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Opinion

Christy Clark’s Club: Kings and Queens of the Crowns

BC’s big Crown corps, like ICBC and BC Hydro, are run by friends of the Premier. Part of a series.

By Tyee Staff 3 May 2017 | TheTyee.ca

This report is part of The Tyee’s reader-funded B.C. 2017 election coverage. To learn more about becoming a Tyee Builder, go here.

Want to head up one of B.C.’s big Crown corporations, like BC Hydro or ICBC?

Then you better be on good terms with Christy Clark.

Like Brad Bennett. The chair of BC Hydro — $30 billion in assets, $5.7 billion in revenues — is travelling with Clark on the campaign trail as a key advisor.

Crown corporations are supposed to operate at arm’s length from government, with independent boards of directors who hire experienced managers. They exist partly to reduce political interference in the provision of basic services. Directors are to be appointed on the “basis of merit,” according to government policy.

It’s not surprising governments want to interfere. Four Crown corporations — BC Hydro, the Liquor Distribution Branch, BC Lotteries, and ICBC — are slated to generate $2.9 billion in government revenue this year. Without the $698 million “dividend” taken from BC Hydro, the Liberals’ 2017 budget wouldn’t have been balanced, a disaster for their campaign chances.

So it was helpful to have a BC Hydro board that wouldn’t kick up a fuss when the government ordered the corporation to use questionable accounting practices to inflate revenue, producing income — on paper — to allow the corporation to send money to the government.

And a board that insisted on ICBC or BC Hydro rate increases that reflected long-term business realities — not election promises — could be awkward.

Even the less prominent Crowns can be politically sensitive. The Transportation Investment Corporation was created to operate the Port Mann toll bridge after private investors decided the project was too risky. The government says the corporation’s profits will pay for the bridge by 2050.

Except there are no profits. The plan called for $504 million in the first three full years of operation, beginning in the 2013/14 fiscal year. Actual revenue was $118 million lower — 29 per cent. By 2015, toll revenue was supposed to be $202 million a year and growing. In reality, it was $136 million. Which might lead an independent board to raise concerns about the plan, even propose a longer time to recover costs or higher tolls.

But the Transportation Investment Corporation chair is Dan Doyle, Clark’s former chief of staff, and former Liberal cabinet minister Colin Hansen is one of seven directors. Both are highly respected. But both have links to Clark or the BC Liberal Party that make the claim of an “independent board” implausible.

The province has 36 Crown corporations. We’re looking at the ties between Clark and the people at the top of some of the most important.

Brad Bennet
Chair, BC Hydro

Brad Bennett is on the campaign trail again this election, riding the Liberal bus and providing daily advice to Christy Clark to do everything he can to help win re-election, a role he also played in 2013.

He’s clearly on Clark’s side, a close advisor. And as chair of BC Hydro, Bennett is responsible for the province’s most controversial and politically sensitive Crown corporation. Hydro’s debt is mounting, rates are climbing, the Site C dam remains controversial, and the corporation introduced a new rate subsidizing LNG plants, with the cost picked up by BC Hydro customers.

Clark has ensured she has an ally at the top.

Bennett’s campaign role goes beyond offering advice. He is the son of Bill Bennett, who was Social Credit premier from 1975 to 1986. His grandfather, W.A.C. Bennett, is the province’s longest serving premier, in power from 1952 to 1972.

So when Brad Bennett joined Clark on the campaign trail in 2013, he was a daily reminder of the BC Liberals’ roots in Social Credit, which had been, until 1991, been the province’s natural governing party.

Clark made Bennett a director of BC Hydro in 2012 and its board chair in September 2015. In the year ending March 31, 2016, the Crown corporation paid Bennett $43,500 in compensation and another $24,238 for expenses.

Bennett has various business interests, according to biography pages on BC Hydro and B.C. government websites. He’s the president of McIntosh Properties Ltd., “a real estate investment and private equity investment company,” and sits, or recently sat, as a director or chair on the boards of Kal Tire Holdings Ltd., aviation company Exchange Income Corp., computer company Rackforce Networks Inc. and Quails’ Gate Winery. (Quails’ Gate was founded by Ben Stewart, the Liberal MLA who resigned to give Clark a shot at a safe seat, and was appointed to a newly created $150,000-a-year post as a special representative to promote trade in Asia.)

Bennett is a director of the UBC Properties Trust and has been the chair of MITACS, a non-profit that “builds partnerships between academia, industry, and the world.” He’s also a member of Clark’s Premier’s Technology Council.

And Bennett is a trustee and past vice chair of the Fraser Institute, the conservative Vancouver organization that campaigns for low taxes, small government, and the privatization of public services.

DONATIONS: $11,705 personally since 2005; $30,060 from McIntosh Properties.

LOBBYING: None.

KNOWN ASSOCIATES: Peter Brown, Gwyn Morgan, Ben Stewart, John Knappett, Jack Weisgerber

Jessica McDonald
CEO, BC Hydro

Brad Bennett isn’t the only senior person at BC Hydro with Liberal ties.

Jessica McDonald, Christy Clark’s choice to run the corporation and push the Site C dam past “the point of no return,” has ties to the Liberals that stretch back to the 1990s.

McDonald started in government in 1991 as a legislative intern assigned to the Social Credit caucus, working with Martyn Brown who went on to become Gordon Campbell’s chief of staff — and who is known as a fierce critic of Clark.

McDonald moved on to an entry-level government job and by 1998, she was a mid-manager in the Crown lands branch. She quit government and launched a land-use consulting company and landed $215,000 in government contracts in the first full year of the Campbell government.

