August

29, 2012 PUBLIC

ACCOUNTS COMMITTEE

The Committee met at 9:30 a.m. in the House of Assembly Chamber.

CHAIR (Bennett): Order, please!

Are we ready to call this meeting to order?

Good morning, everybody. This is a meeting of the Public Accounts Committee

of the Province of Newfoundland and Labrador. I am going to initially call on

people to introduce themselves before I make a statement.

My name is Jim Bennett. I am the Chair of the Public Accounts Committee. I

will go first to Ms Murphy.

MS MURPHY: Elizabeth Murphy; I am the Clerk of the Committee.

MS BARNES: Sandra Barnes, Clerk of the House of Assembly.

CHAIR: Mr. Brazil.

MR. BRAZIL: David Brazil, Vice-Chair of the Committee.

MR. S. COLLINS: Sandy Collins.

MR. CROSS: Eli Cross.

MR. K. PARSONS: Kevin Parsons.

MR. JOYCE: Eddie Joyce.

MR. MITCHELMORE: Christopher Mitchelmore.

CHAIR: I will also ask the witnesses to identify themselves.

Mr. Pike?

MR. PIKE: Bob Pike, representing Marble Mountain Development Corporation.

MS RUSSELL: Sandra Russell, Acting Deputy Auditor General.

MR. JANES: Claude Janes, Audit Principal.

CHAIR: The evidence is taken under oath, and Ms Murphy will administer

the oath to the people who will be witnesses today.

Swearing of Witnesses

Mr. Robert Pike

Ms Sandra Russell

Mr. Claude Janes

CHAIR: The Public Accounts Committee is a Committee that is appointed

from all parties and the purpose of the Committee is to report to the House of

Assembly on financial matters involving public spending in the Province.

The Committee is chaired by an Opposition member and it is made up of all

three parties. There are four government members. Mr. Brazil is the Vice-Chair

and he will say a few words. Mr. Joyce is the other member from the Opposition

who sits on the Committee, and Mr. Mitchelmore is the other member from the

Third Party who sits on the Committee.

Questioning of the witnesses and the witnesses who are here today are not

under subpoena; they are here voluntarily. The matter before the Committee today

is to explore the findings of the Auditor General in relation to the Marble

Mountain Corporation.

Questioning will start with Mr. Joyce from the Opposition. Questioning will

be done in approximately ten-minute intervals and we will alternate back and

forth.

Before we begin questioning, Mr. Brazil would like to say a few words.

MR. BRAZIL: Thank you, Mr. Chair.

I just want to thank the witnesses for appearing and to reiterate what the

Chair had said. This is about looking at the accountability in the Auditor

General's report, to see how we move forward to improving the financial

accountability of all entities that the Auditor General does the reports on, but

particularly in this case, Marble Mountain.

I want to thank Mr. Pike, yourself and your staff, for very promptly putting

together a response to the questions asked by the Committee. We look forward to

some open dialogue and some good responses to see how we can address any of the

shortcomings or any of the issues put forward, and help move Marble Mountain

forward as a viable entity.

Mr. Chair, those are the only

comments that I have as a lead-in, particularly as this is our first hearing in

a number of years.

CHAIR: Unless anybody has any questions of the Chair, I will begin

questioning with Mr. Joyce.

Mr. Joyce.

MR. JOYCE: Okay, thank you very much.

As a person from out on the West Coast, I am fairly familiar with Marble

Mountain and I will get right to the financial position. In 2008 there was a

deficit of $126,587 and in 2011 there was a deficit of $563,059. Can you explain

the difference in range in such a short period of time?

MR. PIKE: Where are those numbers again Mr. Joyce?

MR. JOYCE: That is in the Financial Position, page 325. It is under the

Executive

Summary.

MR. PIKE: I guess I have the shorter version because I only have the

Marble Mountain section, but just give me the numbers one more time.

MR. JOYCE: It is $126,587 in 2008 and in 2011, in three years, $563,059.

MR. PIKE: Just bear with me for one second.

I think a lot of that has to do with two main factors. From 2008 to 2011, one

big thing would have been the difference in the weather. You would have had a

shorter season for the winter product, being skiing, which is the main product

for Marble Mountain. You would have had a shorter season; you would have had an

increase in cost because of snowmaking costs, which has a significant impact on

the bottom line; 2011 would have been the second year of bad weather. Of course,

the way it is in the ski business or even in the snowmobile business, I guess

and all winter product, is that when you have a bad year, you do not really see

the full impact on that until the following year.

The other thing that would play a big

part in those numbers is that back in

2008 you still had a lot of benefits from the European market, and it had a

significant benefit to Marble Mountain. You were seeing more dollars being spent

on day passes, for example. You were seeing more dollars being spent on rentals.

You were seeing more dollars being spent on food and beverage, and more dollars

being spent on lessons. Once the European market died off, because of the issue

with direct flights and so on, it really had a significant impact on the bottom

line of Marble Mountain.

MR. JOYCE: Yes. As most people know, the major operating cost for Marble

Mountain is the maintenance of the hill; as you know and I know, one of the

major costs.

In the AG report it mentioned September, for a five-year period, based on a

request for expressions of interest. The contract expired in 2005. It was

replaced with a three-year contract and then subsequently renewed for a two-year

period which expires in 2014. In that, it went up - $658,000 has been paid in

management contract fees without any further request for proposals or public

tender.

Do you think Marble Mountain should put it out, just to see if they can get

it cheaper to try and help bring down the cost? Because it is the major cost for

Marble, as you know, is the maintenance of the hill itself.

MR. PIKE: Yes. Marble Mountain certainly intends, at the expiration of

that contract, to go to market.

When I look back in the past, in 2000 there had been expressions of interest

and they looked at all options at that time. The individual who manages the

outside operations was hired at that point in time for a five-year period.

Subsequent to that five-year period, there was another contract let for three

years. There have been, subsequent to that, two-year extensions.

I think the board at the time felt very comfortable that they were getting

the best bang for the buck. Operating the outside operations at Marble is a very

unique skill set. The individual they have doing that right now, it is safe to

say, certainly knows the operations like the back of his hand. I would also say

they have been getting some good results.

With the poor weather conditions, of course, you have to make snow. Once you

make snow, the whole grooming process is different. The product that has been

delivered in the last number of years has been second to none in the country. I

think that is mainly due to the leadership of the individual and the expertise

of that individual.

Also, at Marble there is a lot of infrastructure. A lot of that

infrastructure is old and requires a lot of maintenance. In some cases, it is

not easy maintenance. In some cases, they are out there and they have actually

manufactured parts.

The individual in question has a good understanding of the facility; what is

on the ground, what is underground when it comes to the piping, where it is, and

repairs, and what is above ground, being the lifts and the electrical on those

lifts. You have motors; you have a lot of different infrastructure. The board

has been satisfied that in times of need that individual has really come to the

table and has proven that he is very valuable to that operation.

MR. JOYCE: Someone from the West Coast, and I have it in the AG's report

here. In 2005 and I know, Mr. Pike, you were not chair at the time, "the Board

Chairperson stipulated that normal winter operations required operation

management services for 32 weeks."

Isn't that a bit long for a winter season for Marble Mountain? I know you

were not the chair at the time and this is no reflection on you, but management

services for thirty-two weeks for Marble Mountain for winter operations?

MR. PIKE: Is that the correct number? I seem to think it was more. It

seemed to me to be a different number than that for thirty-two weeks, yes.

If I think of the operation, Mr. Joyce, it is more than you have to look

at, how long is the season open for? In a good season, they are usually open

from mid or just they try to be open by Boxing Day and open until Easter. You

have January, February, March, and into April. So you are pretty close to four

months.

In addition to that, there is a lot of outside work that has to be done at

the hill. First of all, in snowmaking situations, if you start in mid-December,

snowmaking usually starts to get that product in place back in November. Once

the season is over at the end of the year, there are a number of weeks of I will

call it, preventative maintenance and securing things for the off season. Things

have to be oiled up; they have to be sort of decommissioned.

Likewise, on the other end, long before you get into even the snowmaking, the

actual lifts and structures have to go through inspections. I think it is a

third of the chairs each year has to be taken down and go through

non-destructive testing. All the lifts and the motors and so on have to be

inspected and annual maintenance and everything done. All of this has to be

documented from the insurance perspective. There is a lot more work to the

outside operations than one would think of, if you just look at the snow

conditions. That is the reason for the extended period.

MR. JOYCE: Does this company do all that work also?

MR. PIKE: Yes.

MR. JOYCE: They ensure the chair lift, the maintenance of the chairs?

MR. PIKE: That is right. The contract with this individual is to manage

outside operations, all inclusive. That takes into account all of those things.

MR. JOYCE: I know this individual and I know he definitely knows the hill

well.

MR. PIKE: Yes.

CHAIR: If we could go to a government member now, that was a little over

ten minutes.

MR. BRAZIL: Thank you, Mr. Chair.

Mr. Pike, you noted in your response that there are some cost-saving measures

and increased revenue streams that you are about to implement. Can you just

elaborate a little bit more on those, at what stages you are and what you plan

to put in place?

MR. PIKE: I guess the most immediate example I could give you is that I

am here by myself.

MR. BRAZIL: Okay, fair enough.

MR. PIKE: I thought of bringing in the General Manager and our Manager of

Finance but, of course, like me, they are relatively new. We had this report, we

prepared our response to the report, and we are happy to be here to be able to

answer any questions or inquiries that you have. The information is what the

information is. I made a decision, in the interest of cost, that I would come by

myself.

In addition to that, I have instructed the managers of the operation to do a

line by line look at every piece of the operation, look at ways to find costs.

Marble Mountain, without the current government grant, would not be able to

continue. I suggest to them that they need to prepare in the event that if that

grant were not there, what would we do? We have to start operating like private

industry. We have to think like private industry. As such, we have to look for

ways to increase revenues, and on the other side of the equation we have to look

for ways to reduce costs.

On the reducing costs, we have been looking at some things. For example, in

the middle of the week when things are slower, when it is not a week like Winter

Carnival and those type of things, do we need all three lifts operating? Can we

get by with two lifts operating? Can we get by with one lift operating? As long

as, in that time of the week, we are able to get access to the majority of the

hill and there are no lineups, then the thinking that we are trying to instill

is that there is no justification to have everything running. So that would be

an example.

We have reconfigured the cookhouse, based on some customer input and also

based on a review of just the way that the lineups work and see if we can have

things more efficient. In the past, as good as it was from a product

perspective, anybody who came into that cookhouse and ordered something for

lunch had it made fresh. Of course, that has an impact on your lineup. We are

asking them to look at ways so the things that sell the most, can those things

be prepared in advance and in advance of that rush-hour type thing.

Last year, we had planned to have a new chip fryer in place prior to the

season, but there were delays in delivery. We did not get it up and running. Our

plan with the upcoming season is that, in your cafeteria where you have all of

your food and so on, we will have a separate line for fries only because that is

a popular event. Rather than have somebody who only wants fries standing there

while other people are getting their lunch, we will be able to process things

quicker.

It is the same thing in the bar. We are looking at the bar with putting in

more draft beer machines. Rather than having them back on to the customers, we

will relocate it and have it in the front. While you are serving one, you will

be able to be talking to the other individual. It is just ways of trying to

improve the productivity and increase efficiency.

We are asking that for the whole operation. We are looking at the lift

tickets. Do you need two people on that front counter when historically you look

back and you see that you do not have busy times from, say, a Tuesday to a

Wednesday? So everything is under review.

MR. BRAZIL: Perfect.

