March 13, 2003 PUBLIC ACCOUNTS COMMITTEE

The Committee met at 10:00 a.m. in room 5083.

CHAIR (Mr. Sullivan): Order, please!

Today we are dealing with the C.A. Pippy Park Commission, as per the Auditor

General's report. We will start with introductions. I am Loyola Sullivan,

Chair of our Public Accounts Committee.

MR. JOYCE: Eddie Joyce, MHA for Bay of Islands and Vice-Chair.

MS M. HODDER: Mary Hodder, MHA for Burin-Placentia West.

MR. BUTLER: Roland Butler, MHA for Port de Grave.

CHAIR: For 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: Representing the Pippy Park Commission and government, could

everybody introduce themselves?

MR. MURPHY: Thomas Murphy, Chair of the Pippy Park Commission.

MR. CURNEW: Ken Curnew, Chief Operating Officer.

MR. JOYCE: Just one thing, when you go to speak can you press the button,

please, to turn on your mike.

WITNESS: Then, turn it off when you are finished.

CHAIR: For the purpose, too, of recording for Hansard, before anyone

speaks, if they could - I know some of the members' voices are fairly

familiar, but others, if you could just preface it with your name, please.

Thank you.

MR. MURPHY: Thomas Murphy, Chair of the Pippy Park Commission.

MR. CURNEW: Ken Curnew, Chief Operating Officer of Pippy Park.

MR. BENNETT: John Bennett, Assistant Deputy Minister of Finance. I am

also the liaison officer for the minister and C.A. Pippy Park. I am also the

Secretary-Treasurer of Thomas Development.

CHAIR: Elizabeth Murphy, to my left, is Clerk of the Committee; Mark

Noseworthy, to my right, is the Executive Director of the Public Accounts

Committee; and Kevin Collins, with Hansard office, is doing the recordings of

this meeting.

I would like to just indicate that our Public Accounts Committee is empowered

to seek information dealing with accountability of government agencies and

departments. Our scope is not limited just to Auditor General reports. We do

have powers beyond that. I am sure most people here are fairly familiar with

that. I will not belabor that particular point.

Before we start, we have the swearing in of anybody who has not been sworn in

before. Mr. Casey, I do not think you have been sworn in before with the Auditor

General's office.

Swearing in of Witnesses

John Casey

Ken Curnew

Thomas Murphy

John Bennett

MR. JOYCE: Mr. Chairman, I would just like to bring up the issue of the

report that Mark Noseworthy made for the committee. I am not sure what is in the

report - well, I do know what is in the report, but I would ask anybody from

Pippy Park or the Auditor General's report if they feel that there is anything

in here confidential by nature, that Mr. Sullivan just gave to the media. I have

no idea if there is anything confidential. We were supposed to have a meeting

this morning to discuss it as a committee, but once again, the committee does

not really have a role in that because it was just given to the media. So I do

not know if there is anything confidential there that would cause you concern.

CHAIR: Mr. Murphy has a comment on that.

MR. MURPHY: Well, Mr. Vice-Chair, in the correspondence that came over

from Mr. Noseworthy, Secretary of Public Accounts, we have provided to your

committee, sir, all of the information pertaining to the request that was in the

letter that we could find and file. In going over all of the material several

times, I do not see anything in there that is really confidential. I do not have

any problems. That is the activity of the Commission, in association with Thomas

Development. I think all the contents in here are rightfully public, Mr.

Chairman.

CHAIR: Thank you.

I reviewed it three times, to be careful, to make sure. I checked and there

was no request that anything remain confidential from Pippy Park. I checked with

the House and our Committee people to make sure of that. There was also a copy

of all three documents provided to a private citizen who was asked to appear, on

a request of the Committee here, as a witness. I did not see anything

confidential; that would be on that basis. That is why I gave a copy, and there

was a request to do it. I would have liked to deal with it in the Committee

meeting this morning but there was no forum to deal with it. As Chair, I acted

in what I consider the best interest, having had discussions with the Clerk of

the House of Assembly and the Deputy Clerk of the House.

If we could move on to the business of today.

MR. MURPHY: I have a question, if you do not mind.

CHAIR: Yes, Mr. Murphy.

MR. MURPHY: Did you say you have a private citizen appearing?

CHAIR: Yes, but not before the hearing today. Ms Marshall, the former

Auditor General, was requested by the Committee to appear, and copies of all

these documents were sent and delivered to her. Actually, she indicated she

found them on her doorstep yesterday morning.

MR. JOYCE: So you delivered them to her?

CHAIR: No, not at all.

MR. JOYCE: You just said you delivered them to her.

CHAIR: No, I said it was delivered.

MR. NOSEWORTHY: They were sent by courier to her, as being (inaudible).

CHAIR: By Mr. Noseworthy, yourself?

MR. NOSEWORTHY: Well, we called her to appear so we sent her the

documents.

MR. JOYCE: I just have to get straight what we are doing here. I don't

mean to belabour it, and I apologize, but every other person we call to appear -

it is my understanding there were three other people - do they all receive

copies also? Was Mr. Reid asked to appear?

WITNESS: Not to my knowledge.

CHAIR: The only ones asked to appear - Mark prepared the papers and I

signed them. It was the Chair of Pippy Park, Mr. Murphy; the Chief Operating

Officer, Mr. Nagle; and the minister. Those were the three who were requested to

appear today.

WITNESS: Mr. Curnew.

CHAIR: Mr. Curnew, I am sorry.

I spoke with Mr. Bennett before the meeting. He is here representing the

interests of the minister, too, and being on the Thomas Development Corporation.

I am quite willing to accept Mr. Bennett as a representative, in the absence of

the minister. I did not see a problem with that. We have always preferred, I

guess, to have a minister here, but I am not going to be sticky on that

particular point. I am quite willing to have officials here in the absence of

ministers.

MR. BUTLER: I just asked, Mr. Chairman, to clarify the point. I did not

know who the person from the general public was. Now, it was a former Auditor

General.

CHAIR: Yes, it was.

MR. BUTLER: Okay, thank you.

CHAIR: People come before the Committee and ask to appear as witnesses,

like yourself, for example. If you do not have a document in front of you, and

you are coming as a witness, you have nothing to make reference to.

I think it is customary, and Mark would have to speak to that, that anybody

the Committee feels should be here as a witness should get a copy of the

documentation. The Auditor General's office has it, government officials have

it, and anyone we wish to call from a Crown Agency or anywhere would be expected

to have it, because if you make reference to page 173 in this report how can you

comment on something when you do not have a document in front of you? That was

the basis, I would assume, Mark, in which it was sent out.

Mr. Butler.

MR. BUTLER: Just a couple of comments, one of them along the same lines.

The only concern I have is - here we are asking questions - is there anything

confidential in those documents that should not be put out to the public or to

the media? Here we had a set of documents delivered to an individual, and no

disrespect to this lady but she stated very clearly yesterday that she found

them at her home.

MR. JOYCE: She found them on her doorstep.

MR. BUTLER: She found them on her doorstep. That is my concern - with not

only the former Auditor General, it could be to me - something that lax, that

type of thing. If it was by courier, you would think surely someone would have

been there to be able to account for it.

CHAIR: I certainly agree with the point, Mr. Butler. Maybe it is

something that, in the future - because I asked her if she had a call, if she

was expecting it, and no, she did not know. She did not know anything about it

until she saw it.

MR. BUTLER: The other thing is just a question I was going to ask our

present Auditor General, from a comment you made yesterday. I just want

clarification on this because it more or less ties into what we are saying. Is

there anything here confidential, or are they working papers and so on? I know

it is not in reference to our hearing today but you made some kind of comment

yesterday with regard to it. Someone asked you a question, did you have this

information, and you said - I hate trying to say what someone else said, but

more or less - no, we did not haul out the working papers, or we do not provide

the working papers.

My question is: This book that I have looked through to some degree, are they

classified as working papers or not in the same context as your statement

yesterday?

MR. NOSEWORTHY: One issue that came up yesterday was a reference to the

fact that working papers of my office, in accordance with

section 22 of the

Auditor General Act, state that none of my working papers shall be laid before

the House of Assembly or any Committee of the House of Assembly. What that means

is that the working papers are considered confidential and not for distribution.

MR. BUTLER: You are referencing your working papers.

MR. NOSEWORTHY: My working papers.

MR. BUTLER: Okay, fine.

MR. NOSEWORTHY: There was a question raised by the Chair, whether or not

there was anything in this document that I would consider to be confidential.

No, everything that is included in this document related to the Auditor General's

office, and would include the financial statements and a copy of our annual

report, is all public. There is nothing in here that would cause me any concern.

MR. BUTLER: Thank you.

CHAIR: Thank you.

With reference to dealing with this issue here in the Auditor General's

report, I will give an opportunity for some opening comments by both the

Commission and the Auditor General.

Mr. Murphy, or a representative of the Commission, if you would like to have

any opening comments.

MR. MURPHY: Just a few short comments.

I would probably like to have something to say at the conclusion rather than

now; however, I just want, maybe for the Committee's enlightenment: in the

Auditor General's report, if you look under the scope and the objectives and

what have you, I think you know and understand what the Commission is about,

what its responsibilities are, and what its mandate is.

The Committee is comprised of - I want to put that there - as the former

Auditor General said, three people are appointed by the Lieutenant-Governor in

Council. There is an elected representative from City Hall. There is a

representative from Memorial University. There is a representative from the

Pippy family. There is a representative from the residents of Pippy Park, who

sits on the Commission, and there is also a representative from government.

I just wanted to clear that up, to give you the breakdown of the group that

discusses the issues pertaining to the park. It is a good cross-section, and I

think you should know that.

CHAIR: Mr. Murphy, you mentioned three appointed by the

Lieutenant-Governor in Council, one from City Hall, the Pippy family, a

resident, and government. There is one other that I missed there.

MR. MURPHY: Memorial.

CHAIR: Memorial University, okay.

Would that be, in total, eight people?

MR. MURPHY: Yes, eight.

CHAIR: It would comprise the total membership of the board.

MR. MURPHY: Yes. I don't want to forget anybody.

CHAIR: Thank you.

Did you have any other opening comments?

MR. MURPHY: I might make some comments probably -

CHAIR: Sure. You are free, basically, when we ask questions and so on to

have any comments. You won't be prevented from getting any particular points

out. You will have ample time, if it takes all day and another day if that is

necessary. So, you have no fears there.

MR. MURPHY: Sure. Thank you.

Mr. Noseworthy? No opening comments? Okay.

We will move right into the report and any particular questions by members.

So, if anybody would like to start it off.

MS M. HODDER: I will ask one question.

CHAIR: Ms Hodder, I should just mention, Mr. Osborne was not here for

introductions. Mr. Osborne, St. John's South, is to my left.

MS M. HODDER: During 1999-2000, $100,000 was provided by government to

the commission for the specific purpose of constructing a field house at the

18-hole golf course. Twenty-two thousand seven hundred of this amount was used

for other projects that were not intended at the time.

Can the officials comment on this particular one?

CHAIR: If you repeat the page numbers, it might make it easier to then

respond.

MS M. HODDER: I am sorry! It is page 5.

MR. MURPHY: To start with, the facts are correct in the sense that there

was $100,000, certainly, provided to Thomas Development. We managed to construct

that field house for $77,000, and in consultation with the commission, we then

undertook other projects relating to the course improvement up there. We put an

entrance gate in there because we always felt that if we are going to promote

tourism within the area, there should be a clear indication of where people

could find the golf course. We are continuing to do things like that, with

signage, etc, and the commission is giving us big assistance on that.

I guess the other thing was a small dance floor within the clubhouse. As you

know, what we are trying to do now is promote the clubhouse, not solely for the

use of golf but private parties, weddings and other functions, as a way of

revenue generation. That was done in consultation. In our view it was for the

correct purpose of the grant, which was for the improvement of the facilities.

That is why it was undertaken.

CHAIR: Ms Hodder.

MS M. HODDER: Thank you.

That is all for this time.

CHAIR: Mr. Osborne.

MR. T. OSBORNE: I have a couple of general questions first and then I

will get into some more specifics.

