While we originally would have normally called this post “Notes: Council – October 15, 2018”, the night’s events were quite heavy (handed) on the topic of the Town’s hydro companies, their financials and “secret” meetings. As such, we thought it qualified more as part of our “Hydro Files” series.
After the release of the 2017 Audited Financial Statements of the Town, more questions popped up (in addition to the mountains of them already there) about the profitability (or lack thereof) of the Town’s Hydro assets, including the troubled Biodigester. We covered some of that in our previous piece The Hydro Files: Part 1 – Houston, We Have A Number and that along with Alderman Kadwell and Johnston’s quest for answers made for a tense Monday night meeting. But before we get into that, lets deliver a primer.
The Corporation of the Town of Grimsby
To go up a level, whenever we refer to the Town we are technically referring to the legal body known as “The Corporation of the Town of Grimsby”… while it is not a corporation in the traditional sense, it reflects a business corporation in many aspects. The Town’s “Board of Directors” are elected directly by you, comprising of the Mayor and Aldermen. Just like any board they administer the affairs of the corporation, whether it be your bumpy road, development or revenue generation (eg. taxes). Council collectively is a Board of Directors of the Town.
If you have been following our series, we have looked at how the Town has 5 hydro companies and accompanying boards (stacked with Directors including Mayor Bentley, Aldermen Berry, Mullins and Seaborn). As previously discussed only two of these companies are “directly” owned by the Town (Niagara Power and 1938427 Ontario AKA Holdco2), the rest are shelled away and buried so that other members of Council, and us, the public can not see what is going on inside them.
Ontario Business Corporations Act
Legally under the Ontario Business Corporations Business Act (link here) corporations, including those two hydro companies which are directly owned by and report to the Town (who are the shareholders), must hold Annual General Meetings (AGMs) as proscribed below:
In the past, all members of Council have been invited to these AGMs as they are representing the shareholder (the Town) by way of you voting them in. The public was never invited to these meetings and as such the Ombudsman later declared several of them as contravening the Municipal Act (more on this in a future post). In light of the Ombudsman recommendations, the normal course of action would be to implement the recommendations and open up the AGMs to the public, right? WRONG!
Well it seems that the two hydro companies, the Mayor and the three Aldermen that sit in different capacities on these boards, rather than open up the meetings to the public just decided to make them even more secret… even cutting out the rest of Council from the information loop.
Council Meeting – October 15, 2018 – A&F Minutes
At Monday night’s meeting, Alderman Kadwell brought up the issue of why there hasn’t been any AGM meetings for quite some time. Much to our surprise, he and the rest of Council (except Mayor Bentley, Aldermen Berry, Mullins and Seaborn) were told that the meetings had already been held and that Mr. Derik Brandt (the Town manager) attended as the “shareholder’s representative”.
Below is a clip of how the event transpired, including (slightly off-screen) Alderman Dunstall’s “give us some answers” hand gestures:
Where this CAO is ‘head of the corporation and thus the shareholder’s representative’ non-sense comes from, we are not sure. Either Mayor Bentley and the Aldermen on the boards who held the meetings are not in touch with legal requirements or they willfully tried to dodge the rest of Council, the Ombudsman and most importantly… you.
Even more confusing is that Mayor Bentley stated Mr. Brandt “is the shareholder”… a truly bizarre comment. A shareholder is an “an owner of shares in a company”… so unless the Town (or the Mayor) has given these hydro assets lock, stock and barrel to the Town Manager, he is NOT the shareholder…. the Town is.
In an e-mail to the Town Manager on this matter, he confirmed the dates of the meetings but when asked the how and whys of him being appointed as the shareholder representative, we were directed to Mayor Bentley. Mayor Bentley referred us to the Shareholder’s agreement, which upon reviewing the latest for Niagara Power (2009 and 2016 Board amendment) there is nothing in them about the CAO or any other person being designated as a “shareholder representative”. You can read the 2009 agreement here at this link.
Appointing A Shareholder Representative – OBCA
According to the Business Corporations Act, the only way for a person to be appointed as a representative is as follows:
In plain English, this means that the CAO would have had to been appointed by a majority vote in an open meeting of Council. There is no record or minutes of such a meeting, resolution or appointment… thus it appears whomever approved this “representation” may have done so in violation of the Corporate Business Act and/or the Municipal Act.
On an interesting side note from the clip was that CAO Brandt commented he was “not an expert in the Business Corporations Act”. Despite being the head of “The Corporation of the Town of Grimsby” and designated as CAO of said corporation, we would assume that one would be familiar with legislation one is allegedly appointed under and would also apply to their employ with the Town.
There was subsequent discussion on the amounts reported in the audited Town financials, namely the $600,000 loss by Grimsby Energy (home of the Biodigester) that Mayor Bentley dismissed as being due to “amortization” and the fact the Bio only began running in the last quarter of 2017. But all the detailed numbers are only known by a select few on Council and we are not expecting answers from them anytime soon.