I do like the concept where you are moving forward of treating it like a

full-fledged business, particularly around not being reliant on government

support as part of it. Obviously, government gives supports for reason, because

we see the benefits of Marble Mountain and what it does for that part of the

Province from an economic point of view. I do like the point that you did note

that your plans are not to increase the current debt, but there is a looming

debt that you have inherited.

Will there be any plans down the road to try to address how you get to that

point because of the interest that is being paid on that current debt?

MR. PIKE: First of all, on the debt, I think it is worthy to note for the

current board and staff, and even previous boards and staff, is that debt was

built up in a three-year period. I think it was from January 1999 to June 2003.

That was around and following the Canada Winter Games. Back then, you had a

different board, you had different staff, and it was different times. I would

even go so far as to say it was a different government. The bulk of that debt

was incurred during that period. Since then, that debt has remained relatively

stable.

In recent years, the goal has been not to increase that debt. The current

board, and even the board before it that I am familiar with, it was their goal

not to go into that debt at all, and they have been very successful in doing

that. Unfortunately, that debt brings with it in the range of $100,000 a year

interest, which hits us on our operating line.

Also, unfortunately, the corporation is not in the position to reduce that

debt; however, going forward if and when we have any excess revenue, of course

that is where it will go. I do not hold up a lot of faith for that in the near

future because there are a number of things that we have to do on the safety

side, the liability side, customer service side, and looking in the long-term

viability of the product that we are trying to put in place.

We have had some preliminary discussions with government during Budget time,

the last couple of years, you would raise that; but, of course, the various

departments are trying to balance their budgets as well. I do not think that the

department was in a position to have $1.9 million that they did not have

anything else to do with it, that they could put down on that debt, which

certainly I would like to see but you have to be realistic about it as well. It

is having an impact on our operating line.

MR. BRAZIL: Thank you, Mr. Pike.

Mr. Chair, it is good for me for now.

CHAIR: Mr. Mitchelmore.

MR. MITCHELMORE: Thank you, Mr. Pike, for coming here today. I have to

say that I am disappointed by the responses that you provided in the letter to

Mr. Bennett, our Chair of the Public Accounts Committee, to the six questions.

It certainly lacked any additional detail, really, than what was already in the

Auditor General's report.

For a Public Accounts Committee which is an oversight committee of making

sure we are getting the best value for government dollars, our tax money, we

needed additional details. I am going back to the original question in the

letter. What is the process of identifying examining alternatives to the current

debt structure in order to reduce interest cost, and does the corporation have a

long-term plan to address the debt and debt servicing issue?

That is a big concern. Right now, you have an operating line of credit at

$1.9 million. Has that figure changed and what is the interest rate that you are

paying for a provincial guaranteed line of credit?

MR. PIKE: Well, to your question, I do not know that there is much more

that I can add than what I just previously stated when I was talking about that

debt, in that the debt is there. It is a debt that has been in place for a

number of years. It is a debt that is guaranteed by government. I do not know

the exact interest rate, but I do know that it is very low.

MR. MITCHELMORE: Does the Auditor General or Deputy Auditor General know,

or does somebody in the government department know, what the interest rate is?

WITNESS: We are not sure. We would have to refer to our work papers to

get that information.

MR. MITCHELMORE: It is something I would like to have provided to the

Committee.

Do you know, Mr. Pike, if the operating line of credit has increased from the

$1.9 million since the report? Is it near max right now, based on your financial

statements?

MR. PIKE: No, it has not. In actual fact, it has gone down. I did look at

the number; bear with me for one second. It has gone down by about not much,

but it has gone down and not up, I do know that. Just bear with me now and I

should be able to

MR. MITCHELMORE: Have you made a request to the Department of Finance or

to anybody to look at a lower interest rate for this type of loan? Given our new

fiscal position in the Province, bond ratings and things like that, we should be

at the absolute lowest possible rate for almost $2 million in debt you are

carrying.

MR. PIKE: While I cannot quote you the interest rate, I do know that it

is low, because I remember when I did see it a year or so ago I would have liked

to have had it for myself.

MR. MITCHELMORE: Has a request been made to government for any type of

debt relief, or are you looking at you get a $400,000 subsidy. Are you looking

at seeing if that can go away anytime soon or are you going to be continuously

reliant on the $400,000 of subsidy from the government, and are you looking for

an increase?

MR. PIKE: Just to answer your first question earlier. The debt at the end

of 2011 was $1,889,000. At the end of the last fiscal year it was $1,884,000. It

had gone down by $5,000. I think the positive thing there is that we have

committed to ourselves to hold the line on that debt and we are successful in

doing that.

As for any formal requests, no; my understanding is that interest rate is

extremely low and I do not know that there is much room for improvement on it.

WITNESS: If I can add; yes, we have looked through what we have here and

we believe it is around prime, the interest rate.

MR. MITCHELMORE: Okay.

I have some concerns then about the two snowmobiles that were purchased

costing $22,469, financed over a three-year period at a rate 6.59 per cent

interest, costing your corporation over $10,000 in interest. Wouldn't it have

made sense to just carry the additional debt load? Would it have been cheaper to

look at other financing means, because that is a higher interest rate?

MR. PIKE: I think the snowmobiles in question were not purchased, I

believe they were leased. Leasing equipment for an operation like Marble, for

some things, still makes sense when you look at it, especially the equipment

that is used in outside operations. If I look at their snowmobiles, if I look at

their groomers, especially the groomers are very expensive machines. When they

are used on a mountain and they are used for work and not for pleasure, this

equipment gets used to the full extent of the word and after it is a few years

old maintenance costs gets extremely high.

MR. MITCHELMORE: Okay.

MR. PIKE: I guess it is a combination of, when you do the analysis it

makes sense to lease some of this equipment so that you can change it out. You

can get rid of it around the same time that the maintenance costs start to get

high and hit you on your operating line.

Also, to some degree, some of that pressure comes from the fact that the debt

is there. We have made a commitment to ourselves that we do not want to get into

that debt; we do not want to increase that debt. We are actually operating every

means we can as if it does not exist. That is sort of the thinking we have

instilled in the staff.

MR. MITCHELMORE: Okay.

The Auditor General's report asked questions about your fuel-tracking system.

Do you know what actually happened to your diesel fuel and all the fuels?

Because it had pointed out that two snowmobiles and an ATV had used $4,350 worth

of fuel. Is there any type of tracking for fuel? To your knowledge, do you know

if any of this fuel has been used for personal consumption where you do not have

adequate tracking records?

MR. PIKE: I cannot guarantee you, no, looking back. I think in our

response we have indicated that we will be putting a tracking mechanism in

place, and we will have that in place before the ski season starts.

I think it is worthy to note, that while I was not able to report on that in

a positive way when I replied to the Chair's questions, none of that equipment

gets used during the off season. There should be no fuel being used in the off

season.

MR. MITCHELMORE: I would like you to explain your quote in parenthesis to

the Chair, which, in your response, you said, "As part of MMDC action plan, we

will develop a process to monitor fuel consumption that includes general ledger

accounts." Then, in parenthesis, you had sent to the Chair, "(has this been

developed yet? If not, is this something that could be created rather quickly

and we report positively that we have it done?)"

Was that left in there by error?

MR. PIKE: Yes. I accept responsibility for that. I signed that letter and

I sent it. I think that is an example of good help is hard to get and you get

what you pay for. In that, I did not have anybody do that letter and send it off

for me. I did it myself, I did it in haste. It was during my peak construction

season in my normal job. I do not have a lot of spare time in the summertime and

I was doing that to get it out the door to meet the timelines that the Chair had

requested, and yes, it was an error.

When I had done the draft and sent it off for input, I did ask those

questions. I felt well, is this something that we can do now? Of course, it had

not been done. I was reminded that it is one of the things that we are working

on and we are looking at. This equipment is not being used, so we are not going

to be in any worse position if we do not have this done until the fall.

MR. MITCHELMORE: I think it is a very serious statement for this to be

placed in the letter in your capacity as Chair. I wonder: has the board met to

actually discuss these types of things? Have they met?

MR. PIKE: Yes. Actually, if you would not mind, maybe I could make some

comments on the actual Auditor General's report and what we are doing as a

board.

First of all, with respect to the Auditor General's report, I think it is

understandable that as a board we were somewhat disappointed with the results.

That being said, we accept the report, and we have accepted the report to the

board. We thanked the Auditor General for the work they have done and their

efforts, but at the same time, we, as a board, and certainly I, as a Chair, view

this as a very positive exercise.

MR. MITCHELMORE: Mr. Pike, I would just like to cut in because I have a

very minimal amount of time and some very specific questions. You will get an

opportunity to maybe explain those types of things, but -

CHAIR: Mr. Mitchelmore

MR. MITCHELMORE: My time has expired?

CHAIR: Yes, but there will be ample opportunity for questions.

MR. MITCHELMORE: Okay, thank you.

CHAIR: A government member.

MR. S. COLLINS: Mr. Pike, I was wondering if you would like to continue,

because I was interested in where you were going with that, so if you would like

to continue with that train of thought, if you can do it within a limited amount

of time.

MR. PIKE: Yes, what I was about to say is that we view it as a positive

exercise and one that brings with it lots of opportunity. It is important to

note that Marble Mountain's management team has experienced unprecedented

turnover in the last year or eighteen months. Unfortunately, we were going

through this audit with new staff. In lots of cases, we as a board feel that the

decisions made back when were made with full insight and full approval. In a lot

of cases, there was a lack of documentation or there was a lack of being able to

find the documentation. That was one of the things.

Since the report, or around the same time, we have a new General Manager.

Certainly since the report we have a new Manager of Finance and we have set a

new course for ourselves. We have a new team in place and we are focused on

safety, we are focused on reliability, and we are focused on the whole customer

experience.

In the last year alone, we have done a lot of things to improve Marble

Mountain. We have made improvements to our snow-making capabilities. We have a

newer, safer, customer-friendly Magic Carpet to replace the old T-bar because it

had reliability issues, it had safety issues, and it had issues for the

customer. It was a thing that often turned people away from the sport. We are

getting some rave reviews on that.

We have started on a ten-year infrastructure plan to rehabilitate, refurbish,

and try to extend the useful life of all of the equipment out there that is

aging. Just last year alone, we have improved lift reliability on one of the

lifts.

We have a new marketing campaign in the last year. We have engaged in a new

company. Marble Mountain now has broken away from the full Department of

Tourism, Culture and Recreation advertising campaign where you have the big

market and the big contract. We have carved off our own little niche and we have

engaged our own marketing group, which is more focused on the product itself.

MR. S. COLLINS: If I may interject there, because that was actually one

of the points I wanted to raise, or a question I wanted to ask, with regard to

the marketing, what do you spend annually on marketing and what positive returns

have you seen from it? Because I know we have all heard it on the radio; it is

great advertising. I am just wondering: Can you put a number to the returns, the

positive returns from that marketing?

MR. PIKE: Well, sometimes it takes a few years before you really start to

see the impact of marketing, and it is hard to see as well when you are coming

off of a couple of bad years, weather wise. We think that we are focused in the

right directions.

Our new marketing team I think we spend $200,000 a year. In the past year,

our main focus has been on the St. John's market. In our plans we plan to focus

on the local market, which I will say is within two hours of Marble Mountain,

the St. John's market, then you have the rest of the Island, then you have

Atlantic Canada and then you have beyond that. Those are the ways that we look

at it.

Last year we focused a lot on the St. John's market. We focused on radio, on

have enhanced, within the past year, Marble's Website: www.skimarble.com. We are

now in Facebook, in Twitter. We have an iPhone app. We have a blog. Of course,

with the blog you have almost instant communication with your customers. So you

are able to explain things when things are not going right or if somebody has an

issue and they put it on the blog, you are able to respond to it. So you are

given the opportunity to recover. Those are some of the things that we are

doing.

