March 25, 2003 PUBLIC ACCOUNTS COMMITTEE

The Committee met at 7:30 p.m. in room 5083.

CHAIR (Sullivan): Order, please!

On motion of Mr. Butler, seconded by Mr. Aylward, Mr. McLean was elected

Vice-Chairman.

CHAIR: My name is Loyola Sullivan. I am the Chair of Public Accounts. We

will do introductions of the members of the Committee first of all. We can just,

I guess, start down at the far right here.

MR. JOYCE: Eddie Joyce, Bay of Islands.

MR. K. AYLWARD: Kevin Aylward, St. George's-Stephenville East.

MR. FITZGERALD: Roger Fitzgerald, Bonavista South.

MR. McLEAN: Ernie McLean, Lake Melville.

MR. T. OSBORNE: Tom Osborne, St. John's South.

MR. BUTLER: Roland Butler, Port de Grave.

CHAIR: I will just mention again to make sure you press on the talk

button when you are speaking, and just press again to release it when you are

finished.

The Auditor General's Office.

MR. NOSEWORTHY: John Noseworthy, Auditor General.

MR. LOVEYS: Wayne Loveys, Deputy Auditor General.

MR. CASEY: John Casey, Audit Senior, Office of the Auditor General.

CHAIR: Okay, representing the C.A. Pippy Park Commission.

MR. MURPHY: Tom Murphy, the Chair of Pippy Park.

MR. CURNEW: Ken Curnew, Chief Operating Officer.

MR. BENNETT: John Bennett, Assistant Deputy Minister of Finance, and also

the Liaison Officer between the Department of Finance and the Commission, and

Secretary/Treasurer of Thomas Development.

CHAIR: Thank you.

We have with us, too, at the table there, Elizabeth Murphy, who is Clerk of

the Committee and Deputy Clerk of the House of Assembly. Mark Noseworthy is

Executive Director, basically, with our Committee here, and Kevin Collins who is

recording with Hansard.

Welcome, everybody.

We do not need to swear anybody in. Everybody was sworn in. This is a

continuation of a hearing that was held on March 13, so we will move right along

because I do not think there is any need -

MR. JOYCE: Mr. Chair, just a point for the meetings. We discussed it here

before, as Committee members, about interruptions while we are asking questions.

Personally, I find it rather rude that, at the last meeting that we had, you

asked questions for one hour and twenty minutes. Not one person interrupted. I

have Hansard here again, where I asked two questions and on both questions you

interceded.

Just for the flow of the meeting, when an individual, whoever it is, starts

asking questions, are we going to let that person finish, or are we going to

allow anybody who wants to ask a question jump in? Because I will not be rudely

interrupted again unless I do it to everybody else.

I would prefer - like, you asked questions for an hour and twenty minutes and

there was not one person who interrupted - we all abide by that. The minute

someone else jumps in there, rudely jumps in - twice, in two questions that I

asked, you jumped in and interceded. Are we going to allow a person, a member,

who has the right to ask whatever questions they like, stay as long as they like

to ask it unabated, or are we going to be interrupted?

I have to ask the Committee that, because if you are going to interrupt me or

anybody else any time you speak, any time I speak, I am going to do it to every

person here.

CHAIR: He wants to ask the Committee. Is there any particular person you

want to ask?

MR. JOYCE: I will ask anybody - I know I have brought it up before and we

all agreed that if a member has questions to ask, let the member ask the

questions until the member is finished.

CHAIR: What we have done the last time on the C.A. Pippy Park Commission

MR. JOYCE: No, I am talking about the last time with Works, Services.

CHAIR: Oh, Works, Services.

MR. JOYCE: You spoke for an hour and twenty minutes. There was not a

person who said a word. Then, when I asked - I had to leave and I had two

questions to ask - I was interrupted twice, you interceded twice. We discussed

it earlier and I know the Member for Bonavista South (inaudible). If someone is

asking a question, they should be able to finish asking their questions and then

we can move on. If I am going to be rudely interrupted by you, I just need to

know so that I can -

CHAIR: Basically, at the last hearing with Works, Services and

Transportation, I waited until everybody had asked their questions and I was the

last to -

MR. JOYCE: No, that is not true. Mr. Chairman, you started out first.

CHAIR: Okay, I am sorry, on Works, Services. I indicated, when we met

with the C. A. Pippy Park, I did not ask any of my questions earlier and I said

if people did not have an objection then I would start off on Works, Services

and Transportation. If there was no objection. If not, I would wait and ask mine

at the end. I did not have a problem.

What I have done in terms of the Committee, sometimes when we are pursuing a

topic and we are on a specific question, if people want to have one person ask

all their questions, I have no problem. Sometimes when we are on a topic and

there is another question begged on that topic before we move to the next

tropic, I have stepped in to try to finish the questions on that topic before we

move on.

MR. JOYCE: It is not your right. If I am asking a question, it is my

right to ask the question. There is no need for you to intercede.

CHAIR: Yes, it is.

MR. JOYCE: There is no need for you to intercede.

CHAIR: It is my right, as Chair, to allow - and I have done that too. I

have stopped and have allowed, whether it is Pippy Park or Works, Services and

Transportation, or the Auditor General, to comment on certain things. I have

stopped people at that point when they have wanted to have a comment. I give an

opportunity on each question, whether it is Pippy Park Commission and the

Auditor General, to comment on each particular point that they would want to

make. I give equal opportunity to them. I have done that.

If we are on a topic and someone wants to ask another question and we have

moved on a topic and someone representing Pippy Park or the AG's office needed

to comment before we move off that topic to justify or further explain

something, I have an obligation, and I feel it is only fair to allow them to do

that. I have done that many times.

MR. JOYCE: Mr. Chairman, you are not the Pippy Park and you are not the

Auditor General. You are another member of this Committee. You are the one

interrupting me. It was never the Auditor General and it was never the Pippy

Park.

CHAIR: Well, if you would like to start today, we will start the hearing

now and you could finish all your questions if you want.

MR. JOYCE: No, it is not starting, it is being rudely interrupted on a

regular basis.

CHAIR: Well, do we want to start now?

MR. JOYCE: I just want to know from the Committee: Are we going to, if a

member is asking questions, let that member finish?

CHAIR: I have no problem with that, if that is what the Committee wants.

We could start with Mr. Joyce with your questions and you could -

MR. JOYCE: No, you go ahead. I just do not want to be rudely interrupted

again.

CHAIR: Well, if you have no questions, I will not be able to rudely

interrupt you.

Do you have any questions, would you like to start?

MR. JOYCE: You can start as usual.

CHAIR: Would anybody like to start?

Well, I have numerous questions because I did not get to ask any questions on

the C.A. Pippy Park the last day when we adjourned the hearing. I have a series

of questions that I would like to ask.

The first ones pertain to pages 23 and 24, and also there is reference on

page 48. This is in the document here that we received from Pippy Park. At the

bottom of page 23, there is reference made here to: A Statement of Claim has

been served on the Commission by the Registrar of the Supreme Court. The

Statement of Claim results from the failure of the Commission to purchase a

piece of land within the boundaries, to release this parcel of land for sale to

other parties. It is comprised of 40.2 acres and so on.

I want to ask - I assume this is still ongoing and, if it is, could you

inform us what is basically the status of that contingent liability at the

moment?

Please state your name first for the record of Hansard.

MR. CURNEW: We have not heard anytime from the court on this in quite

some time. The parcel of land is now actually excluded from the Park and I am

assuming the claimants are satisfied with that. But, it certainly has not

advanced to the court to our knowledge.

CHAIR: It is still being carried as a contingent liability, or has the

purchaser of that - or the removal of that - removed that liability to some

other party?

MR. CURNEW: No, it is still being carried as a liability.

CHAIR: Is there any further thing that the AG might add on that

particular item?

WITNESS: (Inaudible).

CHAIR: Okay, thank you.

11.(b) - there is a statement of claim against the operator of the golf

course that was filed in the Supreme Court in July, 1999, from a personal injury

suffered on the gold course and so on. There is no need to read all through

that. Could you tell us what would be the status of that particular contingent

liability at the moment?

MR. BENNETT: Actually there have been a number of small claims and one

fairly significant one. As of this date, they have not been resolved. Most of

them now have gone through the discovery stage but there has not been any

resolution or court date set on those matters.

CHAIR: Okay -

MR. BENNETT: Sorry, Mr. Chairman, to interrupt, but that is from the

Thomas Development point of view. You know what I am saying, these are not - I

assume it is the operator they are talking about in this particular case.