The clubhouse at Pippy Park, during the contract of Thomas Development - they

are basically operating the clubhouse - Pippy Park is operating. Who will own

the clubhouse after the Thomas Development contract has expired?

MR. MURPHY: When the total figures, or indebtedness, that was mentioned

in the 2001 audit, and I think it was somewhere in the vicinity of $1.3 million,

it is now about $620,000, approximately. In June of 2005 the bank will be paid

in total. That will see the demise of Thomas Development. Then the board, at

that particular time and point, would put in place - or the commission -

whatever they decide to do. They could handle it themselves. They could put in a

small committee to look after it. But, the $10 million golf course - which we

are now trying to protect that equity - would then become part of C.A. Pippy

Park Commission.

CHAIR: A part, would that be part ownership? When you mean a part, would

it be -

MR. MURPHY: It would be total ownership.

CHAIR: Total ownership, okay.

MR. MURPHY: Total ownership. Actually, the equity associated with the

golf course would then become part of Pippy Park, of course which would become a

$10 million equity to the public.

MR. T. OSBORNE: Okay, and the clubhouse is the same thing?

MR. MURPHY: And the clubhouse is the same.

MR. BENNETT: Can I respond?

CHAIR: Yes certainly, Mr. Bennett.

MR. BENNETT: If I could just take a minute, and it will not be very long,

just to try to explain what Thomas Development is because there are lots of, I

guess, misnomers on exactly that.

Thomas Development is a not-for-profit organization, basically a special

purpose, which its only reason for existence is to operate under the management

contract between us, being TDC, the commission and government. It arose from the

old Public Golf Association. At one time in Newfoundland the only place you

could play golf was at Bally Haly and you had to get through a pretty stiff ring

to get on that course. So this group of people, all volunteers, started with a

nine hole golf course up there - which is still there today - and, as well,

moved into developing an eighteen hole course of their own petition. That was

again put under an umbrella, both of them, for an old farm that they acquired

land from for nothing. There was a fellow, Thomas, apparently - just to give you

some of the history. They created this 1989 corporation called Thomas

Development.

Since that time there have been a board of directors - the original public

golfers representatives - on a volunteer board operating that and then they

moved into formal construction with the advent of the management agreement. The

current owners are no longer on the board, even though that is still their

company (inaudible) not-for-profit. It has absolutely no assets. Any assets of

Thomas Development, any revenues that they do over and above what is necessary

for running the operation is the property of the C.A. Pippy Park. It produces an

annual budget, which is approved by the C.A. Pippy Park Commission.

The current board of directors have been appointed by the minister. As the

chairman of the commission stated, once we get the bank out of the way, which is

currently owed about $650,000, then there will be a restructuring of Thomas

Development and it will become within the Crown framework. However that is

structured will be depending on what the lawyers think is the best way to do it

to protect ourselves, being Thomas Development, and the commission and

government. That has not been decided, and at that point then government will be

asked consider exactly the new direction of Thomas Development.

I think we have to recognize the fact that this is a special relationship

between two separate entities. This is not an independent party that is over

there, say, in business, in profit making; it is a very special relationship. It

probably gave rise to some of the less than perfect ways we did business between

the two agencies because we were very much hand in glove in what we were doing

up there.

CHAIR: Mr. Osborne, if we could, probably just before we pursue the

question to get a complete picture because that is beneficial there. I am a

little familiar with structure, but just to make sure we are fully clear on the

structure that is in place because I think that is important in understanding

for everybody. Thomas Development Corporation has how many current owners, for

example? That sort of evolved.

MR. BENNETT: There are five. Five of the original owners are still the

owners of Thomas Development Corporation.

CHAIR: Okay. How many would be on the Board of Directors, for example, of

Thomas Development Corporation?

MR. BENNETT: None, now.

CHAIR: No, I do not mean of the owners. How many people altogether?

MR. BENNETT: Sorry. There are six on the board now. I can give you names

if you wish.

CHAIR: The current owners, were all of them members of the board

initially, I would assume?

MR. BENNETT: Yes, they were.

CHAIR: Because (inaudible) evolution really. So, they are basically off

the board. Were they not reappointed or did they resign, for example?

MR. BENNETT: They basically resigned. They came in to the minister, and

two of the items that you see in there involve staffing. They had financial

problems, not necessarily of their own doing, in my view. Government came to the

table. The two grants that are in question in the report, one for forty-five and

one for 160. They resigned, and a year later they got off the board and the

minister appointed the current board.

CHAIR: If we could get some understanding, too. You mentioned quite

clearly, Mr. Murphy did, that the members of the board of Pippy Park now - there

are six members of the board of Thomas Development Corporation, of which Mr.

Bennett is one of them, I think, certainly representing, we will say the

government interests, I would assume. How would the other membership be made up,

for example? Would Pippy Park Commission - I know has representations, two would

be on that. If you just give us a breakdown of the board, for example, to get

some understanding of the linkage between?

MR. BENNETT: I am member of the board. Again, like I said, I am the

liaison between the Department of Finance, which is the ministry responsible for

C.A. Pippy Park, and obviously Thomas. The Chair is Mr. Art Reid, and Ms Judy

Bugden is an independent member. Mr. Derek Harding is another independent

member, and then Mr. Murphy and Mr. Curnew. I might add that, since its

incorporation back in 1989-1990, there have always been at least two members on

the board because of its uniqueness.

CHAIR: Generally the chair, I guess, and the chief operating officer, I

would assume.

MR. BENNETT: Yes.

Well, informally, there were actually two Commission members.

CHAIR: Okay, that is helpful in understanding.

I am sorry, Mr. Osborne. You can continue. I just wanted to just get that

clarified.

MR. T. OSBORNE: No problem.

In reading through the document, other than Charlie Cook, with Thomas

Development, they could not determine who the owners of Thomas Development are.

Are you permitted or able to give us that information?

MR. MURPHY: I do not see, Mr. Osborne, any problem with that. It was

Charlie Cook who was chair. I think Gerry Angel was secretary-treasurer. Mr. Ed

Dawe was a board member. Mr. - help me, John.

MR. BENNETT: Peddigrew.

MR. MURPHY: Peddigrew.

CHAIR: Bob Peddigrew?

MR. MURPHY: Yes.

MR. BENNETT: Jack Halliday.

MR. MURPHY: Jack Halliday and Winston Crocker.

CHAIR: Would that be five? Is Mr. Cook one of the owners?

MR. MURPHY: Yes.

MR. BENNETT: All of these were.

CHAIR: Like Wince Crocker, I saw his name referenced in some of the

minutes. Would that be -

MR. BENNETT: No, Wince Crocker wasn't an owner.

CHAIR: Okay. He wasn't a member?

MR. BENNETT: Yes, he was on the board the latter four -

CHAIR: But not an owner?

MR. BENNETT: No.

CHAIR: Okay. They are the five owners, basically, I think you just

mentioned.

MR. BENNETT: Yes.

MR. T. OSBORNE: Are there any salaries or per diems paid to the owners of

Thomas Development?

MR. BENNETT: No.

Do you mean former owners?

MR. T. OSBORNE: I guess I can prong that into two questions, former

owners and current owners.

MR. BENNETT: Of the former owners, the only one who receives any

remuneration is Mr. Ed Dawe, who is now the general manager of the golf course.

He receives remuneration. Of the new board, nobody receives any per diem or any

remuneration.

CHAIR: But the owners initially are still the owners, is that correct,

the five that you mentioned?

MR. BENNETT: If you dissolve the management agreement, Mr. Chairman, you

will see that expires.

CHAIR: Yes.

MR. BENNETT: That dies.

Structurally, Mr. Chairman, if I could just add, you are absolutely right.

They own a company which has no assets, if you know what I mean, because

everything goes to C.A. Pippy Park under the agreement.

CHAIR: The legal owners are TDC, basically.

MR. BENNETT: Yes, and that is why I stress the fact, it is a

not-for-profit organization. It is like any other organization that is created

for the purpose of the public good. There is no value for these people in, say,

ownership in this particular corporation.

CHAIR: I guess, is the intent - and I don't want to take from your

questions - is the intent to have the ownership come back completely to the

Pippy Park Commission now? Wouldn't that be the intent at the expiration of

the debt? That was the intent that I think was mentioned.

MR. BENNETT: That is the intent.

CHAIR: Is that still the intent or are you trying to move that back even

before the expiration date?

MR. BENNETT: Well, we discussed all kinds of issues to try and resolve

the debt that is still owed the bank. We certainly have no intention, for

$600,000, of giving up $10 million worth of property. I don't think that would

be wise on behalf of the public purse. We thought of some other ways of paying

that down and so forth and so on, and it was discussed at some length at some

meetings.

No, at the end of the debt, Thomas Development will dissolve, John, and as it

dissolves that property and all the holdings and all the structures on the

property would then become the property of the Pippy Park Commission. Now, I won't

be there but somebody will be there and they will decide as to what structure

would then go in place to manage and look after both golf courses.

CHAIR: Mr. Osborne.

MR. T. OSBORNE: So, Mr. Dawe is the only person who has ever received a

salary from Thomas Development as one of the owners?

MR. BENNETT: Can I just make sure that we have this right. He was

interviewed in one competition. We had a former general manager, that general

manager left and we took the number two candidate from that who was Ed Dawe,

because of his long history. He is also a private businessman and has thrived

quite successfully. He is now in a capacity as an employee, not as an owner. He

is an owner by virtue of the fact that he can't divest himself of his

ownership until such time as the whole not-for-profit organization has actually

changed structure. You can't sell the shares in a not-for-profit organization.

In the same way, his share capital, if you want, which has no value on it,

basically is set up in such a way it is to the individual himself. So, unlike

Mr. Martin, who has now divested himself of his particular holdings, he cannot

just sell his shares to anybody else.

MR. T. OSBORNE: So the general manager position was always a paid

position.

MR. BENNETT: Yes, there are basically three full-time paid positions out

there. The course superintendent, which is absolutely essential in a golf

operation, and another one is an accountant. That is also addressed in the

Auditor General's report.

CHAIR: You have a general manager - just to finish this point - who is

responsible for the whole operations of that golf course, to make sure that it

is up and running and it is going to make a profit, hopefully. The overall

responsibilities would be under the umbrella of the (inaudible) the same as any

general manager.

MR. BENNETT: Mr. Chairman, it is absolutely impossible, and we are an

volunteer board, me included, even though I cannot be fully volunteer because I

do it on work time sometimes in here. As you know, you cannot run, you cannot do

the ordering, you cannot make sure that the seasonal people, for instance, are

paid correctly in accordance with the collective agreement which we do have. You

have to have a person. This is a fairly large complicated little business and we

could never survive without one.

CHAIR: Mr. Osborne.

MR. T. OSBORNE: On page 126 of the Auditor General's report, or page 4

of the package we have received, there was $270,000 provided by government to

the Commission for renovations and there was insufficient documentation to show

whether or not this had gone to tender, or the spending of $265,000 of that

$270,000. I will ask the Commission, first of all, if you can give some

explanation as to that.

MR. MURPHY: Mr. Osborne, at that particular time and point I was not at

Pippy Park. Even though I have done a tremendous amount of research, and one

thing and another, it would be somewhat of an assumption on my behalf to get

into that area, and I am sure the Committee would not want me - I would not want

anybody to assume anything at that particular time and point, but the numbers

themselves, I think Mr. Bennett can probably explain it a little better than I

can. I was not there, so I was not involved with the dealings associated with

that particular question. I would defer that. I would rather not comment on it

because I had nothing to do with monies in or monies out.

MR. T. OSBORNE: I wonder if Mr. Bennett would have any -

CHAIR: Mr. Bennett or Mr. Curnew, or anybody who can -

MR. BENNETT : Well, you can come at it from both points. I was at TDC at

the particular time when this did come and there is certainly no doubt that we

were provided with the grant. We did take Beaton Sheppard. There was a tender

that was called, and the renovations to the clubhouse - if there are any golfers

in the room - it is basically where the Pro Shop is located now. The purpose of

that was to get the Pro Shop, which is again one of the operating arms, up where

they could see the action, especially relating to the tee, and making sure the

play was moving smoothly. We took it out of the basement and renovated it, a

lovely little Pro Shop upstairs. That did not cost, obviously, the full

$270,000, as the Auditor General had pointed out, and we undertook other

renovations which we will probably get into.

