Is ASC on witch hunt?

From Canadian Business

Alberta Securities Commission says it had just cause to fire employee
April 22, 2005
By DARCY HENTON

EDMONTON (CP) - The Alberta Securities Commission said Friday it can't be accused of firing a whistle-blower because it doesn't know who complained that there were improprieties at the provincial agency. Commission lawyer Brett Code said Grahame Newton was fired Thursday for cause and not for raising concerns about enforcement practices and the working environment at the offices of the securities regulator.

Code said Newton was dismissed because he tried to block a KPMG computer systems audit and later admitted that he had intercepted e-mails and passed them on to part-time commissioners who adjudicate Alberta Securities Act violations.

"Mr. Newton responded unco-operatively and . . . somewhat belligerently," Newton said. "His responsibility as a director was to assist KPMG in undertaking the investigation into the security and the confidentiality of the information system.

"I'm told that rather than do that he did the opposite," Code said. "He tried to stop the investigation and so basically refused to fulfil his duties."

Code denied allegations by Opposition Liberal Leader Kevin Taft that the ASC management was on a witch hunt to find out who had complained anonymously that their bosses were interfering with securities investigations.

"Whatever Mr. Taft is saying, we don't have the information to make that connection," Code said. "This person is not known to me or anyone else involved as a whistle-blower. He didn't admit to that. He didn't tell them: 'Listen, I am one of the whistle-blowers. You can't touch me.' "

A recent amendment to the Criminal Code makes it an offence - punishable by up to five years in prison - to try to muzzle or retaliate against whistle-blowers.

Code said the ASC can't be accused of doing that.

"If the violation requires that we're punishing or penalizing someone for whistle-blowing, I don't think that's what the commissioners have done."

Newton said Thursday he received a letter from the ASC advising him that he had been terminated. He has not said why he was let go.

He said he will seek legal advice before taking any action.

Investor advocate Diane Urquhart said Friday that the firing of Newton in the midst of the turmoil at the securities commission will not go over well with the investing public.

"If in fact someone has had a remedial termination because of an allegation of providing information . . . it's unacceptable and the investing public should be very concerned," she said.
Urquhart was skeptical of the timing of the KPMG audit.

"It's entirely reasonable for a forensic audit to occur . . . but right in the middle of a human-resources fiasco makes no sense from a management point of view. It's oil on a fire."

Newton was fired the same day Alberta Finance Minister Shirley McClellan told the legislature there was no witch hunt underway.

The firing appeared to surprise McClellan.

"The minister is very concerned about what happened and she is currently considering her options," said Tracy Balash, McClellan's communications director.

Balash said the minister would offer no further comment on the issue until she had a chance to talk with officials at the commission.

Taft reiterated his call Friday for the government to immediately launch an independent investigation into the matter to protect other ASC employees from losing their jobs.

"This witch hunt has already claimed its first victim and I fear it is not going to be the last," he said.

He said the commission's decision to hire KPMG to go through employees' computer hard drives is not protecting investors.

"If public confidence is lost in the Alberta Securities Commission, we'll see the value of companies decline and the economy of Alberta permanently damaged. In the end, that's my greatest fear."

Code said no more dismissals are expected.

The Alberta Securities Commission is still responsible for the Alberta Securities Act even though the Alberta Stock Exchange merged with the Vancouver Stock Exchange six years ago.

It is responsible for regulating all publicly traded companies registered in Alberta, including most of Canada's biggest oil and gas companies along with WestJet Airlines and CP Rail.

Last week, McClellan directed the provincial auditor general to investigate the ASC after a number of public complaints were made about the commission's enforcement of securities violations, and to issue a report by July.

McClellan said Wednesday that although an earlier probe by Calgary lawyer Perry Mack had cleared commission officials of any wrongdoing, the auditor general's review was needed to clear the air and help restore confidence in the agency.

Auditor general Fred Dunn said he will go back through the ASC case files as least three years and that he will look at management decisions.