Campbell knew McDonald. She was married to Mike McDonald, Campbell’s aide since his time as Vancouver’s mayor. McDonald managed Campbell’s leadership campaign and has been a key Liberal player ever since, managing Christy Clark’s leadership campaign, the 2013 election campaign, and acting as senior advisor this campaign.

In 2003, Jessica McDonald returned to government — jumping from her former junior manager role to the Premier’s officer when Campbell hired her as a deputy minister and made her responsible for planning the Liberals’ second term agenda. Less than two years later, she was a surprise choice to head the public service, replacing Ken Dobell and becoming one of the most powerful people in the province.

In 2007, she resigned and joined law firm Heenan Blaikie as executive vice-president advising clients on business deals and relations with Indigenous communities, joining former Liberal attorney general Geoff Plant. Government appointments to the boards of ICBC and BC Hydro subsidiaries, Powerex and Powertech, quickly followed.

In 2014, the Clark government named McDonald the $500,000-a-year CEO of BC Hydro. McDonald is also on the boards of the Business Council of BC and the Vancouver Board of Trade.

KNOWN CLARK SINCE: 1990s

DONATIONS: None

LOBBYING: Shell Canada, on LNG policy and its LNG Canada project at Kitimat.

KNOWN ASSOCIATES: Brad Bennett, James Brown, Jack Wiesgerber, John Knappett, Mike McDonald.

Barry Penner
Chair, ICBC

ICBC might be even more sensitive than BC Hydro. Everyone with a car has to buy basic insurance from the Crown corporation, which collected $4.6 billion from drivers in 2015. Big rate increases can get a government in big trouble.

Clark picked Barry Penner to chair the ICBC board last March. Like her, his political career started as a legislative intern. They were both first elected in 1996, and part of the winning campaign in 2001 when the BC Liberals formed government. Clark was more prominent initially — Penner didn’t get a cabinet post in the first term — but Penner outlasted her, serving as minister for the environment, Aboriginal relations and as an attorney general before leaving politics in 2012, saying he wanted to spend more time with his family.

Penner has kept a low profile since leaving, first joining Davis LLP, a major law firm, then working in Malaysia and returning to start his own legal and public affairs business, Penner Pacific Advisory Services, providing “insight, legal advice and multi-layered strategies to help […] address public policy, regulatory and legal requirements established by governments, First Nations and the Courts.”

Penner steered clear of controversy in cabinet — in 2010, Vancouver Magazine called him “one of the most credible ministers.”

That’s going to be tested in his role as ICBC chair. An analysis by former senior government manager Richard McCandless warns the government has kept ICBC basic insurance rates low while depleting capital reserves, and big premium increases are ahead.

KNOWN CLARK SINCE: Early 1990s

LOBBYING: Japan Oil, Gas & Metals National Corporation (JOGMEC); Inpex Gas British Columbia Ltd., Lower Nicola Indian Band; Sea Breeze Power Corp., Ashland Canada Corporation.

DONATIONS: $4,724.

Gwyn Morgan
Chair, Industry Training Authority

Ok, the Industry Training Authority, responsible for trades training, isn’t a high-profile Crown corporation.

But it’s important enough that after a review by Jessica McDonald in 2014, Christy Clark made ally and advisor Gwyn Morgan the chair, charged in part with producing skilled employees for the promised LNG industry.

Morgan, a fiercely right-wing retired corporate executive, has been close to Clark since her 2011 leadership campaign. When she became premier, he was one of the key economic advisors on her transition team.

Morgan relocated to North Saanich on Vancouver Island in 2006. He’d made his fortune in Alberta’s oil and gas fields as the CEO of EnCana Corp. and had been chair of the board for engineering firm SNC-Lavalin during a period when the company was found to have conducted itself poorly overseas and at home.

In a two-part story from 2011, The Tyee’s Andrew Nikiforuk traced EnCana’s roots back to the Alberta Energy Company, a government created entity intended to give regular Albertans a stake in the industry.

Five years after then-Premier Ralph Klein sold off the government’s last shares in AEC for $500 million, wrote the journalist, the company was making $2 billion a year in revenue and was worth more than $6 billion. The company, a pioneer in the controversial process of fracking for shale gas, benefited from cheap access to resources in Alberta and pushed in B.C. for similar policy.

Morgan also sat on the board of SNC-Lavalin starting in 2005 and served as its chair from 2007 to 2013. “Morgan’s SNC-Lavalin chairmanship was marred by allegations that the company paid millions of dollars of bribes to the sons of Libyan dictator Moammar Gadhafi and kickbacks to McGill University Health Centre CEO Arthur Porter,” reporter Bob Mackin wrote in 2014. “The latter scandal led to the downfall of SNC-Lavalin CEO Pierre Duhaime, who was charged with fraud.”

Morgan’s retirement in May 2013 came one month after SNC-Lavalin agreed to a 10-year ban from working on projects that had World Bank funding, the result of investigations into a power project in Cambodia and a bridge in Bangladesh.

Despite the troubles, the company continued to own or work on major projects in B.C., including the Evergreen Line, the Canada Line, and the William R. Bennett Bridge across Okanagan Lake.

Federally, Morgan’s a Conservative, and although his wife Patricia Trottier was linked to a 2008 scheme that saw five groups register — all using the same Conservative lawyer — to advertise as third parties on behalf of a local candidate who was in a tight fight but already on track to spend the campaign limit.

Morgan sits as a trustee for the Fraser Institute. He’s also been a major donor to the group, as well as to the BC Liberal Party.

Morgan declined the normal compensation as chair of the Industry Training Authority, and is taking $1 a year.

DONATIONS: $181,770 since 2009.

LOBBYING: None

KNOWN ASSOCIATES: Brad Bennett, Byng Giraud, Peter Brown.

 [Tyee]

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