I guess we had found there were certainly tender documents prepared. I cannot

speak as to where the Commission have kept it in its accounting, but obviously

the tender documents were mislaid and never found. We have copies from Beaton

Sheppard and these have been forwarded on for your review now.

From Thomas Development's point of view, again the liaison was working here

and this is, like I said, a special relationship, the fact that the two board

members sat on the board and met as we went through that particular process. The

funds were paid from this fund, including the other funds, the other

arrangements that were made because we did have surplus money relating to that

$270,000.

MR. T. OSBORNE: I wonder -

CHAIR: I am sorry, Mr. Osborne. Were you asking on the general

contracting? Was that the intent of tendering?

WITNESS: Yes.

CHAIR: Just prior to that, if I could just ask one question leading up to

that, because you mentioned Beaton Sheppard. For instance, how was Beaton

Sheppard selected? Because they, I understood, handled the tendering and a lot

of the work there, as I read through this document. Could you just update us as

to how they were selected, first of all? Was there tendering there? Where is the

supporting information on that?

MR. BENNETT: I cannot tell you how he was selected. I do not know if they

used the government consulting guidelines. Unfortunately, the board at that time

was chaired, or the president of that was Charlie Cook. Mr. Dawe, who is out of

town for the balance of this month, was part of that group too, but I do not

know how they selected Beaton Sheppard as the consultant.

CHAIR: Was Beaton Sheppard selected by the TDC, by the Pippy Park

Commission, or by government?

MR. BENNETT: No, it was certainly not by government. It was selected by

TDC.

CHAIR: I understand Beaton Sheppard handled any other basic transactions

and documentations here. I think they were all channeled through Beaton

Sheppard. How they got the job in the first place, I am just wondering. Somebody

should be able to answer that question. If the Pippy Park Commission sits on the

board of TDC, somebody has to know how they got the job in the beginning, to

start to even oversee this or to facilitate the tendering and the flow through

of all the documents.

MR. JOYCE: The question should be asked: How long has he been there?

WITNESS: I am sorry? How long was -

MR. JOYCE: Sheppard, the consulting engineering company.

WITNESS: He was hired specifically for this project.

CHAIR: Yes, Beaton Sheppard was hired to deal with this. That is in here.

There is reference in the documentation and so on. I read all the minutes, but I

couldn't find out - I don't know if the Auditor General has any input on it

- how Beaton Sheppard was selected first of all. Before we even get down

underneath Beaton Sheppard to look at the tendering, maybe the Auditor General -

before we move on, I think this needs to be clear.

MR. MURPHY: I wasn't there, Mr. Chairman, so I don't know how Beaton

Sheppard got involved. I know Beaton Sheppard, as the consultant, called the

tender, because I have the document.

CHAIR: Yes, that is located here.

MR. MURPHY: I don't know, Ken, if you might want to comment.

MR. CURNEW: In a conversation with the former chief of operating, he

indicated to me that Beaton Sheppard was hired under the consultancy guidelines,

government's consultancy guidelines.

CHAIR: So, the hiring was done through TDC, in line with government?

MR. CURNEW: I don't know who actually did the hiring. I know it was

done in accordance with the consultancy guidelines.

CHAIR: Mr. Noseworthy.

MR. NOSEWORTHY: We looked at this $270,000 that was provided by

government for the construction of the clubhouse, and spoke with officials at

the commission with a view of trying to determine how tenders were called, how

quotes were obtained , whether purchase orders had been issued in order to

control the expenditures, the normal due diligence that you would expect to be

followed. From our discussions with people at the commission and from our review

of documentation available at the commission, we concluded, as in our report,

that in fact there was no documentation available to show that the work was

tendered. We could never establish even how Beaton Sheppard was selected, in the

first instance. Beaton Sheppard apparently was supposed to have then gone and

handled the tendering and that sort of thing. We could not determine or have any

documentation to show how Beaton Sheppard was selected. We suggested that this

was most unusual, to the chief operating officer at the time, and I have a memo

here from the chief operating officer that may clarify this whole situation. The

officer says: 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. It is signed by the chief operating officer.

CHAIR: At the time, the chief operating officer of Pippy Park.

MR. NOSEWORTHY: Yes, Mr. Hopkins.

CHAIR: Mr. Hopkins.

MR. NOSEWORTHY: We said, what you are saying here is that you really do

not have any support as to how all of this happens. He said, that is right.

Now, in your package you can see reams of invoices and that sort of thing,

and we did not say in our report that there were no invoices. What we saying is

that you cannot, we could not satisfy ourselves that this work was properly let,

that it was properly contracted. We could not. The documentation was not

available to show us otherwise.

MR. T. OSBORNE: That was a question, as well, that I had. There are

invoices from horticulturists, there are invoices from contractors and so on

throughout the document without any indication of whether or not they were the

lowest bidder, without any indication as to whether or not there were any

tenders called at all, without any indication that the Commission or government

or Pippy Park were getting the best value for their dollar. I was leading in

that direction to try and ascertain whether or not there is any documentation

available to determine whether or not the money that was supplied by government

through grants, the money that was supplied to Thomas Development or through the

Commission, was spent in the best interests of the taxpayers.

MR. CURNEW: I should indicate that I came on, basically, after the fact

in this. I believe the audit may have still been ongoing to some degree at

least. I do not think it was completed at that time. I think you have to realize

that there was a tremendous turnover in the fact that all of the Thomas

Development staff - the existing board had been replaced. The chief operating

officer had been replaced. Even the chairman of the board had been replaced, and

the secretary, who had been there at the time that this was occurring, had been

replaced. Subsequent to that, I was able to find the tender document that was in

the possession of the consultants and, I believe, subsequently forwarded. We did

manage to track down, after some investigation, the actual newspaper

advertisement that was associated with the tender.

MR. T. OSBORNE: That was through Beaton Sheppard?

MR. CURNEW: Beaton Sheppard, yes.

We did indeed provide that information and it is contained in this binder

that you have there for the construction. The consultancy guidelines, I think,

are fairly clear. In terms of the contract that was let to Beaton Sheppard, they

are well within the consultancy guidelines. It appears that there is sufficient

documentation to address most of your concerns within this binder.

CHAIR: I just want to ask a question.

If we cannot get the information now, could you move it - or Mr. Bennett, or

Mr. Murphy - to track it down and send it to our Committee, to Mark Noseworthy,

the information on how that was done, on how it was selected initially. I think

it is important in the public interest in terms of the most competitive proposal

or tender. If you could retrieve that, I am sure somebody has it and knows about

it, or if there is any possible witness that can provide more information, we

will have to consider having a witness here to be able to answer that particular

question. I am quite content to have it followed up in writing rather than go to

that length, if someone could undertake to do that. Could somebody undertake to

do that for us?

MR. MURPHY: Mr. Chairman, when we received the letter from Mr. Noseworthy,

your secretary, asking for details, I want you and the Committee to know that we

had to go back through files that we were not familiar with. They were dealt

with by the former chair and the former, as Mr. Curnew has already said, so it

was a seek game and we found all of the information that is before you and we

supplied that to Mr. Noseworthy. There may be some other information out there.

We are going to have to ask people who were there and preceded us, if they have

any information either verbally and/or written, or whatever the case might be.

We can only ask that of them. You must understand that. If it is not available,

it is not available.

When we got the audit from Ms Marshall, we took it quite seriously. The

Commission was extremely upset with the remarks and the contents of the audit.

We spent days going over this to try and rectify it; but, again, you must know

and understand that we - and Mr. Curnew for sure - have gone back over all the

requests that have come forward from Mr. Noseworthy and we have provided

everything. There may be some other documentation that we can find. We will try

and seek it for the Committee, but I make no guarantee, and I am sure you

understand that.

CHAIR: Okay, certainly. Mr. Bennett, through government channels, might -

by having a member on the TDC - be able to get an answer to that possibly; if

Mr. Murphy, through the Commission, cannot.

MR. BENNETT: Yes, I certainly will try.

CHAIR: Thank you.

MR. CURNEW : I just want to point out that there may not be any tender

documents, because under consultancy guidelines this amount would not be

required to go to tender.

CHAIR: Somebody had to make a decision to hire Beaton Sheppard. It had to

come from somewhere and we would like to get an answer from that.

Mr. Osborne.

MR. T. OSBORNE: Thank you.

To the Commission as well, on page 214 of the document that was supplied to

us. There are a number receipts in the file, such as this particular receipt,

with no letterhead, no indication as to who it is from, other than to outline

some materials and so on, yet it was approved by Art Reid. Would this be normal

procedure for the Commission to approve such vague invoices?

MR. CURNEW: No, we would not -

MR. T. OSBORNE: Because there are a number of these in here.

MR. CURNEW: I cannot refer to what happened there or what the situation

was, but currently we do have more documentation than this.

MR. MURPHY: As I already stated to you, since we received the Auditor

General's report we have really paid special attention to everything

associated with tendering and we have discussed that with TDC manager and

anybody else who is in a position to purchase. You would not see this type of

document today.

MR. T. OSBORNE: It concerns me however, that at the time - I mean page

215 and 216, and there are others in here similar to this. I mean it would

concern me that a commission spending public money would approve - especially an

official such as Art Reid - such vague documentation.

MR. MURPHY: Well, at that particular time and point I think Mr. Reid was

around, and was around quite a bit, because there were two things on the go.

Number one, there was a bit of capital works and we had acquired - when I say

we, TDC - a national ladies tournament and the time frame was a bit short. I

would only suggest to you that he was trying to get the place in order as

quickly as possible so the golf course would have an appearance of worthiness, I

guess, in association with lady golfers coming from all across Canada. That

might be part of the explanation, I say to you, Mr. Osborne, but I can tell you

now that this does not happen.

MR. T. OSBORNE: I refer as well to page 228, and there was $1,000

approved as an expenditure to do additional work to accommodate an on-site

wedding, which was also approved by Mr. Reid, incidentally. Would the Commission

have made in excess of $1,000 on that wedding? Why would $1,000 be spent to host

a wedding if the site was not ready for it?

MR. MURPHY: Again, Mr. Osborne, I cannot answer the question. Yes, we do

have weddings up to that main net of $1,000. That is about all the information I

can give you.

MR. BENNETT: (Inaudible).

MR. MURPHY: Yes, go ahead.

MR. BENNETT: On that particular one, first of all when we started to do

these renovations we had a finished time in mind and that was exceeded again for

supply reasons or whatever else, that the contractor could not finish the work.

A person booking a wedding would book a year before, so we had thought that this

would be certainly well finished and the club would be certainly acceptable to

host a wedding. So, what they had to do were certain modifications with the

entranceway so that the wedding could go on unimpeded and it would not be

affecting the main room of the clubhouse if anyone visited at that time. Whether

it netted them $500 or $50 million, it would not make any difference,

essentially. We were living up to our commitment. One of the things, of course,

I was trying to do was promote that place, trying to get everybody here if we

can to get up there and spend every waking hour if we could do it.

MR. T. OSBORNE: The additional work was not part of the work that was

supposed to be done under the contract?

MR. BENNETT: No. As I understand it, because I can just remember sitting

on the board that addressed it, it was to accommodate - to change the

entranceway away temporarily so that they would have a reasonable entrance. Now,

just imagine on your wedding day having to walk in through a construction site.

So we were doing our best to make sure that we made it as comfortable for those

people as possible.

MR. JOYCE: Mr. Chairman, could I just intercede for a second because it

is leaving the wrong impression here with the media and the general public. If

you could go to document 212, please. It is leaving the wrong impression. I do

not know if it is on the Auditor General's report, but this document we have,

the working document, if you go to page 212, that is an invoice that was paid

out to Mr. Mike Conway.

WITNESS: A cheque, I think.

