Cabinet defends $10 million deal with Aurora fund boss

IQALUIT – NWT cabinet ministers are insisting there’s nothing wrong with a $10 million, five-year lease signed last November for a Yellowknife office building that’s partly-owned by Aurora Fund boss Roland Bailey.

A phalanx of ordinary MLAs – including Hay River MLA Jane Groenewegen, Mackenzie Delta MLA David Krutko, Nunakput MLA Vince Steen and Kivallivik MLA Kevin O’Brien – have been asking loaded questions about the deal since last week.

Last fall, the GNWT signed a five-year lease with a company called 974102 N.W.T. Ltd. for space inside Yellowknife’s Lahm Ridge Tower office building. The lease begins December 1, 1995 and expires November 30, 2005.

Most other GNWT leases and contracts have been frozen until April 1, 1999, so that after division each new territorial government can sign its own leases and contracts.

The shareholder’s register for 974102 N.W.T. Ltd. shows that Yellowknife “businessmen” Roland Bailey and Mike Mrdjenovich each own 50 Class “A” common shares in the company.

Yellowknife lawyer Geoffrey P. Wiest and Melanie Dunsmore, described as a “corporate legal assistant” each own one Class “A” common share in the company.

Bailey – who now manages the GNWT’s Aurora immigrant investment funds on a contract – is a former deputy minister of the executive and a former deputy minister of economic development.

Pacific Western grants mortgage

The building’s certificate of title shows that on October 29, 1997, the Pacific and Western Trust Company agreed to a $4.2 million mortgage on the Lahm Ridge Tower building.

Pacific and Western also supplies financial services to the Aurora Fund, which Bailey manages.

As of Nunatsiaq News’ press-time this week, MLAs were still asking questions about the deal and cabinet ministers were still defending it.

A “sweetheart” deal?

“I find it alarming how someone was able to make such a sweetheart deal,” Mackenzie Delta MLA David Krutko said during question period Feb. 2.

In earlier questions, Krutko had told the NWT’s new public works minister, Jim Antoine, that he couldn’t understand why the GNWT had agreed to a long-term lease on an office building when there’s already a lot of vacant office space in Yellowknife.

“The number of surplus office space that we have at present… there are some 76,000 square feet of surplus office space in Yellowknife,” Krutko said.

“Mr. Speaker, I find it mind boggling how at this time, with all the vacant office space that we have, that this government can get into a long-term contract,” Krutko said.

Why the long-term deal?

Other MLAs asked questions that probed the timing of negotations between the GNWT and the new Bailey-Mrdjenovich company.

They also asked questions about why 974102 N.W.T. was able to get a long-term lease, while the previous owner, a company called Lahm Ridge Investment Ltd., was able to rent the building to the government on a month-to-month basis only.

After other questions, Antoine said the GNWT actually began to negotiate a long-term lease with Lahm Ridge Investment Ltd last summer.

Later, in a return to a question from Hay River MLA Jane Groenewegen, Antoine said GNWT officials were aware that Lahm Ridge Investment Ltd was also talking to Bailey and Mrdjenovich about selling the building.

Antoine also said that by November 1, when the new long-term lease took effect, the building was sold and the new lease “assigned” to the Bailey-Mrdjenovich company.

Antoine also said the deal is a good one for the government, and he claimed that the GNWT is actually saving money on renovations promised by the new owners under the long-term lease.

Right now, the Lahm Ridge Tower houses offices occupied by the Department of Education, Culture and Communications and the Department of Transportation.