In Mack's confidential probe, which McClellan has refused to release, commission staff reportedly complained that officials interfered with investigations, played favourites, and condoned a sexist and demeaning work atmosphere.

McClellan said that while Mack discovered some personnel issues, he found no evidence of regulatory interference.

AG PROBE - Alberta Securities Commission

FROM THE EDMONTON JOURNAL

EDMONTON JOURNAL

Minister asks auditor general to probe ASC
Allegations of misconduct cited by complainants

By DARCY HENTON
The Canadian Press - Wednesday, April 20, 2005

EDMONTON (CP) - In the face of a flood of complaints, Alberta's finance minister has asked the provincial auditor general to investigate the embattled Alberta Securities Commission.Shirley McClellan sent a letter to auditor general Fred Dunn to request the investigation last week, finance department spokeswoman Tracy Balash revealed Tuesday. She said McClellan asked Dunn to report back as soon as possible.

"We would be looking at the process that occurs when there is an enforcement issue and how it is investigated and ensure those processes are being followed and whether or not improvements are required," Balash said.

McClellan had invited Albertans with "actual examples of enforcement issues" to come forward after Liberal leader Kevin Taft earlier this month called for an independent inquiry into the commission.The probe comes in the wake of allegations of misconduct and improprieties in the commission hierarchy.

Stan Buell, president of the Small Investors Protection Association, applauded the decision."I think it is fundamentally important nationally because the ASC is one of the largest security commissions in the country," he said.

Although the Alberta Stock Exchange merged with Vancouver Stock Exchange in March 1999 to form the CDNX Canadian Venture Exchange, the Alberta Securities Commission is still responsible for enforcing the Alberta Securities Act.

Edmonton businessman Jason Cowan, who is suing the commission for its handling of an alleged fraud, had called for the probe in a letter he sent to the minister Tuesday. He was excited by the news that an investigation is already underway.

"If they proceed the way they should proceed, I think everything will come to the surface," he said. "It will end eight years of fighting with a multitude of lawyers when the evidence has always been there."

Cowan claims he and his business partner were swindled out of $2.4 million on the defunct Alberta Stock Exchange in 1997 and are still waiting for action to be taken. Cowan, 68, and business partner Barb Trosin lost the money when they signed over their shares in Northside Minerals International, a company they set up to develop a piece of oilfield equipment.

Another Northside Minerals investor, Moe Siemieniuk, had also urged the minister in an April 7 letter to "investigate this outrageous situation." Siemieniuk, a chartered accountant in Thunder Bay, Ont., said many of his friends and relatives lost everything they invested in the project and neither the provincial regulator nor the police are doing anything about it.

A prototype of a blowout preventer was developed in Thunder Bay and still sits crated in an industrial yard ensnarled in legal tape. Siemieniuk said he found out only recently that Northside Minerals never did have legal possession of the technology."We've all got our money tied up in a company that was trading with no assets and we don't know how that happened and we want it investigated," he said.

James Denzine, of Thorp, Wis., who also invested in Northside, called the Alberta Securities investigation a "sham" and a "coverup" in a letter he sent McClellan last week. He said he and his son lost $35,000 US in Northside when it was the subject of a 1999 cease trading order. "When you get into the securities market you would expect the public would at least be given some protection - that to be allowed to trade on the Alberta Stock Exchange that company would have to go through some type of scrutiny," he said.

McClellan hired Calgary lawyer Perry Mack last January to investigate allegations from current and former securities commission employees that senior officials were interfering with enforcement activities, but his report dismissed the allegations.

Investor advocate Diane Urquhart has criticized that process and called for an independent investigation by a forensic accountant. Urquhart, who also wrote to McClellan April 11, said the situation cries out for creation of a national securities commission with a separate adjudication branch. She said provincial security commissions should be stripped of investigation powers and the RCMP should be given that role.

Urquhart said provincial security commissions as they now function are accountable to no one except the chairman and the finance minister. "When the public makes a complaint, it goes into a black hole."