CHAIR: Yes. I guess where they have a contract to operate that, it is a

contingent liability on C.A. Pippy Park and that is why it would be listed. What

estimated value is being pursued there? I guess there is an established amount

being sought.

MR. BENNETT: I am not sure. I cannot give you that one. I have not seen

the statement of claim. As you know, what we do is once any action is brought

both to Thomas or to the Commission on this regard, then we send it to our

lawyers and it is handled by the insurance company. So we have actually no

active involvement until such time.

CHAIR: But the statement of claim, just one question -

MR. BENNETT: I have not seen the amount -

CHAIR: It was served on the parties, right? The statement of claim was

served?

MR. BENNETT: Yes, and it is now with our insurance.

CHAIR: Did the Auditor General have a (inaudible)?

MR. NOSEWORTHY: I will just explain I guess - I see what you are asking.

Our responsibility, when we are doing a financial statement audit like we would

do here at Pippy Park, is to communicate with the corporations lawyers and to

get information on any liabilities that may exist. We can only include the

information that would be provided by the law firm. They make a determination.

You will see sometimes references to the likelihood of laws could not be

determinable or the amount could not be determinable. That is based on the legal

opinion and that is about as far as we can go with it. Our responsibility is

communicate with the law firm and to include it in here. That is where our

responsibility ends. So that is all the information we would have. I could not

tell you, for example, the amount of the claim. If I knew the amount, it would

be included.

CHAIR: Okay, thank you.

On page 28, under the C.A Pippy Park Statement of Revenue, Expenditure and

Deficit for the year ending March 31, 2001, under bad debts, $202,308, what

might be the major component there? Because there was a budget for $3,000 and

there was an expenditure of over $202,000. That seemed to be a fairly

significant amount there.

MR. NOSEWORTHY: In the year 2001, you will see a golf course management

fee of $200,000, the fourth line down. The bad debts include that, because we

did not have authority to have it written off but it was likely that it would

never be collected so it was set up as a bad debt to offset. So, the $200,000

related to the management fee is included in the bad debt. That is why it is so

high.

CHAIR: Okay. I guess on the basis it was included, because the year

before, I think, it was written off and I guess not being collected was logical

(inaudible).

MR. NOSEWORTHY: Yes, if there was authority. We could not write it off

until we had authority from government, an appropriate authority. When we could

see an appropriate authority we would recognize it as being totally written off,

but in this case there was no total authority but the collection was unlikely so

it was set up as a bad debt.

CHAIR: It is my understanding (inaudible) that the approval subsequently

came and the money fore-came to, I guess, relieve Thomas Development of their

fees for three years, actually. I think we dealt with that for three years.

Would that be accurate? Was it 2000?

MR. BENNETT: That is correct. Both years, 2000 and 2001.

CHAIR: Okay, thank you.

On page 40, property sales of $781,087, and I think there is reference also

on page 110. No, I do not think it is referenced there. On property sales, what

was included there? Were those sales allowed to be retained to help your cash

flow for operating there? That is my understanding. Did any of these fees

revert, or did it all stay within the Pippy Park budget?

WITNESS: No, all that money stayed within Pippy Park budget.

CHAIR: Pippy Park. Basically, would it be fair to say that to be able to

keep a cash flow and to be able to operate, I guess, and stay in the black

there, that government allowed the sales from those to stay within that to be

able to at least keep it solvent, basically?

WITNESS: That is correct, yes.

CHAIR: Okay, thank you.

I think some of these have been touched on before. Mr. Curnew, I think, just

made reference on page 46, out of question fifty-two - 107- yes, there is

reference here at the time with those ongoing statements. For example, on page

46, the management fees for 2000 of $200,000 - the last line on page 46 - and

$250,000 were subsequently waived by the Commission. The same thing, I think,

applied in 2002, I understand. Would that be correct?

MR. BENNETT: No, I do not mean that as badly as it sounds. I mean we had

not sought application as to what we would do with the 2002 fee, nor the 2003.

We certainly cannot pay it at this time. I am talking from Thomas' point of

view. There will be a presentation made to government of what to do with the

Thomas Development Corporation vis--vis the C.A. Pippy Park Commission once

the bank debt is paid off, the management agreement, and what to do with the

management fee, et cetera, would be decided at that time.

CHAIR: That is still being carried on the statement. Would it be as a

receivable?

MR. BENNETT: Yes.

CHAIR: As an account receivable reflected in the 2002 financial

statement.

MR. BENNETT: Yes. From our point of view, it will be a payable.

CHAIR: Is their operation sufficient now that maybe it might not be

required, or is Thomas requiring a waiving of that fee, basically? Are they are

in a position where they would need that fee waived to be able to operate? Would

that be a significant burden to Thomas Development?

MR. MURPHY: As you can see consistently through the document, Mr.

Chairman, you are correct in that assumption. The revenues have not indicated

that Thomas would be able to send that $250,000 along to the Commission.

CHAIR: Okay.

On pages 106 and 107, in a letter by Mr. Hopkins, Chief Operating Officer, to

Dr. Warren, the Chair, he has indicated that under the agreement - that is

paragraph two, the second half of the paragraph - "Under the Agreement, TDC

is exempt from paying the management fee only if their revenues are

significantly affected by a labour dispute on the golf course, or adverse

weather conditions, otherwise, the Commission has preferred creditor status,

second only to the loan payments...".

The waiving of those fees, I guess, government advancing the money to Pippy

Park in lieu of getting this money from TDC, were they done because of labour

disputes or adverse weather conditions as per the agreement?

MR. BENNETT: No, they were not. They were done because TDC, or Thomas,

did not have the money to make the payment without bankrupting itself.

CHAIR: Okay. I guess, then, to keep TDC solvent, and we dealt with that a

little bit the last time and I will not beat that to death, but it was important

to keep it going because the cost of keeping TDC operating would have been

cheaper than having Pippy Park take it over and operate it. That is, I think,

what we gathered from the last day. Would that be probably the motivation in

advancing it, contrary to the agreement?

MR. MURPHY: I think at the last meeting the member asked the question

related to that, and we responded on the circumstances related to the two

different agreements, and if the Commission itself moved in and took over, et

cetera, there would be all kinds of problems associated with the collective

agreements, and our situation would obviously be in a much, much worse position.

CHAIR: Thank you.

I will not ask further on that because we did sufficiently deal with that the

last day. On page 56, also, 4.9 (b), I think this is part of the basic

agreement. The Commission is required, "...to maintain on its staff a

certified gold professional whose services shall be rendered exclusively to the

Golf Courses during the playing season." I think reference was made that

this did not occur, first of all. I assume that is correct, is it?

MR. MURPHY: Yes, first of all there is no place or space up on the hill

of the golf course that could suitably house a golf pro and the required land

they would need for hitting areas and instruction, and the rest of it. Mr. Stick

owns the driving range at the foot of C. A. Pippy Park across from the college,

and that satisfies this. Both of us agreed that would satisfy that particular

part of the agreement.

CHAIR: So, is there a golf professional available?

MR. MURPHY: No, not on site for Thomas Development.

CHAIR: But is there one available at the driving range down (inaudible).

WITNESS: Yes, Jimmy Stick is a golf member (inaudible).

CHAIR: Yes. The golf professional, was that person hired through Thomas

Development?

WITNESS: No, I think he is an independent operator that has entered into

a lease arrangement for property there with the Commission.

CHAIR: Okay. So the agreement requires him to be there, basically on

site, you are saying. Why would it be put into an agreement to have a golf

professional there on site if it was not feasible to do so? Can you offer any

opinion why you would make an agreement there? Was there land available?

WITNESS: (Inaudible) raised a good question. We were obviously - and I

think I got into this a bit the last time from Thomas' point of view. When you

are working between 57,000 to 58,000 rounds and that is suddenly reduced - if we

had maintained the status that we had, we would have developed adjacent land as

you enter into the general property of the two golf courses and probably put

down sufficient acreage that we could have a golf pro and would have a

sufficient driving range and be able to carry out lessons, et cetera. That never

came to pass because of the financial situation that has really existed since

about 1999, tracking into this year. So we said: Well, that would accommodate.

People can easily, on their way up, drive in and hit practice balls before they

start their rounds up on the hill. Jim also gives lessons, so that can satisfy

that requirement.

CHAIR: Is it possible that sales might have decreased because of the lack

of an available professional onsite? Is there any research to show that

professionals onsite would sort of enhance rounds at a course and increase

revenue and sales? Is there anything that would support or refute -

MR. MURPHY: Yes, I know what you are saying, Mr. Chairman.

