsel Chiarelli was able to get Brown to say that Hydro's previous procedures were "legal" and "ethical." Better questions by other councillors established that Hydro's secret contracts for board members met minimum legal and ethical standards for corporations, but not best practices. That's why Brown proposed the changes.

In an interview, Brown described the situation where Stewart was okaying Shortliffe's payments as "circular," and requiring change. Nothing further for that witness.

Chiarelli also stressed the outstanding performance of both Stewart and Shortliffe. Despite all the chaos of the electrical industry, the company turned a $2.6-million profit for the city in 2003. No doubt that's why a reported $2 million in bonuses was paid to Hydro managers.

Under the expert Shortliffe leadership, the company has also increased substantially in value, and is now worth a minimum of $650 million.

If so, $2.6 million is an astoundingly low return on investment, less than half of one per cent. The city could put its money in a savings account and generate more. Not that any of these points was actually relevant to the real issue at hand. Councillors publicly agreed to a $12,000 salary for Shortliffe, plus $400 for each board and committee meeting. As far as they, and we knew, that's what he was earning. Only Chiarelli was aware the veteran consultant was billing $1,500 a day. If he were paid a full-time salary at this rate, he'd have been earning $390,000 a year.

 
 


The bottom line is that Bob Chiarelli hasn't been honest with his colleagues or the public; and he has neither explained nor apologized for his actions. How does he expect us to trust him?

 
 

Still trying to evade responsibility, Chiarelli has made a point of saying that he didn't vote on consulting contracts for board members, but it sounds as if no one else did either. Until the conference board told them how to do it right, Stewart simply approved the deals for board members under "delegated authority."

The decisions to hand untendered contracts to board members must have been easy, because they are a big, happy family at Hydro Ottawa. Stewart browned his nose by giving a great little speech on what a magnificent job his board chairman is doing. Chiarelli was just as effusive in his praise for Shortliffe. Shortliffe must like Chiarelli too. He donated $500 to his last election campaign. The other big-billing advisory board member, communications consultant John Gorman, is the top public affairs guy in Ottawa, Shortliffe said. Among the tasks Gorman undertook at a cost of $184,000 over two years was lobbying city councillors on Hydro Ottawa issues. Why in the world would Hydro Ottawa need a consultant to talk to councillors, when it has the mayor on its board?

Chiarelli's attempts to demonstrate that the Shortliffe pay issue is small potatoes compared to the numerous triumphs at Hydro didn't persuade his colleagues. They are clearly not happy at having to wear this stinky political mess. They want a study of the board, and a limit on Shortliffe's billings.

These actions are fine, as far as they go, but we still need a straight answer from the mayor. The bottom line is that Bob Chiarelli hasn't been honest with his colleagues or the public; and he has neither explained nor apologized for his actions. How does he expect us to trust him?

Contact Randall Denley at 596-3756 or by e-mail, rdenley@thecitizen.canwest.com

                                                        The Ottawa Citizen 2004


 

 

Hydro sets dismal example

The Ottawa Citizen

May 25, 2004

Re: Mayor belongs on hydro hot seat, May 18.

 
 


It is shocking to learn that Mayor Bob Chiarelli and his cohorts run a public utility with virtually no governance and based on the facts known, appear to be engaged in unethical activities. This is unacceptable.

 
 

Congratulation to the Citizen, especially columnist Randall Denley and reporters Ken Gray and James Gordon, who have obviously done a lot of investigation and produced excellent articles on the Hydro Ottawa fiasco.

In the last few years, shareholders of many corporations have not been properly served by unscrupulous corporate executives or directors. In many cases, this result was facilitated by poor, or nonexistent, corporate governance.

It is shocking to learn that Mayor Bob Chiarelli and his cohorts run a public utility with virtually no governance and based on the facts known, appear to be engaged in unethical activities. This is unacceptable.

Perhaps it's also time to do an assessment of Telecom Ottawa, the secretive and wholly owned Hydro Ottawa communications subsidiary. We might discover that we are getting a good bang for our buck, or we might unearth another fiasco.

Rene Trumpler,
Gloucester
                                                         The Ottawa Citizen 2004


 

 

Don't let hydro board,

mayor off the hook

The Ottawa Citizen

Friday, May 28, 2004

Re: Mayor belongs on hydro hot seat, May 18.

The Citizen has provided very good coverage of Hydro Ottawa's past practice of offering consulting contracts to advisory board members or their spouses. Columnist Randall Denley has provided some particularly clear analysis and some solid questions regarding this mess.

However, I fear that those responsible for this fiasco may simply be hoping that it will fade quietly from the media and the public's attention. This should not be allowed to happen, because the issues are important and demand serious attention. All Hydro Ottawa board members and managers involved should be seriously censured, if not dismissed, for their participation in this deliberate deception.