Former broker Larry Elford, of Lethbridge, Alta., called the Alberta Securities Commission "a dysfunctional organization." He is urging the finance minister to go one step further and immediately call a public inquiry.

Has corruption permeated the Regulators?

April 10, 2005 by e-mail to: drumheller.stettler@assemble.ab.ca

The Hon. Shirley McClellan
Minister of Finance Alberta
#224 Legislative Building
10800 – 97 Avenue
Edmonton, AB, T5K 2B6

Dear Minister McClellan,

Further to our letter dated March 25, 2005, we are writing today to advise you that we fully support the concerns expressed by Diane Urquhart regarding the ASC Commissioners Report in her e-mail to you dated April 10, 2005.

While we would like to have confidence in our provincial securities regulators, recent revelations including the Auditor General's Report, the Gomery Inquiry evidence and the recent allegations against the Alberta Securities Commission do little to inspire trust in the established authorities.

It seems that Elliot Spitzer using a fresh approach to investor protection, with his bureau for investment protection, has blown the lid off widespread wrongdoing and corruption. He was aided by TruthTellers to expose the wrongdoing.

In Canada we are fortunate to have individuals like the Hon. Sheila Fraser and Justice Gomery who are able to pursue the truth. We also have heroines like Ms. Bedard who are prepared to tell the truth despite attempts to intimidate her and destroy her credibility.

Now we have Mr. Jean Brault. Although we do not respect him for his participation in the wrongdoing, we do believe that he is showing courage to come forward and testify when so many others have appeared unwilling to tell the truth and even attempted to make a mockery of the inquiry.

Ms. Urquhart is a very capable and competent young lady who is dedicated to helping to make Canada a better place in which to live and invest. She has taken the time to investigate and expose some of the issues that are the root cause of many of the problems that investors face.

There is need for objective independent oversight of the investment industry and the regulators. Ms. Urquhart has provided knowledgeable comment. We fully support her views on this topic.

Further, we believe it is time that there is an inquiry into our regulatory system. It is no longer acceptable that we simply fiddle with the rules or the existing regulatory structure. There are industry accepted practices of wrongdoing that are costing Canadian taxpayers billions of dollars every year in lost savings.

There is cover-up so the public does not know. It is time to expose what is happening, and to make appropriate changes before Canada becomes entrenched as a nation that harbours corruption.

We trust that you will give Ms. Urquhart's submission your serious consideration and take appropriate action.

Yours truly

Stan I. Buell, P.Eng.President


cc. Hon Ralph Goodale – by e-mail to: goodar@parl.gc.ca
Hon Tony Ianno – by e-mail to: Ianno.T@parl.gc.ca
Hon David L. Emerson – by e-mail to: Minister.Industry@ic.gc.ca
Ms. Diane Urquhart – by e-mail to: urquhart@rogers.com

Gomery Inquiry - Jean Brault

While we do not respect Jean Brault for his past actions we must respect that he has come before Justice Gomery with startling revelations. No real surprise except that someone is speaking out without the usual evasive tactics, refusal to co-operate and mockery that has been displayed by others.

In a letter to the Star on April 9, 2005, Anne Mitchell of Toronto said it very well:
"Come on , Canada. We can do better. Politicians, business people and criminals should not be allowed to grow rich at the expense of the Canadian taxpayer."

Edmonton MP David Kilgour is "disgusted at Gomery findings" according to the Star and "says he may quit". While it is disgusting to see that corruption is rampant in the investment investing and permeating the regulators and now revelations suggest even our Government. There is no surprise. We cannot quit. We must fight for right.

Finally, corruption is beginning to be exposed. Is it because of Spitzer's efforts? Is it because of the new communication via the Internet? Or is it because our morality is beginning to awake?

It really doesn't matter why it's happening, but it is. More and more people are becoming aware and they are disgusted. Next, they need to become enraged. They need to unite and work together to make things change.

We need to change our systems. We need to stop accepting the things we inherently know are wrong. We need to exercise our right to vote. We need to punish those who do wrong. Leaders must be held accountable.