Try and get your head around the fact that we do have an eighteen hole

championship course and a nine hole course that really is the salvation of the

twenty-seven holes. We do very well with that. There is, as Mr. Bennett

explained, when you have a golf pro associated with the twenty-seven holes, that

golf pro needs property to train and to have the ability to teach people. It was

an intent, from my understanding - and I say from my understanding because I was

not there - that we would be able to put a golf pro in place and he/she would

have enough room to train those who were interested in becoming more proficient

at the game.

In lieu of that, realizing we did not have the money to construct that

facility as such, we did have down below us - as Mr. Bennett already stated - an

area that was classified as a golfing range. I am not sure, but I think Mr.

Stick is a registered PGA instructor and a registered PGA pro. I am not sure

now, I cannot say for certain. I could be wrong there, but I know he does have

accreditation with golf in Canada. So, instead of trying to do what we could not

do on the hill, we put it together to try and accommodate the general public on

the driving range, plus Mr. Stick's ability to go ahead on his own and

instruct those who wanted to be more proficient at the game of golf.

CHAIR: So, for referrals - like for any lessons and things, you would

refer them to Mr. Stick or to that particular place.

MR. MURPHY: I am sure that was done many, many times, Mr. Chairman.

CHAIR: I am not asking that question for any particular purpose. I am

wondering when it is required to be there - if it is in the agreement initially,

I am just wondering: Would this enhance revenue and sales and the fees there,

the green fees, or whether it might eventually have people slide away from there

because of that? I do not know. I don't have the answer. That is why - I know

people operating, like yourself, with the Commission and dealing there should be

able to answer that. I think, Mr. Murphy, you are indicating that no, that is

not necessarily the case.

MR. MURPHY: Mr. Chairman, I am not so sure, and I stand to be corrected,

but if you look around the golf courses adjacent to the city and golf courses

around, I do not know that they have a golf pro full-time in place to teach

people how to play. They may have somebody who does a bit of teaching and does

other type of jobs.

As we moved off into hiring a general manager and hoping that Mr. Stick's

facility and his ability would be able to look after this particular item

because we just did not have the ability and capital dollars to construct an

area where a golf professional, number one, could be hired and, number two, take

advantage of training young people and so forth and so on.

CHAIR: Thank you.

On page 59, under 4.22 in the agreement at the top of the page. "To

comply in all respects with the requirements of The Public Tender Act..."

We have information that we dealt with the last day where numerous cases did not

go to Public Tender. I know we asked the question: How was the overall, I guess,

consultant chosen and so on? We were only able to find out why that was the case

or how Beaton Sheppard was hired. There is reference made in the Auditor General's

report to complying with the Public Tender Act or possibly -

MR. BENNETT: If I may interrupt, I do have some information having talked

with some of the people. He was hired by the Commission. There is an established

list that has been ongoing. It is just a way for professional consultants, that

is in basically two departments, of which C.A. Pippy Park is moved to: Works,

Services and MAPA - Municipal Affairs. That person was hired from that list.

What happened was a request was made of a competent consultant to become the

primary consultant for the project and that name was advanced. Mr. Sheppard's

firm - which is now called, of course, Sheppard Case - were familiar because

they were asked to come up and do an adjudication of the original construction.

One of the things we had problems with was when we did the skirting - you

would call it, but I call it the railings, et cetera - outside and the deck that

is on the front of the clubhouse was not built to our satisfaction at the time.

When I say that it is Thomas Development. We wanted an assessment to find out if

the original contractor had built it to the specifications of the contract. They

were familiar with the property. They were familiar with the building and they

were the ones that were advanced and automatically assigned to the project.

CHAIR: I did not see it in the minutes of the Pippy Park Commission. So

basically it was Works, Services and Municipal and Provincial Affairs, really.

Did they make the decision on who the consultant would be?

MR. BENNETT: Yes, the name was advanced, the way I understand it -

CHAIR: Just one name?

MR. BENNETT: Yes, as the person and that person met - from the list. They

are all reputable. They are all people who could do the job, and obviously there

is no documentation of this. I could not find any in our records. They were the

ones that were just assigned the project.

CHAIR: The department could not really - did you make an effort, since it

was asked before, to find out how it was done or how it was selected?

MR. BENNETT: No, I can just say that there was a call made to the

department, which we think - and I have to assume this because they could not

tell me which one it was, whether it was either Works or Services.

If I could just digress a bit, there was a movement between the

responsibility for, say, Pippy Park from works and services when Minister

Matthews, at the time, moved into Municipal Affairs. It followed him and then,

of course, when my minister took over, it transferred to Finance. It was during

that bridge period, but certainly one of those lists was the basis for his

appointment.

CHAIR: There is reference in the minutes of the Pippy Park Commission, on

page 85, on the bottom of the page, "The Commission is responsible to

ensure that TDC follows the procedures of the Public Tendering Act for the

construction of this new facility."

Was there some concern there? We made reference the last day, I think, how

landscaping of roughly $20,000, four separate invoices, all in numerical

sequence, all invoiced on the same day, were done, and it raised the

possibility. I know the Auditor General, in the report, did not say it violated

it. He did not use those words, but it certainly raised concerns that there

could be a circumvention of that. Also, with reference to the overall tender, to

look at the proper audited documents and the evaluation of tenders, other than

show the amounts listed, there was nothing to determine whether the best bid was

the one that got the general contractor work either, or some of these other jobs

through a public tender process. Was the Commission concerned also? I know they

referenced it in the minutes here at their meeting. Why would it be an issue?

MR. MURPHY: I cannot really give you a definitive answer on that. We do

not want to get confused here. I am not saying that it should not have been in

the Public Tender Act but I do not, somehow or other, think, if you confusing

the clubhouse and this particular building, it seems to me, was probably the

canteen.

CHAIR: Yes, I know there is reference made in the expansion or the

renovations there, but overall in compliance. The point, I guess, the reason is

that the Commission did raise in their meeting about a concern, not necessarily

a concern but about compliance with the Public Tender Act. I was just wondering

if there was a concern about that, or whether it was being done. Why would it

have surfaced at a meeting if it wasn't a concern? That is the extent of it,

and I made some references to areas where there were possible violations to the

Public Tender Act. I think there is insufficient supporting documentation to

determine whether they were. I think something along that line was what the

Auditor General made reference to.

WITNESS: We would have no way of answering that question, not being there

at the time, but I would assume that where there are always new members to the

Commission coming on stream this just may have been simply an information item

for new Commission members to point out they are obligated to follow the Public

Tender Act.

CHAIR: I think, too, at the conclusion of our hearing, as I suggested to

some of the members before we started our meeting, I made a suggestion to the

members here that what we could do at the conclusion, when we are finished our

questioning here, is adjourn, and the Committee would meet and decide whether

the Committee feels there are other people who could render information that is

pertinent to answering some questions, and the Committee would make that

decision. I do not think it is the time here to do it around the table, to get

into that or have any new witnesses issued. That is something that the Committee

could come back and deal with in a closed session of our Committee. We could

look at that possibility. I guess, if it cannot be answered now, well, that is

fine. We cannot expect you to answer it if you cannot. We just could move on to

another question and we will just discuss that as -

MR. JOYCE: Mr. Chairman, the Chief Operating Officer stated that Treasury

Board approved funding for the new Field House. It said, "The Commission is

responsible to ensure that TDC follows the procedures of the Public Tendering

Act...". It is only stating a fact. I cannot see why the Auditor General is

suggesting there is something with the Public Tender Act, as you said. This is

the Chief Operating Officer saying we have the money and we have to follow the

Public Tender Act to do the work. This is just a statement by the CEO. You

cannot make it any plainer than that.

CHAIR: Okay.

My next question: On page 61, one of the references in 4.27 at the top of the

page is, "To provide to the Commission..." - that is the TDC -

"...or the Commission's nominee, access to all of the financial records

and books of account of TDC within three business days of a request therefor

from the Commission to TDC's directors." Was that a problem?

MR. MURPHY: It is not a problem now.

CHAIR: I mean during the period of this audit, because there were some

references made to that, I think, in the minutes and so on. I am just wondering,

was there a problem?

MR. BENNETT: From the TDC's point of view, there was absolutely no

problem. Two commissioners, as you know, at that time sat on the board of TDC.

They had access to regular budget information, all the financial information of

the board. To my knowledge, there was never a request made for a formal review

of the books at the time, and these were all audited. KPMG were basically the

auditors at the time, Pete Marrie. All of the information was available.