MR. JOYCE: A cheque, yes, and the amount was $2,685. If you go to the

next page it is a breakdown of what was done on invoice 324659. Now, if you go

with that and you go with this invoice, if you add up the next three that is

broken down, the next three invoices with no name on it, it equals $2,685. It is

just a small breakdown of the invoice that was given. The cheque was paid. The

invoice was given of what was done and the next three pages are just a small

breakdown of bolt by bolt, nail by nail, of what was spent. If you add those

three invoices together it equals that cheque that was paid to this person, and

the reason why it was paid. On the next page, on page 213, it shows what was

done. If you check that page with the next three invoices it is exactly what was

done.

I do not want to leave the impression here with the media or the general

public that Art Reid was signing invoices with no one on it. If you had done

this properly and stapled all of those documents together, it is one single

invoice which, in actual fact, if you - I ask the Auditor General to comment -

were doing a statement, when you break it down nail by nail, bolt by bolt, that

is the way an invoice should be submitted. I do not want to give the impression

that these were just handed in. If you look at them singularly it may be true,

but when you add them up and show it, it is the exact amount of what was paid

out.

MR. T. OSBORNE: Yes, if I could interject. The cheque is certainly made

out to Mr. Mike Conway. There is no question about it. That is the only

indication that I see anywhere there of whom it came from because the official

invoice, on page 213, is sold to Thomas Development, shipped to Pippy Park.

There is no name. It is an invoice that you can get out of any invoice book at

any business supply company. There is no indication as to -

MR. JOYCE: The only reason why it was done here -

CHAIR: We can only have one speaking at a time. Are you finished Mr.

Osborne?

MR. T. OSBORNE: No, not yet.

CHAIR: Okay. When he finishes - we will recognize one at a time. We

cannot have two and three. It is impossible for proper decorum here.

Mr. Osborne, finish your statement.

MR. T. OSBORNE: I still have to say that other than the cheque that is

paid there is absolutely no indication as to where this work was being done

from. There is no letterhead. There is no - even on the official invoice it does

not state who it is coming from. The only indication as to who that was paid to

is on the cheque.

CHAIR: Mr. Joyce.

MR. JOYCE: What I will ask Mr. Noseworthy to do - or Elizabeth, Ms Murphy

- from now on when we get invoices from whomever we request the information, to

ensure that all of the invoices are stapled together, because if these were

stapled together as one document we would not be giving the impression that Art

Reid, or whoever, was out signing documents with no invoice. If they were all

stapled together - it is very obvious that this is just one document, and they

asked for a specific breakdown that they did.

If you add up the three costs again - once again, I say, if you add the three

of them up they equal $2,685, the same amount as the cheque that was given out.

I do no want to leave the impression - just for clarification, next time I will

ask that if we get invoices all related to the same bill, that they all be

stapled together, that we include it as one invoice. If you took this single

document someone would say: What is that doing there? How can you pay that? But,

when you add them together, as is supposed to be done - this is no -

WITNESS: As long as you can identify it.

MR. JOYCE: As long as you can identify it and (inaudible) because I am

sure it was sent down the same way. It all added up, and equals to the same

amount, that these were signed off as specific item by item. In actual fact, if

someone did them item by item they did a good job.

CHAIR: I will get to Mr. Noseworthy in a minute.

By looking at the book that we have, if they came in a package of other

invoices from Mike Conway we could certainly understand. If Mike Conway was sent

other invoices and they got separated - the invoice here does not have who it is

from. The supporting document is not in question. They do add up to the total of

the invoice but we do not know who the invoice came from. Did Mr. Conway have

other payments issued to him that he might have sent invoices at one time? If

they were, I guess they may very well be in this document. I did not see it. I

do not recall it. It could be there because I do not remember offhand every one,

but I think that is important. Maybe if ten or twelve - and they are in

different locations - or fifteen came in and one packet adds up to one, maybe a

little notation can be made or something of that nature, that these invoices

were part of a larger amount; for Mr. Noseworthy's benefit. If that did

happen. Maybe somebody could answer anyway. If it did, fine. It is a legitimate

point. If it did not and Mr. Conway has other invoices or cheques paid. If this

is the only one, I think it is clear that - we do not know who it came from.

Mr. Noseworthy, I think, has a comment first, and then Ms Hodder we will get

back to you.

MR. NOSEWORTHY: From an audit perspective looking at this package that

you are tying together, from our position here these seem like they are a quote

for a piece of work. Each piece of work is a quote and then an invoice is

prepared and it adds up to this.

The issue here, in this example, is what we referred to in our report, it

gets back to no purchase orders or tenders. You are required to obtain three

quotes for any work of this magnitude. For example, what should be in a package

available from an audit point of view is a file, and when you go to the file -

if you wanted to see about a workbench being constructed there should be three

quotes and then you would accept the lowest quote or explain why you are not

going to select the lowest quote. Then you proceed and do your work.

In this case here, this would be considered deficient in that there are no

three quotes. It is not obvious in this documentation. That is what we found

when we were doing our work. That is why we said we could not establish that

fair and reasonable prices were obtained. That is what we said in our report.

That is the conclusion. You can look at Beaton Sheppard as the consultant. We do

not know how they were hired. There is no documentation. We do not know how Jim

Neary was hired. He received $150,000. We do not know, there is no documentation

available.

We saw a tender sheet that Mr. Curnew referred to, but it is simply a sheet

of paper. It is on page 158 in your package. That would in no way, shape or form

constitute an acceptable analysis in order to award a tender. What you would

need is underlying documentation to go through and to analysis that somebody had

to put criteria against and make a decision. That just would not cut it. We saw

that, but that is not enough.

The document back here that you are looking at, these invoices adding

together for the $2600, again, from an audit point of view, from due diligence,

from the rules of government, would not cut it.

MR. JOYCE: With all due respect to the Auditor General, what you have

seen is correct. My point is, the statement made by Mr. Osborne that these bills

here were paid, signed out, don't know who it is going to, is absolutely not

true. If you check this here - and I don't care who wants to check it - by

coincidence you will get five pieces of paper, one with the cheque and the

amount, another one with an invoice and the other three with the breakdown. Your

point is well taken, but the point I was making was that the impression was left

that Art Reid who signed the cheque didn't know who it was going to. That is

not true. It shows in the four or five documentations, I am assuming that were

sent together, because by coincidence they all add up to the same amount, by

coincidence it was all with the same work - every piece of paper, if you look at

the second page, every piece has some corresponding response to the first piece

of what work was done.

I am not disputing the Auditor General and what you are saying, but I am

disputing that these were signed, because the cheque was made out with the

invoices put in. What you are saying, how it was done, that is a different

issue.

CHAIR: Just a point, not on this, but anyone who wishes to speak must be

recognized by the Chair.

MR. JOYCE: Mr. Chairman, I just want to finish. Mr. Noseworthy just

whispered to me: This is the order he got them in. So, obviously they were all

put together for this here. So, I don't want to leave the impression there was

one handed in, don't know where the $1,000 went, another one handed in.

CHAIR: For proper order here, we have to be recognized by the Chair. So,

if you want to be recognized, just signify it to me, I will see and recognize

you in that order. So, please do that. We can't have a discussion back and

forth. I can't see how Hansard can record two people speaking at the one time

and put it in the minutes, basically, in the official document. So we will

follow proper procedure here in running the meeting. Everybody will have ample

time to pass their comments. Nobody will be prevented from having sufficient

time to say whatever they want to say, if we have to spend five days on this

particular topic.

Mr. Osborne.

MR. T. OSBORNE: Thank you, Mr. Chairman.

I will go back to my point again. The only reason we know who this amount was

paid to is because there was a cheque cut. The invoice shows no name, the work

orders show no name, no address, no letterhead. I am not disputing the fact that

we know who it was paid to, because there was a cheque cut, but as a business

owner, myself, if I were to get from my board of directors, or from a director,

an invoice without a letterhead, without a name, without any identification, I

wouldn't have cut the cheque.

Art Reid may have known who it was going to, but I am just pointing out that

for better accounting purposes in the future maybe these invoices - and I

realize that you have said that will happen in the future, and I accept that. I

am just saying that in this particular case the invoices, the work orders, had

absolutely no identification. The only way the identify who the money went to is

to look at the cheque that was cut.

CHAIR: Thank you, Mr. Osborne.

Mr. Butler.

MR. BUTLER: I just want to add a little bit to that and not take too much

time. I mean, I agree with Mr. Joyce and what the Auditor General said. Yes,

that practice is not sufficient. The commission has agreed with you on that

because Mr. Murphy just said you won't see that anymore. I agree with all

that, but I have to take Mr. Osborne to task on it because there was no sign of

cheques when you mentioned bringing this up. He was wondering who, and you named

the person, who had approved something like this without knowing where it came

from. Now, you are switching it a little bit now. You know where it came from.

Why didn't you do in the beginning, rather than mislead the media (inaudible)?

CHAIR: I think we have moved beyond this point now. I think we have

exhausted -

MR. JOYCE: No, he wants the question answered.

CHAIR: Did you want a question answered?

MR. BUTLER: I placed one.

CHAIR: Who would you like to answer the question?

MR. BUTLER: I would like for Mr. Osborne to explain that. When he brought

this up, and he said it very eloquently, he listed the three pages about the

invoices.

CHAIR: I think Mr. Osborne answered that question already, but if you

want an opportunity again. If you could make it brief, Mr. Osborne, then we will

move on.

MR. T. OSBORNE: I will certainly do that.

I pointed out the work orders, absolutely. My question to the Commission,

which was answered to my satisfaction on this particular case, was: Why would

they approve a payment without knowing who it came from? Yes, once the payment

was paid -

MR. BUTLER: You knew that when you asked the question, though, didn't

you?

MR. T. OSBORNE: Before the cheque was cut, Mr. Butler, how would we know

who the cheque was -

MR. BUTLER: The cheque was cut, Sir, back on a certain date, and you just

asked the question.

CHAIR: If we want to have basically our own meeting, I do not think this

is the forum. I think we are here to be able to -

MR. BUTLER: We will have it after, Mr. Chair.

CHAIR: Yes, I think that can be done in our own session. I think we are

here to be able to ask questions on this and be able to get answers. I think we

have to keep a certain amount of proper decorum here. If we make a statement on

a point, if we make it once and someone else -

WITNESS: (Inaudible) it is accurate, Mr. Chairman.

CHAIR: Yes, if someone makes a statement that is inaccurate, I will

recognize somebody who has a statement or rebuttal to that. I have done that

over all the committees I have chaired, whether it is the Auditor General,

whether it is a government response or whatever.

Mr. Curnew.

MR. CURNEW: I was just going to point out that it is not unusual for

these invoices to come in envelopes that do have the identifiers associated with

it, and not all the time are the envelopes retained. Indeed, in some occasions

they are hand delivered by the proponent or by the actual person who has been

hired to do the work. So it is not a case of simply writing out a cheque and

hoping that it lands at the right spot. There is more due diligence than that

employed.

CHAIR: The point is well taken. If the name is not on the invoice, I

guess, just as a proper procedure, maybe the envelope could be retained to show

that it is associated with it. I am sure you have indicated you are following

procedures there, and that is fine.

Mr. Osborne, you were on a line of questioning. Do you have others?

MR. T. OSBORNE: Thank you, Mr. Chairman.

I will refer to pages 253, 254 and 255. There are others as well from O'Neill's

Gardenland, but these three -

CHAIR: Mr. Osborne, page 256 ties into the same total if you want to - I

do not mean to take you away from your question there, but I think they all tie

into the one total. I think that adds up to the total amount, if I am correct. I

think the amount on page 252, if you add up pages 253, 254 and 255, and also

256, it also adds up there.

WITNESS: Yes.

CHAIR: I am not sure of page 257, to be honest with you. Some quick math

would show that. Page 257 also - I see nodding by the Auditor General's office

- all add up to the total amount of $23,063 on that.

MR. BUTLER: Page 257 is included.

CHAIR: Yes, that is included there. Go ahead with your question.

MR. T. OSBORNE: The question that I had is, on pages 253, 254 and 255,

these receipts are for the same amounts. They are obviously different invoices,

because the invoice numbers are different. The explanation on the invoices is

just landscaping as per quotation. I am just curious as to the identification of

this landscaping. Maybe the Auditor General can answer this. Was this clearly

identified as three different pieces of landscaping in three different areas to

support three different invoices of the same amount? I understand the cheque

that was paid adds up to all of the individual invoices.