Industry leaders who condone or allow wrongdoing must be punished along with the so-called "rogues". The perpetrators must not be allowed to benefit and escape unscathed. The same applies to our politicians. We must demand leaders who know what is right and what is wrong. We must accept nothing less than the best.

There are more good people than bad people. It is time for the good people to unite and fight for what is right. Voices must be heard. Votes must be counted.

Gomery Inquiry - Cover-Up

Is our Government guilty of cover-up?

Why does it take our friends in the United States to inform us of what is wrong in Canada?

At least some of our journalists try to keep us informed.

The following appeared today.

GOMERY INQUIRY
On-line journal provokes a firestorm

By JANE TABER
Tuesday, April 5, 2005
SENIOR POLITICAL WRITER

OTTAWA -- An unassuming 42-year-old call-centre manager and Star Trek fan from Minneapolis, Minn., has provoked a political firestorm in Canada.
Ed Morrissey -- Captain Ed to his friends -- published on the weekend what no Canadian is allowed to print or broadcast. On his Internet blog, he posted testimony before the Gomery commission that is subject to a publication ban.
Yesterday, after the story of his blogging exploits broke in the Canadian media, Mr. Morrissey saw the traffic on his website increase tenfold as Canadians clicked on to read the testimony from Quebec ad executive Jean Brault.
By midday, 131,000 people had visited the site. In just one hour before lunchtime, he had 26,000 hits and by the end of the day he estimated he was on track for about 300,000 hits, many from Canadians. He averages 22,000 visits a day.
Advertisements
"There's a lot of people coming to me through Google Canada," Mr. Morrissey said.
"Just taking a quick look here at the last 100 people who were on the site, which at this rate was in the last 10 seconds, there's a lot of Canadian servers on there."
As an American, Mr. Morrissey is not subject to the ban, and his publication of the details of the testimony has made the story accessible to all Canadians.
And he says he didn't go looking for the story. It found his right-wing blog, and he was happy to publish it. Mr. Morrissey, who describes himself as a libertarian, believes strongly in freedom of the press.
"Somebody contacted me through somebody I knew. I read a little bit more about it and then when I got the information I was able to fit it together and write the post."
He wouldn't say who his contact "may or may not be" but it is his understanding that there is someone in the Montreal room where the hearings are taking place who is giving the information to his contact, who is then passing it along to Mr. Morrissey.
Mr. Morrissey is not paying his contact for the information.
His contact could be anyone as the commission hearings are open to the public. Indeed, the Brault testimony is an open secret in political Ottawa. Ask any political staffer or MP and they seem to know some, if not all, of the details of the testimony. The television feed from the commission can be picked up in some Ottawa newsrooms, and other information is being passed through e-mails, transcripts and phone calls.
Political leaders are being kept abreast of the story, with the exception of Bloc Québécois Leader Gilles Duceppe who asked his staff not to tell him anything for fear he will divulge information and run afoul of the ban.
Last week, the NDP dispatched their man, Pierre Ducasse, to the hearings when the publication ban was imposed. He reports the testimony back to the senior staff. Party leader Jack Layton, however, is briefed only on the "gist" of the information, his spokesman, Karl Bélanger, says. Again, it is to ensure that he doesn't let details slip.
Mr. Morrissey is a California native who has lived in Minnesota for nearly eight years. He started the blog 18 months ago when he found himself close to home after his wife, Marsha, suffered from a serious kidney ailment.
The Captain Ed nickname comes as a result of a gift from an old girlfriend. Twenty years ago, Mr. Morrissey was a huge Star Trek fan. So his girlfriend bought him a personalized licence plate that said "Captain Ed."
Living just a few hours from the Canadian border, Mr. Morrissey says he follows Canadian politics but has always been hesitant to write about Canada.
"I know Canadians are sensitive about Americans being arrogant about their politics. So I don't write a lot about Canadian politics."
But he is continuing to follow and post articles about the inquiry.
"It's an interesting story. It's a fascinating story," he said. "The one thing that was concerning was that the Liberal Party could call a snap election before this came out."