In the report, there are a lot of policy and procedure issues. I was not able

to respond positively as to what we have accomplished in my response to the

Chair, but what we have done we recognize there are a lot of policy issues.

There are policies that had not been adhered to, there are policies that need to

be tweaked, and there are new policies that need to be written. We have formed a

subcommittee of our board to look at all those policies. Where we are at to

date, is that that subcommittee has come back with a first cut of these

policies.

At our last board meeting, as the full board reviewed those policies, we gave

a lot of feedback, we gave a lot of input and we gave direction. So, now that

subcommittee has gone away and hopefully by September-October time frame they

will be back with a close to final draft that we will have another look at and

then we will have them ready to go before year-end.

What we did, we went through the Auditor General's report, we did our

response, which of course was printed in the report, then we took our response

and we did our own internal action plan with assignments, and our goal is to

have each and every recommendation and each and every issue that is raised in

that report addressed by the end of this year.

MR. S. COLLINS: Sorry, I do not mean to be abrupt, but of course I am on

a limited time schedule, but thank you.

MR. PIKE: Yes.

MR. S. COLLINS: You make reference in your responses I am referring to

the response back to the Chair question 2, that as part of the MMDC action

plan you will review and update current purchasing policies. You go on to say

that the process will include seeking the help of the Department of Tourism,

Culture and Recreation comptroller. I am just wondering if you can expand on

that a little bit, and with regard to it do you plan to adhere and adopt the

recommendations that will come forward?

MR. PIKE: Yes, we certainly do plan to adopt the recommendations

MR. S. COLLINS: Wholeheartedly, everything across the board, or is it

something you bring back to consider and take those that are appropriate, or is

it just a

MR. PIKE: No, I think we recognize that there were some things that just

did not have the documentation to show they were being done, there were other

things that could have been done, and there were some errors in some

calculations and things that were not done on T4s, for example. All of those

errors have been addressed already. We have new staff in place. We have met with

those staff. We got them to ensure that they are doing things as we are supposed

to be doing.

With the consultation with the department, a lot of that has to do with the

purchasing and just understanding the government procedures. For example, when

you only have one supplier, then what do you do? Within government, there is

proper paperwork and so on that has to be done. Well, the new staff, of course,

not coming from government would not be familiar with that. So, in our response

what we said is that we will consult with the comptroller within the department

to help our staff understand the correct procedures and to give them guidance

and to help us make sure that we are doing the right things and getting things

put in place right, upfront.

MR. S. COLLINS: Okay, fair enough.

Mr. Chair, do I have time to ask another question?

CHAIR: Sure.

MR. S. COLLINS: Not to beat a dead horse, I understand, obviously, safety

takes precedence as a liability and it is something you always have to look at

as a corporation, I am sure. That precedence over debt servicing, I am just

wondering we see you are taking positive steps toward a more fiscally prudent

operation. I note that somebody had asked a question before. Do you see anywhere

in the near future where you would start servicing that debt as opposed to

letting it just continue?

I know it may be hard to say today, but would it be reasonable to say that

would be part of an action plan? Maybe, no, it is not something we could address

in a short term but perhaps we would turn the corner in five years time,

whatever the case, where we would start addressing that service. Let's start

addressing the debt.

MR. PIKE: Yes. Well, there is no short-term solution to it.

MR. S. COLLINS: No.

MR. PIKE: Also, we have some other issues that we also have to deal with.

Last April, when I was appointed Chair, that was one of the reasons going back

to somebody's question on the amount of time that the outside operational

manager is around. When I became Chair I had him stay around for an additional

three weeks, it might have even been four weeks, because I wanted a full

assessment done. I had asked some questions that I was not quite satisfied with

some of the responses.

What I did, I took some time myself and I went out. Myself and the new

general manager, and the outside operations manager, walked every inch of that

hill. We climbed structures, we looked at the intake, we looked at the pump

house, we looked at the condition of the villas, we looked at the lifts, we went

up and looked at every electrical motor, every belt. We identified what we had,

and where the strengths and weaknesses were.

There is approximately $35 million worth of infrastructure associated with

Marble Mountain. Some of it is fairly old. Like anything, if you do not maintain

your capital investment it will deteriorate and it will have to be replaced. I

do not think that Marble, and I do not think we have the support where we would

be able to go out and just start replacing those lifts. So we have to make sure

that they are adequately maintained.

You have to spend money on capital investment to have a good, useful life. If

you spend the right money in the right places, you will be able to extend that

useful life. So, we have created a ten-year plan. We have been working with the

department; we have presented our ten-year plan.

In addition to the operating grant that we get, we also get a capital grant.

It is not a guaranteed thing. We have to present, but I think the department was

pleased that we had taken this long-term approach and I think it makes good

business sense.

Also, if you look at the operating lines, over the last five years, I did a

calculation that the lift-repair line went up in the last five years somewhere

over 100 per cent. Those things were eating away at our operating dollars as

well. So, not only are we going to improve safety, are we going to improve the

reliability, are we going to improve the customer satisfaction, but we are also

going to have a positive impact on our operating line. Otherwise, those

operating costs then you are fixing things when they break in peak season and

it is at all cost to get it done. Again, we are trying to step back and take a

business approach to this Crown corporation.

MR. S. COLLINS: Okay, thank you.

CHAIR: Mr. Joyce.

MR. JOYCE: Thank you.

Mr. Pike, I go back to the extension for the contact which was, at first, for

a minimum of sixteen weeks in 2005. Again, I acknowledge you were not there as

chairperson. Can you tell me if that was approved by the board? Because here in

the Auditor General's report it says the board chairperson stipulated. Can we

get the minutes? Can you tell me how many meetings were held per year with the

board itself?

MR. PIKE: Back in 2005

MR. JOYCE: From 2005 up until you took over as Chair, are you familiar

with how many meetings? Because even in the Auditor General's report earlier

there were things that were not signed off by the board. The minutes were not

signed by the board and the board was actually expired. Is there any way that

you can send us a copy of the board minutes?

MR. PIKE: Yes.

MR. JOYCE: Because in such an expenditure like this here, I am assuming

it was approved by the board with everybody present and everybody agreeing. Once

again, I am from out in that area. I think people would be a bit surprised when

they hear that the winter operation took over forty weeks out at Marble

Mountain.

MR. PIKE: It is my understanding that those contracts were approved by

the board. As for the number of board meetings, again, it is my understanding

that the board was meeting fairly regularly, as often as once a month. Again, I

do not think they met every month, especially during the summer period, but for

the majority of the year they had a meeting.

MR. JOYCE: Can we get a copy of those minutes?

MR. PIKE: Pardon me?

MR. JOYCE: Can we get a copy of the minutes of the meetings for these

expenditures?

MR. PIKE: I can certainly take that under direction and see if I can get

them for you. I do not know where to put my finger on them at this point in

time, but I will request those.

MR. JOYCE: It is a major expenditure, and you assume that it was approved

by the board, the full board, to have such expenditure.

MR. PIKE: Is this, Mr. Joyce, the 2005?

MR. JOYCE: It is 2005; May 2005, yes, when it was done. In the AG report

2010-2011 it was extended for forty weeks, and in 2009-2010 it was thirty-nine

weeks for winter maintenance.

MR. PIKE: I will do my best to get that for you, Sir.

MR. JOYCE: Thank you.

Once again, I know you were not Chair. In May 2010 to October 2011 there were

a lot of additional expenses. They were paid out to a contractor, like repairs

to the vehicles, cellphone charges $2,000, insurance, and vehicle rentals

$7,000. Then, in the AG report, "These expenses were not covered by the contract

and there was no assessment to determine whether the Corporation was getting the

best value"

My question to you is, for a lot of the expenditures now, is there a system

put in place by Marble Mountain to ensure that things are either put out on

tender or by quote to ensure that from here on in things will be done according

to government policy, and also to ensure that Marble Mountain gets the best bang

for its buck?

MR. PIKE: Yes, there is.

MR. JOYCE: Okay. Can you explain what procedures are put in place? Is

there a new comptroller put in place or new procedures? Is it following

government procedures?

MR. PIKE: The staff now has been reviewing the Public Tender Act and the

requirements. They have been instructed and they have been following the proper

procedure since this report has been written.

MR. JOYCE: Okay, perfect.

MR. PIKE: And instructed to do so on a go-forward basis.

MR. JOYCE: Okay.

In a lot of instances in here, the Auditor General mentioned even smaller

things, like some services. Are there services included? Because there is a

certain limit that you have to go to tender, and a certain limit that you just

have three quotes. Is that also included in your new structure to ensure the

services are included?

MR. PIKE: Yes, it is.

MR. JOYCE: Okay.

Also, when you notice, in the Auditor General's report, "The Board minutes

were not signed as approved and the terms of appointment for eight Board members

had expired. These members continued to serve on the Board without the required

approval of the Lieutenant-Governor in Council to extend their terms."

Has that been taken care of to ensure that all board members are properly in

place and properly approved by the Lieutenant-Governor in Council? Because,

again, that goes back to my first question: How many board meetings did they

have? Were all these expenditures and the extension of the contracts approved by

the board? Who was on the board to ensure that these expenditures fell within

government guidelines? Because it is very obvious, with the extension from a

contract from sixteen weeks going up to forty weeks, I am assuming it had to be

approved by the board.

MR. PIKE: There are two parts to the points you make, Mr. Joyce. First of

all, the minutes not being signed by the general manager and the Chair; that is

correct, they were not. They have been since, but what I will say is that while

they were not signed and that was probably an oversight by new people involved

each meeting, the minutes are prepared and sent to the board, at the following

meeting one of the agenda items is always adoption of the previous minutes.

While they were not signed, there is documentation that there was a motion put

forward and they had been approved by the full board.

The second question you have on the terms of some of the board members, you

are correct in that some of the board members' terms are currently expired. It

is my understanding that the department or government has looked at that and it

is now in the hands of the minister and the new appointments are working through

the process. You are probably more familiar with the process than I, but it is

in the works from what I understand.

MR. JOYCE: A lot of times in Public Accounts hearings it is to try to

highlight some things and improve things. I know I will have another time later

I have a few more questions later. Can you give the Public Accounts and the

public assurances that with the AG report and with the new procedures put in

place by Marble Mountain and yourself in particular, can you give the public and

the Public Accounts more assurances that things will be followed according to

the Public Tender Act, through the proper procedures, that Marble Mountain now

will be looked at in a better light through the board?

MR. PIKE: I can give you that assurance right upfront, but what I will

say and in my experience in private business and in this current exercise,

while I am sure there are a lot of people who do not look forward to an audit, I

am the opposite. Because I think it is a point in time when you have people who

are not involved in any day-to-day operations. They come in and they dig and the

probe and they question, as I am sure that the folks representing the Auditor

General can attest to, and they write a report.

As I said earlier, we accept this report for what it is, and we welcome what

is in it. Audit reports are not always pretty, but audit reports are always an

opportunity for improvement. That is the way that we look at this, that is the

way the board looks at it, and we have set to task to ensure that each and every

recommendation that is within the audit report is addressed prior to the end of

this year.

By addressing these recommendations, the point that you asked: Can we be

assured that things will operate better? Yes, they will. Partially because we

have taken the point in time, we have looked at and we will be revising our

policies. We now have new staff and not to point any fingers at anyone who was

there before, but we have a new general manger, we have a new manager of

finance. These people have been involved in this audit report. They will be

there now involved with the new policies. They are the ones who are recreating

procedures to plug all the holes to make sure that if there are any monies that

are laid out that T4s are that everything is done by the book.

Now, will something slip in the next year or two? I hope not. I would not go

so far as to guarantee it, but the intent here is that as much as reasonably

possible things will be operating correctly going forward.