CHAIR: Mr. Osborne, I want to add, too, landscaping is the fourth invoice

and it is also landscaping, for your information. There was four, okay?

MR. T. OSBORNE: Yes.

CHAIR: Mr. Noseworthy.

MR. NOSEWORTHY: We inquired about this particular transaction and again,

because it exceeded the $20,000 as a public work, it was required to be publicly

tendered, so we looked at it from the angle, were these invoices split? I mean,

if you look at the invoice numbers, you have 2442, 2443, 2444, 2445, 2446. It is

like somebody just sat down, wrote it out, tore it off, wrote it down, tore it

off. You had these done sequentially. Certainly, you know, one question we asked

was: Is this invoice splitting? Because that is one way to circumvent having to

comply with the Public Tender Act.

The bottom line on all of this is that we were not provided with any

information as to how it was selected, or what it was for, or anything else. We

could make no determination. We could not put in our report, for example, that

it looked as though the invoices were split to avoid public tendering. We could

not do it because we just did not have enough documentation. The information you

have in this package, though, shows that it is the same date, the invoice

numbers are in sequence, they all just happen to be less than the amount

required to be publicly tendered on an individual basis; however, the whole

package is rolled up and when you get your lead sheet on page 252 when they make

the payment it exceeds the $20,000. You know, we could not conclude either way.

All I can conclude is that there was no documentation to support how this person

was selected, how this company was selected, or what it was used for.

CHAIR: Maybe if the Commission could answer that?

Mr. Murphy.

MR. MURPHY: Again, I said I would not do this, Mr. Chairman. I said I

would not assume, but.... In recollection, I was not involved, but in

conversation, at this particular time and point - maybe Ms Elizabeth Murphy can

relate to this, being a golfer. When the women's tournament was being held, it

was just prior to all of this particular work and there was a great whatever

about flowers and all kinds of landscaping and sods and so forth and so on to

ready the course. As I said to you earlier, Mr. Chairman, this could not happen

now because we have taken corrective action on this, but in expediency in trying

to get the golf course prepared, I can understand this. Mr. Noseworthy, I can

also understand invoices coming in, because this has happened to me over my

private life, from one individual looking like this with consecutive numbers and

so forth and so on. I am not trying to condone this, but I am just trying to

explain to the Committee what was going on at this particular time and point so

the Committee might have a better understanding.

CHAIR: Mr. Osborne, do you have another question on this?

MR. T. OSBORNE: Yes.

I have another question as well, actually, on the splitting of invoices and

it goes to - I am just trying to locate them now - but it is from Murray's.

CHAIR: Okay.

While you are locating it, if I could just ask one question to the Commission

on the previous invoice.

If there is approximately $20,000 worth - they are all here, the invoice

numbers - if we are going to do $20,000 worth of work all dated August 20, all

the invoices in succession, all for landscaping, four different ones for

quotations, adding up to about $20,000, why would it be split down into four

separate ones if it is all on the same date and time, other than to circumvent a

Public Tender Act? Would there be any other valid reason why it would be broken

down as to avoid it going to a public tender? If that is the case, were there

quotes asked for? Was there any public tender done on this? Maybe that question

could be answered.

MR. MURPHY: As I stated earlier, Mr. Chairman, I have absolutely no idea.

I do know that this activity was going on at the time. I was not around but I

know that the ladies international tournament was going on and there was some

period of weeks over this landscaping situation that was going on to improve the

course. Any other information than that, I have absolutely no idea.

CHAIR: Okay.

Mr. Bennett.

MR. BENNETT: If I could just add, we were leading into that tournament

and it was, again, a matter of urgency that we would get it spruced up because

the Province, in my view, was high profile during that tournament. I certainly

cannot answer how they were selected and what tendering process led to them. I

have no knowledge, but if you look at the invoices we talk about, basically the

first three - almost like a progress billing, if I am not mistaken - and the

$300, if you take that, it is around $17,000 and the other one was extra.

Basically, there were two contracts. The first one dealt with the entranceway

coming up, as well as on the course.

CHAIR: Which number was that, Mr. Bennett?

MR. BENNETT: Sorry, I am reading from the same ones, from page 253 on. If

you look at the fifty-seven, the fifty-seven and the fifty-seven, I do not know

why.

CHAIR: Are you saying the first one, invoice 2442, is dealing with - do

you have a breakdown on what these dealt with?

MR. BENNETT: No. What I am saying is, if you look at the landscape quote

on 253, and then you look at 254, and then you look at 255, then if you carry on

and look at the next one, which is 256 obviously, this $300 loan, you add those

together you around $17,000, which is under the limit because over here is a

change order. There were extra flowers being added, and I know that was around

the clubhouse and the practice green.

CHAIR: You have the same date on consecutive invoices.

MR. BENNETT: Yes, I cannot explain why somebody would have gone off - and

suddenly on one day. I know they were there for a number of weeks.

CHAIR: If there was a sequence going on in the number of weeks -

MR. BENNETT: Yes, you are absolutely right, Mr. Chair.

CHAIR: Why would the invoices be in succession? Why wouldn't you have a

space between invoices if they were not all done together?

MR. BENNETT: I have no idea. The point I am trying to make here is the

original contract, within the $20,000 guideline essentially, and this add-on of

$4,755 which was the subtotal of the invoice, plus the tax, comes to $5,468.25.

It was really an add-on to an existing contract.

CHAIR: Is there any information to show that different quotes were sought

from different companies?

MR. BENNETT: No, and I have admitted that, Mr. Chair, upfront. I said,

basically, I do not have that documentation and I was not involved close enough

to the project (inaudible).

CHAIR: Even if it was an emergency and needed to get done, it would not

be uncommon to get two or three quotes anyway. That is often done. It would not

necessarily be confined to one then, would it?

MR. BENNETT: No, my point would be - well, it could be. If you have the

people who are doing the work onsite and then you said: okay, I want to make a

change - and in this case it was certainly to put the flowers in and about the

clubhouse proper. Then you may just say to the existing people: Give us a quote,

and continue on with the extra work. You would not stop and bring in somebody

else at that particular time.

CHAIR: I did not see any other work done by them, other than this two, to

show that they would have been onsite before any of theses invoices.

MR. BENNETT: Yes, you are right here. By looking at this documentation

all you can see is when the billing dates were.

CHAIR: That is right.

MR. BENNETT: There was no question that they were there. If you remember

the flowers at the front gate, if anyone has been up there, all the way up the

sides there. On the course itself there were flower arrangements put down.

Shrubs, basically, when I say flowers. Then because we had the ladies at that

point, they put an add-on because we looked at it and said: Let's spruce up

around the clubhouse a little better because that is where they are holding

their opening and closing ceremonies and the rest of it. So that was the reason

for it. I certainly cannot sit here, with any degree of truthfulness, and say I

certainly know that they were hired under the guidelines, since I just do not

know. I was not involved in this particular project.

CHAIR: Okay, Mr. Osborne, do you have a question?

MR. T. OSBORNE: That was my concern in trying to identify these

particular invoices and identify whether or not there were work orders on these

invoices, why the work was divided up into three equal parts - and there are

other invoices as well - but they obviously add up to beyond the acceptable

limit for a public tender. Is there any supporting documentation or any

documentation available as to why there would be three identical invoices where

the work was carried out at the golf course?

MR. BENNETT: We had none at Thomas Development, is the only thing I can

say.

MR. T. OSBORNE: Okay.

MR. MURPHY: If I might, Mr. Osborne, I will refer you to page 105, which

is a letter from - I do not know if this will help or not, but it is a letter

from the chairman of the board, Mr. Charlie Cook, to the minister discussing

that particular tournament. In the second last paragraph, and in the last

paragraph, he talks about the amount of money that it would cost to host that

particular tournament. I just reference that to you. That does not change the

situation associated with O'Neill's Gardenland, but just to give you some

idea.

CHAIR: This cost though, Mr. Murphy, would be rates that would be in lost

revenues because of green fees and things of that nature because the course was

closed to the public.

MR. MURPHY: I realize that, Mr. Chairman, but again, I say to you that

that funding then was turned into to trying to beautify the golf course.

CHAIR: Mr. Curnew.

MR. CURNEW: I just wanted to respond to one point because I do not want

anybody to assume that the only assumption here was that this was an attempt to

violate the Public Tender Act, because if this was indeed the contract for

landscape design it would again fall underneath the consultancy guidelines and

would fit within that, up to $20,000. Now, I do not know what the - the

documentation is not there so I do not know, but there is a possibility that if

it was a design, and implementation of a design, then it could indeed be

interpreted as falling under the consultancy guidelines.

CHAIR: It is my understanding that this contract for that would not be

under consulting guidelines. Does the Auditor General's office have a comment?

MR. NOSEWORTHY: Yes, that work would never fall under consultancy

guidelines. That work, no matter whether it is a capital work which gives a

$20,000 threshold, or whether it is the acquisition of a service which is a

$10,000 threshold, in either case it is a Public Tender Act issue, not a

consulting guideline issue.

CHAIR: Mr. Osborne.

MR. T. OSBORNE: Thank you.

On page 106 and 107 there is a letter there from Thomas Hopkins. In it they

outline, in the top paragraph, "The TDC financial problems continued into

the year 2000, and to-date none of the invoices valued at $33,333 each,

submitted to them by the Commission for the months of June-October 2000, have

been paid." It goes on to say, "TDC has informed the Commission

verbally that they have been relieved of the responsibility to pay the

management fee for the year 2000, and they have also been given to understand

that the Government will offset the $200,000 through a grant to the

Commission." Which raises a couple of questions. Why would, first of all,

government inform TDC that they were going to be relieved of a debt and a grant

given to the Commission without the Commission being informed? The other

question is: Why would government relieve a debt of $200,000 to Thomas

Development Corporation when they realized that they were financially unstable

or had financial problems?

CHAIR: Mr. Murphy.

MR. MURPHY: Mr. Osborne, I am kind of glad you asked that question. It

gives me an opportunity to delve into some of the honest problems associated.

In 1997, when Thomas and Pippy Park signed a management agreement, there were

two golf courses in St. John's. One was a privately-owned golf course, namely

Bally Haly, who collected from its membership January 1 every year. The other

golf course was a public golf course, that we are talking about here today on

the hill. In my recollection there was absolutely no other golf courses in play

at that particular time and point. Subsequently, Governor's Park, that great

white elephant out on the Salmonier Line, was purchased and publicly supported.

Public dollars supported that particular golf course. Subsequently, other golf

courses, Clovelly was built in the east, and all of a sudden the ability for

Thomas Development to attain the number of rounds in 1997, which was somewhere

close to 60,000, had now started to decrease because of competition. Now, I

would suggest to everybody here that is the way the world is. Competition is

competition, but all of a sudden instead of one public golf course or one public

gas station on the corner, there were now five golf courses on the corner. So,

what happened was the ability of the public golf course to continue to hold

because at 4 o'clock in the morning - and we all remember this, at least I

remember it, and I am sure Mr. Bennett and others remember it - you went to the

hill and you put your ball in and hoped to get a round, and that was John Q.

Public.

You could not go to Bally Haly and play because you were not a member but

now, all of a sudden, there were three other golf courses in and around St. John's,

plus Clovelly, which is two golf courses. So now the public golf course had to

compete with the private. When I say private, yes, because they are held in

private, but taxpayers' money went to help those golf courses in kind with

grants and other ACOA circumstances and situations, which I do not want to get

into. I just want, for the information of the Committee, to know and understand

that the water on the beans changed dramatically. Thomas Development then found

itself in the position where their revenues had decreased, that their inability

to pay the Commission the $250,000 was diminished. It was diminished.

Again it comes back to, you know, as Ms Marshall said, there was a million

three owing at that time in that audit. It is now down to six. The Commission

had to go. Ms Marshall also says it in her audit, in her introduction, "The

majority of Commission operating revenues result from the provision of services

to the public including operation of the trailer park and rental of Commission

facilities. While the Commission has in the past received significant operating

grants from the Province, such grants have been greatly reduced in recent years.

