More accountability needed for government corporations: report

A report by the Yukon’s Standing Committee on Public Accounts recommends more cabinet oversight of Crown corporations.

A report by the Yukon’s Standing Committee on Public Accounts recommends more cabinet oversight of Crown corporations.

The committee published its third report in December 2005, more than a year after federal auditor general Sheila Fraser set off a firestorm of criticism against the Yukon Energy Corporation and the Yukon Development Corporation through a scathing evaluation of capital projects.

Specifically, Fraser picked apart the methodology of the Energy Solutions Centre Inc. and the bungling of the Mayo-Dawson hydro line project.

Two previous public accounts committee reports detailed deficiencies in the operation of the Crown corporations.

The new report backs up those findings, and proposes a bigger role for government.

It details communication breakdowns between directors and managers and calls for real action, soon.

“Most of these recommendations have to do with the governance of government corporations,” says the 10-page report.

“The events detailed in the reports of the auditor general show clearly that the failure of board governance was a contributing factor to the problems that occurred.”

Those problems were many and varied.

For example, the Energy Solutions Centre was created without informing the minister responsible for it, according to Fraser’s 2004 report.

The public accounts committee “considers it astonishing that the management and board of directors of the Yukon Development Corporation would consider it proper practice to create additional responsibilities for the minister responsible for the corporation without informing the minister of their intention to do so.”

The centre’s directors didn’t understand their responsibilities and lacked qualifications, while managers “did not inform the company’s board of directors of many of its significant actions.”

They didn’t keep many formal records, either.

As a separate subsidiary corporation, the Energy Solutions Centre had fewer legal restrictions, which might have made its work easier, says the report.

“However, this lack of restriction instead manifested itself in inadequate management and inadequate reporting to the board of directors.”

The boards of directors and senior management of government corporations have taken Fraser’s recommendations to heart, says the report.

For instance, under the Corporate Governance Act such entities can no longer be created without cabinet’s knowledge, it says.

But the committee stops short of endorsing the government’s plan to move the Energy Solutions Centre into the fold of Energy, Mines and Resources.

“As the details of the plan were not made clear to the committee, the committee cannot endorse this change,” says the report.

Things were even worse with management of the Mayo-Dawson transmission line, it says.

The energy corporation’s directors were not fully briefed by its managers, who preferred a “design/build” method of construction for the transmission line and “deliberately” did not inform the directors about cost estimates.

Costs escalated from a $21.7 million estimate to actual expenditures of more than $35 million.

“It is surmised that the desire to get the project done led to improper management practices, such as the over-use of sole-source contracts and contracting with contractors who had no demonstrated experience in transmission line construction,” says the report.

It didn’t help that the transmission line was overseen by “four ministers, three board chairs and a similar number of corporate presidents” between the project’s inception in August 2000 to its completion in January 2004.

The committee cited nine previous recommendations, including an end to partisanship appointments by establishing a “standing committee on appointments to major government boards and committees.”

And it made four recommendations for establishing new protocols for government corporations.

The Yukon Development Corporation — which parents most of the territory’s Crown corporations — negotiated a new protocol under the Corporate Governance Act in November 2004.

But the new protocol has yet to be tabled in the Yukon legislature.

The committee recommended the protocol be tabled during the spring 2006 sitting of the legislative assembly.

The public accounts committee includes NDP MLAs Todd Hardy and Steve Cardiff, Yukon Party MLAs Patrick Rouble, Brad Cathers and Dean Hassard and Liberal Party MLA Pat Duncan.

The MLAs agreed that Duncan, who was premier when the Mayo-Dawson transmission line deal went through, would not participate in the public hearings of February 2005.

Contact Graeme McElheran at (GM)


Smoking bylaw to be rewritten

Whitehorse’s contentious non-smoking bylaw has been sent back to the rewrite desk.

The law, which prohibits smoking in public places like restaurants and bars, will be revised this week because it isn’t holding up to scrutiny in Yukon court.

“We need to revamp the bylaw itself to make it a lot clearer so it will get through the court system,” said city councillor Dave Stockdale on Monday.

Since the bylaw came into effect in January 2005, the city has found four bars in violation — the Capital Hotel, the 98 Hotel, Sam McGee’s Bar and Grill at the 202 Motor Inn and the Skyjacker Lounge.

Charges against the Skyjacker Lounge were dropped in November because of a change in ownership.

However, a flaw in the law’s wording may force charges against the other bars to also be dropped.

Delegation of responsibility is the biggest point of contention.

“The enforcement is delegated to hotel owners,” said lawyer Andre Roothman in a past interview.

That makes the bylaw unenforceable, he added.

Roothman is representing three of the bars charged with violating the bylaw — the Capital Hotel, the 98 Hotel and Sam McGee’s Bar and Grill.

“Everybody wants to see a bylaw that can actually be enforced, and not be disputed,” he added.

City reps will discuss the changes in a closed session today and then bring a new bylaw forward at Tuesday’s council meeting. (LC)