MR. JOYCE: I just have one more question, Mr. Chair; I have another

minute left.

There are two department mainly involved with Marble Mountain: Tourism, of

course, and the Department of Finance. Has Marble Mountain Corporation, under

your leadership, asked those departments to come in to help with ensuring that

procedures are put in place? Because I am sure they have the expertise and they

have the ability to come in to help and almost do another review, financially or

through the tourism aspect; they have the personnel to come in. Was that ever

requested or is that something you might think about to ask to try to ensure all

the safeguards are put in place?

MR. PIKE: The new general manager, with the assistance of his new finance

manager, had a lot of discussions and consultation with the appropriate people

within the department. We deal mainly with the Department of Tourism, Culture

and Recreation because that is where we fall. We feel that we would go to them.

If they cannot help us, if they find they do not have the answers, we would rely

on them to consult with others, whether it is the Department of Finance or

whomever.

There has been a lot of consultation ensuring we understand and I say we,

speaking on behalf of the staff the way things work in a government process,

as I mentioned before, and for a Crown corporation because their backgrounds are

not in government and are not in a Crown corporation.

For me, personally, when I first got involved with this board, the biggest

adjustment for me was understanding the process of a Crown corporation and

government, coming from private industry. I am of the practice of: I see

something; I think it should change, you make a decision, and you get on with

it. You do not stop to think: What policy does this fall under or who do you

have to consult with?

It takes time, but we are figuring it out. I truly think we are starting to

make some great progress.

CHAIR: Thank you, Mr. Joyce.

A government member.

MR. CROSS: Just to follow on with some things I had identified and have

indicated, there seems to be a theme coming around that there is a lot of change

and changeover in staff in the operations. Looking through, I see there is a

small management component of approximately six people but it lists up to 140

other full-time or part-time staff. I guess that is seasonal.

How many of these do you know are repeats? Do they come back from year to

year? Is the staff from most years new people?

MR. PIKE: No and I am speaking now more of my experience as a customer,

because I have been a customer longer than I have been a Chair. The seasonal

staff, the 100-plus seasonal staff at Marble, are very fortunate in that there

is very little turnover. A lot of them have been around twenty-five-plus years.

I am proud to say that this year Marble Mountain celebrated its fiftieth year

of actual lift skiing in the Province. Some of those people have been around

close to thirty years. It is the same thing when I look in the bar, when I look

in the cafeteria, when I look at the lifts, when I look at the groomer

operators, the people who are in place there now, as long as I can recall in the

last eight, ten years, the majority of them have been there every winter. I

think that is a very positive thing.

MR. CROSS: Okay. In looking forward, as well, because I think probably

one of the themes we have seen today is not to look back. We look at the reports

that are there and there are some things that we would wish were not there, but

looking forward seems to be a theme.

In today's world, it is not necessarily how smart you are but how can you be

smart, or how are you smart? - which means PD for staff and management. I do not

see, in looking through this, much expenditure for training and PD and things

for staff. How does that build into the positive image towards the future? Are

there plans or something in the modest budget that that can be arrived at?

MR. PIKE: Well, I think on the training side there are a couple of areas.

One is, from the outside operations, where you have a lot of repeat staff and

they do have the product down very well, but for them it is always looking at

the new technology. Part of our capital long-term plan is trying to invest in

that technology.

For example, when you look at snowmaking, there are new technologies and new

snowmaking heads that can make snow in a higher humidity, higher temperature

than some others. We will be investing over time in that so that we can improve

our snowmaking ability. Right now, we have to wait for the temperature to be

down to probably -7, as an example. It has to be down for probably, forecast for

three or so days out, because by the time you get the water in the systems and

get it flowing, it takes a number of hours to get it up and running. Then you

have to drain it all down afterwards. So you have to make sure that it is worth

your while. That is one of the things that we are looking at.

On training, an area of recent that there has been a lot of training done on

although it does not take a lot of cost, because usually you do it in-house

and that is on your ski patrol; again, looking at safety, looking at first aid,

looking at rescue and how to get people down from lifts. I know the more recent

managers of the ski patrol in the last few years have been doing a lot of

training and a lot of exercise.

Another area that we are looking at going forward on training is our customer

service staff; how to interact, how to get more efficient with the cafeteria

operations, how to get more efficient with the bar, and always trying to get the

most product out for the less effort and improve productivity. There are some of

those things.

Another area we are planning to invest on, and we have, it is part of a

three-year plan that we have, and that is a new financial system. Right now, the

financial system at Marble Mountain is basically archaic. I do not know if there

is really a proper system that exists. That will take care of a number of the

small procedural things and the tracking things that are missing today that

surfaced in this report.

The first phase of that is basic financial. We are investing in IT, and with

that will come training with that IT. We will have a new basic financial package

in place by this fall, followed by the following year where we will expand that

into our lift tickets and being able to automate some of that stuff. Then in the

third year the whole point of sale, so that people can call up, they can book.

If you go down to get your skis, you do not have to come up, line up and buy

your lift ticket first and then go down and get something else. You can go down

to the point of sale and do it all in one place, anywhere where there is a

contact person. Even better again, you can do it all in advance. Have it booked

and have it paid for and it will be all put aside for you before you even show

up. That will improve the output. It will improve productivity but it will also

improve customer service.

MR. CROSS: Okay. Just a couple of quick questions and then I guess I am

finished for this session.

Some of the points have already been referred. When you are talking about

contractors and the length of the season, there is a comment that says: No

weekly invoices were submitted as required by the contract. Under a new

financial management system as you suggest, then there should be an adequate way

that this would all be in there and accounted for?

MR. PIKE: That is correct, yes.

MR. CROSS: In the meantime, is there some way of monitoring this? In the

sense of recording these and having this done now, has that started?

MR. PIKE: Yes, yes it is.

MR. CROSS: Okay.

MR. PIKE: I think what happened in the past is that there is a

familiarization over time with the people. You have a contractor, you know this

is the weekly rate that he gets paid. He gets paid that weekly rate.

Technically, he would be supposed to submit this invoice, but over time it sort

of fell by the wayside.

I personally do not have any concern that there were payments made when they

should not have been made. It is just that when you come from an audit process,

you are looking at: Okay, where is the paper trail and where is the

documentation? When you go through this you will see there are a lot of areas

where that fell down, but I am not concerned that proper procedure was not in

place. It is just that the proper paperwork had not been done.

MR. CROSS: Another item that was brought up and started by Mr.

Mitchelmore, and I guess he is probably going to pursue it but it is just a

comment from me.

In the case of the purchase of diesel fuel for the three snow groomers, it

was purchased in bulk and there is no record of the different machines that

consumed the different amounts. In the efficiencies, if you want to look at the

operations such that you want to know which lifts are costing more and all this,

then obviously these finite records are an area that is there. Has that started

or is that part of the new system as well?

MR. PIKE: That will be in place before that equipment goes in service

this coming fall.

MR. CROSS: Yes. That is another example, like your comment, of how you

can make yourself smarter. If you can identify certain things and you know it,

you get the information quicker.

MR. PIKE: You are absolutely right. There are two things there. One is

you are ensuring the fuel is actually going where you say it is going and not

going somewhere else. Also, you are able to track so that if you have three

machines and you are about to get a new one, well which one are you going to let

go and which one are you going to keep? You look back at your maintenance costs.

If the maintenance costs are not high, can you extend that one for another year?

Is that cheaper than bringing in a new one?

To come back to the whole lease thing that we mentioned earlier, that is the

benefit of leasing. Is that you have that flexibility,

whereas if you own them,

then you do not. Once you are hit with the operating costs and the maintenance

costs, you are hit with it, and then if you are trying to get rid of them and

buy a new one

whereas with a lease you know what you have. You know you are

going to be able to turn it around and you know what you are going to get for it

at the end of the day.

MR. CROSS: Okay.

I will turn it now to Mr. Mitchelmore.

MR. MITCHELMORE: Thank you, Mr. Pike.

I would like to ask you: When was your last board meeting held?

MR. PIKE: This is August. It would have been in July.

MR. MITCHELMORE: Okay.

How many times has the board met since January?

MR. PIKE: Since January?

MR. MITCHELMORE: Yes, since the release of this report.

MR. PIKE: The board met in January. Of course, in the winter months it is

when we are under our main operations, so it meets more often. We would have met

in January, February, and March. I do not recall if we met in April. We did meet

in May and then we did meet in July.

MR. MITCHELMORE: Okay.

How many members are on your board?

MR. PIKE: Ten.

MR. MITCHELMORE: Ten.

How many of them are operating to capacity, which are not expired? Are there

just two active members based on the fact that the Auditor General's report said

there were eight operating with expired terms, or have there been new

appointments since that time?

MR. PIKE: I did not quite hear your question.

MR. MITCHELMORE: Based on the Auditor General's report it had noted a

number of board members who had expired terms. You had noted that there have

been recommendations put forward to the department and the minister's office.

So, during these meetings, are these people who are attending operating on the

pretence that they have expired terms?

MR. PIKE: Some of them would have, yes.

MR. MITCHELMORE: Okay.

Can we have a list of the board members and when their expired terms are, and

if you are contravening your own bylaws in the Corporations Act? Because all of

the decision-making processes would could you actually make a decision and

reach a quorum in this situation?

MR. PIKE: I do not recall, exactly, off the top of my head, who is

expired and who is not, but I can get that for you.

MR. MITCHELMORE: I sat on a number of well, I sat on at least one

government board, one of the RED Boards, and they produced their staff, their

board members and their expiry terms on their Web site. Is that something in the

name of openness and transparency that Marble Mountain Development Corporation

will be looking at to be more accountable to the public?

MR. PIKE: It certainly could be done. Personally, I do not know if there

is any benefit but it can be done, yes.

MR. MITCHELMORE: I want to go back then to the fuel question. You had

mentioned that there was personal abuse of the fuel. I just want to know: Has

your board taken any action for disciplinary action on this or pursued a

criminal investigation?

MR. PIKE: I do not recall saying that.

MR. MITCHELMORE: Okay.

I had asked you if you could confirm that some of the fuel was not used for

personal consumption and you said no, you could not confirm that.

MR. PIKE: I guess I did not understand your question.

MR. MITCHELMORE: Okay.

MR. PIKE: I think what I thought you were saying, could I confirm

basically which piece of equipment fuel was being used for, and no, I could not

confirm that. That was my understanding of your question.

MR. MITCHELMORE: Can you explain then the $50 fuel for the truck receipt

that was listed in the Auditor General's report which was listed as not being

owned by the corporation?

MR. PIKE: I cannot go to any specifics, but I can give you an example of

where something like that may happen. Because I do recall with our outside

contractor one time, the winter before last which would have been within this

time frame when we had a motor problem late in the afternoon, the contractor

worked until midnight or so to get that motor taken out, took it in his own

vehicle, drove to St. John's, had it down to the electrical company for when

they opened up at 8:00 o'clock. He waited around until they had it fixed by late

that day, put it in his truck, drove back to Corner Brook, spent all night again

putting it in place and had it up and running for the following morning. My

experience with the individual involved if he put in a gas receipt, it certainly

did not cover his expenses.

MR. MITCHELMORE: I guess that does not make any sense to me as to why

someone would not claim the full expense of fuel if they are incurring costs and

doing work for your corporation.

MR. PIKE: They may have left with a full tank of gas. They may have come

back and they had one receipt, and that is what they put in and they did not try

to maximize how much they could get back.

MR. MITCHELMORE: I guess the Auditor General's report also listed that

you are using a per kilometre rating that is higher than the stipulated

government rate. Why is that?