Capital grants have also been provided to the Commission by Government over the

years to fund expenditures for Park development, including acquisition of land

and property from private owners, construction of facilities, and major

improvements to land and property. The amount of capital funding provided each

year varies; however, the level of capital grants have also been reduced in

recent years."

You have to put your mind around the whole picture. The Commission felt, in

losing grant structure from government, that the management agreement signed

with Thomas Development was going to be able to support the Commission to do the

work that the Commission does. The Commission owns the property we are sitting

on. Well, it is in the park. We cut grass, we do hedges, we do it across the

road, we do the university, the college up there, and so forth and so on, and

Pippy Park. You have to decide if the integrity of Pippy Park is worth

protecting.

I leave this in your minds as you go through the audit. Ms Marshall says it

openly and honestly, that our ability, and I say the Commission's ability, to

function with the management agreement that we went into in 1997 with Thomas

Development was diminished by competition.

Obviously, somebody could say that is not good foresight on behalf of the

Commission or Thomas Development. So be it, we will have to let the case rest

there, but I want the Committee to know and understand why the Commission and

Thomas are in the circumstance and situation that they are presently in, in

trying to keep everything together to hold the $10 million equity up on that

hill.

CHAIR: Mr. Osborne.

MR. T. OSBORNE: There were -

MR. BENNETT: Excuse me, could I -

CHAIR: You certainly can, Mr. Bennett.

MR. BENNETT: I would just like to say in that, first, that you are

absolutely right. As part of that restructuring that we did, which is tied into

those two grants that I mentioned and I assume will come up to $45,000 and to

$160,000, we went to government and sought approval to waive the grants for the

two years. Basically, our management fee would have been paid by December. I

work on calendar year, so that is 2000 and 2001. That was subsequently approved,

and that has been. As a result of that approval, government gave its permission

for certainly the land sale that it had outside the new boundaries, if I am

right, Mr. Chair, to be used as revenue for the Commission to replace this,

because it did take a $250,000 home.

Just to bring this up to date so there is nothing behind, we have also gone

to the Commission every year since and said that we cannot pay our current

obligations under that agreement. So we are in default under that management

agreement, there is no question, and we have not resolved those particular

things yet.

The key that the Chairman of the Commission is making, we peaked when we made

this, at 58,000 rounds. I forget the breakdown between the two courses. Just

kind of look at it this way: We are currently running at $40,000. We have lost

30 per cent of our revenue base. The capital expenditures that we are trying now

to resolve, which is with the bank, and so far we have been successful, which is

taking that $1.3 million bank loan to build the facility that we have up there -

the eighteen-hole course and clubhouse - is now down to $650,000 and will be

retired in 2005. So, we have a bit of a whiplash here. We have a very aggressive

repayment on the debt because we want to be able to turn this back to the

Commission - I am talking from Thomas's point of view, debt free - and we are

getting the revenue cut out of us because the proportion of golfers or the

frequency of golf for golfers, when you are looking at $40-plus a throw to play

around a golf course in the St. John's area, except for ours which is closer

to $32, we have lost revenue base.

I am very, very comfortable that it will regenerate because as people move

into the Eastern Seaboard, and this wonderful game, when people start to really

enjoy it, they will have facilities and we will all fill up, but right now we

have the worst of both worlds. We have had two absolutely horrendous years for

golf. There was more wind last year than there was probably in the last ten

years that we have had altogether. If you can recall the August season all the

way through to the end of October, I mean you could not hit a ball into that

wind without it coming back in your face. So people, obviously, went down on

golf.

The year before that we had tremendous snow. As you know, we did not get

started really until the end of June. These things had tremendous weather

impacts as well as the increased competition. Obviously, we cannot pay the

bills. So you say to yourself: Well, who do we pay? Well, if I paid the

Commission, it is $250,000. It is just as well for me to declare bankruptcy

because I cannot pay anything else. I cannot get the feed and all of the rest of

the stuff that we need to reopen in the next year. We took a choice. Government

is aware of it and has accepted what we requested of them. The Commission, like

you said, got some funding from a different source to fill that particular hole,

and that happened subsequent to this particular letter.

MR. MURPHY: Just one other point, if I might, Mr. Chairman.

CHAIR: Mr. Murphy.

MR. MURPHY: Just one other point. What needs to be said is that Bally

Haly, under the Labour Relations Board, has a collective agreement with its

employees. On the hill we have a collective agreement; actually, we have two.

Mr. Curnew has to deal with NAPE and the 15 per cent that government gave NAPE

and try and find the money to pay our staff all summer long. We pay

approximately $4 an hour more to our maintenance staff at the golf course than

any other golf course, outside of Bally Haly, in the immediate area. It is a

tremendous strain to try and stay with that. We provide a lot of jobs for people

up there and we provide a lot of benefits to them. Under the Labour Relations

Act we had no alternative because these workers work hard, but, to my knowledge,

there is no other golf course that is involved in the collective bargaining

process. We have to sit down next year and put a new agreement together. I think

it is next year, John, 2004?

MR. BENNETT: 2004, yes.

MR. MURPHY: Yes, put a new agreement together for our workers up at the

golf course. These are things that you need to know and understand as you look

at the full operation of the golf courses and C.A. Pippy Park. So, I just bring

that to your attention.

CHAIR: Thank you.

Mr. Osborne.

Now, I have numerous questions on the finance end but I think what I will do,

I will let you run your course even if we do get back to the same topics because

I do not want to be commenting on each point. I will probably do mine in

succession at the end.

MR. T. OSBORNE: Sure.

On the same page, 107, of our document. It goes on to say, "To-date, the

Commission has not received; (

a) Any management fees from TDC for the year 2000.

(

b) Any offsetting grant form the Government. (

c) Any official approval for TDC

to be relieved of its contractual agreement to pay the Commission its $200,000

management fee for the year 2000."

Mr. Hopkins goes on to say, "Collectively, these issues have placed both

myself and the Commission in an awkward position. From an audit standpoint, we

will be requested to show the Auditor General what authority we had to ignore

TDC's outstanding debt. We will also be required to account for the transfer

of funds from the Commission's capital account to its operating account."

On page 118, in a letter to Mr. Bennett, it goes on to say - and this letter

was also from Mr. Hopkins. The second paragraph from the bottom it says,

"In my opinion, the Treasurer is continuing to be manipulative in his

handling of TDC's contractual obligations to the Pippy Park Commission."

On the next page, "As you know, the Commission has its own cash flow

problems, and is obviously not in a position to be able to fund the obligations

of TDC for an extended period of time."

As a final comment, I should make you aware that the Auditor General has been

carrying out an extensive review and that in fact, they are going to be in again

today.

Why would the Commission continue to honour the contract that they had with

TDC if they were continuously running into financial problems with TDC, if TDC

continuously had their own financial problems and if they were causing a drain

on the Commission as a result of that? In fact, there were a number of occasions

were government actually provided grants, basically, to bail out TDC and to keep

the Commission in the black. Why would that contract continue to go on to this

day?

MR. MURPHY: Again, Mr. Osborne, I was not around at that particular time

and point, but the same thing exists today. I sense what we are doing is we are

trying to burn the mortgage. Again, we can collapse on this and let Thomas

Development collapse. If that should happen then the Royal Bank owns two golf

courses. I do not suggest that that would be appropriate.

The other thing is, that if litigation should fall, because of whatever

reason, on Thomas Development we will have first option of lien in the

management agreement. So that litigation would obviously have to come to the

Commission before it would go somewhere else. Again, it is a game of survival.

As you see and relate to grants coming over from government to Thomas

Development, since I have been up there, we do our auditing and we know what -

again, it comes down to the balance sheet. It comes down to revenue versus

expenditure. And, do we keep the golf courses going? We have great difficulty,

as Mr. Curnew can tell you, trying to stay alive within the Commission and

respond to the mandate as required of us under the act. So for all intents and

purposes, until - and if Thomas Development tomorrow did not owe the bank, it

would be a viable operation; but, the monies that they have to pay the bank,

until the bank is completely paid off, until that happens, then they are going

to have the shortfall. I mean when you look at what I said to you about 1997

versus today, the revenues lost at TDC are somewhere in the vicinity of

$150,000.

MR. BENNETT: I am just wondering if you can probably, Mr. Chair, start

looking at this as almost a relationship of a father and a son, or another

parent and a child. TDC, three of the board members are sitting in front of you

here; the other three are volunteer, non-paid board. The Commission itself

controls the activity in every which way. We have thought about it, and said:

Well, what happens if we say, in the event of default? Once you acknowledge that

and say: Let's wrap up TDC, kill the agreement. The first thing we have to

deal with is the bank and that would take time and money, as you know, for them

to put in another type of security arrangement that would give them exactly what

they have now. The second thing is: Who do you give it to? Do I go out and hire

a private firm and say: Well, you can run this better. They will come to me and

say: Well, great, you give me $60,000 or $100,000 a year and I will run your

golf course for you; which is an extra expense.

If the problem were one of mismanagement then I would agree, but it is not up

there. I would defy anybody to go up there and look at the relevancy of the

expenditures of golf operations and say there is a better way of doing things. I

cannot do it as well as Bas Dobbin down in Clovelly. If I have a collective

agreement that not only has me paying a salary but an order for callback, an

order for how I can lay somebody off if suddenly we get hit by a midday storm,

then somebody who does not have a collective agreement can come in at 10 o'clock

in the morning and say: It is going to rain too much today, so everybody goes

home. It is far different work in a unionized arrangement than it is a

non-unionized shop. That is nothing against these other courses. We are very

happy that we have competition. It is a great thing for our tourism, in my view.

The Commission has control of this organization. It does not make any

difference if you let John Bennett wild up there. The fact is, the Commission,

through its chair, is also a member of our board. The chief operating officer is

a member of our board. I am a Department of Finance representative who is also a

member of the board, and three independent people with a golf interest. This

board is unlike a private third-party relationship. There is certainly no arm's-length.

If I am not mistaken, and the Auditor General can probably comment on this,

given the fact that the minister appoints the board, in the structure they will

probably look at Thomas Development as being a pseudo Crown agency because the

minister appoints the board, the Commission controls its activities, its

budgets, and everything else. That is one of the reasons we have allowed it to

happen, knowing full well why the problems are caused.

We are not the drain on the Commission. These expenses that he talks about,

for instance, up here were expenses relating to payments that they made for the

account, which was already addressed by the Auditor General in a separate

paragraph. It was our intention at the time, when the management agreement was

signed, to say that all expenses relating to the clubhouse we would pay up

until, basically, the end of the golf season. The former president and treasurer

of Thomas has always taken that point, that we did not really owe you the money

because the lights and the heat bills that Thomas was required to pay in the

off-season were really not a part of it. When you read the management agreement,

it is very clear that it is not the case, that we owe all of that money relating

to heating and lighting that clubhouse even though we have no revenues coming

in. That is subsequently being resolved and paid. Now there have been delays in

payments because again if we are juggling with payrolls and we are juggling with

other expenses and liabilities we have to pay, our parent, like most parents,

will get the brunt of it for awhile until we get money to pay it, but all bills

have subsequently been paid that we owe, except for the management fee.

Sometimes we have had delays because we have been under financial stress since

1996. Please think of us as really a family up there because there is no third

party relationship here; we are all the same organization under two separate

corporate structures.

MR. T. OSBORNE: That kind of leads me to my point, though. Logistically,

would you consider it to be more bureaucracy or more red tape in having TDC and

the Commission - and obviously it is pointed out here where Mr. Hopkins feels

that the treasurer had been manipulative, and it created some headaches for the

Commission -

MR. BENNETT: These points have been resolved but I would go the other

way. It is less bureaucratic because the decisions made by Thomas Development

relating to its operations are made by an independent board. It does not have to

get into them all with other issues and have other people make the

prioritization of which issues they are going to deal with and which not.

MR. T. OSBORNE: When the contract with Thomas Development does eventually

expire, barring the fact that it is subject to renewal, is the Commission

capable of managing the golf course on their own or are they going to have to

re-enter into a contract with Thomas Development?

WITNESS: Or some other.

MR. T. OSBORNE: Or some other entity?

