THE DEMOCRATIC REPORTER
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National Post - June 29, 2010 - By Megan O'Toole - email@example.com
Enersource phase of probe ends
The Enersource phase of Mississauga's judicial inquiry ended yesterday, with lawyers blaming the city's former manager and an outside lawyer for dropping the ball, while absolving the Mayor of any wrongdoing.
The decade-old Enersource deal, at the heart of the first phase of an inquiry into a pair of allegedly suspect city business dealings, is controversial because of a key, last-minute change giving minority shareholder Borealis veto power over board decisions.
"Council was not told of the insertion of the veto [and] the Mayor was not told," said Freya Kristjanson, a lawyer acting for Mayor Hazel McCallion.
After seven days of testimony on the Enersource deal, painting contrasting pictures of what happened 10 years ago, something of a consensus appeared to emerge yesterday. All parties agreed Borealis, a subsidiary of OMERS, had acted appropriately throughout the deal's evolution.
Lawyers for the city and Ms. McCallion maintain council was never informed of the last-minute change, but they attribute fault to former city manager David O'Brien and lawyer Bill Houston for failing to report the change to council before the deal was signed.
Mr. O'Brien also became the first president of Enersource, the city-owned hydro utility, around the time the deal was done, putting him in "a position of conflict," city lawyer Tracy Wynne said.
"Wearing the two hats that he was ... Mr. O'Brien's judgement may have been clouded," she told the commission.
Though Mr. O'Brien has testified he likely briefed the Mayor and council on the change, Ms. Wynne pointed out there is no record of any such briefing, and in fact all but one councillor who would have been party to such a briefing deny it ever happened. Councillor Katie Mahoney, the solitary exception, says she recalls a briefing but cannot pinpoint details, including when it happened.
Ms. Wynne said the "ultimate responsibility" for apprising council of the change rested with Mr. O'Brien, but Mr. Houston, as outside legal counsel, should also have taken action to ensure they knew.
Ms. Kristjanson agreed both men should have informed the Mayor and councillors of the change. The veto was inserted a few days after council approved the agreement and a couple of days before it was officially signed by Ms. McCallion, who did not read the final version.
Ms. Kristjanson says it would be "unreasonable" to expect the Mayor to personally proofread the large amount of documentation that comes across her desk.
"Municipal governance would grind to a halt," she said.
A lawyer acting for Mr. Houston disputed the suggestion his client was at fault, noting it was understood that Mr. O'Brien handled the business side of the Enersource matter -- including briefing council on any changes -- while Mr. Houston handled the legal aspect. There was no legal reason not to proceed with the veto, the commission heard.
Alan Mark, a lawyer acting for Enersource, said representatives for both the city and OMERS acted with integrity throughout the process.
"The veto may not have then resonated with the significance it resonates with now," Mr. Mark said, noting taxpayers should have no concerns about the parties entering into a revised shareholders agreement.
lawyer Michael Barrack said the deal has provided "extraordinary benefits" to Mississauga, but rued the impact of the inquiry on his own client, saying OMERS has been "significantly affected" by the process.
Mr. Barrack asked the commissioner, in his findings, to declare OMERS acted in a commercially reasonable manner throughout.
The next phase of the inquiry, which looks at a controversial land deal involving the Mayor and her son, is scheduled to begin next week.
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