CHAIR: I saw some reference there. It is not something I am going to have

a further question on.

MR. MURPHY: Mr. Chairman, I noticed in Ms Marshall's audit that she

talked about Thomas Development under the management agreement, bringing forward

financial statements quarterly. In our reference to it, sometimes it was done

month to month and then we might have missed five months, or it was missed at

that time. I can assure you right now that TDC has corrected that particular

statement in Ms Marshall's audit, and we now receive at least six or seven

financial updates from TDC.

CHAIR: I know the current Auditor General was Deputy Auditor General, I

think, who oversaw this particular audit there. If there is something you could

add to that.

MR. NOSEWORTY: The quarterly reports were are not provided as

contemplated in the agreement. They were not. There were references, we saw in

the minutes, to some information being provided by members, but there were no

quarterly financial statements provided.

MR. MURPHY: That is what I just said, Mr. Noseworthy. That we got Ms

Marshall's audit and we corrected it.

CHAIR: Yes, I think -

MR. BENNETT: Mr. Chairman, if I could just have a supplementary to that?

CHAIR: Certainly, Mr. Bennett.

MR. BENNETT: It is leaving kind of an implication that is not correct.

Where we made the mistake in those earlier years - at least when I was

involved, I am talking about the period under audit review here - is we did not

formulaize the process. Again, I just keep stressing the special relationship

between TDC and its parent - I will use that word - which is the C.A Pippy Park

Commission. The two members were certainly apprized and received financial

updates at the meeting. Now, what we did not do was to write some sort of a

cover letter and then send that formula to the Commission to be reviewed at the

Commission's meetings. That is something that we now, I think between the two

organizations, have to address. We basically now have a set - I think on every

Commission meeting there is something to deal with the golf course. Anytime that

I have financial information and I prepare a monthly financial statement, those

things are communicated down through the Commission for review at their meeting.

I think that is the point, and I am not trying to read into the Auditor General,

but that is the way I understand his point.

There was no clear audit trail of a bunch of information tied to this

agreement which showed the formal process in operation.

CHAIR: I cannot comment on what the Auditor General - other than draw my

conclusions, too. I guess what you are saying, basically - just to make sure we

are clear and then I will move on if we are clear on this. It is not that there

were no reports, there was probably representatives of the TDC who sat on the

Pippy Park. There was probably verbal reports on finances that were given by

them or was that a written -

MR. BENNETT: Mr. Chairman, they were written. They were statements that

were set before - financial updates by the then treasurer were given on regular

meetings. Some of it verbal because obviously you do not need major reports with

a small organization like that in the off season. Basically, you are just

carrying forward until you start your operations again. They, I guess, were not

formally communicated to the Commission.

CHAIR: Thank you.

On page 86, and I guess there is a follow-up on 94 and 102. There is just a

sequence there. I will just make reference there.

There was a concern, too, that the Commission was using funds from its

capital account for cash flow purposes. That is referenced in the minutes there

on page 86, a special meeting of the Commission. Just a follow-up on that, on

page 94. Dr. Warren, the Chairperson, in a letter to Mr. Hopkins, the COO, said,

"Would you please arrange to transfer an amount, up to $100,000, from the

Commission's Capital Account to its Operating Account to offset the projected

deficit for the fiscal year 1999-2000. I will be continuing discussions with the

Minister on this matter..."

Would that be the Minister of Municipal and Provincial Affairs? Would that be

Minister Aylward at the time, I would assume? While you are looking there, on

page 102, this is just all a follow up.

To the Auditor General, by Dr. Warren, it says, "Transfer from Capital

Account to Operating Account." This was a letter of response: "In my

opinion, I gave the Minister of Municipal and Provincial Affairs - I am assuming

it was the minister - sufficient advance notice that the Commission would be in

a deficit situation at year-end, and her Department, in turn, informed Treasury

Board of the options put forward by the Commission." I guess the option was

to be able to use capital funding, that was given for capital, to be able to use

it for operating. "I feel that I was left with no choice but to transfer

the necessary funds from capital account to operating." - Dr. Warren is

indicating.

On the next page, "Field House Project - I believe that the funds were

allocated for purposes other than the construction of a field house. The

Treasury Board approval in this instance is, in my opinion, a generic

description of several improvements to the golf course..." and so on.

There is a concern with using capital funding to meet your operating costs. I

guess Treasury Board gives approval ultimately on this. Would that be correct? I

think it -

MR. CURNEW : To my knowledge there was no approval given.

CHAIR: No approval at all? It was just used by Pippy Park Commission on

their own without approval. Would that be - because there was a request for

approval to do it, I think. Was that approval denied? Could someone just

enlighten me on that?

MR. BENNETT: We are talking about the $100,000 funding. This is because

we have four different projects here.

CHAIR: Yes.

MR. BENNETT: The $100,000 funding was advanced and both the Commission -

the senior officers of the Commission anyway - and Thomas were certainly aware

of the adjustments we made. The $77,000 Field House and the creation of the

dance floor and the gate. To my knowledge - and I may have seen it since my

minister would have been responsible - there was no communication back to the

department which would have asked Treasury Board to approve the modifications.

To me there was none. That was not done.

CHAIR: Okay.

MR. BENNETT: As I understand it, at the time - this is why, if you

recall, I made a statement to the Auditor General at the last meeting. I am not

sure that the contents of the TBN were fully communicated to the Chair at that

time. In his view, when he responds in his letter here, he felt he did not need

to go back. His view was he did not have to get back because it was more of a

generic - as long as it was spent on the project, which was the Thomas

Development. I know, to my knowledge, that has never gone back for subsequent

ratification or was ratified before the projects were carried out.

CHAIR: Mr. Curnew.

MR. CURNEW: I would just like to clarify. What I was referring to was not

the $100,000 grant for the construction of Field House, it was the transfer of

the $100,000 from capital to operating. So, it was something different than what

Mr. Bennett was just referring to. You had two $100,000 amounts.

CHAIR: Okay. Yes, there was one - the intent of my question was the

transfer from a capital account into an operating account. That is basically -

was there approval to do that? My understanding was that you could not do that.

It was not the proper thing to do. Basically, it happened without - the

Commission did it because they felt they needed to do it or were going to show a

deficit, and we will use capital for operating? Isn't that correct?

MR. CURNEW: That appears to be correct, yes.

CHAIR: On page 97, Minutes of the 379 th Meeting. Could you

just sort of enlighten us or give an overview? I know the Minister of Municipal

and Provincial Affairs, I think Minister Alyward, received the Golf Course

Report. This was, I guess, leading up to the renovation. I think it came to

$200,000-plus, whatever the total cost. Appointed Mr. Reid to oversee. What

basically were the responsibilities of Mr. Reid, overall? Was it just confined

to basically this specific project? Could you elaborate on that?

MR. BENNETT: The role at that particular time, there was a report that

had been carried out which basically confirmed the structure that we had. It

made one brief recommendation to the fact that what we should do is to hire a

professional golf management group to come in and take over the golf courses,

and run it as a business.

As we pointed out to the person who made that report, that would have cost us

a lot more money because if a fella moved in on a corporate basis you are going

to end up with somebody wanting a profit at the end of the day, so we continued

on. Essentially, then, it became - the work was of the project. which is the

renovations to the clubhouse, two-hundred and some odd thousand.

CHAIR: So that is what Mr. Reid sort of oversaw?

MR. BENNETT: At that particular time, yes. That was (inaudible).

CHAIR: That was just a project that entailed that?

MR. BENNETT: Yes.

MR. MURPHY: Mr. Chairman, just for the information of the Committee, Mr.

Reid had been involved between Thomas and government for some period of time in

liaising some of the problems that the golf course were having in trying to stay

alive so forth and so on.

CHAIR: Would that be prior to this, Mr. Murphy, you are saying?

MR. MURPHY: Oh, yes. All along he was very interested, apparently, in

doing things for the golf course, so I would suggest to you, because of his

background, all of a sudden this did not fall from the sky, that Mr. Reid was

appointed by the minister. He had been involved along with the then board of

Thomas Development and he was a liaison trying to do his best.

I do not know that you will find any minutes or any documentation that relate

to that, but you will have to decide if you want to seek further information on

that. It is my information, over years, that he gave very freely of his time. He

was very much involved in the golf course from a standpoint of knowledge of what

made up the golf course, and helped in many ways to try and improve and keep the

golf course going and in good financial state.