MR. BENNETT: They are quite capable of running it themselves, but they

are going to have to have the key people. You are going to have to have a course

superintendent, there is no question on that. That is a person with special

skills in grass management. People kind of say: Well, it is easy to just go out

and mow the lawns. But everyone who has a path of kids going through their back

lot knows how difficult it is to keep grass on that particular section. Imagine

that in a golf course setting. You need that particular person there. You would

have to hire that person. In my opinion, you would have to have a manager, an

overall manager, because it is a unique function. Whether that person then would

structure into the Commission through the general manager here is something that

I cannot answer at this particular time. They certainly are quite capable of

running that course with the right personnel.

CHAIR: Mr. Murphy.

MR. MURPHY: Yes, thank you, Mr. Chairman.

Just let me remind Mr. Osborne of something else. Remember, under the Labour

Relations Act Thomas Development has a collective agreement in place with

workers. That collective agreement pays at levels. I think there are two or

three levels, I am not sure, but it is based at one level or possibly two.

CHAIR: Depending on the nature of the work of the employee, basically. Is

that what you are indicating, based on the (inaudible) and everything else.

MR. MURPHY: Exactly, Mr. Chairman, based on the (inaudible).

Now, Mr. Curnew's workforce are members of NAPE. The NAPE employees are

probably paid anywhere from $2.50 to $3.00 an hour more under the collective

agreement. So, if and when the time runs down that Thomas Development goes off

into the sunset, so to speak, we have to put a management company in place to

take over the collective agreement between Thomas and the workforce that is up

there now. Unless we are going to pay twice as much as The Woods and The Wilds,

that is what is going to happen. What we are trying to do is to protect

ourselves financially in dealing with two separate collective agreements. You

are always going to have this. If you know the Labour Relations Act, you know

you just cannot dissolve a contract and open the same business. As the Chair

knows, you cannot close a fish plant and open a fish plant, and tear up the

contract, to sit down and try and reduce the salary of workers. That does not

work.

So, when the bills are paid to the Royal Bank and Thomas (inaudible), then

C.A. Pippy Park will have to put in place a management company of some nature to

deal with the collective agreement that is associated with Thomas.

CHAIR: Yes, whoever the successor would be and the successor (inaudible).

MR. MURPHY: Yes, exactly, Mr. Chairman.

CHAIR: Just one question on the same topic, I guess, rather than revisit

it again. I thought about it as I read through this, some of the financial

problems. The thought occurred, and I will toss it out, I think we have just

sort of stepped in there.

Mr. Murphy made reference to: If Thomas Development Corporation collapsed.

For all intents and purposes now, really, the Government of Newfoundland and

Labrador is basically, through funding money into the Pippy Park Commission,

either directly or allowing income revenue from lands sales or whatever the case

may be, to keep them solvent and therefore to keep Thomas Development

Corporation solvent in the interim. If you let it collapse, the Pippy Park

Commission would take over the whole responsibility then. They would assume the

debt and that is who it would go to, I think. I do not think there would be a

legal battle on that end if they default in their agreement, and they could have

defaulted in their agreement had we not waived it in 2000, the $200,000 and the

$250,000 a year; and, to my knowledge, it has been waived since, I think, the

$250,000 overall.

Would there be economies in operation by having it all run under the umbrella

of Pippy Park Commission with the staff as you referenced? Of course, to run a

golf course you need your superintendent, you need to have it in condition for

playing, you need the staff, but under the umbrella of Pippy Park, because we

are dealing with an accountant who spends so much time on each. There is another

question, I think, and I will get into more detail after, but I just want to

keep it on the generality now. Would there be economies, or have you looked at

identifying economies under the one umbrella without have to go through TDC,

Pippy Park, dealing with government? There is a triangle going on, out of one

into another and into another, and I think Mr. Osborne made reference to some

bureaucracy because of having three entities. I know they are all intermingled,

but get it all under Pippy Park roof and look, run the whole operation of Pippy

Park with the necessary personnel needed to do the job and -

MR. MURPHY: I take you back, Sir, to what I just said about collective

agreements.

CHAIR: But can Pippy Park Commission run the collective agreement, for

example?

MR. MURPHY: If Pippy Park takes over, yes, but we have to have another

Thomas Development. I do not care if it is Southern Shore Development. It does

not matter what it is.

CHAIR: Because you have other agreements that might be under the one

employer. Would that be -

MR. MURPHY: Exactly, Sir.

CHAIR: And therefore you -

MR. MURPHY: Exactly. Then, all of a sudden, we would find ourselves with

NAPE salaries on our table, and NAPE salaries - Mr. Curnew, what do our

maintenance workers make now under the NAPE contract?

MR. CURNEW: (Inaudible).

MR. MURPHY: Well, it does not matter but on the third 5 per cent raise

now, as we get up to it, it is significant. When you look at other private golf

courses paying $6.50 and $6.75 an hour to their maintenance people, we are

presently paying over $12 an hour to our maintenance people because they are in

a union. If we dissolve that and move everybody into NAPE, now we are looking at

probably another $2.50 an hour.

CHAIR: Even with some streamlining of management there is probably - and

that probably answers my question that I asked. Basically you are saying there

will be no economies of operation. There probably could be higher costs by

putting them under one. Would that be correct?

MR. MURPHY: That is a fair statement, Mr. Chairman.

CHAIR: That is all I wanted to ask.

MR. MURPHY: That is a fair statement. That would put us in a more

negative position, without question.

CHAIR: Yes.

MR. BENNETT: If I may, and I will be very quick.

CHAIR: Yes, Mr. Bennett.

MR. BENNETT: We have three full-time employees. You need the core

superintendent; that is essential. If you know of any courses, if you have any

investments in courses that do not have a core superintendent then get out of

that investment. You need to have a manager. Now it may be a different manager

because you could have a different structure, but it will be roughly the same

and you need now a full-time accountant. This individual that we have now is a

full-time accountant from us and, as the Auditor General aptly points out, she

is now working full time at the books of that, and this is because we are

getting into things like winter packages. We still have to reconcile our bank

accounts and pay the ongoing expenses.

So there is, of those three people - and then when the seasonal people come

on, we need the seasonal people. I do not think there is anyone at the

Commission idle, in their outside workers especially, so there is no way that

you get a synergy of being able to (inaudible) those two together to save a few

units. It just will not be there, in my opinion.

CHAIR: It is 12 o'clock now and I know I have a whole array of things

that I want to ask, and this probably could go on into the day for a

considerable time, so if in an agreement we could probably take a lunch break

and come back at 1:00 p.m.

MR. BUTLER: I can't.

MS M. HODDER: I can't.

CHAIR: When we set it initially, we set it in the morning in case it went

on all day long. The possibility, I know, was raised at the time. We still would

have four here. If Mr. Butler had to leave with -

MS M. HODDER: I also have to leave. I have a medical appointment.

CHAIR: Okay.

We could arrange, probably, to have a member drop in to meet the quorum

requirements. I do not think that should be a problem over the lunch hour.

MR. JOYCE: Well, I don't know where you are going to get them.

CHAIR: We only need one more.

MR. JOYCE: Well, I have a meeting at 1:30 p.m. I could probably make it

back at 2:30 p.m.

CHAIR: Well, we could recess until 2:30 p.m. and come back at 2:30 p.m.

MR. JOYCE: Are you going to get two -

CHAIR: We only need one. With the two of us, and yourself, we only need

one more.

MR. JOYCE: Where are you going to get the -

CHAIR: Initially, when we set up for meetings, we ask to have it in the

morning because it could be a day-long even, in case it carried over. We set

them in the morning in case we need to go into another day. In that way, we

would not interfere with the next day's hearing. I cleared my timetable on

that basis and, with one exception of our caucus who could not abide by today's

commitment but who would be here tomorrow and probably even back into - because

when we

schedule people to come here, I think it is nice to get it dealt with

rather than have to go back.

MR. JOYCE: My point of view is: I know I have a meeting at 1:30 p.m., and

you have a medical appointment.

MR. BUTLER: I cleared my schedule, but the poor fellow where I was going

passed away and I did not have any control over that.

MR. JOYCE: My suggestion is, let's keep going for the next hour until

1:00 p.m., and if we have to adjourn until another date then we will.

CHAIR: Okay, if we could probably take a ten minute break, I think it

would be appropriate. Then we can continue.

MR. BUTLER: Mr. Chair, that still will not help me.

CHAIR: No, but what about Ms Hodder?

MR. BUTLER: If I am going to be here until 1:00 p.m., it is just as well

for me to stay for the rest of the night because I cannot get back to it anyway.

MS M. HODDER: My appointment is for 1:30 p.m., so I don't know what

time I can get back.

WITNESS: We can go until 1:00 p.m., though. Myself and Mary can stay

until 1:00 p.m.

CHAIR: Even into the evening or night, I am flexible.

MR. T. OSBORNE: I could do with another ten minutes and then I will have

my questions done.

Recess

CHAIR: I would like to get the meeting back to order again.

Mr. Osborne was on questions when we took a recess.

MR. T. OSBORNE: Thank you.

I just have one final set of questions, and that is regarding some work done

by Murray's. I will refer to page 148 initially, where Murray's had put in

one proposal with three prices: one for $11,500, one for $1,800, and one for

$1,850.

It is my understanding that the supply of topsoil and flowers and so on would

require a public tender for any work done over $10,000. Clearly, this is above

the $10,000 range. I will refer to the invoices in which Murray's were paid.

It is for the same work. The prices are slightly different then what was on the

proposal.

CHAIR: What page would that be, Mr. Osborne?

MR. T. OSBORNE: That is on page 299. That was actually a cheque from

Pippy Park, but the actual invoices - I am sorry, on page 300 - where there is

an invoice for $4,945; page 301, where there is an invoice for $4,197.50; and

page 303, an invoice for $4,600; page 304, an invoice for $3,680. I mean these

invoices would add up to more than the $10,000 allowable limit prior to having

to call public tender.

I am just wondering if the Commission can advise us as to why? Again, it

looks like invoice splitting here. It obviously came from the one proposal which

was outlined on page 245. I believe I pointed out earlier. Why would these

invoices be split, and why would a tender not be called for this work?

CHAIR: Mr. Murphy.

MR. MURPHY: When I was vice-chair of the Public Accounts Committee, I

asked the same question of the Libraries Board. I did not get an answer. I am

sorry, to be quite honest with you, Mr. Osborne, I do not know. I was not there.

It was not under my watch, sir. I really cannot answer that. The only thing I

can say is there is a possibility that it was done in separate - but it is your

interpretation that it might have been over and above when it was all priced out

at $11,500, if you refer back to page148, or it was done in short periods of

time.

Let me show you one thing. Since the audit came in, relating to the Public

Tender Act - Mr. A.G. Noseworthy done an audit last year - we have told all our

senior employees, under no circumstances do they do anything without reference

to the Public Tender Act. That is because of the 2001 audit, and that was

specifically in there. Most of that we have cleaned up, as such, from the

direction of the Auditor General in relationship to the accountant and so forth

and so on, and other areas related to the Commission.

I was not there, Mr. Osborne, and I cannot, in all honesty, answer your

question.

MR. T. OSBORNE: I will probably refer to the Auditor General. I mean all

four invoices are dated the eighth month, eleventh day of 2000. The proposal

initially was - all of the work was outlined on one proposal. I wonder if the

Auditor General can shed any light on whether or not these should have been

included all as part of one bill, as part of one proposal?

CHAIR: Mr. Noseworthy.

MR. NOSEWORTHY: This ties back to the whole issue, I guess the crux of

the report, which states that in

summary there was a lack of documentation

available for us to make an assessment as to what exactly happened. As a result

of that, we cannot conclude that it was done properly. It is very difficult to

conclude that it was not because the documentation just did not exist. It looked

like these were in order, in sequence. In fact, if they were, then yes, the

$10,000 limit applies in public tendering and it should have been tendered; but

the documentation did not exist. We asked, and I think the Commission has

already acknowledged the documentation was not available and as a result it is

not possible for anybody to conclude either way. We can only conclude that the

documentation was not available.

MR. T. OSBORNE: Okay.

Thank you.

CHAIR: Ms Hodder.

MS M. HODDER: No questions.