 
 
    ...it may have been technically legal,
        but it was anything but ethical.

 

 
 

I disagree with Mayor Bob Chiarelli's self-serving description of this abuse of position and process as "legal" and "ethical"; it may have been technically legal, but it was anything but ethical.

As Mr. Denley rightly pointed out in his May 20 column ("Chiarelli shares blame for Hydro mess"), the mayor has not been honest with his council colleagues or the public in this matter. The conduct involved in this affair reflects the type of casual cronyism and disregard for the public that has created such cynicism among Ottawa's voters.

I am writing to my councillor and other members of council insisting that the mayor be made accountable and, if necessary or appropriate, censured or impeached for his behaviour in this matter. I encourage other readers to do the same.

Peter Lawless,
Ottawa

                                                         The Ottawa Citizen 2004


 

 

Brooks to ask staff to explore

Chiarelli's Shortliffe deal

Ken Gray
The Ottawa Citizen


June 9, 2004

Rideau Councillor Glenn Brooks will file an inquiry with city council today asking staff to explore whether Mayor Bob Chiarelli had the power to come to a consulting-services deal with Hydro Ottawa's chairman, Glen Shortliffe.

"Did Mayor Chiarelli have the authority to negotiate a contract for consulting services with Glen Shortliffe in addition to the chairman's standard contract approved by council?" said a memo from Mr. Brooks distributed late yesterday to councillors, city manager Kent Kirkpatrick and the city clerk's office. "Further, were tendering and contract policies followed?"

Mr. Brooks' questions come after the city's corporate services committee ordered an independent review of the structure and governance of Hydro Ottawa on May 18.

The call for a review followed revelations the Hydro board had authorized contracts of $531,000 over two years to firms associated with directors and advisory board members of the corporation. Mr. Shortliffe's consulting firm received $166,000 in 2003 and $129,000 in 2002. Mr. Chiarelli negotiated the deal with Mr. Shortliffe.

Until these numbers were made public by the Citizen, council believed Mr. Shortliffe was receiving only $12,000 a year for his Hydro duties.

 
   

"Did Mayor Chiarelli have the authority to negotiate a contract for consulting services with Glen Shortliffe in addition to the chairman's standard contract approved by council?"

..."Further, were tendering and contract policies followed?"

-Councillor Glen Brooks

 
 

Councillor Gord Hunter said Mr. Brooks poses a good question. "If things were attempted to be done on the QT, we should know that," he said.

The public still has questions about the issue and he wonders why news of the contracts was buried in a report, Mr. Hunter said.

Councillor Diane Deans said there will already be a report on Hydro's governance and that Mr. Brooks should have asked the inquiry question on May 18 when the review was created.

                                                          The Ottawa Citizen 2004


 

 

City lawyer chosen to probe

Hydro Ottawa

Utility paid $531,000 to firms linked to board, advisory board members

Ken Gray
The Ottawa Citizen

Thursday, July 08, 2004

Lawyer Kent Howie has been appointed to conduct an inquiry into the structure and governance of Hydro Ottawa.

 
 
Mr. Howie's appointment comes after the city's corporate services committee unanimously ordered Mr. Kirkpatrick to create the review on May 18 following controversial financial dealings at the city-owned utility...

Mr. Howie must complete his review by Aug. 17.

 

 
 

A letter from city manager Kent Kirkpatrick that was circulated to city councillors announced the appointment of the business law partner with the firm Borden Ladner Gervais. Mr. Howie's appointment comes after the city's corporate services committee unanimously ordered Mr. Kirkpatrick to create the review on May 18 following controversial financial dealings at the city-owned utility.

Hydro Ottawa paid $531,000 over the past two years to firms associated with some board and advisory board members.

Glen Shortliffe, the Hydro board chairman and former clerk of the Privy Council, received $166,000 in 2003 and $129,000 in 2002 for contracts through his consulting firm, Glen Scott Shortliffe Enterprises Inc. Mr. Howie must complete his review by Aug. 17. A Hydro shareholders' meeting is scheduled for Aug. 25.

Mr. Howie is also a chartered accountant and a graduate of the University of Victoria law school. His areas of practice are corporate and tax law. He has worked on the reorganization or sale of municipal electric utilities in Ontario under the Energy Competition Act.

Mr. Howie is also a business law instructor for the bar admission course of the Law Society of Upper Canada and a part-time professor at the University of Ottawa.

As part of the inquiry, Lisa Dwyer Hurteau, an associate at Borden Ladner Gervais, is consulting with Mayor Bob Chiarelli and councillors. Her area of practice is corporate law, specializing in finance, securities, mergers and acquisitions. She graduated in law from the University of Ottawa.

The Citizen was unable to reach Mr. Howie and Ms. Dwyer Hurteau declined to comment, citing client confidentiality.