CHAIR: Prior to this, in the spring of 2000, how long was he working as a

liaison prior to his appointment to oversee this project? When would he have

been involved? You indicated that he served as liaison for a period time.

MR. MURPHY: I could not give a definitive answer. All I know is that Mr.

Reid was involved trying to help, like you or any of us here would try and help

with something that we had a good general interest in, and he spent quite a bit

of time, and I think that the former board of Thomas would concur with that.

CHAIR: In what capacity would he have been working as a liaison?

MR. MURPHY: He might be planting a flower. He might be talking to

government.

CHAIR: It was not on behalf of government or behalf of Pippy Park, or was

it?

MR. MURPHY: He was a sound, solid liaison between the golf course - which

he had a great interest in. I would assume, and I can only assume, I cannot give

you a definitive answer, but every time I was up there, prior to my appointment,

Mr. Reid was around many times with the former board, trying to do things to

help the golf course improve. Without remuneration, I might add.

CHAIR: Okay, so prior to his appointment he was doing a sort of liaison

for a number of months or years, assisting in the operation or - I am not really

clear on the roles.

MR. MURPHY: Mr. Chairman, let me say it this way to you, Sir. Hopefully,

I can sum it up this way. It is simply this: He was involved, he had a general

interest, and anything he could do to promote the golf course, he did.

CHAIR: Prior to his appointment to oversee the expansion?

WITNESS: That is right.

CHAIR: I am just wondering, for how long a period?

WITNESS: I have no idea.

CHAIR: Could Mr. Bennett enlight me on that?

MR. BENNETT: It was just for a period of months. It was basically that

season (inaudible).

CHAIR: Prior to the previous season?

MR. BENNETT: No, when I say for the beginning of that season, from about

January on, when you start to do your planning. He was involved to see what we

could do to make improvements up there, because we had run into financial

difficulty.

CHAIR: So he was not involved in 1999, we will say, or 1998?

MR. BENNETT: No, not to my knowledge.

CHAIR: So from roughly January of 2000?

MR. BENNETT: I would say. Please, do not hang me on the date of January.

(Inaudible).

CHAIR: No, but that ballpark. That is fine.

MR. BENNETT: Let us say the spring, anyway, of that year.

CHAIR: There was no real official capacity, though, on anyone's behalf?

MR. BENNETT: No, not at that time.

CHAIR: Just as a volunteer, basically.

MR. BENNETT: Yes.

CHAIR: Then the appointment was made. I think there is a letter here

confirming that appointment from the minister. I believe it is in this docket

here.

What funds did Mr. Reid have access to? I guess the pot of money that was

going to be used for this expansion, he was sort of overall overseer of that

expansion. I think it was, what, roughly $275,000 or in that ballpark? He was

responsible for disbursement of the account, approval. I see he signed off on

numerous invoices and things here for payment, so he oversaw the payment of all

these? Did he oversee compliance with public tender, everything pertaining to

that particular project?

MR. BENNETT: Yes. In my view that was his role on that particular

project. He liaised closely with the Commission, presumably through the

Chairman, and also through the Chairman of Thomas Development at that time.

Whether he was the person who was supposed to say whether there was full

compliance with the Public Tender Act, or the consultant guidelines, or any

other of the government regulations, I am not sure.

CHAIR: Okay.

Was he responsible, I guess, in the awarding of the tender too? As the

overseer, I would assume he would have to give the final - I know he had the

final signatures, they are shown here in the documents, on approval for payment.

Did he approve the tenders, too, or was there someone else that approved each of

these?

MR. BENNETT: As I understand, that was under his mantle as well, after

discussion with these two other individuals.

CHAIR: Okay.

Thank you.

MR. MURPHY: I think maybe (inaudible).

CHAIR: Yes. In fact, I was trying to move in order as I went, but if you

want to comment, sure. Go ahead, Mr. Murphy.

MR. MURPHY: After the letter of appointment, I think page 141 gives you

an idea of the breakdown of - actually, it totalled out $276,000 but $270,000.

We had a $6,000 deficit on the whole thing. It gives you a breakdown of what

transpired in the monies associated with the transfer of the $270,000.

CHAIR: Thank you.

I had a question when I get over there. I will try to keep it in sequence

here.

On page 112, it is a letter to Dr. Warren from Ms Alyward, the Minister of

Municipal and Provincial Affairs. She is, "enclosing a cheque in the amount

of $150,000 to provide operational funding for the C.A. Pippy Park

Commission.... The long-term financial situation will be considered by Cabinet

in the near future."

I think there was some report then to look at the long-term - I think on the

next page, 113, Dr. Warren to the minister. "It is comforting to note from

your comments that Cabinet will shortly be considering the longer-term financial

requirements... with a view to providing for more stable funding for the

operations of the Pippy Park Commission."

Then on page 114, it is all tied in in sequence. Under (d) "Mr. Hopkins

reported that it is his understanding that Mr. Robert Smart has been assigned by

the Minister to review the operations of TDC, and to file a report to the

Minister on how to deal with the golf course operations in the future." Was

the report filed? What did it indicate for the future operations there? Because

I know at the time - I guess I will just preface my rationale behind this

because I know TDC has indicated it was having financial trouble - there are

several references here in the minutes - and Pippy Park Commission was having

difficulty generating sufficient revenues to break even. They had to

continuously waive fees to TDC back to the Commission, and sell land to use it

in operation and things. I guess the purpose of this was to see what the future

is and look at the prognosis and come forward with some recommendations as how

to achieve the most efficient operation, I would assume. What happened as a

result of that?

MR. BENNETT: Just to give you sort of a brief history of what happened

here. Once TDC was not in a position to pay the management fees and the two

years were waived, then that created a major hole in the Commission's budget.

The special funding request and the long-term future request for the Commission

was related to that. How do we go forward and how do we get sufficient funding

to carry out the programs, other than the golf course? In the case of Thomas,

basically we could not pay the $250,000.

CHAIR: You are speaking on behalf of TDC, basically, Mr. Bennett?

MR. BENNETT: With regard to Thomas, there was a report prepared by Mr.

Smart, and I referred to that earlier. He made a recommendation that it probably

should have been contracted out into private hands. As I said to you earlier, we

felt that if you did that then whoever the independent operator would be, would

want a profit at the bottom of the line. Since we were a volunteer board, and we

were having difficulty meeting our expenses as it was with a volunteer board,

that we felt an independent private contractor would not be able to do anything

better and we proceeded on that basis. So that is the reference here to the Bob

Smart report, and that was agreed by government.

With regard to the Commission, what happened at the end of that - and we have

already made some reference to it - the MC did two things: One, waived the

management fee - I think it is the 201 MC - and also agreed to take the lands

that were basically owned by C.A. Pippy Park. They used that as a way to fill

the void left by the Thomas Development lack of payments. So, the action to get

the Commission over the hump was to allow them to use the land sales that is

currently made - and made reference to earlier in the report - to fill the void

created by Thomas.

CHAIR: I think too, Mr. Bennett, there was reference made to - they were

going to look at dealing with the long-term financial situation. Was there

anything happened from the report? I know it has been operating from year to

year. How much is needed? You sell land, you put it toward it, we waive the fee.

Was there something looked at in the long-term, or any long-term plan laid out,

or exactly where it would fit in the scheme of its future viability?

MR. CURNEW: The Commission is in the process now of finalizing a revised

management plan. Within that plan there are a number of initiatives that the

Commission has undertaken to examine further as possible revenue generating

mechanisms. What it has done, it has identified a number of possible mechanisms

to increase revenues and determine that it will pursue those in terms of doing

some feasability studies and see what the profitability is as a mechanism to

raise funds for the future.

CHAIR: Okay. So, basically, the viability is looked at as enhancing your

revenue. I guess there is not much flexibility in the expenditure line, I wouldn't

assume, because you need so many personnel to operate it. I guess basic

promotion to encourage or enhance usage, et cetera, along those lines, and the

facility itself up there too, to bring in revenues. It is a lovely facility up

there. To maximize its use there too, would that be a part of it or is the

responsibility of TDC to increase the fees? That revenue would go through TDC.

How would that benefit overall?

MR. MURPHY: Mr. Chairman, you are really spot on. We have dealt long and

hard at this trying to increase our revenues to make ourself more stable, like

any business as such. We have increased our ability to our trailer park, as

such, R.V. park. Now the overflow hopefully will be in the main. We have other

objectives to move forward with, to increase revenues and so forth. We

constantly deal with that from a financial promotion subcommittee within. It is

not always easy because of the way Pippy Park is seen within the legislation and

the way the public looks at it as almost property for use without charge, but we

continue to move forward in cross-country skiing. Any avenue that you can

possibly think of, with that property up there, we have discussed trying to

increase our revenues.