MR. PIKE: Well, our policies are currently under review. A number of

things that are looked at for Marble are not necessarily looked at by looking at

government. Government is one of the things that we look at. We are looking at

wages or we are looking at other things. We compare ourselves to the industry.

We will look to other positions within the industry. If we are looking at

salaries, we just do not look at government rates because that is where our

competition is and that is what we are competing for people and policy and so

on.

On the actual mileage, obviously, at some point in time that was a rate that

was set by a previous board, for whatever reason. They may have been looking at

private industry for all I know.

MR. MITCHELMORE: How could you incur $20,000 worth of interest in

penalties of taxpayers' money for failing to pay the payroll tax, the health and

post-secondary tax to the tune of $47,000 that was revealed in the audit? Once

you knew that you had failed to pay this fee, it is owed to the Canada Revenue

Agency. Why did you not pay it and incur all of these penalties and additional

fees above and beyond to the tune of $20,000?

MR. PIKE: I do not think they knew they had not paid it. Once it was

picked up, a period of time had gone by. Just like you or I, if we are dealing

with a government agency and they determined we have not paid proper tax and it

is three years old, then usually there is an interest charge associated with it

by the time you are made aware of it.

MR. MITCHELMORE: Have you met or requested a representative from the

Canada Revenue Agency to meet with your finance department or your chief

accountant and the staff who would be dealing with these T4s since the Auditor

General's report?

MR. PIKE: No, we have not that I am aware of, but the new finance manager

comes with a fair bit of experience to the point that I would feel comfortable

he is aware of the way these procedures should work and are working now.

MR. MITCHELMORE: There are significant problems when it came to the

financial aspect previously. Do you account that to the turnover of staff at

that time and a lack of following generally accepted accounting principles?

There is too much happening to say that is just human error or whatnot.

Something has gone astray with your accounting department at Marble Mountain.

MR. PIKE: Certainly that would be a big part of it. We went through a

number of people in that financial position in about a twenty-four-month period.

MR. MITCHELMORE: Even so, Mr. Pike, in your own questioning, you have had

a total of five meetings since the Auditor General's report, with your board.

The questions were asked, responses were made, and then we get back answers

wherein two of the answers you have stated: Has this been developed yet? If not,

is this something that could be created rather quickly? We report positively

that it has been done.

Would you provide us with the minutes of your board meetings since the

Auditor General's report? That is something the Public Accounts Committee, or

myself as a member, would be quite interested in having.

It seems alarming that you have not reviewed the capital assets since you

have said you have gone with the contractor and also with your general manager

touring and putting in this big infrastructure plan to government for a ten-year

plan.

MR. PIKE: I think, Mr. Mitchelmore, you have to understand that when this

report came out we were in the midst of our winter operations, when it takes

full commitment from the staff at hand to keep that hill running, to keep the

snow made, to keep the grooming done, keep everything operating. That is their

first and foremost priority during that period.

Once that period is over, we are down to a very minimal staff of four or five

people, with vacation periods and everything else, because certainly there is no

vacation taken during that peak winter season. We have a plan that we are

working on. We have timelines that we are working on. We did not have a lot to

report with the timing of your questions. Our goal is that we have everything

done by year-end.

Your comment you make on the letter, I think I have explained that it is no

other error other than my own, and I take full responsibility for that.

MR. MITCHELMORE: Yes.

What about the copy of your board meeting minutes? Can we have copies of

those since the Auditor General's report?

MR. PIKE: I can undertake to get those.

MR. MITCHELMORE: Thank you.

CHAIR: Thank you, Mr. Mitchelmore.

MR. K. PARSONS: Thank you very much.

Mr. Pike, thank you very much for coming here today. I have to say that it is

very informative what we are hearing here this morning. To me, it seems like

your corporation is in a positive mode and there are a lot of good things

happening. I agree with you, the Auditor General's report is a good thing for

any corporation because it really does give an outside view of what is happening

at Marble Mountain.

I just have a couple of little questions to ask now. I know you stated this

morning when you came here that you are here by yourself. Is there anything in

place now because the Auditor General's concerns, there was a lot of concerns

there with travel and cellphone usage. I know if I had a report, one of the

first things I would be looking at is saying: Okay, this is something that we

have to stop right now. This is what we have to do in order to make these usages

and make sure that things are tracked properly and whatnot. I am wondering if

you have any procedures in place when it comes to travel and cellphone usage.

MR. PIKE: Yes, we do.

Some of those procedures were in place beforehand; they just were not

adequately followed. In a lot of cases, it is not a case where we have to start

from the beginning; it is just that we have to do what we say we are going to

do.

Each and every travel claim, each and every cellphone bill, is reviewed now

monthly by the general manager. That is in place and has been in place since

this report came out. Cellphones because we have a number of cellphones in use

because of the operation at the end of the season, any of the seasonal staff

that have cellphones, those cellphones are turned back in. I know at one point

in the report where our outside operations guy had been gone during the

operational time for personal use and had the cellphone with him.

If that were next year, this same thing would happen, because from the

board's perspective or from the management's perspective, and some of the

examples that we used, he is the guy who knows the operations best. If he were

going somewhere for four or five days, any time from the beginning of December

to the end of April, I would want to ensure that our staff were able to get a

hold of him, and that is one way to do it. So, I make no apologies for that

piece. If it were next year, the same thing would happen again. That is just

good business.

MR. K. PARSONS: Okay.

When it comes to travel, like you said this morning, is there a specific

policy now that you have in place for travel for recording? There was a lot of

stuff that was done that was not recorded. There was travel that no one could

figure out who was there and why and whatnot. So, is there a policy? Because

that is something that I think you could adapt right away and say: Okay, this is

our travel policy and this is what it is going to be. Is there one in place?

MR. PIKE: Yes. As I said, our policies are all under review, travel

policy being one of them, but we did have a travel policy all along. It was

clear by some of the detail that was brought out in the Auditor General's report

that even our existing policies were not followed to the T. So, some of the easy

fixes upfront was initially that staff were instructed and the general manager

was instructed to ensure that these things happen, that as a minimum, until we

got new policies, that we are doing what we say we should be doing. So, having

receipts to substantiate payments of travel claims is in place today.

MR. K. PARSONS: Okay.

Also, when it came to the use of your corporate credit card statements, there

were a lot of questions there from the Auditor General. Is there anything done

as it comes to credit cards and the statements themselves? Do you have either

policy in place with that?

MR. PIKE: Yes, again, I think that in the expenditures that were in

question, that were approved, obviously the people who were approving the

expenditures knew what the expenditures were for, but the proper paper

documentation was not in place. Staff has been instructed since then, that in

order for payment of travel claims you have to have the proper forms filled out;

you have to have the proper receipts to substantiate it.

MR. K. PARSONS: Okay, that is good. I know with us now, with the Green

report and everything else that come out with government, I mean it is such a

procedural thing now we are pretty well used to it and you know what you can

claim. Once staff I am sure realizes that it does not go to the room cost,

it has to go to the cost of this is the policy and I understand.

The other thing I wanted to just question about was the tracking of your

inventory. The Auditor General was really concerned that there was no tracking

of the stuff that was disposed of and your capital assets. Have you put anything

in place now to do a complete inventory of that?

MR. PIKE: We do not have the full process in place at this point in time.

It is a work in progress. It is part of our action plan and it is one of the

things that we have planned to have in place before the end of this year.

MR. K. PARSONS: Okay.

You said also that you had a new financial manager in place. Can you give a

little bit of background to what his background is and stuff like that? Because

sometimes it is fairly important that the people who we put in place in

corporations like Marble Mountain, that they do have familiarization with that

type of thing, how to run a corporation and whatnot. Because a lot of the stuff

that I am reading in the Auditor General's report is financial, like when you

talked about the T4s and not recording the employment and stuff like that. So,

it is very important that the financial person is probably one of the main

people, especially when you do an audit of a corporation that they have to be

really qualified.

MR. PIKE: Unfortunately, I cannot because I was not involved in the

interview process for this individual. The only statement I can say is that I am

assured that he is qualified, that he met all of the requirements that we had,

but I cannot give you much more than that about him. I am not that familiar with

MR. K. PARSONS: Okay.

I just thought that he may be familiar with that type of operation.

MR. PIKE: I am familiar with his work since he came with us, which I am

impressed with. His support to me, for example, just going through this exercise

and helping to prepare the response to this Auditor General's report. Obviously,

we have a lot of discussion about a lot of detail and about how things should

work, and the lack of documentation and so on.

I think by just going through the exercise, because he was fairly new in that

role when he got thrust into this audit, so I would say that he is quite

familiar with what needs to be done coming out of it.

MR. K. PARSONS: Okay.

I know Marble Mountain creates a lot of spinoffs, and I know Mr. Joyce

probably is more familiar with it than I am, being from that area. Can you just

talk about some of the stuff? We look at the picture here today as Marble

Mountain with deficits and everything else, but I am sure that you must have

some kind of records of hotels, travel, and whatnot, and the benefit it does

bring to the West Coast of the Province.

MR. PIKE: I do not have the numbers, but it does bring in a lot of

business and spinoff to the airport, to all the hotels, and to the restaurants.

Even in the immediate area, Marble Mountain is the key winter attraction for

winter tourism in the Province, and more particularly on the West Coast. It is

the diamond in the crown, so to speak, on the West Coast for winter tourism.

In addition to what it generates itself, if you look in the immediate area,

at Marble Mountain now we have a private company, Marble Zip, which has been in

place now since 2008 operating on the premise. Since it has been there is has

expanded three times. It operates year-round. Most recently, it has added to its

zip line operations summer ATV tours, winter snowmobile rentals. They have

partnered with Marble on a Zip & Stay using the condominiums or the villas next

door.

Also, when Humber Valley Resort started a number of years ago, Marble

Mountain was one of the things it used in its marketing and packaging to try and

promote that. Now that it is under new management and a new operating model,

those villas or those chalets are still open for rental and so on. Again, they

are marketed with the hill in mind.

Have a look at the property across the street that started as a number of

cabins a few years ago. Now it has developed into an inn, a restaurant, and a

fitness centre. The cabins are gone. There is a fifty-unit, condominium-style

business that is created there now. Another company in Corner Brook has built a

number of condominiums across the street, and has plans for more. You have a

business there, George's Ski World. Again, it is all a spinoff from the hill

itself. There is a lot of activity.

Part of going forward, one of the things we are looking at as a board is how

we can develop the base of Marble Mountain to attract private investment. That

is where we need to get to in order for Marble to become really viable. You have

to surround it by these generators of revenue that is going to create more buzz,

that is going to bring more people in, and there would be some spinoff back to

Marble for that which will help it become more financially viable.

MR. K. PARSONS: I look at Marble Mountain as a real asset to the

Province, obviously. It is one of the highlights of our Province for the winter

tourism industry. I am just wondering what other revenues like you just

mentioned that time. Is there anything you can see that should be done with

respect to tourism that we can do as a government or whatever to make it even

better than what it is? Because I think East of Montreal it is the largest hill

that is around, and we need to attract like you say, it is a business. It is a

place where we can generate a lot of revenues and stuff like that. So, I am just

wondering, is there anything else that you think needs to be done there?

MR. PIKE: I know government, or with tourism, I know last year they were

out there and actually did some footage to create some new winter tourism ads.

So, they are working on that, but Marble itself is looking at its own marketing

plan and strategy in trying to generate more interest.

Another thing that Marble is doing a lot is working with the school program

and supporting youth in recreation, which is also introducing our youth to the

outdoors, to sport, to skiing, and to snowboarding. The new magic carpet that I

talked about earlier has been getting rave reviews. It has only been in

existence now for a year, but for school kids because before you had this old

T-bar where there were more injuries getting on and off, and there were more

people turned off from the sport because they never really got to learn it. Now

you go out and it is just like standing on a conveyer belt going through Toronto

airport. It is actually no more difficult than that, and it is amazing the

reviews that we are getting.