MR. JOYCE: I just have a few. I agree with the AG, things should be done.

Can you, or Mr. Curnew, explain the difference between when you go to public

tender or under the consultants? There is a bit of a discussion here that if you

go under a consultant it is a bit higher? Can you explain that, just very

briefly? It does not matter -

CHAIR: Mr. Noseworthy, or whoever can provide. Maybe we will hear from

Mr. Noseworthy, and if Pippy Park has a comment they want to make too, if you

feel a difference in Mr. Noseworthy's - feel entitled to comment when he

speaks.

MR. NOSEWORTHY: In the simplest form, consultant guidelines relate to the

hiring of professionals who are to provide opinions, provide artistic

definitions. Artists, architects, and those sorts of things, who provide

professional opinions on work, that would be covered underneath consultant

guidelines. When you are looking for the acquisition of a good or a service - if

you are buying an automobile or a micro-computer, or you are hiring somebody to

put shingles on a roof, do construction work, even build a building, you are

into public tendering. That is the simple differentiation right there.

CHAIR: The limit for those, for example?

MR. NOSEWORTHY: The limits, in the Public Tender Act, to deal with goods

and services and public works, if the public work, which relates to capital work

projects, building buildings and that sort of thing, it is a $20,000 threshold;

but, if it is the acquisition of a good or a service, like a computer or

shingles or sods, it is $10,000. Consultant guidelines can relate to any amount

of fee for the consultant. However, the thresholds determine who has to approve

it. If it hits $50,000 you may have to go to Treasury Board. If it is $100,000,

another level of approval, and those sort of things. You have to get quotes and

support the information. So there are thresholds but it would cover all payments

to consultants.

CHAIR: If I could ask one question?

MR. JOYCE: No, I am not finished yet, Mr. Chairman.

CHAIR: I wanted clarification on the answer. I just wanted to - but that

is fine. Okay, we will -

MR. JOYCE: You can -

CHAIR: Mr. Bennett, to that question. I will get to mine after. If you

wanted to on the same question, then we will come back to Mr. Joyce.

MR. BENNETT: I just want to amplify the situation with regard to TDC, or

Thomas Development Corporation, where it deals with the Public Tender Act is

under the management agreement which says that we will apply the same standards.

So we are not directly under the Public Tender Act per se, but we have agreed in

the management agreement to apply it. We would not need, it would seem to me -

and we have never had it, we have never gone that way - Cabinet authority to

hire a consultant, but we would make sure that we went through whatever the

process that the Public Tender Act would go. That is our

interpretation of the

management agreement.

CHAIR: Mr. Joyce.

MR. JOYCE: Mr. Curnew, I think, was going to -

CHAIR: Mr. Curnew.

MR. CURNEW: If we might, yes.

I think the comment I made before was that the automatic, or the idea that

was left was in relation, I think, to Murray's was that there was - obviously,

the only explanation was a violation of the Public Tender Act. The point that I

made is that, and again, I say this in absence of the documentation because I do

not have the documentation, but I just pointed out that that amount may have,

indeed, been a combination of landscape design and supply. A component of that -

again, I would have to defer to the Auditor General's Office, but it was

always my understanding that any design work, whether it is architectural design

or landscape design, would, indeed, fall under the consultancy guidelines. So,

that was the point I was trying to make there.

MR. JOYCE: I am not saying it is right or wrong, because I would not know

the Auditor General and accountants. Has that matter been clarified now, on the

Commission? For example, any services done or any work to be completed, will it

follow the Public Tender Act as recommended by the Auditor General, or to avoid

dispute, as in the past, is it or isn't it? As the Auditor General said, he is

not sure if he can -

MR. MURPHY: Mr. Joyce, be assured that since Ms Marshall's audit came

to Pippy Park we have had great discussions, both Ken and myself, and Thomas

people, openly at our board meetings and what have you, directly related to the

Public Tender Act. Where I sit, as chair, you can be assured that under no

circumstances will we do any purchasing over and above the guidelines of the

Public Tender Act. It has not happened since I have been here and it has not

happened since Mr. Curnew has been there. The General Manager at Thomas

Development is also very much aware of it all.

MR. JOYCE: Just on page -

CHAIR: Did you want to finish yours? I had a question on this topic but I

can wait and come back to it again if you want me to. Whatever you prefer.

MR. JOYCE: No, I will finish my questions because I only have another few

questions anyway. Page 103, please, at the top, the Field House Project, and

this was a response from Dr. Warren to the Auditor General about the fund. I

will just read, right at the top, number 3, "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 that were planned, but

not specifically identified at the same time that the TBA was issued, including

the improvements to the gate entrance and the Clubhouse that you

mentioned."

It was discussed earlier about the money that was given for that. Can we be

sure that the funds that were given were all put towards the improvement of the

golf course in some way?

MR. MURPHY: From my recollection, I came on February 12, 2001, so I

really only had five weeks within that audited year. I am sure everybody knows

that in five weeks we were going through a master plan and just reviewing the

act and trying to get up to speed. I can say, Mr. Joyce, in my dealings I would

suggest to you - and Mr. Bennett might want to comment also - that any funds

that come over, with specific allocations to them, if they did not total out to

that specific allocation you can be sure it was put to good use in the situation

that we were in.

MR. JOYCE: Okay.

I just want to make a clarification, Mr. Chairman, on page 107. I think Mr.

Osborne was bringing up this morning about the letter from Mr. Hopkins

concerning the funding. I just want to make a clarification because from my

understanding, and a few people expressed it, this letter was written to Phil

Warren; it was not written to the Government of Newfoundland and Labrador. It

left the impression that this was advising government, but it was advising Phil

Warren, as chairman of Pippy Park. So the request in there was made to Phil

Warren, not to the Government of Newfoundland and Labrador. I just wanted to

bring that up for clarification. I will just ask Mr. Murphy, I guess -

CHAIR: On this topic?

MR. NOSEWORTHY: It is related to (inaudible).

CHAIR: Okay, I will give the Auditor General an opportunity on the topic.

As we go through each topic, I will be doing that with both sides, which is in

all fairness.

MR. NOSEWORTHY: On the $100,000, that is included in our report as an

issue. We have it in the chart (inaudible) was used for purposes other than

intended. We are not questioning whether or not the money was put to good use.

That is not the issue. The issue is, it was not used for purposes intended, and

the purposes intended are included in the TBA that was issued from the Secretary

of Treasury Board to, in the first instance, the deputy minister of the

department. It says: On behalf of Treasury Board and subject to the availability

of funds, authorities hereby extend it for the payment of a grant in the amount

of $100,000 to the C.A. Pippy Park Commission for the purpose of constructing a

field house. This expenditure will represent a charge against a subdivision, and

it contemplates only a field house.

Another letter to the deputy minister from the Secretary of Treasury Board

says that the department is directed to inform the Commission that the purposes

as outlined above and that no funding was advanced to the Park Commission for

any other expenditures. So, it is very clear in the TBA that the $100,000 was

for that purpose, and that is why we included in the report as an exception to -

MR. BENNETT: Mr. Chairman, is that available to us?

MR. NOSEWORTHY: No. I can give you the reference and you can get it.

MR. BENNETT: The point I am trying to make here is -

CHAIR: For identification, Mr. Bennett asked the question. I think he was

wondering if that was available, what the Auditor General was referring to. I

will give the Auditor General an opportunity to respond to that.

MR. NOSEWORTHY: Yes, it is available. You should be able to get it from

Treasury Board people. For your reference, it is TBA A5515 and that will provide

the clarification.

MR. BENNETT: Mr. Chairman, the point I am trying to make here is, that is

an internal document to government. I would like to see what the communication

document said that transferred the $100,000 from government to the chairman of

the Commission. We would have no access to an internal documentation that was a

directive of Treasury Board.

CHAIR: The point was made - and it looks like we are not going to get

through this today. That is an issue that we really can come back to. In the

interim, I think you might want to be able to pursue it and see if you can have

some extra opportunity to access that.

MR. JOYCE: Can I, myself, who brought up that questioning, get a copy of

that document?

MR. NOSEWORTHY: The Auditor General Act precludes me from providing any

of my documentation to the House of Assembly or any committee of the House, so

the quick answer is, no, I cannot provide documentation to any committee. I can

read from my documentation and try to shed light on some of these for your

information.

MR. JOYCE: Did you check and see if there was any letter after the

agreement that was written to the minister? Because Dr. Warren says here in his

statement - on the same page, 103 - in consultation with the minister. Was there

any follow-up after, a request, if there were additional funds that were left

over? I will just use a municipality. Once there is $100,000 given to a

municipality and they only use $70,000 of it, they usually can request back: Can

we go ahead and use the other $30,000 on another project?

MR. NOSEWORTHY: We inquired and we were told there was nothing. The only

thing that we could obtain was the TBA. There is no other documentation

available to us, and we asked that very particular question because it related

to what we were reporting. We went through a process with - you have to

understand that when this report was drafted, before it was released, we went up

and met with senior officials at the Commission and said: Here are the findings.

If there is something in here not right, by all means explain it to us, or if

there is other documentation we need in order to change our comments. It just

was not provided, it was not available, so this has been validated, it has been

issued. This is the documentation we have. Now, if there is something after

coming up, we have never seen it.

I just wanted to explain that even though Dr. Warren is writing this and says

that, yes, it is okay, the only documentation available says, no, it is not

okay. The $100,000 was for a very specific purpose and it was used for a purpose

other than that. Not that it was not a good project, the gate or whatever. That

is not the issue. The issue is that it was supposed to be just for that. That is

the point we made.

CHAIR: Mr. Bennett.

MR. BENNETT: Just in response, it is an internal document he is quoting

from. The chair at the time had absolutely no access to that document, and the

key document in the issue would be the instructions that were given to the Chair

at the time he received the grant.

If Cabinet makes a decision and it is never communicated, how in the world

can a public servant at all be responsible for that? That is the issue that I

would like to bring up, because the other half of it is important as well.

CHAIR: That is why it is beneficial to have, sometimes, ministers here,

people at the table. Maybe the committee could consider then if we are having

difficulty getting information, I think. Most of the questions, for example, we

have asked were with people who previously were in the responsibility and you

cannot answer the questions. We need, as a committee, to probably identify

several other witnesses I could think of now who were there at the time who

could get answers to some of this stuff for us. Maybe somebody representing the

minister in this particular area too, I think, would certainly be beneficial for

getting answers.

MR. MURPHY: Really, Mr. Chairman, if Dr. Warren were here I am sure he

would be able to speak to this. He would not be able to speak to the letter that

was read by the AG. He would not know that.

CHAIR: No.

MR. MURPHY: He would not know that.

CHAIR: No.

That is why, Mr. Murphy, I said earlier and I have said in Committee here

that I am reluctant to have any former people here unless there are questions we

cannot answer. We will deal with it as a Committee then, and then we will go

beyond that if we have to go to private citizens if we have a problem with that.

We will take that up with the Committee and see if we should not issue a request

to other witnesses also who can shed light on it, if that is suitable.

I think Mr. Curnew had a comment.

MR. CURNEW: I just have a question for my own education here. This point

came up in both the 2000 audit and was addressed, and it came up again in the

2001 audit. I am just wondering, in terms of annual audits, how far back am I

going to be expected to go to be able to respond to the same questions every

year? This is only my second year at this so I would like to know how many years

I am going to have to be able to maintain and respond to the same questions.

CHAIR: Does the Auditor General - from the Auditor General's office in

terms of your auditing procedures - want to shed some light, from your

prospective? I can certainly pass a comment from the Chair's position, but I

am not sure if you wish -

MR. NOSEWORTHY: If issues continue to be issues, if we see similar issues

each year, we will raise the issue. We will not raise the issue in 1999, and

then because the same issue happens in 2000, we told you about it once before.

It does not mean we will not talk about it again. As long as issues keep coming

up we will keep talking about it. If we find another non-compliance with the

Public Tender Act, we will talk about that again. I do not know if that is

exactly what you mean. We do not let anything drop. If we find that every year,

we will talk about it every year.

MR. CURNEW: No, this was not want I meant. It was obvious that prior to

this one - the other ones were fr