CHAIR: I guess with reference to increasing usage and so on, and green

fees and that usage, that would really improve the bottom line of TDC,

basically, as opposed to improving the bottom line of C.A. Pippy Park

Commission.

MR. MURPHY: We have to stay competitive, Mr. Chairman.

MR. BENNETT: Yes, you are absolutely right; if we could, it would improve

us and allow us to pay our debt and be more solvent than we currently are, but

please appreciate that as part of this agreement, and it is a non-profit

organization, that all surplus funds flow into the Commission. So, if we could

ever get the rounds - and I keep harping on that for those people who are

interested - back up to 58,000, roughly, from currently 40,000, then there could

be a flow back into the Commission. I do not think we could ever get close to

paying them $250,000 as well as cover, but we could certainly make a bit of a

contribution to the bottom line of the park.

CHAIR: A statement, I think, was made the last day when I asked a

question, and the answer I got was an adequate answer but it arose when I wanted

to ask with reference basically to, I guess, the bottom line. I think you

mentioned that, well, if you let TDC collapse, obviously it will come back to

the Commission and then we will be negotiating with two different groups of

people and you would not want to see the facility, with its value - I think you

mentioned $10 million or $11 million value, I forget.

WITNESS: Anywhere from $9 million (inaudible).

CHAIR: It is an asset - or $9 million. Now, what is included in that

asset? Because at the time I just made a metal note to ask the question. That is

the total asset, is it, under the control of C.A. Pippy Park, which would

include the trailer area, or is that just the golf course?

MR. BENNETT: That is the golf course and all facilities on the golf

course.

CHAIR: Okay, strictly the golf course.

Other areas, I guess, would have a different asset value. They would be under

the C.A. Pippy Park Commission, of course, these other ones?

MR. BENNETT: Yes.

CHAIR: Would they be directly reflected? It is really an asset of C.A.

Pippy Park initially, isn't it, I suppose? If you are looking at the global

picture, I guess, you are taking in the whole facility, the whole surrounding

area, which would have an immense value.

MR. BENNETT: No question.

CHAIR: That is strictly to that.

MR. BENNETT: Again, let me refer you to the act, Mr. Chairman, and the

act has not changed since its inception between Mr. Smallwood and Mr. Pippy. It

has not changed, not a comma, not a sentence. Not a comma has changed, and the

intent of the act is still there for education, government buildings, and it

goes on and on and on. It did, three years ago, or two-and-a-half years ago -

Ken, correct me if I am wrong - have authority to move the core of the park in

and leave some properties that the Commission owned outside of Commission

boundaries, and authority was given in a MC which is contained in your booklet

here to go ahead and supplement ourselves to stay alive, to sell those

properties. By and large you are 100 per cent correct, the integrity of Pippy

Park has not changed even though it has gotten a bit smaller.

CHAIR: One of those properties, I guess, is where we made reference to

the contingent liability. That was one of the areas that, I guess, was in the

sale. Would that be referenced in the statement? It is not really pertinent to

the line of questioning, but -

MR. BENNETT: That piece of property, Mr. Curnew can tell you its value

better than I can.

MR. CURNEW: The contingent liability - the forty acres you are referring

to - is actually in the area that is now excluded from the park. It is deemed to

be surplus to the park's needs.

CHAIR: Thank you.

On page 141 there is a list of vendors. It shows the total cost of these

renovations of the clubhouse for $276,000. I guess the question I wanted to ask

was: Were all of these tendered?

WITNESS: (Inaudible).

CHAIR: I guess what I meant, to look at it, either proposals or publicly

tendered. Some would require it, because of the amounts of these. What happened

with the tendering on these, for example? The overall bid, I think, was Jim

Neary. One question that was raised was: Where is the support for the qualifying

bids? The Auditor General referenced, I think, in the report, the supporting

information to show - the exact words, I guess, are in the report - to

substantiate the bid. I think there was reference made to that, Mr. Noseworthy?

MR. NOSEWORTHY: The report, page 126 of our report, which would be page 4

of that report, in the conclusion, we said, "There was insufficient

documentation at the Commission to support approximately $265,000 of the

$270,000 spent on the clubhouse renovations in that there were no purchase

orders or tenders. As a result, we could not determine how the various suppliers

were selected and whether a fair and reasonable price was established."

That was our conclusion.

CHAIR: You have asked, I would assume, Mr. Noseworthy, for supporting

documentation, and they could not provide it? Would that be -

MR. NOSEWORTHY: Yes, we certainly did ask and we were told by the Chief

Operating Officer at the time, by way of a note to a staff member of my office,

and I quote: I do not have anything in my files to indicate how particular

suppliers were selected. Quite often the projects were underway or completed

before I was aware of them.

They had no documentation and, as a result, we could not make any

determination how the suppliers were selected. Whether or not they were

tendered, we just do not know.

CHAIR: It was mentioned here earlier, I think, that Mr. Reid oversaw the

total expansion. He had the responsibility for the tendering and the signing off

on these. Was an effort made with Mr. Reid to get supporting documentation

through Mr. Reid?

MR. NOSEWORTHY: When we inquired at the Commission, we did ask to make

sure they contacted everybody - Beaton Sheppard, Mr. Reid - whoever was involved

in this, and make sure that before we conclude our report that, in fact, we have

gone every possible route in trying to get the documentation. My understanding

is that they went everywhere they could, came back and concluded that: Look,

there was no documentation available. We reported that and we stand by that.

CHAIR: Did the Commission itself have an opportunity to look? I think you

made reference earlier to it. My understanding is, you did not see the tender

documents, the bids, or evaluate them, or have an opportunity to have

information on that. Would that be correct? Could you just enlighten me on that?

MR. CURNEW: I believe the problem here, in large part - at least for the

major piece of work - was the lack of the tender analysis documentation.

Basically, the documentation is there to show that tenders were called. I

believe the point was, if I am not mistaken, that the analysis associated with

the wording of the tender could not be found, at least for the major portion of

the construction. Some of these items are not required to be tendered in this

list because of the amounts, or the type of expenditure. The others - we have

provided the documentation that we could find. So, basically, the answers that

we gave before - the explanation that Mr. Bennett gave before, for instance, as

to how Beaton Sheppard was selected under the consultancy guidelines. He

answered that response earlier. We have not been able to, as was pointed out,

find any more documentation since this report was complied.

MR. MURPHY: The real difficulty, initially, was trying to find the

original tendered document. It was not in our files. Our administrator, Mr.

Curnew, had to go down and search. If you look on page 138 you will see, as per

the Public Tender Act, tender notifications. Page 138 is the original one. You

will see on May 6, 2000 in The Telegram , a tender call: Extension And

Renovations Admiral's Green Clubhouse (Golf Course) Pippy Park, et cetera. It

was called by Beaton Sheppard who was then the hired consultant for Thomas

Development.

If you go back to page 141 you will see Beaton Sheppard, his amount as a

consultant under the consultant clause. Then you will see, as a consultant, he

was responsible for the administration of the awarding of tenders within his

tender. So what you are seeing here with Jim Neary and all the rest of these

people, he went along with that. The invoices pertaining to that are all

contained in this document.

MR. JOYCE: Mr. Chairman, are we talking about the extension and the

renovations of the clubhouse?

CHAIR: Yes.

MR. JOYCE: Page 158, I mean I do not know what the confusion is.

CHAIR: Yes, I think -

MR. JOYCE: It is there where who bid it, and what bid it, and the lowest

tender was Jim Neary Limited.

CHAIR: Yes, but the point - I think we raised this the last day, too -

MR. JOYCE: It was in the paper.

MR. MURPHY: All I am saying, Mr. Joyce, is if you take it from step one

with the original tender associated with Beaton Sheppard, consultant, then there

is a pretty consistent flow on expenditures throughout the document.

MR. JOYCE: Then on page 158 it shows who put in bids and what the cost of

the bids were. So I do not know how anybody can say it is against the Public

Tender Act when it is right here in the document that everybody bid on.

CHAIR: Well, the last day we dealt with this, too. The Auditor General

had a comment that, while the amounts are here - I am not going to speak for the

Auditor General. I would like for him to speak for himself on this, which on the

last day we discussed that. He indicated all - and it is here as he just

referenced - $265,000 to $270,000 there were no purchase orders or tenders. They

could not determine how they were selected and insufficient documentation, I

think. We did deal with it. Maybe you could reiterate what we said at our last

meeting, before we adjourned on that.