So, I think over time we are going to see the numbers of people who are

interested in the sport and taking up the sport increase. I think it is a little

bit cyclical right now, but this magic carpet is going to go a long ways in

turning that around.

CHAIR: Thank you, Mr. Parsons.

Before we go back to Mr. Joyce, I would like to give our witness a ten-minute

break because we have been going for an hour-and-a-half. So, if we could come

back in ten minutes.

We are going to see if we can get the noise to stop.

Recess

CHAIR: Order, please!

Are we ready?

We are ready to resume right now. I will go back to Mr. Joyce.

MR. JOYCE: I will go on with one comment Mr. Pike made and I will ask

just a few questions.

I will just ask you, just in case it ever happens again, would you think it

would be beneficial if the comptroller was here to answer some of the questions

that we are asking or, you thought, where he was new at the job also because a

lot of these questions are financial in nature.

MR. PIKE: I think my perspective coming into this today, a lot of this

has to do with the past and what are we doing today. I think had our financial

guy been here, the response would be somewhat similar. Today, we are doing

things right. We know what we have to do. We know where the errors or the

non-conformances that have been identified are.

We do not disagree with them and we know we have to do it right. If it does

not take policy changes the things that we have to do, we are doing. Some of

the paperwork that we have to get in place, like the tracking systems and so on,

it is going to take us between now and the end of the year. Some of the policies

to have written up, explored and fine tuned are going to take to the end of the

year, but we have all of the confidence in the world that we will be there by

the end of the year.

So, no, I do not know that it would make much difference.

MR. JOYCE: Okay.

I would just like it for the record, for you more so than anybody, and have

it on the record that of all of those things, this is prior to you becoming

Chair. When we are asking you all of these questions, this is all prior

information that you probably would not be privy to. I just want it on record

that when you came here today, a lot of this information was prior to you being

Chair of Marble Mountain. The question that we are asking you is the review that

you had with the comptroller and other staff, and by no means is it a reflection

on your term as Chair of Marble Mountain.

MR. PIKE: I appreciate you raising that. Likewise, for the general

manager we have now and the finance manager we have now, it is all prior to

their time as well.

MR. JOYCE: Two more things on it. You mentioned earlier we are not

looking at money missing, and I do not think anybody in this Public Accounts is

saying there is. As we go through some of the things, part of our duties is to

bring things forward and to ensure for example, the Auditor General's report:

Our review identified six purchases totalling $119,295 were not tendered as

required. Snowmobiles our review identified fourteen purchases totalling

$65,906.

I agree with you, there is no money missing, but our role when we make a

report back to the House of Assembly is to ensure the procedures are in place

that we can save money for the Marble Mountain Corporation. I do not think

anybody is accusing anybody of inappropriate funds. We are looking for better

ways to save Marble Mountain money and in the long run save the government and

the taxpayers of Newfoundland and Labrador that is our role here as a

Committee and as the AG.

My last few questions for now as you mentioned, Mr. Pike, you fall under

the Department of Tourism. I am not sure if you would know this or if it is

something you would consider: As a lot of entities of the government, are your

financial statements reviewed by the Department of Tourism at the end of the

year, your procedures? Are they or were they in the past? Is that something you

would consider for the future, just to ensure that Marble Mountain is following

government procedures and the proper procedure is in place?

MR. PIKE: Yes, the financial statements are done each year. They are

presented to the department. I certainly know that is happening now, but it is

my understanding it was also happening in the past. I can recall the first

meeting I had with the deputy minister when I became Chair. He was very familiar

with the financial statements over the years, more so than I was.

MR. JOYCE: Just to follow up on that and some of the things, the

extension of the contract, say, from thirty-two weeks in May 2005: Will that be

put into the minutes and properly approved I am not sure if it was before to

ensure it reflects the accurate time that you would need a contract? Because if

it is not and I can give an example, when the AG went in, the contract was for

sixteen weeks, and in 2005 it was extended up to thirty-two weeks. If the proper

minutes were not approved, then when it comes back again and the AG does another

review we will be back here again saying: Well, why wasn't the proper minutes

done and why wasn't the proper procedures put in place? Is your board looking at

ensuring that all decisions made are put in the minutes to reflect the actual

funds that have been spent?

MR. PIKE: I can certainly speak for, since I have been involved with the

board as Chair, that decisions like that get brought to the board, there is a

motion put forward, and it is documented in the minutes.

MR. JOYCE: In the report there were a lot of smaller expenditures that

were made. Were there procedures put in place prior to your taking over are

you aware of where people should get three quotes for services? Did you ever

come across that since you became Chair prior to, that it was actually in place,

or was it never in place or just not followed? I know I am putting you in a

position, because I know that you may not have been back there in 2005 and 2006.

MR. PIKE: Yes.

I think, Mr. Joyce, I would have to answer by saying that it was in place and

not followed, because the requirement within government is not new, it was

always there. As such, as a Crown corporation, the staff at the time would have

been required to follow that procedure.

I think where they got sidetracked is that oftentimes they felt, through

their own experience, when they were looking for certain services, they felt

that they knew they just were not going to get three quotes. They knew who would

come to the table and after a while that is the way they went. I am not making

excuses for them, because if you look at the proper procedure, if you cannot get

three quotes then you have to show what you have done and there is a process to

follow. Not one that I am totally familiar with within government policy, but I

do understand that it is there.

MR. JOYCE: Just on another note, how are the Marble Mountain condominiums

doing? I notice now they generally report the occupancy rate is up 25 per cent,

27 per cent. Can you just comment on that?

MR. PIKE: Yes, I had some notes on the actual occupancy rate somewhere. I

do know the occupancy rate over the years has not been really high. It has been

10 per cent, 12 per cent. One year it was 17 per cent and 19 per cent. Two years

ago, I believe, it got up to 25 per cent. It dropped off again.

This past year, which is not covered by this, was probably the best year yet.

I am going to say that it was somewhere in the range of 35 per cent. That was

driven by some developments within Corner Brook. Being from Corner Brook, you

will recall how they had a fire at Greenwood. That took all of those room nights

off the system. The people who would have normally been using Greenwood of

course expanded out into other areas. The Marble condominiums picked up some of

that business.

Interestingly enough, some of the people who stayed there just did not

realize they could actually stay there. I think they thought that they were

indeed condominiums, privately owned condominiums. So that may result in some

repeat business.

Just my local knowledge for this coming season, we are probably not going to

sustain that level of occupancy rate because the Greenwood is back on the market

again, all refurbished. I am sure as you would be aware the hotel in Deer Lake

that has been under construction for a number of years now is now open. There

are a lot of rooms that are available that were not available this time last

year. All of that has an impact on it.

While the villa is perfectly located for the winter tourism and the skiing,

it is not perfectly located, the way it is right now, for someone who is in town

doing business. Everything they do, they have to drive. You cannot walk downtown

Corner Brook, you cannot walk to a restaurant, and you cannot go out and have a

beer and walk back. I am sure all of that has an impact.

I think going forward it is one of the things with our new marketing thinking

that it is something we should be promoting more than it has been promoted in

the past. I think there is some potential there to increase it. That being said,

the villa is a nice plus line on our financial statements. It is a positive

thing, but at the same time it has been around now since 1998 or 1999.

MR. JOYCE: 1999.

MR. PIKE: 1999, and it is probably now to the point where it needs some

refurbishment. Some of the monies that we take in now, we will be reinvesting in

it for the long-term and try and get it back up to speed. Otherwise, you are

going to be competing with new, fresh hotel rooms with older furniture and a

little bit dilapidated rooms.

CHAIR: Thank you, Mr. Joyce.

Does the government member wish to ask a question?

MR. BRAZIL: Thank you, Mr. Chair.

At this point, I really do not have a lot more to ask. I am very pleased at

the fact, as my colleague noted, that you have acknowledged the Auditor

General's report being a benefit to your organization, being optic from an

outside visionary to be able to look at how you address some of your concerns

and some of your issues.

I have been very much informed here, particularly around your operational

policies and how you want to move forward, some of the fiscal accountabilities

and some of the plans for future economic viability. While, again, the Auditor

General did outline some major concerns, the whole Committee agreed and that is

why you were asked to come forward as a witness. Your explanations, your

outline, and the process you have put in place reassures me that if things do

fall in place the way that you plan, Marble Mountain will become more viable and

will address some of the concerns. I would hope the next Auditor General's

report will attest to that and the compliancy will be up.

As my colleague from the Bay of Islands mentioned, I did look at and I do see

the condominiums as a major asset for the organization out there. Has there been

any thought given I know you just answered about the occupancy rates and I

understand there are struggles around that, particularly when the market is

where it is.

Are there any potential sales? Has that been looked at since the original

the original process was to build and sell so many of them and move from there.

I know that things have changed from there. The plan was around the European

market and all that has sort of bottomed out. Have you discussed that? Will that

be discussed down the road? I look at that from being able to accumulate some

additional revenues to address some of your shortfalls, or the debt load, or

improve the day-to-day operations.

MR. PIKE: The short answer is yes, it will be discussed. We have had some

discussion on it at this point. Before those units were on the market for

private sale and I do not think there was any uptake on them at all. There is a

lot more available out there right now. The timing today to put them on the

market might not be in the best interest of gaining the best result.

Before I go further, the other thing we look at, as I just mentioned, right

now it is one of the more positive lines on our financial statements. It brings

us in more today than the interest on the line of credit, even though that hits

us on the operating line. Had it been the other way around, then maybe we would

say: Well, let's just shake those and get rid of this. At the end of the day,

our operating would be better off.

We have a number of subcommittees set up and we have a development committee

set up. I do not want to get ahead of ourselves here, but I will say just to

give you a little bit of an idea of where we see our vision going. We are

exploring looking at base development and looking at trying to create a base

development plan and strategy. We are looking very closely at the success of

some other ski hills, whether it is things like Tremblant or any of those where

you go out and you actually have that sort of village around the hill.

We will not get to the point of that, but is there room out there for some

private investment, or some private homes or not necessarily homes, but

private condominiums for a rental pool? Once you bring that in, can you get some

restaurants there? Can you bring some other revenue generators that bring people

to the area to bring in its own little resort or its own little community?

We will be exploring a lot of that. Once we start looking at that, then one

of the things that I think should be explored at that time is whether the timing

is then right to look at putting the villas up for sale.

MR. BRAZIL: Perfect.

Mr. Chair, I am quite content with the answers I have gotten. My colleagues

have asked some very poignant questions and we have gotten some honest,

straightforward, and visionary answers. I am, at this point, quite content to be

complete in my asking of questions.

CHAIR: Mr. Mitchelmore.

MR. MITCHELMORE: Thank you, Mr. Pike.

Since we are on the topic of the condos that are there, strictly looking from

an accounting perspective of the revenues and expenses, to me you are saying it

is one of your more profitable lines and it is reporting a net profit in 2011 at

$135,437 on page 339.

Is that just direct revenue and direct expenses? This does not take into

account the grant to build, the repayment of the long-term debt, and things like

that. It is just direct revenue and direct expenses. If you look at it in the

long-term, your condos are most likely losing money.

MR. PIKE: Well, if you had to go build them yourself with your own money

or finance them yourself, it would make a big difference to that bottom line.

MR. MITCHELMORE: Right.

MR. PIKE: For Marble today, it is a revenue generator.

MR. MITCHELMORE: It is only because of the grant, the subsidy from the

government to build them, that you do not have to pay for them

MR. PIKE: Most certainly.