In a letter to the mayor and council, Mr. Shortliffe promised the full co-operation of the Hydro board to "provide whatever reports, information and assistance that is requested."

Meanwhile, Orleans Ward Councillor Herb Kreling confirmed Alain Lalonde has been chosen to be the city's auditor general. Mr. Kreling, a member of the selection committee, said a deal is in place to hire Mr. Lalonde, currently auditor general for the City of Gatineau. The hiring must be approved by council.

Mr. Lalonde is expected to have a seven-year contract that would allow him to act independently during his tenure.

The auditor general's post was created to separate the position from staff. Mr. Lalonde will report to the mayor and council, much like the federal auditor general reports to Parliament.

The current auditor, Tracy McTaggart, reports to the city manager as well as the mayor and council. Mr. Kreling said the city is looking for another city position for Ms. McTaggart.

 The Ottawa Citizen 2004


 

 

Councillor demands audit of
Hydro deals

'Look at' $531,000 paid to firms tied to board members,
El-Chantiry says.

Inquiry called in response to controversial contracts won't investigate payments

Ken Gray
The Ottawa Citizen

Wednesday, July 28, 2004

Councillor Eli El-Chantiry has called for the city's new auditor general to investigate the $531,000 in consulting contracts paid by Hydro Ottawa to firms associated with some board and advisory board members of the utility.

 
 
Mr. Howie said that when he was hired by the city in the spring, he was told the inquiry was to investigate how the utility should be run in the future, not probe events in the past.

...Mr. El-Chantiry said the governance inquiry doesn't have time to investigate the payments, but the new auditor general does and he should.

...The councillor will introduce a motion at council to have the auditor general proceed with an investigation.

"That's the auditor general's speciality," Mr. El-Chantiry said.

 

 
 

"The auditor general needs to look at that and see if there is any conflict there," the West Carleton councillor said yesterday.

Mr. El-Chantiry made the comments after lawyer Kent Howie told a public meeting that his inquiry into Hydro Ottawa governance will not look into the payments.

Mr. Howie said that when he was hired by the city in the spring, he was told the inquiry was to investigate how the utility should be run in the future, not probe events in the past.

The city's corporate services committee unanimously ordered the review in May after a series of Citizen stories revealed the contracts' connections to the Hydro board members.

The contracts included payments to board chairman Glen Shortliffe's consulting firm of $166,000 in 2003 and $129,000 in 2002.

Previously, council thought the chairman made $12,000 a year. The deal was negotiated by Mayor Bob Chiarelli, the only civic politician on the five-member board.

The city is the sole shareholder of Hydro.

Mr. El-Chantiry said the governance inquiry doesn't have time to investigate the payments, but the new auditor general does and he should.

The councillor will introduce a motion at council to have the auditor general proceed with an investigation.

"That's the auditor general's speciality," Mr. El-Chantiry said.

 
   

Ottawa resident Peter Lawless said he saw conflict in the board's actions.

"I don't understand how that could have happened," Mr. Lawless said. "Conflict of interest is easily defined."

...He said it was terrible that city council was cutting services while the Hydro board was paying itself through consulting contracts.

"That won't wash," he said. "It was an abuse of the process. I find it incredible. It is time for this cronyism to stop."

 

 
 

Only 16 people attended last night's meeting at City Hall -- the only public meeting to be held by the Hydro Ottawa inquiry -- and conflict of interest dominated the public comment.

Ottawa resident Peter Lawless said he saw conflict in the board's actions.

"I don't understand how that could have happened," Mr. Lawless said. "Conflict of interest is easily defined. There was a complete lack of due diligence through this whole process."

He said it was terrible that city council was cutting services while the Hydro board was paying itself through consulting contracts.

"That won't wash," he said. "It was an abuse of the process. I find it incredible. It is time for this cronyism to stop."

 
   

Mr. El-Chantiry was the only city councillor to show up, and he questioned why just 15 of 21 councillors found time to be interviewed earlier by Mr. Howie and lawyer Lisa Dwyer Hurteau, who both will prepare the final report, to be released Aug. 10.

...an angry Mr. El-Chantiry said. "Where are they tonight?"

 

 
 

Mr. El-Chantiry was the only city councillor to show up, and he questioned why just 15 of 21 councillors found time to be interviewed earlier by Mr. Howie and lawyer Lisa Dwyer Hurteau, who both will prepare the final report, to be released Aug. 10.

"This is bulls--t," an angry Mr. El-Chantiry said. "Where are they tonight?"

Mr. Howie said that after speaking with Hydro officials, councillors and the public, a consensus is developing on some changes.

First, the five-person board is too small, he said. A nine- to 12-person size can better govern a firm the size of Hydro. Second, board members should be adequately compensated.

"People shouldn't be out of pocket" for serving on the board, he said.

The city's corporate services committee recommended continuing the contract of Mr. Shortliffe until a shareholders meeting on Aug. 25, and that his pay be limited to a maximum of $20,000 for that period.

