A bad idea exposed once again

A bad idea exposed once again

Keen observers of the Nunavut legislative assembly, especially those addicted to the reading of tabled documents, were treated to a stern ­lesson in public policy this week.

And that lesson is this: it's always a bad idea for governments to give no-bid leases and contracts to politically-favoured companies.

That lesson is contained in two hefty packages of documents tabled June 2 by Hunter Tootoo, the chair of the assembly's standing committee on government operations.

Those documents consist largely of emails sent either to or from David Simailak's government-supplied email address during times when Simailak, MLA for Baker Lake, served as either minister of finance or minister of ­economic development.

What's most interesting, however, is that Simailak, in most cases, did not initiate those emails.

A large number of them are actually forwarded, mostly to Simailak's Nunavut government email address. Most of that forwarding is done by a fellow by the name of Warwick Wilkinson, general manager of a Rankin Inlet company called Piruqsaijiit.

Simailak, according to his disclosure statements, is a part-owner of Piruqsaijiit, a 19-year-old firm with a long history in the eastern Arctic. It's one of several companies whose internal affairs he wasn't supposed to know anything about, on account of his having put his business interests into a blind trust when he entered the Nunavut cabinet.

Piruqsaijiit's main business is to manage and give advice to other businesses. To that end, it's the management hub for a well-known family of "Inuit" community development corporations: Qamanittuaq Development Corp., Tapiriit Developments Ltd., Ilagiiktuk Ltd., Arviat Development Corp., and others.

Simailak, by his own admission, is a part-owner in some of these ­businesses, principally the Qamanittuaq, Ilagiiktuk, and Tapiriit firms, as well as the Kangiqliniq Development Corp.

He wasn't supposed to know anything about the internal affairs of those businesses either. Simailak's interests in them were also supposed to be put into his blind trust, which was managed by trustee Gerald Avery, of the ­Yellowknife accounting firm Avery, Cooper and Co.

But the emails suggest that in spite of the blind trust, Simailak's associate at Piruqsaijiit, Warwick Wilkinson, kept Simailak apprised of some key ­activities within his businesses.

For example, he forwarded to Simailak a series of lengthy email threads concerning a business deal involving Qamanittuaq Development Corp. and the Land Store, another Baker Lake business in which Simailak holds an interest.

Through Simailak's trustee, Qamanittuaq agreed in 2005 to pay the Land Store $235,000 for some property in Baker Lake.

Later that year, the emails suggest that Wilkinson lobbied Simailak to set up a meeting between Piruqsaijiit and the ministers of housing and ­community government.

The apparent purpose of the meeting was to resolve a dispute between Piruqsaijiit and the GN over lease payments and fuel bills involving various development corporations – which included development corporations in which Simailak held an interest.

Those efforts bore fruit. The emails forwarded to Simailak show that by June of 2006, those meetings, which appear to have been arranged by Simailak's ex-executive assistant, Chris Lalande, produced a benefit of $691,000 for Simailak's business associates. This was a payment to the ­development corporations, from the Nunavut Housing Corp., related to property that the GN leases from them in the Kivalliq.

By now, you must be wondering why Simailak's business associates appeared to show such flagrant disregard for the existence of the blind trust.

Privileged public domain evidence suggests that this may be because they've always done business that way – exploiting special connections inside government, connections that are not available to other businesses.

For example, in 1995, the Auditor General of Canada found that between 1989 and 1995, the Government of the Northwest Territories paid the salary of the man who then served as Piruqsaijiit's general manager, an economic development employee called Bill Graham, who was seconded to the company.

The GNWT, in effect, was using public funds – totalling $510,000 – to pay the employee of a private business whose job was to negotiate no-bid leases and contracts with the government who paid his salary.

The Auditor General said in 1996 the government got little in return for this unseemly arrangement, but in those days, nobody much cared.

Given the Yellowknife government's pliable civil servants and gullible politicians as well as Yellowknife's traditionally supine news organizations, nobody made much of a fuss about that and other disturbing issues ­connected to Piruqsaijiit and its family of development corporations.

In those days, it was considered normal for government to hand out ­millions of dollars worth of no-bid leases without disclosing their cost and without evaluating them afterwards to find out if the public interest was served. It's such policies that led to the growth of Pirusaijiit's family of ­development corporations.

We know now that this is a pitiful approach to economic development, a bad idea that Nunavut inherited from the Northwest Territories. It's a ­policy that tends to produce weak businesses dependent on hidden subsidies and favours from government. That's what happens when businesses aren't forced to compete for government work.

What's worse, these policies encourage people to think that business ­success depends upon the cultivation of special connections with government insiders. That, to say the least, is not in the public interest.

As for David Simailak, we have a lot of sympathy for him, actually.

His business associates created an email trail that has already led to his ­public humiliation. It's not entirely fair that he be made the patsy, but that's what appears to be happening. We look forward with keen interest to the acting Integrity Commissioner's findings.   JB