MR. MITCHELMORE: Right.

What I would like to see, or maybe an option, is that you might look at

selling it to a private investor to extend on the development, if possible, to

get to fifty units because the Province has a Resort Property Tax Credit of 45

per cent. That would be an incentive to be able to sell these condos. If you

have thirty-one of them and you are able to sell them at $150,000 or $180,000,

given the market, you could generate millions of dollars in revenue and pay off

some of this operating debt.

I ask: Is something being done to pursue this option? You had mentioned

earlier to my colleague, Mr. Parsons, when he had talked about the developments

and the economics of the area. You talked about all the other condos and the

other hotels in the area. I would have to say the other condos and hotels would

have to be above 25 per cent occupancy or they would all be out of business.

This is not a net revenue generator for the taxpayer, and I would seriously look

at trying to sell the condos.

Is that being done?

MR. PIKE: I think the original intent when they were put there is that

they would be sold, but there was no uptake at that time. I can assure you there

is nobody knocking on the door trying to buy that building for any price, even

to steal it, to my knowledge.

MR. MITCHELMORE: Since that time, though, we have also seen the Humber

Valley Resort basically close up shop in terms of what it was doing in terms of

timeshares and things like that. There may be an opportunity now to look at

that.

What I am saying is that thirty-one units are not big enough. It needs to be

at fifty units to take advantage of the direct tax benefit of purchasing the

property at a 45 per cent discount. That is something that might need to be

explored in a public-private partnership to look at selling them so you can get

in a better financial position. That is my suggestion.

MR. PIKE: Now, I am not really familiar with that fifty units, you may be

more so, but my thinking is that is for new units coming on the market. The

whole incentive is to create additional rooms or units for tourism. I do not

think the existing thirty or thirty-two would count in that formula.

MR. MITCHELMORE: I do think you need to sell those units because it is

costing the taxpayer too much money to maintain them.

I would like to ask you about the number of evident loose tracking records

and the number of times you have contravened the Public Tender Act. I am

wondering about this exclusive sole-sourced contract you have with the

maintenance supplier. The Auditor General's report said this person received

$3,164 while on vacation and unable to perform the duties of the contract.

This needs an explanation for me, Mr. Chair.

MR. PIKE: The payment that the Auditor General referred to comes from the

fact that there were no weekly invoices put in to substantiate the payments. The

payments were made based on the time frames and the work that needed to be done.

The staff at the time just carried on with their normal payment

schedule knowing

that the contractor was on vacation, but knowing the contractor would indeed

make that up at the end.

I do not think it was a case where the contractor was paid an additional

$3,000 or whatever the number was more than he should have received. It is just

that technically, had things been done by the book, during that week there would

be no payment and the payment would have been made for the week at the end of

the period.

MR. MITCHELMORE: So this exclusive contract that is provided that did not

go through the Public Tender Act, this person is receiving $3,164 weekly for the

work being done for a total of thirty-two weeks? Is that the contract?

MR. PIKE: The way that it is, the contract is per season, but then the

way that it gets paid, it gets paid out by the week. He does not get a cheque

for the full amount.

MR. MITCHELMORE: So what is the total amount of the contract annually?

MR. PIKE: I do not know the exact if you did the calculation, but I am

thinking that it is somewhere in the range of either $109,000 or $112,000.

MR. MITCHELMORE: Okay.

That is the same no matter if there are sixteen weeks, thirty-two weeks,

thirty-seven or thirty-nine, or in those additional weeks because Mr. Joyce

had pointed out that the original was sixteen weeks, it was extended to

thirty-two weeks, and in the Auditor General's report they had noted that there

were two instances where they were paid seven additional weeks and nine

additional weeks beyond that amount.

MR. PIKE: That amount is for what they deem to be a normal season now,

which I am thinking are thirty-two weeks. Then, outside of that, it could be

because of mechanical issues that have to be dealt with after the fact that they

are trying to get done at the end of a season or at the beginning of a season.

Then, it is in addition to the normal time frame, and that gets paid.

Or, as I mentioned last year, when I became Chair, it was around the same

time that the contract would have been expired and I had requested that the

operations manager stay on for a few more weeks because we needed to really get

a handle on each and every piece of the infrastructure and create a ten-year

strategy that I could work with government on, as to this is what I felt needed

to be done.

MR. MITCHELMORE: So this contract is now expired?

MR. PIKE: Pardon me?

MR. MITCHELMORE: The contact the service agreement has expired?

MR. PIKE: No, I think it expires in 2014, if I am not mistaken.

MR. MITCHELMORE: So do you plan at that time to go to public tender?

MR. PIKE: That is correct.

MR. MITCHELMORE: Okay.

Coming from someone who had dealt with controls in terms of business, I am

wondering why you would pay a supplier who fails to provide invoices for work.

If the contract is set at $109,000 annually, it is not broken down in a weekly

rate that they get paid this much per week, it is based on the work, is from

what I am gathering from you. It is based on what they supply. So, how are you

paying them for the work done? Is it a weekly set rate? No matter if they do no

work or lots of work or

MR. PIKE: No, the contract is in place to manage the outside operations

for a particular point in time. That is how the dollar amount gets set. Now,

what is required and is brought forward in the Auditor General's report is that

the contractor is supposed to be submitting weekly invoices for payment.

MR. MITCHELMORE: Okay.

MR. PIKE: Of course, that was not happening. Again, that is just one of

those paper trail things that had either and I do not know if it had ever been

in place or it had been in place and it just became complacent, but the weekly

amount is basically taking the contract, dividing it by the number of weeks

within that contract, and that is how you get paid. So, they did not give them

any monies they did not give them 50 per cent upfront, or he did not have to

work twelve weeks and then he would get 30 per cent of it, that kind of thing;

he was paid on the week, the same as a payroll type thing.

MR. MITCHELMORE: So, when the contract was extended for the seven

additional weeks in the Auditor General's report, this person was paid an

additional $3,164 per week?

MR. PIKE: That would be my understanding of it, yes.

MR. MITCHELMORE: Okay.

There is a

CHAIR: Mr. Mitchelmore, thank you.

I will go to a government member now.

MR. MITCHELMORE: Sure.

MR. S. COLLINS: Just to go back to marketing we had discussed it in the

last round of questioning there currently you mentioned you are spending

expensive I will say than traditional media.

I am wondering: Would you keep your budget of $200,000 constant or is that

something that you could realize some savings there if you were to use Twitter,

Facebook, those types of things? I am looking, even if you cut that back by

half, you would be realizing a savings of $100,000, which given your debt

servicing and whatnot, that money could be well used, I am assuming.

MR. PIKE: Over time that may indeed be the case, but I think right now

overall strategy. It is something that we are seeing a lot of uptake on because

if you look at year over year, you are increasing with your blog and certainly

with Facebook you are seeing more likes or more hits, whatever you want to refer

to it, but that is only a certain component. We still have a lot to do on our

marketing strategy, trying to get out to those outside markets or even the

local market.

I will give you an example. One of the issues that I think we have to address

is that I talked earlier about how you have a bad snow year the year before last

so then it will affect last year, or the last year's snow will affect people's

mindset on the upcoming season. In recent years, our outside staff have done a

fantastic job of creating something out of nothing and I also talked about how

we are planning to invest in new snow-making technology, so we will even be able

to do more.

The difficulty we have is, when we have a good product at Marble Mountain,

our focus is trying to get potential customers on the East Coast to understand

we have good snow conditions. I am from the East Coast and when I leave my

driveway and I love it when there is no snow on the East Coast because I do

not have to shovel it and I do not have to be worried about it when I am gone; I

spend a lot of time on the West Coast in the winter.

Likewise if people are not shovelling snow in their driveways in Corner

Brook, they do not go up skiing. It is a mentality that we have to get around.

The ski conditions are absolutely fantastic, and then you get somebody to come

up. I am out there skiing and I am out from St. John's. I am looking around

saying: I do not see a lot of people here from Corner Brook who I know normally

ski. Someone will come up and say: I did not realize it was so good up here.

We have to re-engage the immediate local market. Then we have to focus on

that two-hour drive market. We have to focus on the Avalon Peninsula where the

bulk of the population is. We are taking it piece by piece because you cannot do

everything and we have to balance the dollars we have with what we need to do.

Then we have the Halifax market. Then we have other markets we can look at.

There may be a point in time that if we find we get successful, then you are

not going to spend marketing dollars for the sake of spending marketing dollars.

It is always an evolving strategy. Will we always spend $200,000? Mr. Chair,

$200,000 is not very much money when it comes to a marketing strategy. In my own

business I spend a lot more than that, probably on The Telegram alone or

on NTV alone. We are really working with a very limited budget, but we are

trying to maximize that.

have no plans on getting there in the near future.

MR. S. COLLINS: I hear you. Fair enough.

I was happy with what was brought up by a couple of my colleagues previously

with regard to the condominiums. Even myself, I am from Glovertown and I go to

Corner Brook I would not say quite often a few times throughout the year. I

am not really in the mindset when I go to Corner Brook, if I go to look at

accommodations, I do not look to Humber Valley.

I think it is something lacking in the marketing that lets people know that

these are available. I am kind of on a different page, I guess, than my

colleague, Mr. Mitchelmore, because when I look at the figures here even when

you are operating at 17 per cent occupancy rate, you are still at $135,000 in

the black. I am of the mindset to keep these. It is an asset. It is something we

can build on, certainly, but to sell them off in a fire sale, I do not think

would prove beneficial. I think it is a great asset.

Something definitely needs to be done on the marketing side of it because you

just have so much potential there, I think, that has been untapped. I think in

the last year you mentioned because of a hotel in town shutting down that has

pushed people that way. Maybe that is going to build on next year's sales.

Anyhow, that is where I am with that.

I have just one other question with regard to cellphone usage. How many

cellphones currently are issued throughout your corporation? Are you able to put

a number to that?

MR. PIKE: I do not know. If I was to guess, and this would only be a

guess, I would say probably in the twenty to twenty-five range.

MR. S. COLLINS: Okay.

My only thing with that is how you justify that use. Because I am just trying

to, in my own mind, think of the operations on a ski hill. I picture people

using handheld radios to communicate back and forth. I am just wondering: Are

the cellphones used for offsite? I am not intimately familiar with the

operations of a ski hill, but I am just wondering is it justifiable to have

twenty-plus cellphones in an operation such as this, and is it something that is

needed, or is it something that you could go to like a handheld radio. Again, I

know that may be quite archaic.

MR. PIKE: The twenty-five is only a guess, as I said.

MR. S. COLLINS: Certainly.

MR. PIKE: Just one second now, I might be able to tell you.

MR. S. COLLINS: Okay.

MR. PIKE: We have fourteen.

MR. S. COLLINS: Fourteen is better than twenty-plus. That is fantastic,

yes.

MR. PIKE: We do have a radio system, but it is mainly for the ski

patrollers.

MR. S. COLLINS: Okay.

MR. PIKE: It is not something that is used for the normal communication

because it is for emergency response, the condition of the hill, knowing where

people are and communicating when they are doing their morning sweeps, their

evenings sweeps, is the hill in good shape, if it is not, if we have a problem,

where we have to send somebody to get it fixed before the runs actually open.

Then, at the end of the day, making sure that there is nobody on the hill, and

then between opening and closing if there is anybody hurt, injured or lost, you

have immediate response.

MR. S. COLLINS: Fair enough.

Those bills at the end of each month, would that be something where you would

give it back to the employee who owned the cellphone and ask them to go through

it to see what personal calls would be on it. Is that is something that is

monitored to make sure that it is not abused?