MR. NOSEWORTHY: Yes, we acknowledge that there was an ad in the paper and

we did see page 158, which included some references to tenders. However, if you

take it from step one there is no documentation in the first instance to explain

how Beaton Sheppard was selected. That is the first point.

MR. JOYCE: They already explained that tonight how Beaton Sheppard -

MR. NOSEWORTHY: There is no documentation. If you were following

consultant guidelines you would have to retain documentation in a department so

that you could go down through the process and see that due diligence

(inaudible) was applied and that the consultant was properly selected.

MR. JOYCE: Did you ask the minister on that?

CHAIR: You have to go through the Chair on questions. I recognize Mr.

Joyce.

MR. JOYCE: Did you ask the minister because - and it is the same in any

department. It is not fair for the Commission here, is that the minister in any

department - for example, if we are going to do schools he has a list of

consultants who are qualified, and they are usually picked because they are all

qualified.

MR. NOSEWORTHY: The documentation -

MR. JOYCE: My question to you is: Did you ask the minister how Beaton

Sheppard - because obviously the minister or the department is the one who

picked Beaton Sheppard?

MR. NOSEWORTHY: We asked the Commission for documentation but there was

nothing available. We audit this in departments. In Works, Services, for

example, I use this quite frequently. They hire consultants to coordinate

tenders. However, all the documentation on all the tenders would be coordinated

by a consultant. Everything is kept on file and we can go through to make sure

that everything was let properly.

We do not approach ministers directly and ask ministers for copies of

documentation. The bureaucrats in departments have the documentation in the

files and we audit those files. That is where we get our documentation. We ask

the officials. If they do not have it we expect them - if their ministers would

have it - to get it, but we deal with the senior government officials. That is

how we do our audit work.

CHAIR: You did not get information to substantiate, to draw a conclusion,

as to whether Beaton Sheppard would have been the preferred consultant?

MR. NOSEWORTHY: Yes, that is in the first instance. Then if you carry

that forward. So now we have Beaton Sheppard putting an ad in the paper. We do

not know how Beaton Sheppard was selected because they have an ad in the paper

calling tenders. Then we get a sheet of paper that says some people responded to

the tender. Well, there is no supporting documentation underneath that list so

we can go through it to see what people actually submitted. We have a sheet of

paper, and that is not sufficient. We would not call this sufficient in any

government department or any government agency. This just does not cut it. You

need documentation to explain and to show what happened. It just was not

available. So we concluded that we could not determine whether or not there were

purchase orders, tenders - somebody referenced that not everything here is above

the threshold to be tendered. Well, there is a requirement that if it does not

have to be tendered you need three quotes. That was not available either. There

is just no documentation to support how any of these people were selected. It is

just as simple as that. There was no documentation available.

CHAIR: In other words, there is nothing to show that the Jim Neary bid or

the one next to the Jim Neary bid, that they were exactly apples and apples,

exactly what was included in the bid was there? There was nothing to back up

that.

MR. NOSEWORTHY: That is right. We could not determine if they were

qualified bidders or anything else. We had no documentation, so we do not know

if they were qualified or not.

CHAIR: You requested it, but you did not get it provided.

MR. NOSEWORTHY: We requested, we waited, and the Commission came back and

concluded: Look, there is nothing here.

The Chief Operating Officer wrote us a note, actually put it in writing,

which I read already. They just did not have the information.

CHAIR: Who approved all of those tenders? Can somebody tell us who

approved those? Where there were tenders, we only see the general tender. To my

knowledge, there were no posted tender call for anything else other than the

general contractor. Would that be accurate? I could not find it here.

WITNESS: Mr. Chairman, in concurring with what the AG had to say, I am

not going to argue with the Auditor General, he knows more than about this

business than I do, but let me say, whatever caused Mr. Sheppard to be selected

as a consultant, Mr. Sheppard is not from Kelly's Island. He is known long

around this city, so Mr. Sheppard is here as calling the tender as a consultant

on behalf of Thomas Development.

If we go through, and again it is only an assumption on my part because again

I was not there, Mr. Sheppard awarded, as per Mr. Joyce's statement of page

158, I think it is, and there is not, according with what Mr. Noseworthy, the

AG, is saying, enough documentation here to award the contract to Mr. Neary. I

have to take the Auditor General at his word, but I still see here, as I think

most people see, some continuity and some - you know, I was not there. I cannot

speak to it.

CHAIR: It is my understanding - we will move past Beaton Sheppard - there

is nothing to indicate that Beaton Sheppard would have been the preferred

consultant. There is nothing to back it up. It could have been that he was, but

there was nothing supporting it there to draw that conclusion.

I think that has already been indicated the last day and today. We will move

beyond that. Now that Beaton Sheppard is the consultant, where is the

information to show that all of these, whether subcontractors, submitted

proposals or went through a tendering process for all the work that was done?

Where is the documentation? It is my understanding that the Auditor General's

Office could not get that supporting documentation either. Would that be

accurate, Mr. Noseworthy?

MR. NOSEWORTHY: There was no documentation to support any of the money;

$265,000 -

CHAIR: Mr. Curnew or Mr. Murphy?

MR. CURNEW: That is right, we could not find the documentation either, so

I cannot answer that question.

CHAIR: It had to be in one of two locations. It had to be with Beaton

Sheppard, who was the consultant, or Mr. Reid, who oversaw the whole project.

Would that be logical to say, that it had to be one of these?

MR. JOYCE: Mr. Chairman, could I just - if buddy, whoever it is, got the

contract, if he is the general contractor, he does not need to tender anything

else because it is up to him who does his work.

CHAIR: No, not when the general contractor was for a certain amount and

all these other contracts were paid over and above the amount of the general

contractor. They were separate. Then it is very much so - there is $276,016.86

of public money there, of which we do not have necessary documentation on who

the consultant was, even to substantiate that the general contractor got the job

or if any of these others, Murray's Horticultural, whether all these other

areas there - Jen-Mar, any of these - were tendered, were proposals. The Pippy

Park Commission cannot find the documentation and I am asking where it is. Maybe

that is the reason why we will come back to the Committee, certainly we can come

back after and discuss in Committee, at a closed meeting of the Committee,

whether there are other people who are able to shed light on this to find out

what really happened. Mr. Murphy and Mr. Curnew were not there at the time and

it is not in the records that they have. Somebody has to be able to answer the

question, is the point. There are a lot of unanswered questions, so I think that

is a matter for our Committee to deal with and we will not hassle over that here

on your time. I think it is something that we need to come to grips with.

MR. MURPHY: Mr. Chairman, if you are making an assumption, either Beaton

Sheppard and/ or Mr. Reid or whatever, I can say nothing to that. That is your

assumption. The only thing that I can say, Sir, is that if you look all the way

through and look at different invoices from O'Neill's and others that have

been approved and signed, you will have to draw your own conclusions.

As I said to you, I did not deal with this paper. I did not deal with the

meetings associated with it, and I do not think my colleague, Mr. Curnew, did

either. I know that Mr. Bennett did not deal with them either. He may have some

vague knowledge. You are asking us to be very direct and we cannot be, Sir.

CHAIR: No, I understand.

The questions I need to ask, basically, I cannot go any further than the

question. I understand that and I am going to stop asking questions on that,

basically for that reason, and we will discuss it in Committee after. I am going

to give anybody else an opportunity now who would like to ask some questions.

Does anybody wish to ask further? I know we dealt with it fairly extensively

before, but if some other people want to ask questions now I will invite other

members here to do so.

MR. FITZGERALD: I am just going to ask a couple of questions, Mr.

Chairman, because I missed the first meeting. Not to be repetitious of what was

happening then, I would just like to go back to Mr. Stick's golf driving range

here. Is that wholly and solely a private operation? Does Pippy Park or does TDC

contribute anything toward that operation?

MR. MURPHY: Without introducing yourself, I think I remember your face.

Mr. Fitzgerald is it?

MR. FITZGERALD: Roger Fitzgerald, I am sorry, Mr. Murphy.

MR. MURPHY: I though I might remember you, Sir.

Candidly, the property is owned by Pippy Park. We had an arrangement some

years with Mr. Stick to use that property as a driving range. We went into an

agreement with him for x amount of dollars and we negotiated last year some

extra monies for the Commission; again, I say to you, Mr. Chairman, trying to

increase our revenues. Mr. Stick is an approved professional golf - I do not

know what his criteria is, and I do not want to ask Ms Murphy because I know she

probably knows more about it than I do.