Council Meeting – October 15, 2018 – New Business
The issues around hydro resurfaced during the “New Business” portion of the agenda, where Alderman Johnston expressed her concerns over the now-secret AGMs, the disclosure of financials and the deepening secrecy of what is really going on in the Town’s hydro assets. Mayor Bentley deflected by focusing on Grimsby Energy (one of the
secret private shelled companies) and once again repeated the false proposition that “Mr. Brandt is the shareholder”… if you are keen on body language, it is interesting note the disconcerting look on the CAO as Mayor Bentley puts this incorrect information again into the public record.
EDIT: Mayor Bentley incorrectly identifies the CAO as the “head of the corporation” (the Town)… however according to the Municipal Act s.225 “it is the role of the head of council […] to act as chief executive officer of the municipality”. Mayor Bentley is the head of Council and thus his status as “CEO” outranks a CAO.
Mayor Bentley then went on to cite that information might be used by “competitors in the area” looking to takeover Grimsby Hydro/Grimsby Power and mentioned Fortis Ontario’s minority interest (10% of Grimsby Power) and heavy regulation as to why information could not be released. As none of the Town’s power companies are publicly traded on any stock exchange, there can be no “takeover” of these companies… a competitor may offer to purchase, but would only do so by performing due diligence and having a good look at the books (which might cause them to run away).
He went on to further suggest that questions of Council have been asked and answered in the past. It was quite a rambling run-on list of reasons as to why the information should not be released. But to Mayor Bentley’s credit he did state that “truth be known… the information could and should be made public, but it is open to abuse from the public”. We almost thought it was going to be a magical moment in one of the last meetings of this Council… but alas it was not to be.
Alderman Johnston further inquired whether the Aldermen (Berry, Mullins and Seaborn) sitting on the hydro boards can discuss with the rest of Council what happens in the companies whose boards they sit on. The Mayor went on to explain that due to “fiduciary responsibility to the corporations” (the hydro companies) as such that business decisions should not be disclosed. He further continued on to say that the Town has benefited from the current setup of hydro to the tune of $8 million.
Fair enough… but the real question is, if all is great financially and the “imaginary” competition does not exist, why not open the books and be transparent with the numbers. Does the public think there was potential for more money to be made, but science-fair projects like the Biodigester and the CoGen turbines sitting on the lawn at Town Hall skimmed off that potential extra profit? Show us the books, prove us wrong… or right.
After a long-winded explanation of hydro as Mayor Bentley sees it, Alderman Kadwell followed up with a thoughtful point on how members of Council (not on any of the boards) are to answer questions that constituents have about hydro. He further asked how (and we still have not figured out even through research) Mr. Brandt apparently became the “shareholder’s representative’ without a proper vote before Council.
The flawed logic of the CAO being head of the corporation and thus the shareholder representative is once again put forth by Mayor Bentley, but can not explain the “sequence of events” and deflects the question. What followed was an *interesting* to say the least, exchange between Alderman Kadwell and Mayor Bentley. The clip is a little long, but should be viewed entirely to give context.
Based on this author’s professional training and experience at assessing verbal and non-verbal behaviour, all that can be said is that the rather defensive posture of the Mayor is telling. Further resorting to an ad hominem attack on Alderman Kadwell, accusing him of wanting to sell hydro (he just wants a business valuation) shows that line of inquiry is getting into a very sensitive area.
Now if you think this secrecy surrounding the Town’s hydro companies is “normal”, you only need to look to look to our neighbouring municipalities to see how things should be done. A quick search in a popular search engine for “Niagara On The Lake Hydro Report” should turn up detailed hydro financial statements, made public by NOTL to residents. Further, if you dig a little deeper and look at Welland you can find their 2016 hydro Shareholder Declaration at this link here. Since we are on the topic of shareholder representatives and AGMs, lets took a look at what Welland says:
Wow! Welland really has its act together. They explicitly state the assignment of a “shareholder representative” (which is an unknown “sequence of events” in Grimsby ) and a very strong stipulation that Board of Directors meetings are open to the public. No secrets there apparently.
Now turning our eye back to Grimsby, for the astute observers out there did you notice anything missing from the hydro discussion clips (and no we did not edit them out)?
Give up? Alderman Berry, Mullins or Seaborn who all sit on hydro boards had *nothing* to say about these matters… not a peep and not a concern. In fact it is notable that Alderman Berry was slouching in his chair, if not sleeping, in the least showing through his body language little interest in the majority of these discussions. Their collective silence and lack of input on a big issue like hydro and the financials speaks volumes about how this “veil of secrecy” over hydro will continue should voters blindly return them to Town Hall.
If municipalities like NOTL and Welland can run an open and transparent hydro enterprise, why can’t Grimsby? Is there something to hide? These are questions you should ask yourself when deciding on who to cast your ballot for. A special “tip of the hat” goes out to Aldermen Kadwell and Johnston for their pursuit of trying to get true disclosure from our Town’s “secret” and mismanaged hydro assets.