The payments to the board members' firms were buried in the company's consolidated financial statement, which was released to the mayor and council but not to the public.

The Citizen obtained a copy of the statement.

 The Ottawa Citizen 2004


 

 

Mayor should quit hydro board

Randall Denley
The Ottawa Citizen

June 28, 2005

It turns out that the mess at Hydro Ottawa was a bit bigger and smellier than we imagined. The city auditor-general says payments from Hydro to its directors or their companies were actually $1.2 million, not the $545,000 previously reported. The auditor's report gives the impression of a happy little family where no one asked too many questions as six-figure contracts were given to directors and their companies, sometimes without so much as a written description of the work to be performed.

You'd think someone ought to be held responsible for this four-year run of negligence, and the first name that comes to mind is that of Mayor Bob Chiarelli. Not only did the mayor handpick former board chairman Glen Shortliffe, he initiated a deal that saw Shortliffe paid $552,000 over four years. As the only elected person on the board, one would think that the mayor had a special responsibility to make sure that this publicly-owned corporation was being run in the public's best interests. Minding the public's money is the very essence of his job.

 
 
You'd think someone ought to be held responsible for this four-year run of negligence, and the first name that comes to mind is that of Mayor Bob Chiarelli. Not only did the mayor handpick former board chairman Glen Shortliffe, he initiated a deal that saw Shortliffe paid $552,000 over four years.

...Minding the public's money is the very essence of his job.

 
 

He didn't know and he was simply unaware that his fellow board members were getting sole-source contracts, Chiarelli said yesterday. The matters weren't brought to his attention.

The mayor does admit that he initiated the Shortliffe contract, but he thought it would only be for a short term. The mayor maintains that he didn't follow up on the Shortliffe deal to see how much the board chairman was actually being paid, and for how long.

If true, it's certainly out of character. The mayor is a detail guy. It's a bit of a stretch to imagine that he personally arranged extra payment for Shortliffe but never checked on how it came out. In hindsight, the mayor agrees with the auditor that Shortliffe's extra payments should have been taken to Hydro Ottawa's board, and to city council.

On the overall mess, Chiarelli says: "I take some responsibility but not full responsibility."

 
 
The "I didn't ask, they didn't tell me" defence would be better if the mayor wasn't a lawyer who has spent most of his adult life involved in governance.

 
 

The mayor would like to deflect some of that responsibility to former Hydro CEO Ron Stewart, to other board members and even to the Ottawa transition board, which picked Stewart and put in place the utility's sloppy governance rules.

It's a nice try, but it doesn't really wash. The "I didn't ask, they didn't tell me" defence would be better if the mayor wasn't a lawyer who has spent most of his adult life involved in governance. He's a lot sharper than he was pretending to be yesterday.

Let's not forget that only dogged reporting by the Citizen brought part of the truth to light. The Hydro board's idea of public disclosure was a vague note at the end of its annual report. Even when the story finally came out, the mayor and other board members did nothing to inform the public or councillors that less than half of the relevant contracts had been revealed.

The real surprise yesterday was the amount of money paid to communications consultant John Gorman under various corporate entities. Gorman received $310,000 from contracts for communications and related matters, when Hydro had its own communications staff. Even after city council specifically directed that board members receive no extra pay, Hydro continued to pay Gorman for four more months of work.

The auditor identifies contracts of $471,000 related to Adam Chowaniec and companies with which he is involved.

These contracts are of a different nature than those with Gorman and Shortliffe. One of the companies is run by his wife and had a contract prior to his involvement with the board.

He has a small ownership in the other companies and argues that they provide services no other company can, enhancing the value of Hydro Ottawa subsidiary Telecom Ottawa. There is probably nothing wrong with these contracts, but they should have been made public.

At least auditor general Alain Lalonde found that there was value provided for the work done. He might have been the first one to care.

The problems at the board seem to be fixed now, but that's not the point. It's not so much about blame as it is about responsibility. When things go terribly wrong at a city-owned company, who should be responsible?

 
 
The mayor has done a disgraceful job of representing the public's interests. He should leave the board without having to be pushed.

Responsibility doesn't mean sort of taking partial blame. It means consequences.

 

 
 

We could blame former CEO Ron Stewart, but he's retired. We could blame former Hydro board chairman Glen Shortliffe, but he's gone, too. Besides, he was the mayor's choice.

Councillor Alex Cullen will seek to have the mayor removed from the Hydro board.

He shouldn't even have to ask. The mayor has done a disgraceful job of representing the public's interests. He should leave the board without having to be pushed.

Responsibility doesn't mean sort of taking partial blame. It means consequences.

Contact Randall Denley at 596-3756 or by e-mail, rdenley@thecitizen.canwest.com

 The Ottawa Citizen 2004


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