MLA makes conflict of interest complaint against Don Morin
Hay River MLA Jane Groenewegen is alleging that Premier Don Morin has violated the conflict of interest provisions of the Legislative Assembly and Executive Council Act.
IQALUIT ¬ Hay River MLA Jane Groenewegen has picked up the gauntlet.
On Feb. 16, she filed a formal conflict of interest complaint against Premier Don Morin, alleging that Morin has violated the spirit and intent of Section 67 of the Legislative Assembly and Executive Council Act.
On Feb. 4, after he and other cabinet ministers had endured days of aggressive questioning from MLAs over a GNWT lease on the Lahm Ridge office building in Yellowknife, Morin challenged Groenewegen to make a conflict of interest of complaint against him.
Lease won by associates of premier
Last fall, a numbered company called 974102 N.W.T. Ltd ¬ who acquired the Lahm Ridge building on September 29, 1997 ¬ won a long-term lease from the GNWT worth an estimated $10 million.
The new company is owned by two close associates of Morin: Roland Bailey, a former high level bureaucrat who now manages the NWT’s Aurora immigrant investor fund under a contract, and Mike Mrdjenovich, a construction contractor and developer who owns a house in Yellowknife that Morin rents.
Until 1996, Bailey was the GNWT’s deputy minister of the executive, a job considered to be the most powerful bureaucratic post in the territorial government, akin to Ottawa’s clerk of the privy council.
To finance its acquisition of the Lahm Ridge building the Bailey-Mrdjenovich company recieved a $4.2 million mortgage from the Pacific and Western Trust Corporation, also on Sept. 29, 1997.
Pacific and Western is a company that Bailey deals with in his capacity as Aurora Fund manager. In the Legislative Assembly last week, Groenewegen said that Pacific and Western holds 25 per cent of the Aurora Fund’s assets in “liquid securities.”
Morin will make no statements
Also on Feb. 16, Morin issued a press release saying he will make no statements related to Groenewegen’s complaint, since there is a clear process set out in the Legislative Assembly and Executive Council Act for dealing with such complaints.
“[I]t would be inapropriate to make a comment that may infringe on the matter,” Morin’s press release says.
The press release goes on to say that Morin looks forward to “a prompt and fair resolution of this matter,” and that he will cooperate fully to “ensure that the matter is resolved quickly, and in the best interest.”
Public confidence eroding?
In her own press release, Groenewegen makes no mention of the Lahm Ridge lease.
But she did say that “public confidence in the integrity of this government has been eroded and I believe that the premier’s office must address this issue.”
Groenewegen filed her complaint with David Hamilton, the clerk of the NWT legislative assembly. Hamilton will then forward it to Ann Crawford, the NWT’s conflict of interest commissioner.
“If the conflict of interest commissioner undertakes an investigation and finds no grounds for the suspicion, speculation and rumours, nobody will be happier than myself,” Groenewegen said. “At this time though, it appears that the 13th assembly’s reputation has been tarnished and this impacts all members.”
In her complaint Groenewegen alleges that Morin may have contravened the “spirit and intent” of Section 67 of the Legislative Assembly and Executive Council Act.
That section states that members shall perform their duties and arrange their affairs “in such a manner as to maintain public confidence and trust in the integrity, objectivity and impartiality of the member.”
It also says that members may not accept any “remuneration, gift or benefit, the acceptance of which might erode public confidence and trust in the integrity, objectivity or impartiality of the member.”
Groenewegen summarizes Lahm Ridge deal
On Feb. 11, before having made her complaint, Groenewegen made a member’s statement in the assembly that summarized information about the Lahm Ridge lease.
She said that until the summer of 1995, the Lahm Ridge building was owned by Al and Hazel Marceau. A previous five-year lease held by the Marceau’s had expired, and the Marceau’s were renting the building to the GNWT on an “overhold” or month-to-month basis.
After unsuccessfully attempting to get another long-term lease, the Marceau’s put the building up for sale at a Yellowknife real estate company, with an asking price of $5.8 million.
A southern company called “Urbco” looked at the building and considered buying it, Groenewegen said in the assembly. But the lack of a long-term lease apparently made the building a poor investment.
The Marceau’s were then stuck with a “huge liability,” Groenewegen said.
But she alleges that all this changed when the Bailey-Mrdjenovich company became interested in buying the building.
“Enter Mr. Bailey and Mr. Mrjdenovich, they looked at the property and made an offer of $4 million. This is $1.8 million less than the declaration of values signed by Mr. Bailey at the time of the transfer.”
Groenewegen went on to say in the assembly that this is when the GNWT changed its mind on negotiating a long-term lease.
“Mr. Marceau then went back to Public Works and Services and negotiated the not so burdensome conditions of the lease extensions. The department readily admits that they knew of the pending sale and who the players were. The conditions were easy to achieve given that the deal was very attractive,” Groenewegen said.
Building sold for only $4 million
She said Bailey and Mrdjenovich paid only $4 million for the building, $1.8 million less than its market value.
Groenewegen also said the lender, Pacific and Western, added an extra $200,000 to the mortgage on the building, “to carry out the renovations and upgrades” required by the GNWT.
“This was all accomplished without the necessity of a down payment because there is still a $1.6 million spread between the purchase price and the totally justifiable declared value of $5.8 million,” Groenewegen said.
“It was a very safe loan for the Pacific and Western Trust Company. The company which incidently holds 25 percent of the Aurora Investment Fund assets in liquid securities. The fund which Mr. Bailey coincidentally manages,” Groenewegen said moments later.
Minister didn’t know
She also said that bureaucrats worked out the deal without the knowledge of the public works minister, who at that time was Baffin South MLA Goo Arlooktoo.
“Although cabinet had not endorsed any office space plan, the deputy minister, Ken Lovely, with absolutely no direction or knowledge of the minister of public works and services, negotiated an eight-year almost $10 million office lease,” Groenewegen said in the assembly.
Over the past two weeks, the current public works minister, Jim Antoine, has said the Lahm Ridge deal was worked out in accordance with a “Yellowknife office space plan,” and that it’s a good deal for the GNWT.