MR. FITZGERALD: She knows more about golf, I am sure of that.

MR. MURPHY: That is right, and it is like you and I with fish or FPI or

whatever the case might be.

I would suggest to you that Mr. Stick is a qualified golf professional and he

does a lot of work with people who play golf on the hill and in other golf

courses around the city.

MR. FITZGERALD: I am not asking a question as far as Mr. Stick's

ability or his profession. What I am asking is the nature of his business there.

Is there any contribution that comes from TDC or Pippy Park Commission in order

to carry out that activity there - financial help?

MR. MURPHY: No, we do not give Mr. Stick any financial help outside of

the fact that we do maintain the property.

MR. FITZGERALD: You supply the property and maintain it.

MR. MURPHY: Yes, it costs us. No, we charge Mr. Stick a fee for use of

the property because he has a decent source of revenue from anybody who goes up

and hits 100 balls or fifty balls, what have you, and we do our best to maintain

the property for him, keep it up, and it is a mutual agreement because if Mr.

Stick was not there, there would not be any source of revenue for the Commission

as such because it is well under the hill of the golf course and, I would say to

Mr. Bennett, we could not afford to have a full-time golf pro there, who would

stay there looking at whatever, Mr. Fitzgerald, revenues that would come out

from the golfing public. He just would not be able to do it.

MR. FITZGERALD: Going back to some more of those invoices there, on page

253 there is an invoice submitted there from O'Neill's Gardenland on August

30, for $5,750.

CHAIR: Mr. Fitzgerald, I will just mention, because it is in the record

there and I think I mentioned earlier today that -

WITNESS: (Inaudible)?

CHAIR: Yes, it has.

These four invoices in numerical succession, I think I mentioned today, too,

and previously, are in numerical succession and they are on the same date. They

are all for landscaping to the tune of a little over $20,000, and there is

perceived - perceived - there is no information to substantiate otherwise, each

one separately is under the Public Tender Act but collectively all were invoiced

successively, all on the one date that it is made out. We asked the question,

would it be contravening? That suspicion was raised and they had no supporting

information to indicate it was not. We did deal with that, I think, reasonably

and throughly, but if there was something there you wanted to -

MR. FITZGERALD: No, that was the reason for my questioning. Certainly you

had them all together and they are above the -

MR. MURPHY: Just for your information, just outside of the fact that you

may have a question related to the invoicing, at that time, Mr. Fitzgerald,

within weeks, the golf course at C.A. Pippy Park was hosting a national

tournament. The national tournament, of course, was bringing golfers from all

across Canada. At that particular point in time, there was a tremendous amount

of dressing, I guess, for want of another word, that had or needed to be done to

the golf course.

In my conversation with Mr. Reid and others, at that particular point in

time, other people were contacted, and when I say other people, I am talking

about our friends over here in Churchill Square, Allandale Nurseries and so

forth and so on, and the response was, from these people, that they did not have

enough material left, at that particular point in time, to supply the golf

course and supply their regular customers so it became a pretty critical issue

for someone trying to host a national tournament. Now, that has nothing to do

with the invoice here. I am just trying to explain to you how sometimes if you

turn another page or you talk to somebody you get a little more information.

CHAIR: Mr. Fitzgerald.

MR. FITZGERALD: Just one other question. I think it was Mr. Bennett

indicated that the golf course was doing 56,000 or 58,000 rounds of golf two

years back, and today you are down to 40,000 rounds. What is the difference? Is

that the number of rounds of golf that are played or the number of rounds of

golf that are paid for?

WITNESS: I am talking about the number that is played. We do a track of

that particular thing, and there has been a major decline, and I think I

mentioned this at the last hearing, Mr. Chair. The first one is, of course, the

general competition we now have in the area. We have Clovelly which has become

well established. The Woods is becoming well established, as well as The Wilds,

for instance, and the one at Salmonier.

The other thing is, we have had two horrendous seasons. I do not know what

you people do for your recreation, but we have had nothing but high winds or

heavy snow. Both of those have, unfortunately, hurt us by either starting later,

because we have had to get rid of the snow and our season has been shorter

because of it, or stopping sooner, last fall, for instance. I mean, you had to

be a real ardent golfer to play, in my view, in September and October, on a hill

exposed to the winds we were receiving. You would hit balls into the wind there

and you would walk back five or ten steps to pick up your drive even though you

hit it well. These two things combined, but certainly the general, I guess,

downgrading in our annual golf rounds, and we depend, if I might add, solely on

green fees. We do not have an established membership like some of the other

clubs, like Bally Haly or Clovelly, that gives us a floor on which we can

operate.

Because of those two factors, there is no question that the competition is

keeping us now at a lower level, and that has made it a very difficult operation

to keep going.

MR. FITZGERALD: Is the downturn in both courses there, the nine hole and

the eighteen, or is it predominantly on one or the other?

WITNESS: Basically, surprisingly, the eighteenth hole has taken the

biggest battering. The nine hole had declined as well, but not to the same

extent. There are some very loyal golfers who love to play that thing, thank

God.

CHAIR: Mr. Fitzgerald?

MR. FITZGERALD: Okay.

MR. MURPHY: Just to add something else that I mentioned the other day,

Mr. Fitzgerald, again, every corner has a service station now. I do not know,

Sir, if you remember some years ago, at 4 o'clock in the morning there were

people up on the hill waiting to get on. That does not exist any longer. The

competition is much keener and, of course, one of the other problems that we

have from a revenue standpoint - not a revenue standpoint, even though we are

down 20,000 rounds - is our golf course is paying approximately $4 an hour more

to our maintenance workers than every other golf course except Bally Haly,

because we have a collective agreement and Bally Haly has a collective

agreement. Those are the only two golf course that are involved with a unionized

workforce.

MR. FITZGERALD: Just a general question, since you have some knowledge of

golf courses. Do you feel we have reached the saturation point in Newfoundland

when it comes to golf course levels? There is a fellow in my district now

cutting out a golf course, using his own money up until now. You know, there is

a fair amount of interest in it there. It is on the Bonavista Peninsula.

WITNESS: A great Peninsula.

MR. FITZGERALD: No doubt about it.

MR. MURPHY: The short answer, Mr. Fitzgerald, is: If I had the money,

Sir, the last thing in the world that I would do is invest it in a golf course,

unless you really have a lot of money.

MR. BENNETT: If I may answer that, too, because we could fight amongst

ourselves, I am very optimistic about golf.

One of the things - as you get my age, I have been at it for fifty-forty

years and still have not gotten much better, but I still love the game - the St.

John's area is definitely saturated. Now, the great thing about the St. John's

area from a very personal point of view, a selfish point of view, is the

migration that is coming in here. So, in three or four years we will start to

return, I believe, to the levels we once had. To extend the golf courses in

various regions of the Province, I think, is tremendous not only for tourism,

but - the trouble is, and the biggest example I can give you is in the

Clarenville situation, which is a beautiful golf course. If you like the game at

all, you should play it. The trouble with that is, often you cannot get on that

course because of the number of locals that are playing that course. Everybody

who plays golf, I do not care what your profession is or what your education is,

you love the game.

MR. FITZGERALD: You are talking about Hatchet Cove.

MR. BENNETT: You are talking about Hatchet Cove and I am even talking

about Terra Nova. Terra Nova used to be the hardest place to get a round of golf

in, and it was not because of the flocks the tourists out there. It was the

local people suddenly realized what a wonderful game this is. Anyone who plays

golf knows that.

There are areas where you can develop golf courses and I think be quite

successful, but certainly in the St. John's area we are pretty well at the

saturation point.

CHAIR: Are there any other questions? Does anybody wish to ask any

questions? If not, we will conclude questions.

I would just like to indicate, until the Committee meets there - because

there are some things I would like to take back to the Committee. If we could

adjourn it, there may be no further meetings. That will be decided in Committee,

and we will deal with that as a Committee.

I certainly thank you for your time.

MR. MURPHY: Thank you, Mr. Chairman.

I just want to say this for the record: We are constantly and continually

trying to do things at Pippy Park. We just had a conclusion with our friends of

the Grand Concourse Authority on the future of Pippy Park, which will be

presented to government very soon. From our standpoint, and from others, we had

general meetings and so forth and so on, on input. We are still trying to

intensify and increase our revenues, and trying to become more and more viable.

CHAIR: Okay.

Thank you again.

On motion, the Committee adjourned.