MR. PIKE: Right now the initial response is for the general manager or

the finance manager to go through each of them. Because, some of them, you would

not even go through that exercise. It could be just the basic charge and no

additional charges, just your local calls. Anything outside of that, it is

reviewed and it is questioned. Those approving it have to be satisfied that it

is legitimate Marble use.

MR. S. COLLINS: Okay.

I guess the same train of thought would be applied to the credit cards that

are issued amongst employees.

MR. PIKE: Most definitely.

MR. S. COLLINS: The same checks and balances would be in place, I assume.

MR. PIKE: Yes, certainly on a go-forward basis.

MR. S. COLLINS: Okay, perfect.

Thank you. That is everything.

CHAIR: Thank you.

Mr. Joyce, do you have questions?

MR. JOYCE: I just had two more things for Mr. Pike.

In one of the highlights that the Auditor General put in, "The payroll data

system used at the Corporation is inadequate to record overtime separately from

regular hours." That was a bit of confusion about overtime. Is there a new data

system put in place?

MR. PIKE: There will be a new financial system I mentioned that we are

trying to get in this fall. In the meantime, while we do not have a process of

tracking the overtime for approval after the fact, the way that the overtime

gets approved at Marble, it is approved in advance, and that has been the

procedure. Overtime gets scheduled in advance of it occurring. It is not

something that overtime is incurred, okay was it right or wrong. The overtime is

approved before it happens, and that has been the practice. It is just that

there is no paper trail to support it.

MR. JOYCE: Okay.

MR. PIKE: The financial process right now does not support it. As Chair,

I have a lot of questions that I would be asking. They are not easily answered

because the information is hard to get. I was not surprised when I saw those

comments. That is why part of our ten-year capital investment strategy in the

upfront piece, in three years we have an IT component of that because we

recognize we really need to get a better financial system. We are getting the

basic finances this year then we are building on it in the next two years.

MR. JOYCE: I have two more questions and a comment and I will be

finished.

I go back to the management of the hill. Will the board now put in place the

time limit that they would need in the management of the hill? As in the AG

report and I brought up earlier, it started out as fifteen weeks, sixteen, then

it went up to thirty-two and then it was gone to forty. Will there be a time

frame put in place for that? Because when you look at it, it is almost like:

What do we want to do with it this year? How do we want to do it this year? Is

there any way to put that in place?

In no way am I trying to not recognize the commitment of the company and the

value to the hill, but it just looks like the deal was for sixteen weeks, then

it went up to thirty-two weeks, then it was gone to forty last year and

thirty-nine the year before. Is there any way to narrow that down so when the

public looks at it or anybody sees it, here is what we are using

MR. PIKE: I think the standard in the last number of years has been

thirty-two, but one of the things you have to recognize as well is if you go

back to the year 2000 to now, in the last twelve years, there has been, not just

in the ski industry but in many industries, a tremendous amount of changes in

regulations and inspections and required maintenance and things of that nature.

So the whole safety and reliability is held to a much higher standard today than

it was twelve years ago, especially in the ski industry because you are dealing

with lifts of people. The standards have gotten very high and our expectations,

and I am sure the expectations of government, is that we take it very seriously.

That is why now, as I mentioned earlier, you have a certain block of the ski

season and then prior to the ski season, because of weather conditions, we are

spending a lot of time making of snow and getting the hill in its place. Then

you are back up from that and you are back into early fall when you are doing

all of, I will call it, your non-destructive testing, so that every so many

years every chair has to come off those lifts, the cables have to be checked,

especially the detachable quad.

For those of you not familiar, the high-speed lift, as you are getting on

those lifts or off those lifts, the chair is actually detached from the cable so

that you get off when it is slow and the cable is still going around fast. Then

when it clamps on away it shoots out again, and the same thing down at the lower

end.

Well, if you ever had the opportunity to go up inside that housing and

looking at all the checks and balances and the safety features built into that,

it would blow your mind. Those have to be checked every year not every year, I

mean they are checked every week, but it has to go through a certain protocol

every year. So there is a lot of maintenance and they call non-destructive

testing where you have to take it all apart, you have to pressure it to the

point that you do not break it but you have to make sure that it is working.

MR. JOYCE: My point to that is and I understand what you are saying. I

skied Marble many times, been up there; I understand. Just for openness and

transparency, I would just suggest to the board to change the contract to meet

those regulations, those thirty-two weeks instead of the original sixteen. Then

it would be more open and more transparent of here is the length of the contract

and the reasons why. Then you would not have this in the AG report. This is just

a comment to the board and yourself to reflect on it.

MR. PIKE: I think you are absolutely right because I think what has

happened is that the original contract in 2000, as we see, was five years, then

it got extended and extended. Everything else changed and the length of time

that we are being paid for within that block all changed. Again, as we saw with

a number of things in this Auditor General's report the paper flow and the paper

work, the paper trail, is not there to substantiate it. That was one of our

weaknesses, and it is one lesson learned through this exercise.

MR. JOYCE: Mr. Chair, I am finished with questions right now unless

something else comes up in the discussions.

Mr. Pike, thank you very much. I know it is always difficult to sit down with

a group from Public Accounts, but it is even more difficult when you are

speaking about happenings before you took over as Chair. Obviously, you came in

well prepared. You spent a lot of time reviewing this to give us what

information you can so we can make recommendations. Personally, thank you very

much for your time that you put into it to help us.

MR. PIKE: You are welcome, sir, and we look forward to seeing you on the

hill this winter.

MR. JOYCE: You will.

CHAIR: The next government member.

MR. CROSS: Just a very, probably, general short couple of comments and

then a sort of a wrap up.

My interest here, I guess, in looking through the documents in review are

more or less looking at the broad strokes, not taking the exact dollar and cent

line items as such, just to know that what was, in essence, in looking at the

Auditor General's report was a comedy of errors almost that could have led to a

good tragedy.

Looking at the ineffectiveness and the inefficiency of all of that and seeing

that most of the response from you today, as well as what is listed here, is

that the MMDC will endeavour to review policies, create policies, develop and

document procedures, these are the positive statements on a go-forward basis

that we need to hear.

My question is not to you right now but to either Ms Russell or Mr. Janes.

What we are hearing and on this go-forward basis, I guess, in the future we are

going to look to a future Auditor General's report that would show that what we

have seen or what we look at now is maybe a recipe for success; the proof is

going to be in the pudding, in that when another report comes out.

What should we be looking for in the meantime that would make sure this would

be open, transparent, user friendly, and not get us another report in the future

like this? We hear the language and we respect the point of view of Mr. Pike.

Again, he is answering for his predecessors and not for his actions. How would

we look to the future to see that this does not repeat itself?

MS RUSSELL: Two years from the time that report was issued, we will

follow up on the recommendations with the corporation to see where they are. We

would hope that they would act on them. At that time, we should see improvements

in their position.

I think their biggest challenge is going to be their debt. Most of the other

recommendations are things they can address. You can develop policy and you can

put procedures in place to monitor compliance with policy, but addressing the

debt will be a little bit more difficult.

MR. CROSS: Well, thank you, Mr. Pike. I respect your answers. I am

satisfied and content right now.

I will pass it back to some of my colleagues.

MR. MITCHELMORE: Thank you.

Mr. Pike, I have several other questions for you. Mr. Joyce had brought up

safety and you had talked about it. One of the issues highlighted in the Auditor

General's report was the lack of Certificates of Conduct on file of employees.

Even in the response, you had noted that all new employees will have them on

file, but it still did not give the assurance that all employees currently on

staff have these Certificates of Conduct on file. Has this been done to date?

MR. PIKE: Yes, and I think the response indicated the more recent

employees had them when the audit was done, but they were not paper. They found

them afterwards on an electronic format. They also confirmed that, for the

employee who looks after the child care centre, they did have that one. We

indicated in the response, we would be getting them for the other staff that was

required. Any staff that is on staff during this time of the year and are

required are in place, to my understanding.

MR. MITCHELMORE: What type of timeline are you looking at to have them

all accurately and on file, since they are not all there yet?

MR. PIKE: Our goal, as I mentioned several times this morning, on this

Auditor report, is to have everything done and in place by the end of this year.

MR. MITCHELMORE: Okay.

MR. PIKE: The only exception, I would say, because it may take a lot of

consultation and it is probably not as easy a task, and some of you are probably

more familiar than I, and that is the review of the corporation's bylaws and so

on. That is probably not one that we are going to have done by year-end because

it is probably not one that is totally within our control and we have to do a

lot of consultation.

MR. MITCHELMORE: Okay.

Mr. Pike, did someone drop the ball when they approved $21,900 in relocation

for an employee without signing the return to service agreement, and will this

happen again?

MR. PIKE: No, it will not happen again.

MR. MITCHELMORE: How long was this employee with the corporation, who

received the $21,900 in relocation expense?

MR. PIKE: That employee has been around now, I think, two years. We are

going into the third year.

MR. MITCHELMORE: What types of costs were absorbed in this $21,900 in

relocation? It seems quite high to me for anyone to relocate. Where did they

relocate from?

MR. PIKE: They located from the far side of British Columbia.

MR. MITCHELMORE: Okay.

MR. PIKE: We were fortunate enough in attracting somebody with some

industry background, who was actually working in the Whistler area and we

relocated them to Corner Brook.

MR. MITCHELMORE: So then are you willing to continue to repay relocation

expense to this tune but you would ensure that you would have the return to

service agreement?

MR. PIKE: That is correct, we would. It would be normal practice. In this

case, I would have thought that there would have been one, but obviously there

was not. Usually when you have a return to service agreement, it usually runs

out within three years. In any that I have done in my own business, it has been

three years. So we have two years behind us, one year to go, and I certainly

have my fingers crossed that this guy does not leave in the next year.

MR. MITCHELMORE: How many corporate credit cards do you have?

MR. PIKE: I do not know, but my guess on that one would be in the range

of about four or so.

MR. MITCHELMORE: Okay.

MR. PIKE: Because it would be your key managers.

MR. MITCHELMORE: Why do you have them, period? Is there an absolute need

for corporate credit cards?

MR. PIKE: Well, in some cases they are out buying materials certainly

on the catering side. They are picking up things on short notice based on what

they need. They have a wedding; they have a conference. You cannot always

MR. MITCHELMORE: Could this not be invoiced or cheques paid or a direct

deposit to the suppliers?

MR. PIKE: It all depends where you are getting things. You could have a

supplier set up and what you need on that particular day or that particular week

they do not have, you have to go somewhere else. So, I would suggest that it is

just a matter of convenience.

MR. MITCHELMORE: Are you credit card balances paid off at the end of

every month, or are you incurring interest on these cards?

MR. PIKE: I am not familiar with that level of detail.

MR. MITCHELMORE: Okay.

I just have some big concerns with the credit cards in general, because the

Auditor General's report revealed double billing where employees had claimed

hotels, they had claimed meals, they also put in a travel claim then it was not

cross listed. So, in the essence of openness and transparency, I think it would

be a wise decision to get rid of the corporate credit cards.

MR. PIKE: Well, Mr. Mitchelmore, I think you have to be careful that you

do not throw out the baby with the bath water. We would read the Auditor's

report as it is, it was over a three-year period, you look at the issues that

are there. For the most part, in some cases, there was no documentation. There

were several errors over that time period. My approach to that would be is that

we put processes in place to make sure that things are working correctly, and

not that we take things away that are going to make it more inefficient for us

to operate our operations.

MR. MITCHELMORE: There were instances where funds were paid to people

without providing official receipts. If they are putting this on their credit

card, they can contact the credit card company to get a copy of the receipt so

that it is on the file and that it can be proven that those claims were

supplied.

MR. PIKE: Yes, but obviously the individual approving felt satisfied that

it was a legit. In my day-to-day business, if I have somebody working with